AI in advertising, what the research is saying

Among advertisers the sentiment is nearly universal (96%¹) that artificial intelligence will have an impact on advertising and marketing in the next 12 months. The anticipated impact to the ad industry comes as no surprise to us, as Yahoo has been working on integrating AI into ad performance for over 20 years. AI continues to evolve and as advertisers get greater exposure to it, Yahoo decided to embark on several research studies to understand how advertisers anticipate the latest advancements in AI will change the ad industry. Overall, advertisers feel AI will have a positive impact on their jobs with 87%¹ saying AI will reduce the time they spend on manual tasks, 85%¹ produce content faster, and 82%¹ say AI will reshape how brands and advertisers interact. 

A key trend across our research studies was the opportunity for greater optimization: advertisers continue to see AI as an opportunity to generate greater value from their campaigns.

When asked where advertisers feel AI will have the most impact, optimization is often the top cited opportunity. Advertisers see the most value in driving cost efficiencies (75%²), followed by driving incremental performance (66%²) and three-fourths of advertisers expect AI to help them exceed campaign benchmarks, increase ROAS and reduce costs¹.

‍Assurances and Transparency

‍While advertisers are anticipating AI-enhanced optimization, there is also a desire for more information about the data sources ingested by the models. Our research shows that despite the majority (68%¹) of advertisers already using AI for at least half of their campaigns, they want more assurance and transparency rather than needing less. They want assurance that the ‘model is built for their KPIs’ and the ‘data is sourced in an ethical way.’ 

When we asked advertisers to elaborate on what they mean by transparency, their feedback was similar to what they said they wanted assurances on: that the AI model is working in their best interest. 

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More transparency on…
‍“Signals used to optimize plans, clarity on assets being leveraged for creative development and IP/rights usage behind what is being leveraged.”

‍“What is the source data, how is it used, why is the recommendation valid, what are alternative recommendations and why is the first better?”

‍“How and why a particular recommendation was made for a particular individual or a segment.”

‍“What is the end metric optimizations are optimizing toward? Again, we also need to know the inputs because garbage in = garbage out.”

As AI becomes more prolific, advertisers want to know more about how the models are being trained, where the data is sourced and if it is even the right data for their goals. Recent news around errors produced by AI may also be driving the desire for greater assurance and transparency before trusting AI to self-manage campaigns.

‍Opportunity for AI-Enhanced Optimization in an cookie-constrained world

‍While Google's industry-shaking announcement that they won't be deprecating third-party cookies after all is significant, if their new approach that elevates user choice is anything similar to Apple’s App Tracking Transparency framework, we can expect cookie opt-out rates in the 90% range, depending on the website.In this case, advertisers will still need to seek out tools to help drive campaign success in a cookie-limited world. One area of focus is the maximization of advertiser first-party data. Advertisers, platforms and publishers have already invested heavily in their first-party data in preparation for the depreciation of the third-party cookie, which is another reason why we can anticipate continued development of alternatives for the third-party cookie. The advancements in AI will only make the use of first-party data more compelling. Advertisers feel that AI will be extremely or very helpful (63%²) in “creating more accurate look-alike modeling or predictive audiences.” About half of advertisers also see AI playing a role in further optimizing first-party data. AI can optimize the data advertisers already own in every stage of the campaign process. Just around half of the advertisers surveyed feel that AI can help first-party data seed optimization models, campaign planning, inferring conversions across non-addressable environments, and managing their first-party data.

What does this mean for advertisers?

‍As artificial intelligence continues to gain greater sophistication, integration into all aspects of advertising campaigns will give advertisers an opportunity to find optimizations at each step of the process. Advertisers should expect their roles to become more efficient, as they can spend less time on manual operations and more on strategy, while reviewing and approving AI-generated approaches. However, platforms will also have to provide more transparency and assurances that the AI tools are working in the client’s best interest.

With the likelihood of high opt-out rates for tracking and the momentum behind the industry building third-party cookie alternatives, it is likely we will continue to see heavy investment in first-party data solutions.  Managing first-party data has always been difficult, and with the increasing amount of data, greater need to adhere to privacy regulation standards and more opportunity for data enhancement, it is only becoming more difficult. The future of AI will truly empower advertisers to gain greater control and supercharge performance by supercharging their first-party data. Advertisers should anticipate AI will help to manage, enrich and optimize their first-party  data to seed further opportunities for enhanced planning, targeting and measurement.  

‍Yahoo Blueprint Solutions

‍Want to know how Yahoo is leveraging AI, based on trusted data, to drive better outcomes while ensuring control for advertisers? Check out Yahoo Blueprint.

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‍^{1 ‘}Future of AI & Advertising,”Yahoo & Publicis Media, 2024
² Advertiser Perceptions Omnibus, June 2024
‍^{3 “}AI Adoption and Advertising,” Advertiser Perception Ad Tech Community, May 2024