The Dynamic Impact of AI on Ad Tech Evolution

Last updated on March 8th, 2022

AI is revolutionizing ad tech like ad tech revolutionized digital marketing. Digital advertisers are hailing AI as the next big thing in online advertising, and who can blame them? The prospect of automating tasks with AI for sophisticated targeting and positioning of ads is enough to get anyone excited.

For those who can’t see why AI is such a big deal, understanding the intricacies of advertising tech might help. Sure, ad tech made online advertising more sophisticated, but it also made it vastly more complicated and time-consuming. 

With AI, it’s easier and more efficient to execute digital advertising. As we shall discuss later on, AI makes online ads relevant to consumers and lucrative for advertisers. Considering the long history of advertising, that’s no mean feat!

So let’s start this journey with a quick background of ad tech.

A Brief History of Ad Tech

It feels like digital advertising has been around forever! From social media ads to website pop up ads, online advertising is omnipresent. Yet, the first digital ad only appeared a few short decades ago. Since then, there’s been a rapid increase in the frequency and quality of ads online. 

Today we can’t even imagine our online experience without ads (even though we’d like to). So how did it all begin? What prompted this revolution in the world of advertising? And where does Ad tech fit into all this?

Dawn of a New Age!

The first time users saw an advertisement online was in 1994. It was a banner ad for AT&T that was purchased from the commercial web magazine, HotWired. It cost a whopping $30,000 and had a remarkable click-through rate of 44%! It’s no coincidence that the internet was commercialized a short time after this banner ad was displayed.

From then on, the online advertising landscape has never stopped evolving. It didn’t take long for online advertisers to realize what a goldmine this was, but not even they realized it’s true potential. Of course, in 1994, ad tech was in its infancy. Any technology that helped in the purchase and sale of online ads could be categorized as ad tech.

Yet, by 1996 it was clear that the entire online advertising industry relied on this framework of transactions. It wasn’t nearly as simple as first thought and was capable of changing how users and advertisers interacted with each other.

A Small Search Engine Emerges

In 1998, a modest search engine came onto the scene. This search engine, known as Google, would edge out all others in the bid for dominance in the ad tech industry.

The early giants such as 24/7 Media, DoubleClick, and a-Quantitative soon became overshadowed by Google. As more and more users began using the search engine, Google and other advertisers realized that it was where the ads needed to be.
Ultimately, Google developed Google Ads and AdSense to capitalize on the volume of consumers. This development also gave advertisers a reason to bring their business to Google. The corresponding analytics developed by Google sealed Google’s dominance in the ad tech domain.

The Social Network

Meanwhile, Mark Zuckerberg created the social network, Facebook, in 2004. This network paved the way for advertisers to take their ads to social media and engage consumers.

It was just a short while later when YouTube came on the scene. This platform provided an opportunity for advertisers to implement ad tech in a whole new way. The model adopted for YouTube and Facebook was then used for other social media platforms as well. 

As a result, audiences see more relevant ads today than ever before. Whether on social media or browsing the internet, consumers find ads that strike their interest thanks to ad tech. Today, online advertising is a $2.23 billion industry with growth rates in the double digits as a testament to the sophistication of ad tech.

The introduction of AI in Advertising

So that’s how ad tech became what it is today. But what’s AI got to do with it? Where does machine learning fit into all this? And how has ad tech evolved using AI?

The truth is, AI is essential in just about everything these days, including advertising. The capability of AI to automate ad campaigns and optimize budgets is priceless. AI is so evolved that it can predict what ad strategy would be best for advertisers based on past consumer behavior.

Such AI-driven advertising keeps advertisers harking after the technology. In the modern world, it’s not enough to employ ad tech but to employ it effectively. Only then can you beat the competition and remain relevant. 
Even though ad tech tools allow advertisers to do just that, but AI takes it one step further. With predictive analytics and sentiment analysis (all of which we will talk about), it can spot opportunities humans can’t.

Evolution of Ad Tech through AI

Let’s talk about some of the ways AI has left a lasting impact on ad tech and how it can pave the way for the future.

1. Sophisticated Audience Targeting

Right off the bat, AI has allowed ads to become more relevant. The reason digital advertising is better than traditional advertising is because of personalization. Relevant ads made for people who want to see them.

In the old days, finding the right target audience for an ad was like shooting in the dark. But not now, not with AI! AI ad campaigns are targeted at the right audience every time, thanks to consumer data.

Artificial intelligence goes through gigabytes of data in seconds and analyzes it to spit out an ideal audience for an ad campaign. Primarily, the work that would have been done by humans in weeks is done by AI in minutes (and done better).

2. Consumer-Focused Ad Creation

Each consumer is different in their online behavior. So the content they consume is unique, which means the ads for each consumer would be unique. But it isn’t possible to make customer-centric content for each consumer, or at least it wasn’t. 
Thanks to AI, businesses can make consumer-driven content and ads better than ever. There’s such an abundance of consumer data that AI can easily predict the ads that will perform best with specific consumers.

3. The advent of Real-Time Bidding

RTB, through AI, saves businesses millions of dollars each year. This technique is based on real-time consumer data. As the webpage loads, AI allows businesses to place the lowest bid that enables them to acquire ad space on a website.

Before AI sprung into action, firms would enter real-time bidding with their best estimate. This technique cost them dollars they could have saved had they used real-time information. AI eliminates this problem by bidding for businesses using real-time consumer data.

4. Ad Positioning via ML Algorithms

Machine Learning algorithms have simplified the process of ad positioning online. Ad developers used to spend hours trying to find the right position for their ads on Google. With machine learning, this process is down to seconds.
By analyzing user data, machine learning algorithms determine the best position for ads. They can pinpoint the position on the website where consumers spend the most time. The algorithm then places the ad in its proximity to maximize impressions.

5. AI-based Sentiment Analysis

Sentiment analysis is one of the latest adaptations of AI in advertising. By using natural language processing (NLP), computational linguistics, and a variety of other techniques, AI can judge the emotional state of consumers. 

This understanding of consumer sentiment allows AI to understand consumer opinions. These represent one of the most valuable sources of consumer data. If the AI can build a complete profile of a consumer, it will know what type of ad to present. This tactic will increase ad impressions and revenue manifold for businesses.

6. Predictive Analysis Adaptation Model

Predictive analysis is the prediction of future user behavior. This concept gives rise to predictive advertising, which devises ads based on consumers’ predicted future behavior. 

You would be forgiven, at this point, to think that has nothing to do with ad tech. But consider this, what if firms already knew what consumers were going to search for? Wouldn’t it save millions of advertising dollars if firms knew what to advertise for? 

The answer is a resounding yes. That’s why AI and predictive analysis are at the forefront of ad tech.

7. AI Ad Network Selection

Placing ads and keywords on relevant channels is a piece of cake when you have AI. Artificial intelligence analyzes the keywords and ads that have the best response. It then cross-checks it with the platforms and channels that attracted the most users.

As a result, firms can place ads specifically on the channels and networks that bring the most ad revenue. Not only does this method enhance ad revenue, but it also reduces human effort and resources consumed.

All in all, the impact of AI on the evolution of ad tech is evident all over the internet. From more relevant ads to better-targeted audiences, the development of ad tech is just beginning.

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