"Advertisers are grappling with
trade-offs of artificial-intelligence-powered ad planning and buying tools for
automating nearly every step in digital ad campaigns.
The tools work by asking buyers for
parameters for campaigns, such as budget limits and sales goals, then allow
algorithms to decide where ads will run, who they target and, in some cases,
how ads appear.
Buyers often can't find out exactly
what decisions the artificial intelligence implements, but they can essentially
press a button for campaigns to run on their own.
AI tools can make a campaign more
efficient, according to their developers, which include pioneers Google and
Meta Platforms.
TikTok, Amazon.com and Pinterest
also have released their own such tools over the past year.
The tools also can help developers
sell advertising more effectively to small and midsize businesses that provide
a majority of their ad revenue and that can't develop complex campaigns on
their own, said Karsten Weide, an advertising technology consultant.
For many advertisers, however, the
lack of control is disconcerting.
"It's almost like a necessary evil,"
said Nicole Fisch, senior vice president of marketing at baby-products brand
Lalo, which uses Google's AI-fueled Performance Max campaigns to run ads
online. "You see the numbers and it does drive sales, but. . .at what
cost?"
Reports from Google sometimes show
higher returns for Performance Max campaigns than non-AI efforts. But Lalo's
team can't tell if their ads reached the company's core audience of
design-focused parents, nor can they actively target specific websites and apps
those people may frequently visit, according to Fisch.
Many marketers -- Lalo included --
are using the tools nonetheless.
"AI buying agents are going to
be directing upwards of 80% of digital media buys by 2030," said Ben
Hovaness, chief media officer at ad buying firm OMD, part of ad giant Omnicom.
Marketers have for years responded
to the proliferation of platforms and media formats by demanding greater
control and transparency in allocating budgets. The tech giants dominating
digital advertising now appear headed in the opposite direction.
The particulars vary. Meta's
Advantage+ places ads only within Meta apps such as Instagram and Facebook, for
example, while Google's Performance Max campaigns run on Google properties and
elsewhere.
Some marketers now call Google's and
Meta's AI tools "black boxes" because, depending on the platform,
they may not be able to control key factors such as the consumers they are
targeting, the platforms and webpages that run their ads, and whether the final
ads look like they want.
In many cases, marketers may have
limited visibility into how well specific campaigns performed and why.
"The idea is to relinquish
control and trust the algorithm," said Zach Thompson, director of ad
operations at digital planning and buying firm Arm Candy.
Arm Candy initially spent around 45%
of some clients' e-commerce ad budgets on AI tools but now advises using them
only in special cases, Thompson said. The tools improved outcomes such as
clickthrough rates and costs per click, but in the agency's experience didn't
increase sales, and clients lost a certain level of control, he said.
Online event marketplace Event
Tickets Center has seen its images and text appear in other brands' ads when
buying through Advantage+, said Chief Marketing Officer Ben Kruger.
Some OMD clients have shied away
from AI buying altogether due to a lack of control over audiences and
inventory, according to Hovaness.
Marketers considering AI-driven
campaigns aren't confident ads for restricted products such as alcohol will
appear only in appropriate places, Hovaness said. Other brands can't accept not
being able to select where their ads may run online, he added.
Despite such complaints, many
marketers have embraced the "black boxes."
Event Tickets Center found
Performance Max campaigns deliver higher traffic numbers than traditional
search ad buys, which is more important for the ticket seller than
transparency, according to Kruger. "As long as it's delivering profitable
sales to us, I don't really care where it's running and what it's doing,"
he said.
The company now spends around 10% of
its roughly $100 million annual Google budget through Performance Max, Kruger
said.
Advantage+ has reduced the time Saxx
spends identifying leads and setting up campaigns, said Kevin Meikle, director
of digital marketing. That gives the underwear brand's marketing team more time
to test other marketing channels and work on creative strategy, Meikle said.
Saxx currently spends 20% to 30% of
its Meta budget on Advantage+, but that share has run as high as 50% to 60%,
depending on fluctuations in ad prices, Meikle said.
Google and Meta have gradually
updated their AI products. Performance Max advertisers since March 2024, for
example, have been able to block their campaigns from running on up to 20,000
sites or apps.
Many marketers, however, would
prefer to choose where ads run rather than where they won't, because even a
list of 20,000 sites, pages and apps accounts for only a fraction of the
billions of places where digital ads may appear.
No matter how marketers feel about
"black boxes," the approach appears to work for tech companies
offering them.
Meta Chief Financial Officer Susan
Li said on the company's most-recent earnings call that adoption of its Advantage+
shopping tool, which automates ad campaigns tied to online sales, increased 70%
year over year. Li also said the product could bring in $20 billion annually.
Meta has received overwhelmingly
positive feedback about Advantage+ and is testing a new campaign setup that
will turn AI tools on by default for certain kinds of campaigns to simplify the
process for buyers, according to a spokeswoman.
Google will continue to develop AI
tools for creating and buying ads, Philipp Schindler, chief business officer and
senior vice president at Google parent Alphabet, said on the company's
most-recent earnings call.
"When advertisers succeed, we
succeed, and so we have very common interests," Brendon Kraham, vice
president of global search ads and commerce, business and product strategy at
Google, said in an interview.
As AI takes up larger shares of
brands' budgets, the ad industry must push tech platforms to ensure AI tools
keep those interests aligned, said Hovaness.” [1]
