As artificial intelligence (AI) grows its presence in the marketing and advertising sector, experts believe personalised advertising has gained popularity. The technology contributing to this trend is computational advertising (CA). CA aims to target and deliver personalised advertisements through machine learning (ML), data analytics, and artificial intelligence, to optimise and enhance the efficiency of online advertising campaigns. “ CA enables precise targeting by using algorithms that analyse user behaviour, demographics and preferences. However, it can be a boon and a bane, depending on its implementation, ethical considerations, and the balance between personalisation and user privacy,” Neha Lidder, founder, Platoon Advisory, a luxury marketing advertising services, told FE-TransformX.
Computational advertising market
More than 80% of industry experts integrate some form of AI technology into their online marketing activities, as per insights from Statista, a market research platform. This adaptation of artificial intelligence for marketing purposes can include task automation, campaign personalisation, and data analysis, among others. Reportedly, about 50% of respondents from the United States (US), Canada, the United Kingdom (UK) and India mentioned ad targeting as marketers’ main application areas of AI. “CA’s data-driven insights help businesses optimise real-time bidding to ensure that the right ads are delivered to the right audience at the right time for maximum impact. It is cost-effective since regular optimisation of ad campaigns avoids futile ad spends and maximises return on ad spend (ROAS),” Delphin Varghese, co-founder and chief business officer, AdCounty Media, a digital marketing agency, mentioned.
Moreover, BOULT, an audio company claims that in an open campaign, the click-through rate (CTR) was around 1.2% but after leveraging CA for retargeting campaigns the CTR went up to 3% and in personalised campaigns, it was about 2.5%. In totality, it saw about a 100% increase in results. “By adjusting messaging to each person’s tastes with CA, personalisation increases conversions. It even aids in the real-time optimisation of campaigns and the creation of dynamic content, reducing expenses and increasing reach,” Varun Gupta, co-founder, said.
Industry experts believe that retailers can use CA to create ads that showcase products based on a user’s browsing history or preferences, enhancing the chances of conversion. Reportedly AdRoll, a digital marketing company, applies AI to consumer data analysis and retargeting. TubeMogul, part of the Adobe advertising cloud is a programmatic video advertising platform that uses AI to personalise ads based on user behaviour. In addition to this in 2019, Snorkel AI, a data-centric AI platform, employed AI to do programmatic data labelling, as per insights from Statista. “ By using big data and artificial intelligence, CA allows for responsive ad creation and placement. Its data-driven insights help to refine marketing strategies, resulting in better consumer response rates and higher return on investment (ROI),” Sonakshi Pratap, founder and CEO, Leadzen.ai, a lead-generating platform, explained.
The future of AI-based advertising
A 2023 study revealed that some ad platforms’ algorithms showed discriminatory bias against certain demographics, favouring some groups over others in ad delivery. The rise of fake data and ad fraud furthermore poses a threat to campaign budgets and consumer trust—for example, the conversation around elections and deepfakes. “ Creepy tracking and microtargeting, are some examples where companies use invasive tracking techniques and targeted ads based on personal data such as browsing history and location, creating a feeling of unease and intrusion for users. This raises ethical concerns about respecting user privacy and boundaries,” Ambika Sharma, founder and MD, Pulp Strategy, a marketing agency, mentioned.
In 2023, global programmatic ad spending reached $558 billion and can surpass 700 billion by 2026, as per insights from Statista. However, critics argue that CA can bring challenges such as multi-touch attribution, bias, fake data and ad fraud, among others, creeping out customers. “While CA can enhance focused advertising, it increases questions about privacy, algorithmic biases and fact manipulation. Mitigation includes obvious algorithms, record safety safeguards and criminal frameworks. CA can be a boon, allowing tailored studies and research, or a bane, jeopardising security and propagating prejudices,” Sukesh Madaan, CEO, Blaupunkt India, the Indian subsidiary of a German company, highlighted, adding that predictions factor into developing AI integration, moral scrutiny, and changing restrictions. Ethical AI practices also have the potential to redefine marketing.
CA can be a powerful tool for both businesses and consumers. It can connect brands with their ideal audience, deliver relevant and engaging experiences, and drive efficiency and growth. However, if left unchecked, the dark side of CA could eclipse its benefits. “The future of CA lies in balancing between using its power for good while safeguarding individual rights and ethical principles. Through regulation and standardisation, a focus on trust and transparency, and collaboration between researchers, developers, and policymakers, can steer CA towards a future that benefits everyone,” Hariom Seth, founder, Tagglabs, a tech-based marketing company, concluded.
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