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  • Perspective What's this? Why is AI the New Buzzword in Ad Tech?

    Advertising technology is a fast paced business driven by trends in innovation. In the last twelve months, the video industry has been dominated by headlines devoted to the rise of header bidding and brand safety. But what is next on the horizon? For advertisers and media owners, streamlining costs and efficiency in video advertising remains paramount, which is why the latest trend is the adoption of artificial intelligence (AI). But what exactly is it and why is it such a hot topic right now?

    AI is the ability for computers to perform tasks that are traditionally considered representative of human intelligence such as decision making, visualization, language translation or speech interpretation. The ad tech industry operates on a large scale with billions of transactions completed daily in a largely automated fashion, making AI a natural fit. Some video ad tech companies have already begun to see the benefit of AI and adopted the technology to eliminate inefficiencies.

    For example, Demand-Side Platforms (DSPs) have begun to leverage AI to reduce infrastructure costs. With the advent of video header bidding and server-side ad insertion (SSAI), DSPs must evaluate more impressions than ever before and infrastructure costs have skyrocketed as a result. To adapt, several demand-side platforms have begun to leverage AI as a potential solution. By trimming out opportunities they are unlikely to win, DSPs can avoid unproductive bidding and reduce their infrastructure costs as a result.

    On the supply side, publisher CafeMedia is using AI to more efficiently categorize and tag their inventory. This is traditionally a very manual process for publishers, requiring humans to individually categorize inventory within a content management system. It’s important for buyers to know what type of content is present where their video ads are playing. It is equally as important that publishers and media owners know the types of ads being served on their properties. The opportunity to automate the process of reviewing and classifying all programmatic ad creatives could be transformative if applied in the correct way.

    So if advertisers and media owners are considering incorporating AI into their video advertising strategies, what are the pros and cons to consider?  

    Pros:

    • Workflow Efficiencies: One of the largest benefits of AI is how much time it can save on the user side. Without AI, proper campaign optimization is time-consuming and is more an art than a science. Consider how much data is available on each individual impression opportunity. Even with a target audience in mind, sifting through vendors and guessing at which attributes will perform best is costly and takes time and expertise. Once that’s done, the ad trafficker then needs to toggle pacing, pricing, and potentially dozens of other variables. AI can automate much of that; the user just needs to pick a goal the AI can optimize towards and let it run, giving directional guidance where necessary.
    • More Data Processing than Humanly Possible: Big data and AI go hand in hand regardless of the industry. It’s all about automated buying and selling to maximize value. AI can “see” and consider as many features as it’s been trained to, considering hundreds or even thousands of variables over the course of a video ad campaign to determine significance.
    • ROI: Cost saving is the natural outcome from implementing workflow efficiencies and maximum data activation. Since AI requires less human capital to operate, adopters stand to gain from not having to hire as many heads and the heads they do hire aren’t focused on tweaking knobs and levers manually. Additionally, since AI learns as it goes, performance constantly improves over time as it begins to distinguish between what’s important and what’s irrelevant.


    Cons:

    • Not All AI is Made Equally: If AI is a brain made to learn for a specific purpose, it can be a challenge to identify which partner is best suited to tackle specific requirements. Some AI partners are better for specific industries and some are probably pure vaporware. Choosing the right partner isn’t easy, and if everyone’s offering an AI solution it’s difficult to say which is the best one for you without at least some degree of upfront investment and a decent amount of research.
    • ROI: AI has the potential to generate significant cost savings, but if implemented carelessly, it can also become a sunk cost. The initial barrier to entry – either investing in developing a bespoke algorithm or paying a partner to use theirs – is going to be fairly substantial for most advertisers or publishers. There is also no guarantee that it will perform in every scenario. As much as partners would love to believe that their AI will become profitable quickly, that’s not always feasible. When choosing a partner, historic performance shouldn’t be considered in isolation, but in conjunction with whether they meet transparency standards in both costs and reporting.

    Getting started with AI isn’t easy and shouldn’t be taken lightly. Trends can be unpredictable so implementing something new into a video advertising strategy needs to be done with care. If considering implementing an AI program, advertisers and media owners should keep in mind that success begins and ends with data strategy. Even if AI is the industry’s biggest buzzword these days, that’s all it is. A buzzword. It’s not magic, and it’s not a guarantee. However, if an AI strategy is executed with plenty of time and research, there is enormous potential for success as this exciting technology continues to evolve the video advertising landscape.

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