How the generative A.I. boom could forever change online advertising

Shortly after ChatGPT hit the market last year and instantly captured headlines for its ability to appear human in answering user queries, digital marketing veteran Shane Rasnak began experimenting.

As someone who had built a career in creating online ad campaigns for clients, Rasnak saw how generative artificial intelligence could transform his industry. Whether it was coming up with headlines for Facebook ads or short blurbs of ad copy, Rasnak said, jobs that would have taken him 30 minutes to an hour are now 15-minute projects.

And that’s just the beginning.

Rasnak is also playing with generative AI tools such as Midjourney, which turns text-based prompts into images, as he tries to dream up compelling visuals to accompany Facebook ads. The software is particularly handy for someone without a graphic design background, Rasnak said, and can help alongside popular graphic-editing tools from Canva and Adobe’s

While it’s all still brand new, Rasnak said generative AI is “like the advent of social media” in terms of its impact on the digital ad industry. Facebook and Twitter made it possible for advertisers to target consumers based on their likes, friends and interests, and generative AI now gives them the ability to create tailored messaging and visuals in building and polishing campaigns.

“In terms of how we market our work, the output, the quality and the volume that they’re able to put out, and how personalized you can get as a result of that, that just completely changes everything,” Rasnak said.

Rasnak is far from alone on the hype train.

Meta, Alphabet and Amazon, the leaders in online advertising, are all betting generative AI will eventually be core to their businesses. They’ve each recently debuted products or announced plans to develop various tools to help companies more easily create messages, images and even videos for their respective platforms.

Their products are mostly still in trial phases and, in some cases, have been criticized for being rushed to market, but ad experts told CNBC that, taken as a whole, generative AI represents the next logical step in targeted online advertising.

“This is going to have a seismic impact on digital advertising,” said Cristina Lawrence, executive vice president of consumer and content experience at Razorfish, a digital marketing agency that’s part of the ad giant Publicis Groupe.

In May, Meta announced its AI Sandbox testing suite for companies to more easily use generative AI software to create background images and experiment with different advertising copy. The company also introduced updates to its Meta Advantage service, which uses machine learning to improve the efficiency of ads running on its various social apps.

Meta has been pitching the Advantage suite as a way for companies to get better performance from their campaigns after Apple’s
The 2021 iOS privacy update limited their ability to track users across the internet.

‘Personalization at scale
As these new offerings improve over time, a bicycle company, for example, could theoretically target Facebook users in Utah by showing AI-generated graphics of people cycling through desert canyons, while users in San Francisco could be shown cyclists cruising over the Golden Gate Bridge, ad experts predict. The text of the ad could be tailored based on the person’s age and interests.

“You can be using it for that sort of personalization at scale,” Lawrence said.

Meta’s Advantage service has been gaining traction with retailers using it for automated shopping ads, according to data shared with CNBC by online marketing firm Varos.

In May 2023, roughly 2,100 companies spent $47 million, or about 27.5% of their combined total monthly Meta advertising budgets on Advantage+, the Varos data showed. A month earlier, those companies directed 26.6% of their budget, or $44.9 million, to Advantage+.

Last August, when Meta formally debuted its Advantage+ automated shopping ads, companies put less than 1% of their Meta ad spend into the offering.
Varos CEO Yarden Shaked said the increase shows Facebook is having some success in persuading advertisers to rely on its automated ad technology. However, Shaked said he’s “not sold on the creative piece yet,” regarding Meta’s nascent foray into providing generative AI tools for advertisers.


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