By Tim Peterson • December 5, 2024 •
Ivy Liu
When it comes to artificial intelligence technologies affecting the ad industry, programmatic marketers would naturally be toward the tip of the spear. After all, their roles originated as machines disrupted traditional buying methods. And now AI-based ad buying tools are similarly changing the nature of their roles.
During this week’s Digiday Programmatic Marketing Summit in Nashville, Tenn., agency executives convened behind closed doors and opened up about how the insertion of AI has impacted their abilities to optimize clients’ campaigns and how they are having to adapt and define the value they bring to the table. The executives were granted anonymity in exchange for their candor, and a selection of what they had to say is excerpted below.
AI-powered ad buying has a transparency problem
“You’re not totally sure what optimizations the DSP is making and why and if they’re the best thing for your business and the weights of the optimizations. Is it just towards the CPM or towards different KPIs? If you have multiple KPIs, that can be really challenging?”
“When you’re optimizing with some sort of AI optimizer within a DSP, it’ll add [audience] segments or lookalikes that cost more. You’re not sure how to optimize in that way or control it. Because you want to optimize, but you want us to make decisions as well. So where’s the balance in that?”
“Part of the problem is we’re only trading in one KPI, and the things we’re now using require accuracy, and the only KPI we can trade on is money.”
“They’re pushing hundreds of millions of dollars based on these decisions on personas that not only don’t exist but they’re actually to take actions you can’t take. That’s the part where the accuracy is going to hurt because the machines just lie faster than we ever could.”
“The methodology isn’t transparent. We are strategists, and if we don’t understand the strategy and how it’s optimizing, how can we make the strategy better in order to input something into the AI to make it even better? Because the AI is just optimizing towards what it thinks it should be optimizing towards.”
AI-driven advertising creates incrementality issues
“You can set up an AI, and it will optimize everything. Theoretically, it will optimize everything perfectly; we can all go and chill and everything’s great. But where it really becomes limiting is if you want to expand beyond what you’re already doing. If you want to start testing into new environments, new technologies and mediums, then you really do need to understand the strategy: Who was I accessing, how was I accessing them, what resonated well with them? So that I can go and do something different with those learnings.”
“With Google’s Performance Max, I’m seeing really high returns but no transparency. And I feel like they’re just finding people who were already going to convert anyway. So we end up letting AI do it, but they’re doing it to what they know and that’s a conversion. But I worry about the incremental part of it.”
“You’re optimizing – or you’re sharpening that pencil – against people who are going to buy anyway because you have infinite inventory and not infinite people. So you’re going to buy that person so many times [that] they’re going to convert. But I feel like there’s so much inventory at this point, the computer or person doesn’t have a choice: They can only optimize against money.”
“To your point about is it really incremental when those people are going to buy it anyway, I think what AI does is it allows you to find those individuals faster who are not aware of your brand, to drive growth faster or performance faster.”
Agencies need to define their value to clients in an AI-driven era
“Value can be really hard to define. I think that’s the main thing.”
“Instead of the technical aspect, what the technology has allowed us to focus on is the strategy, actually thinking vs. spending a lot of time doing. If you spend a lot of time thinking, which is where the value comes from, that’s what brands are paying us for nowadays: to think.”
“The notion of value is evolving every day. Getting a creative, a media planner, a strategist all in the same room, that’s where the value is. The point about incrementality and the more we can get done, the more we can think – knowing that there’s something else that can handle [tasks] for us that might take a long time – that allows more value. That’s the perspective we need to have.”
“The transparency of ‘Yes, I’m using AI to reduce the amount of time that I have to spend doing [clients’] work and more time thinking, I feel like our clients are going to appreciate. It’s this nervousness that some have, and maybe it’s back to the [people who are] lazy, push the button and not have to be accountable to the world, that should be nervous. Because at the end of the day, we have to explain to our clients what we’ve done, why we’ve made the decisions that we’ve made and what it means for their business. And the inability to do that no matter how we got to the endgame is what’s going to get you in trouble.”
“I don’t think the compensation model should change because, frankly, brands need to pay a little more now because we’re using more of our knowledge capital, all the learnings over the years to now apply to activation and not doing the mundane technical stuff that you can let the machine do. So quite frankly, if [compensation] changes, it should be actually be increasing the pricing model for the knowledge capital that we’ve gained because that’s what a lot of the value is coming from.”
“The struggle that we have is this idea of value for our clients. At the end of the day, we’re trying to grow, but showing the growth isn’t always as easy as it sounds. If we could show that we’re working 50% less and driving 20% more growth, that’s great. But showing that 20% growth when there’s all these other outside variables that are also driving growth is really difficult.”
“This conversation about what we deliver back to the client, it puts you in a spot that you are kind of coming from a defensive place because you have to be somewhat risk-averse because you’re trying to show value.”
“The biggest issue we have is we come at it with such a defensive state all the time, trying to defend our value. Each month we have an opportunity in our reporting call to do the education necessary to show the return on their investment in our strategy and our thinking. We love using acronyms and all these words to sound fancy and be defensive, instead of just doing a better job of communicating the value of what we did for our client, what the return on that investment was and what we’re going to continue to do and move forward.”
“Value, to me, is perceived. And it’s all about building that trust with your client and really having them see you as a strategic advisor to make themselves better. I think where we as an agency fall short is that our relationships become transactional with clients. And when it becomes transactional, then your value’s diminished.”
https://digiday.com/?p=562325
