How Artificial Intelligence in Advertising is Giving Retailers the Sales Edge They Need

How Artificial Intelligence in Advertising is Giving Retailers the Sales Edge They Need

As online advertising continues to evolve at a rapid pace, becoming more technologically advanced and data-driven, so too should your digital marketing strategy.  

The challenge for most marketers today is how to differentiate themselves in a world where consumers are hit with hundreds of advertising messages and choices every day.  How do you stand out? How do you become more relevant? How do you reach the right customers and know that your advertising budget isn’t going to waste?

In this article, we'll show you how you can differentiate your marketing with AI-fuelled advertising. We’ll showcase what it is, how it works, and how it can work for even advertisers with modest budgets. Then, we'll demonstrate how you how it can turn your sales funnel into a pipeline, converting more prospects into customers faster and for less investment. 

What is AI-Fuelled Advertising?

AI-Fuelled advertising is a technology that uses advanced machine learning to make optimal decisions that work towards meeting an advertiser's goals. The advanced software system reads billions of data points from tracking and mapping user behaviours on the internet over time, identifying overarching patterns and trends and creating its own insightful pathway or what is called ‘an algorithm’. This algorithm is what creates Artificial Intelligence. AI in advertising makes crucial decisions on the fly, improving the advertiser’s opportunity to reach, engage and acquire more customers.  

Woman on her phone interacting with an AI | Adgility
Here are some examples of some of the decisions AI can make when trying to work out the most cost-effective pathway to conversion:

  • What type of user should it serve an ad based on demographic, user behaviour, interest category, search behaviours, keywords etc
  • What type of ad format is more likely to attract a click-through 
  • What type of  website is more conducive to engage a user 
  • What type of bid (CPM, CPC, CPMC) it should pay to target a particular user based on their likelihood to convert

How can AI turn your sales funnel into a pipeline?

Marketers that have started using AI in their advertising have noticed that their online advertising performance starts to change within a few weeks, starting with a decrease in web traffic. This is because the technology learns from conversion data it accumulates from an advertiser’s website over time.

Person interacting with a phone. Interacting with a storefront. Adgility
The machine learns who to target and who not to target in order to complete the advertiser’s desired actions - increasing leads, sales, downloads, etc.  Progressively over time, marketers also start noticing that their conversion costs steadily decrease. The company doesn’t have to spend as much to find and engage the right prospects before converting them into customers. 

How do you get started with AI-Fuelled Advertising?

Most marketers will utilise a programmatic demand-side platform, or ‘DSP’, to leverage Artificial Intelligence in their advertising. A DSP is a programmatic advertising platform that automates the buying of ad impressions for a specific audience through a process called ‘real-time bidding’. For example, instead of having to go directly to lots of different publishing networks like Google Ads, News Extend, Microsoft, Nine etc., DSPs can access a vast amount of networks simultaneously, giving advertisers access to a lot more ad inventory and eyeballs.

How Does AI-Fuelled Advertising Work?

First, the programmatic machine must have enough conversion data to learn from. For some advertisers with fewer daily conversions on their websites than average, this can take a bit of time. By studying user behaviours online, the machine creates what we call a "predictive audience". This audience is created based on your existing audience and insights gained from studying user behaviours and tracking them through to your desired action such as a sale, sign up, or content download. 

Most marketers use a 'lookalike' audience to find new customers. This technique is now somewhat out of date since it’s based only on existing customer data rather than a combination of several types of data, such as ‘Big Data’. As a comparison, AI's predictive audience has performed up to 8x better than ‘lookalike’ audiences, depending on the industry. Here are some industry benchmarks below.

Ref: Stats reference all campaigns run globally on Verizon DSP for various periods 2016-2019.

Once the AI has created a predictive audience, it takes part in 'real-time bidding', which is like an online auction for advertising. By utilising the goal set by the marketer and the predictive audience, the AI will show ads in a particular sequence to the users more likely to become your customers. Once the technology starts to learn who the user is and how they’re engaging with media channels, it starts to form a funnel for bringing that user to your ultimate goal.

Stamford Hotels was able to achieve an ROI of up to 1200% by leveraging AI-fuelled programmatic advertising. With the rise of online hoteliers, Stamford Hotels was forced to rely on Expedia Hotels and Trivago to make sales. This drove profitability down while driving commission for sales up. Yet, using AI-fuelled technology, Stamford was able to strengthen its online brand. This helped them convert customers without relying on online hoteliers.

Learn More About our Work With Stamford Hotels

Programmatic advertising platforms or DSPs are popular because they allow marketers to merge their media buying into one platform. This way, they can get data faster while also reaching more people. Whether you're looking to gain more leads or promote your brand, AI-fuelled advertising can do it cheaply and efficiently.

Read Our Programmatic Media Guide

Is AI-Fuelled Advertising Right For My Business?

AI-fuelled advertising presents a lot of advantages for businesses. By leveraging new, innovative advertising technology, companies have been able to increase their ROI, decrease their cost of sale (eCPA) and overcome their competition faster with more efficiency.

By utilising AI in advertising, marketers have been able to target more of the right people, cut down ad wastage, improve brand and customer experiences online and ultimately get more bang for their advertising buck.

If you want to learn more about how you can best unlock the power of AI-fuelled advertising, we'd be happy to help. Book a call to learn more.

Five Reasons why you Need AI in Your Marketing Strategy

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The Marketer’s Guide to Programmatic Advertising

All you need to know about becoming a data driven marketer with the power and precision of programmatic advertising.

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