How AI Will Impact the Advertising Industry’s Future

May 6, 2020 - 8 minutes read

It’s been almost three decades since the Internet was made available to regular consumers. Many of us didn’t know it then, but the transition of computing technology from giant mainframes that take up entire rooms to personal devices we could have in our homes would revolutionize how we live.

Many people found themselves browsing the world wide web for the first time after this historical moment. And not long after that, a tech startup named Google would start serving us ads based on our past search queries.

Fast forward to today: Google and Facebook see more businesses spending on digital advertising than the whole world spends on print media. In 2017, Facebook made over $39 billion in ad revenue, while Google took in over $95 billion. Together, the two companies accounted for 25% of global ad spend. We all now encounter a variety of ads in our day-to-day, from search ads to video ads to native ads that blend into a site (like those you would see on YouTube’s recommendations).

But we’ve only experienced the first phase of ad evolution; in the next one, we’ll see how applying artificial intelligence (AI) to ads will impact and revolutionize the global ad industry. It turns out that AI might usher in a hyper-personalized ad experience before it upends the advertising industry by becoming your personal shopper.

How Advertising is Evolving Right Now

Facebook, Snapchat, and other companies are investing heavily in augmented reality (AR), and advertising is a huge reason why. It’s yet another avenue to reach consumers. When 5G finally rolls out everywhere, the tech giants will combine the faster mobile speeds with AI and AR to create a truly unique ad experience for consumers.

In the future, we’ll be wearing AR-enabled glasses that identify us when we enter a retailer, when we are looking for new clothing, and when we step into our cars. These glasses will carry an embedded chip that allows companies to advertise their products and services to you directly. No longer do we need physical billboards or posters placed in our surroundings; we’ll be reachable immediately through our spectacles.

AI built into the glasses will even notice when your gaze is lingering through eye-tracking software. The AI will log that information away to leverage when it’s more relevant.

Ads as Visual Search Tools

As is the case with the current ad landscape, smart ads are still super annoying. That won’t disappear with the addition of better AI algorithms. In fact, smarter ads often equal more frustration among consumers. But for the tech giants, as long as advertisers are happy, there’s no reason to improve the user experience if some users are still clicking.

The smart AR-enabled glasses will embed visual searching into everything you look at. This data-collection feature is already in use on many social media sites. For example, San Francisco-based Pinterest adds a dot to their photos when they can show you products similar to those in the photo. And Amazon partnered with Snapchat to allow users to point their camera at an object and get search results from Amazon for products that match. There’s also Google Lens, which literally scans everything in the camera image, including plants, animals, and even the location you’re at.

As far as user experience goes, Ikea has probably offered the most value with their AR-enabled tool: their app allows you to map your space with your phone’s camera. It then lets you place Ikea products in the room to see if they fit properly and go along with your aesthetic. Later, after you’ve made a purchase, the app walks you through setting up your new furniture.

As more consumers use these tools, more data is generated, and the algorithms become smarter. By the end of 2018, visual searches were used more than a billion times every month.

AI as a Personal Shopper

At some point in the future, consumers will employ AI to do their product research, comparing, and shopping for them. This could end up reducing the value of traditional advertisements.

But it’ll open the door for companies to quietly pour their advertising dollars into any number of AI companies that large amounts of consumers use as concierge technology. This will help the AI prioritize which products to give more weight to during the research and comparison phase. This isn’t much of a difference from today’s set up: our product research often gets obfuscated or impacted by the highest bidding advertiser.

Of course, the AI will be embedded in many aspects of our lives, so many decisions will just be “reorder my favorite toothpaste”, rather than spending large amounts of time researching toothpaste from scratch before every order.

For things that are ever-evolving, like fashion and food, our AI will be connected to our friends, local news, glasses that know when our gaze lingered on a particular style of clothing, and our daily conversations. It will do a pretty good job of finding you an outfit for your next date without much extra input from you.

AI Plays a Pivotal Role in Advertising’s Future

In 2018, global ad spend reached over $550 billion, increasing both Google’s and Facebook’s valuations. This increase in value came from users’ data: our friends, what we search for, our likes and dislikes, what we click on, what content we report, and more.

Over the next decade, AI will personalize advertising greatly. But afterward, we’ll experience a future where AI does our shopping for us and saves us countless hours of browsing as a result.

In short, the ad industry and landscape will evolve significantly. You can see this in action today to some extent. Machine learning and AI are already transforming many organizations’ advertising endeavors.

Are you using these technologies in your marketing efforts? Why or why not? What do you think of the future of advertising? Let us know in the comments below!

Tags: , , , , , , , , , , , , , , , , ,