AI in Advertising: Beginners Guide [2024]

The advertising industry is one of many areas that have been transformed for good with the rise of AI.

However, the sudden onset of new technology left many companies wondering how to stay ahead of the innovation curve.

This is precisely why I came up with this detailed guide on AI in advertising, where we’ll explore:

1. Key advantages of using AI in advertising.
2. The challenges of successfully implementing AI in advertising and marketing.
3. The best ways of adopting AI in various advertising processes.

Buckle up, and let’s dive in!

What is AI in Advertising?

The simplest definition of AI in advertising is the integration of artificial intelligence technologies into ad campaigns to optimize, automate, and enhance them in various areas.

Namely, AI can help you make ads more relevant to specific audiences by:

1. Analyzing large datasets.
2. Predicting customer behavior.
3. Personalizing content.
4. Improving targeting and bidding.
5. Tracking and optimizing campaign performance.

Due to their specific capabilities, machine learning (ML) and natural language processing (NLP) are the two most common AI technologies used to enhance advertising.

Machine learning, on the one hand, enables AI to predict consumer behaviors, identify patterns, and improve decision-making processes over time, leading to more accurate audience segmentation and ad placements. 

On the other hand, NLP allows AI to understand and generate human-like text, create personalized content, and even respond to customer inquiries through chatbots.

When it comes to the most common use cases for AI in advertising, these include the following:

• Ad automation – AI automates the process of ad buying and placement, ensuring ads are shown to the right audience at the right time, maximizing relevance and return on investment.
• Ad personalization – AI analyzes user data to deliver tailored ads based on individual preferences and browsing history.
• Dynamic pricing and bidding – AI adjusts ad bids in real-time, optimizing ad spend for maximum results.
• Chatbots – AI-powered chatbots enhance customer engagement by providing real-time support and information, improving the user experience.

And now, let’s look at the key benefits of leveraging AI in your advertising campaigns so you can get a good grasp of what AI can help you with.

What Are the Benefits of AI in Advertising?

In case you were wondering whether investing your precious time and money into adopting AI in advertising is worth the trouble, here’s a quick breakdown of some of the key advantages of using AI in advertising campaigns.

1. Improved targeting and personalization:

As mentioned above, AI can analyze massive amounts of consumer data to identify patterns and predict behavior. 

This enables more precise targeting, ensuring ads are shown to the right audience at the right time. 

Personalization is also enhanced, as AI can tailor ads based on individual user preferences, past behavior, and real-time data.

Pro tip: You can leverage AI-powered platforms like Team-GPT to analyze user data and get actionable reports in minutes.

Upload your data and prompt the AI chat to identify KPIs, patterns, and potential anomalies and suggest further actions based on them.

Moreover, you can prompt the AI to act as a specific persona – an advertising specialist in this case – and provide vital insights into your data from that perspective.

Finally, you can also use the platform to create personalized ad copy. 

Describe your target audience – or let AI identify audience segments based on your data – your product and the goal you want to reach, and you’ll get compelling ad copy for any number of audience segments you need.

2. Automation and efficiency

Although automation was possible even before AI, new technologies have made automation better, smarter, and more powerful.

AI-driven advertising ensures ads are delivered in the most effective way with minimal human intervention. It automates the buying, placement, and optimization of digital ads in real-time without requiring constant human oversight. 

Namely, AI uses advanced algorithms to ensure that ads are delivered to the right audience at the right time, on the right platform, and at the best possible price. 

Here’s a quick overlook of what AI can do, how it works, and why it’s so effective:

1. It automates the ad-buying process – AI determines the most cost-effective way to place bids when buying ad space based on predefined parameters like target audience, budget, and campaign goals, giving you a solid competitive advantage.
2. Data-driven targeting – AI ensures that ads are shown to users most likely to engage with the content based on user data, including browsing history, interests, demographics, and online behaviors.
3. Automated optimization – AI continuously monitors ad performance across various channels, platforms, and devices. It adjusts ad placements, bidding strategies, and budget allocations on the fly to optimize for the highest engagement, conversions, or return on investment (ROI)

Automating all these processes greatly reduces manual work and streamlines processes, allowing marketers to focus on strategy and creative aspects rather than tedious, time-consuming tasks that are better left on autopilot.

3. Real-time optimization

AI continuously monitors ad performance and can make adjustments in real-time, optimizing campaigns on the fly. 

Whether it’s adjusting bidding strategies, reallocating budget, or tweaking targeting parameters, AI helps maximize return on investment by responding to live data.

Achieving this without AI would be more than tricky, as no human would be able to detect all these changes the second they happen and react accordingly.

4. Enhanced analytics

Thanks to its ability to quickly and thoroughly analyze vast amounts of data, AI provides deeper insights into campaign performance, using them to offer actionable recommendations.

This way, marketers can gain a clearer understanding of what’s working and where improvements are needed, making data-driven decisions to enhance future campaigns.

5. Cost efficiency

AI helps businesses reduce wasted budget by optimizing ad spend through intelligent bidding strategies and better targeting. 

When ads are shown to the most relevant audiences, the cost per conversion is lower, and the overall return on ad spend (ROAS) is improved.

6. Better customer experience

AI-powered technologies like chatbots and dynamic ad content can enhance customer experiences by offering personalized interactions and real-time responses. 

This improves engagement and customer satisfaction, leading to higher conversion rates and stronger brand loyalty.

7. Scalability

Finally, all these benefits combined mean that advertisers will be able to scale their campaigns much more efficiently.

With the ability to handle vast amounts of data and make rapid adjustments, AI can manage larger, more complex campaigns across multiple platforms without losing performance quality and, most importantly, without shooting your costs through the roof.

How Does AI Enhance Targeting and Personalization?

Ad targeting and personalization are among the biggest advantages of using AI in advertising, so they deserve a separate chapter.

There are several ways in which AI improves these critical areas, including the following:

1. Data-driven audience segmentation

AI enables marketers to move beyond basic demographic data and analyze deeper behavioral patterns, preferences, and intent signals. 

Machine learning algorithms can process huge amounts of customer data from sources such as browsing history, social media activity, purchase behavior, and engagement with previous ads in just seconds. 

This allows AI to create highly granular audience segments based on real user behavior rather than assumptions, leading to more accurate targeting.

2. Predictive analytics for smarter targeting

AI uses predictive analytics to forecast user behavior, helping marketers target individuals most likely to engage with or convert through their ads. 

By analyzing past actions, AI can predict future behaviors, such as whether a user is likely to make a purchase, sign up for a service, or leave a website. This makes it every advertiser’s best friend with psychic powers.

As a result, you’ll be able to direct your efforts toward high-value prospects and optimize ad spend.

3. Dynamic ad personalization

AI enhances personalization by delivering dynamic ads tailored to individual users in real-time.

Namely, AI can quickly generate personalized ad content that reflects each user’s unique preferences by analyzing relevant user data such as previous purchases, location, and interests. 

For example, an online retailer might show a returning visitor an ad featuring products similar to their last purchase, creating a personalized shopping experience that increases the likelihood of conversion.

This will boost your conversion rates and help you upsell and cross-sell related products.

4. Content personalization at scale

With AI, businesses can personalize content for a large audience without manually creating different versions of ads. 

AI tools can automatically generate different ad creatives or messages based on user characteristics like age, gender, location, or browsing behavior. 

For example, Netflix uses AI to create personalized recommendations and custom thumbnails for individual users, ensuring that the content each viewer sees is aligned with their tastes and preferences.

5. Contextual targeting

AI enhances targeting by ensuring ads appear in relevant contexts, not just for the right audiences. 

Through natural language processing (NLP), AI can analyze the content of web pages or videos where ads might be placed and determine if the context aligns with the brand’s messaging or the audience’s interests. 

For instance, an ad for eco-friendly products might be displayed on a sustainability blog, ensuring that it reaches users already engaged with related content.

6. Real-time adjustment and optimization:

AI continuously learns and adapts to user behavior. AI tools can adjust targeting parameters and ad content in real-time to increase relevance as more data is collected about how users interact with ads. 

For example, if a user who has been browsing for home furniture shifts their interest toward home décor, AI can quickly adjust the ad strategy to show décor-related products, ensuring personalization stays up-to-date.

7. Personalized recommendations

AI excels at generating personalized product recommendations that enhance user experiences. 

E-commerce platforms like Amazon and streaming services like Spotify use AI to analyze past behaviors and suggest products, songs, or services that align with the user’s preferences.

These personalized recommendations can be seamlessly integrated into ads, increasing engagement by offering something highly relevant to a specific user.

8. Hyper-localized targeting

AI can incorporate geolocation data to deliver personalized ads relevant to a user’s immediate environment. 

For example, AI-powered platforms can serve localized ads that promote store sales or events happening in a user’s area. 

This not only enhances personalization but also improves ad performance by delivering content that aligns with the user’s location and local context.

9. Customer journey mapping

AI helps marketers understand where individual users are in the customer journey—from awareness to consideration and conversion. 

By tracking users’ interactions with content across channels, AI can deliver personalized messages appropriate to each stage of their journey. 

This ensures that the content resonates with the user’s current needs, boosting the chances of conversion.

What Are the Biggest Challenges of Using AI in Advertising?

While AI offers significant benefits for advertising, there are also some challenges associated with its use, which you should be aware of before applying it more widely.

Here are the top three hurdles marketers and businesses face when implementing AI in advertising based on my experience:

1. Data privacy and ethical concerns

AI in advertising heavily relies on user data to optimize campaigns. 

However, collecting and processing this data can raise privacy issues, especially with increasingly stringent regulations like the GDPR and CCPA. 

Marketers must ensure they comply with these regulations, which often restrict the extent to which personal data can be collected and used.

Moreover, you have to make sure that the data you collect and use doesn’t leak accidentally, which is why you should always use only those AI-driven tools that offer military-grade security.

Failure to handle data responsibly can lead to legal penalties, reputational damage, and loss of customer trust.

2. Complexity and implementation costs

Implementing AI-driven advertising systems can be complex and costly, especially for small businesses or organizations without extensive technical expertise. 

Building or integrating AI tools requires investment in technology, data infrastructure, and skilled personnel who can manage and optimize AI systems. 

Additionally, ongoing maintenance and fine-tuning of AI models to keep them effective adds to the cost. 

For many companies, these barriers can make adopting AI in advertising challenging.

This is why you should focus on AI providers like Team-GPT that:

• Deliver tailored onboarding.
• Provide constant customer support.
• Drive AI adoption across departments by enabling all team members to collaborate on AI-powered projects in real-time.

3. Integrating AI with existing systems

Many companies already have established advertising and marketing workflows that might not be fully compatible with new AI tools. 

Integrating AI systems with existing platforms, such as customer relationship management (CRM) software or ad tech stacks, can be complicated and time-consuming. 

Marketers must ensure that AI seamlessly integrates into their broader marketing ecosystem to avoid disruptions or inefficiencies.

How to Start Implementing AI in Advertising as a Beginner?

I was in your shoes once, so I know from experience how difficult it is to start adopting a completely new technology into your area of expertise.

As a seasoned AI user, I’d like to share some of the tested tricks and tips I’d like someone had offered me when I was just embarking on my AI journey:

1. Start small and scale gradually

Don’t try to implement AI across all your campaigns at once. 

Start with one or two areas where AI can make an immediate impact, such as automating bidding through programmatic advertising or personalizing ad copy for specific audience segments. 

As you gain confidence and see positive results, you can expand AI usage into other areas, such as audience targeting, creative generation, or predictive analytics.

2. Focus on data quality

AI is only as good as the data you feed it. 

Make sure you have clean, accurate, and comprehensive data from various sources, such as your website analytics, CRM, social media, and past advertising campaigns. 

High-quality data will lead to better insights, targeting, and optimizations. If your data is incomplete or inaccurate, AI will not deliver the results you expect.

3. Choose the right tools for your needs

There are plenty of AI-driven advertising tools available, and not all of them are suitable for every business. 

Take the time to research and select the right tools for your specific goals, whether you’re automating ad placements, creating personalized ads, or using AI to analyze performance. 

Tools like Google’s AI-driven features for Google Ads, Facebook’s AI-based audience targeting, or third-party platforms like Adext or Albert.ai can be great starting points.

4. Test continuously

AI excels in testing and optimization. 

Set up A/B tests for your ads and use AI to analyze the performance. Continuously iterate based on the data and insights AI provides. 

Over time, you’ll be able to fine-tune your campaigns for better results, such as higher click-through rates, conversion rates, and return on ad spend (ROAS).

5. Closely monitor AI performance 

AI automates many processes, but keeping a close eye on performance is crucial. 

Don’t set it and forget it. Regularly check the results, and if something seems off (e.g., ads being shown to irrelevant audiences), step in to adjust parameters or refine the data. 

AI learns over time, but human oversight ensures that it stays on track and aligns with your overall goals.

6. Don’t overlook creativity

While AI excels at automation and data-driven decisions, creativity still plays a crucial role in advertising. 

Use AI to handle repetitive tasks, data analysis, and optimization, but leave room for creative input in your ad messaging and visuals. 

AI can help test variations, but the creative concept should always resonate with your audience on an emotional level.

You can combine AI with human marketers to strike that perfect balance between efficiency and uniqueness for optimal results.

In Team-GPT, your entire team can collaborate on all aspects of building and realizing your marketing strategy, from brainstorming campaign ideas to tweaking killer ad copy and more.

7. Stay updated with AI advancements

AI is constantly evolving, and new tools and features are regularly introduced. 

Keep yourself updated on the latest trends, tools, and best practices in AI advertising. 

Follow industry blogs, attend webinars, and network with other professionals to ensure you use the most effective techniques and stay ahead of the competition.

Good Examples of AI in Advertising

There is no better way to grasp the full power of AI in advertising than by looking at some real-life examples of brands leveraging AI to enhance their advertising campaigns.

Here are my top three picks.

1. Pomelo Fashion leveraging AI to personalize product recommendations

Pomelo Fashion, a South Asian global ecommerce brand, was looking to improve its personalization efforts to win over more customers and boost upselling and cross-selling.

ML algorithms proved key to this, enabling them to provide real-time, hyper-personalized product recommendations to customers based on their past and present buyer decisions.

The brand used Amazon Personalize, part of the Amazon Web Services suite, to achieve this, and the results it got were worth the effort, including:

1. Increased return on investment by 400% within 1 month.
2. Increased gross revenue from category pages by up to 15%.
3. Boosted click-through rate from category to product pages by up to 18%.
4. Increased add-to-cart clicks from the category page by up to 16.

2. JP Morgan used generative AI to create compelling ad copy

Interestingly, JP Morgan was one of the earliest adopters of AI, starting its AI journey way back in 2019.

The company used generative AI to create personalized ad copy that was bound to resonate with specific audience segments.

The results?

A 450% increase in its click-through rate, leading to more conversions and better brand engagement across levels.

3. Nutella played with AI to create quirky and unique jar labels

I decided to include one non-digital business here to show you that AI can be used by a much wider range of businesses than you’d expect.

Nutella used AI to generate 7 million unique jar labels where no two jars were identical.

The brand experienced a massive boost in sales, with every single jar sold in record time.

This is a perfect example of how AI can be used for more creative aspects of advertising rather than just automation or optimization.

Start Leveraging AI in Advertising Today with Team-GPT

Starting to use AI in advertising as a beginner is not easy, but it’s not as difficult as it may initially seem – and I sure hope this guide showed you that it’s absolutely doable.

Team-GPT can help you start your journey as a newbie in the world of AI in advertising, as it enables your entire marketing and advertising team to:

• Collaborate on creating and executing marketing campaigns while leveraging the power of any AI model you may need.
• Generate and edit highly personalized ad copy.
• Create and save custom prompts specialized to your unique brand and use cases.

Book a demo with our team and find out how Team-GPT can help you harness the full power of AI to enhance your advertising efforts across levels.