How far has AI come in the A&M space?

At the beginning of 2023, 33,000+ tech leaders signed an open letter petitioning to pause all AI experiments for six months. Back then, AI posed a threat to many industry leaders, but today, it has become an everyday conversation for many. 

According to EY India, Gen AI could boost India's GDP by $359-438 billion by 2030, a 5.9-7.2% increase. Over seven years, this could cumulatively reach $1.2-1.5 trillion, adding 0.9-1.1% to annual growth.

These predictions clearly show how far AI’s impact has grown, and the Advertising & Marketing (A&M) industry is no different. AI’s journey in A&M can be traced back to the late 90s when the internet took off. Back then, brands used AI-powered algorithms to analyse data collected from online presence and make targeted ads for their customers. 

Manas Gulati, Co-Founder & CEO, ARM Worldwide said, “AI's journey in advertising and marketing (A&M) began with basic automation and data analysis. Its role was confined to automating repetitive tasks and enhancing data analysis capabilities.” 

This has changed and how! The GenAI space is rapidly growing in the country. According to Nasscom, Indian Gen AI startups have received a total investment of US$ 700 million in the past three years. Experts believe AI has undergone a massive transformation over the years.

Kruthika Ravindran, Director, Key Accounts, TheSmallBigIdea said, “We've ditched the days of rudimentary chatbots for powerful algorithms that can do way more than just automate tasks. Today's AI can crunch massive datasets, predict consumer behaviour with uncanny accuracy, and even generate creative content that resonates.”

Bournvita recently launched its AI campaign titled ‘D for Dreams’ featuring Rahul Dravid. Through a QR code and a microsite, the brand offers parents and children the opportunity to receive training from the former cricketer. Parents simply need to record their children playing shots under the sun. Using the AI training module, Rahul Dravid will provide the child with technical training, perfecting their technique down to the minute degrees.

Reflecting on AI’s progress and its role in Advertising, Ravindran added, “AI supercharges advertising. We can now laser-target campaigns, personalize ads on the fly, and manage everything across platforms. The result? Maximum ROI and seamless brand experiences.”

Manas Gulati said, “Today, marketers are wielding AI as a secret weapon, unlocking a new era of audience understanding and campaign effectiveness. It empowers them to sift through massive datasets, identifying niche audiences and predicting consumer behaviour with incredible accuracy. This translates into laser-focused messaging that resonates deeply with specific segments, skyrocketing engagement, and conversion rates for advertisers.”

Ambika Sharma, Chief Strategist and Founder - Pulp Strategy pointed out some opportunities that AI has created for advertisers in the recent past. 

One significant advantage is the efficiency in campaign management, as AI tools streamline the entire process, from content creation to performance analytics. This allows marketers to concentrate on strategic initiatives rather than getting bogged down by routine tasks. Additionally, AI offers enhanced customer insights by providing a deeper understanding of consumer behaviour, which enables more effective targeting and segmentation.

Challenges of AI

While AI has made work easier, it has also brought up some ethical issues. One major concern is protecting the information of users who utilise AI-based tools.

User privacy and data protection are at the heart of ethical debates about AI in advertising. AI technologies allow advertisers to collect a lot of data from consumers, including their browsing history, shopping habits, and personal preferences. While this data is useful for creating targeted advertising campaigns, it also raises significant concerns about privacy breaches and potential misuse.

According to a study by KPMG, 63% of consumers were concerned about the potential for generative AI to compromise an individual's privacy by exposing personal data to breaches or through other forms of unauthorized access or misuse.

Manas Gulati said, “In the past year, concerns around data privacy intensified as AI systems require vast amounts of personal data. The industry still faces scrutiny over data collection, storage, and use, with regulatory bodies imposing stricter guidelines to protect consumer privacy.”

Kruthika Ravindran acknowledges, "Despite its benefits, AI can perpetuate biases and some AI algorithms can also make it hard to understand its decisions. While ethical frameworks and transparency initiatives are being worked upon, some of these challenges still remain."

Bhushan Kadam, Creative Director - Design, White Rivers Media said, “AI's rapid advancement comes with some temporary bumps like algorithmic bias, data privacy concerns, workforce disruption, scalability issues, and environmental impact. These challenges call for ongoing collaboration and responsible practices.”

Combating these issues, many ethical guidelines and frameworks have been in the works. A recent report by EY titled ‘Realizing AI for all in India’ highlighted that to make India an ‘AI hub’, concerted efforts are needed to resolve issues of algorithmic bias and other ethical considerations.

Ambika Sharma shared another rising concern that advertisers face due to AI. She highlighted the problem of quality control, noting the risk of producing "nice-looking garbage" — content that appears visually appealing but lacks substance.

To address this issue, she said, “Ensuring human oversight and integrating AI as an augmentative tool rather than a replacement will help maintain content quality.”

Festive 2024 to be AI heavy

The integration of AI in festive ads is becoming increasingly prevalent for brands. Experts say more and more brands are recognising its powers and are actively combining it in their festive plans. 

Ambika Sharma said, “Clients are increasingly recognizing the value of AI in enhancing their marketing efforts, especially during the high-stakes festive season. They are pushing for AI integration to leverage its capabilities in personalization, real-time analytics, and efficient campaign management.”

Bhushan Kadam thinks this is due to the intense competition in the market. “Clients are pushing hard for AI in their festive marketing to gain a competitive edge,” he added. 

According to a report from Accenture Song, 91% of consumers are more likely to shop with brands that recognise, remember, and provide them with relevant offers and recommendations.

Manas Gulati thinks the reason for brands aggressively pursuing AI for festive is directly related to the above consumer behaviour patterns. He notes two reasons why AI fits right into the brand’s festive plans. 

• Through Engage Time Optimisation, AI analyses past behaviour to pinpoint the ideal send time for each individual, maximising engagement that translates to revenue, not just opens. This caters to today's hyper-connected consumers who engage in micro-bursts throughout the day.
• Predictive Channel Engagement Scores facilitates seamless coordination between marketing channels for a unified customer experience. AI predicts which channels – email, push notifications, SMS – resonate most with each customer. This allows for targeted messaging and optimised budget allocation across channels, ensuring you reach the right person at the right time on the right platform.

Last year’s festive season saw personalised ads taking centre stage for brands. For example, Coca-Cola gave a twist to boring old festive greetings. By launching a microsite, the brand gave its users a chance to send personalised messages using OpenAI’s DALL-E and GPT-4 models. This personalised campaign garnered over 557k+ engagements.

View this post on Instagram

A post shared by Coca-Cola India (@cocacola_india)

Similarly, Mondelez India promoted small businesses across the country by turning every Cadbury Celebrations ad into a virtual store for them with #ThisAdIsMyStore campaign.  

Experts believe this trend will continue to dominate this year’s festive season as well. 

Manas Gulati said, “Personalisation is definitely here to stay, and it will only get more sophisticated this festive season.  Last year was all about generic "Dear Valued Customer" emails – this year, we expect a hyper-personalised experience.” 

Ambika Sharma said, “Personalisation will undoubtedly continue to be a major trend as consumers expect more tailored and relevant experiences.” 

Apart from this key trend, experts also see potential in following other AI trends. 

As per Google Marketing Live 2024, advertisers will soon be able to enhance their Shopping ads with virtual try-ons, interactive product demonstrations, and immersive storytelling experiences, capturing consumer attention innovatively.

Virtual reality is a space that has immense potential, according to experts. They think brands should actively tap into its offerings. Gulati added, “AR will bridge the gap between online shopping and the physical experience by enabling customers to virtually "try on" clothes, place furniture in their homes, or even see how festive decorations would look in their space. This would promote greater confidence in online purchases, leading to a smoother and more satisfying festive shopping experience.”

There has been a 71% rise in online searches for sustainable goods globally, over the past five years. With this rise in eco-conscious consumers, experts believe, brands might also focus on eco-friendly practices and products, using AI to highlight sustainability in their marketing campaigns.

Gulati said, “Brands that highlight sustainable practices, eco-friendly packaging, and charitable initiatives will win. Businesses will likely devise festive campaigns that give back or promote a sustainable lifestyle.”

Data from Juniper Research suggests that consumers will interact with voice search on more than 8.4 billion devices by the end of 2024, doubled from just 4.2 billion devices in 2020. 

Ambika Sharma thinks brands can effectively make use of this insight to enhance their festive campaigns. She said, “With the increasing use of voice-activated devices, optimizing content for voice search will become crucial.”

As AI continues to revolutionise the A&M industry, its integration has become crucial, reshaping how brands engage with their audiences. However, as brands and advertisers adopt this technology further, the importance of addressing ethical concerns and maintaining quality content cannot be overlooked. 

By striking a balance between innovation and responsibility, the A&M industry can harness the full potential of AI, driving growth and building meaningful connections with consumers.