← MarTech Podcast ™ // Marketing + Technology = Business Growth
MarTech Podcast ™ // Marketing + Technology = Business Growth
The $750 billion AI advertising opportunity
00:21:44
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Benjamin Shapiro
The Martech Podcast is a proud member of the I Hear Everything Podcast Network. Looking to launch or scale your podcast, I Hear Everything delivers podcast production, growth and monetization solutions that transform your words into profit. Ready to give your brand a voice? Then visit iheareverything.com.
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From advertising to software as a service to data across all of our programs and clients, we've seen a 55 to 65% open rate.
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Kevin Yalowitz
Getting brands authentically integrated into content performs better than TV advertising.
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Benjamin Shapiro
Typical lifespan of an article is about 24 to 36 hours. If we're reaching out to the right person with the right message and a clear call to action, then it's just a matter of timing.
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Welcome to the Martech Podcast, a member of the I Hear Everything Podcast Network. In this podcast, you'll hear the stories of world class marketers that use technology to drive business results and achieve career success. Here's the host of the Martech podcast, Benjamin Shapiro.
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80% of B2C marketers reported that their AI tools exceeded ROI expectations according to Invoca's 2024 State of AI in Digital Marketing Report. The performance gap isn't just reshaping advertising effectiveness, it's creating a new competitive divide between Leiterds and lacquers. How could you capitalize on this AI revolution before your competitors? I'm Benjamin Shapiro and joining me today is Kevin Yalowitz, the global software and platform lead at Accenture, who is going to explain how AI is reshaping the advertising landscape. Kevin, welcome to the Martech Podcast.
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Kevin Yalowitz
Thank you for having me.
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Benjamin Shapiro
It's great to have you here. Excited to have you on the show and talk a little bit about artificial intelligence and specifically the impact in advertising to so let's start off at the top. What are the three ways AI is impacting advertising?
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Kevin Yalowitz
AI is broken onto the scene and sort of taken every corner of our daily lives by storm. But in advertising specifically, it's interesting because it's allowing advertisers to a build creative at a speed and relevance to end users faster than they ever have before, which is really powerful. And we can dive into some of the areas where that I believe is most powerful. The second is it's driving better segmentation and better targeting, which means better roi. And your exact point as you opened up hits at that and we're seeing that in our data which we can dive into a bit later. And then I think third, it's making content more relevant to end users. And why does that matter? It matters because at the end of the day, ad Dollars chase eyeballs and attention. And when you have content that's more relevant to the end user, it tends to attract better outcomes for those advertisers. So it's an exciting time, what you're saying, Sort of.
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Benjamin Shapiro
I think you could replicate for marketing broadly where artificial intelligence is helping us in three ways. Segmentation and targeting, creative production and evaluation. Is there anything that's specific in advertising where you think it's most impactful? Maybe more than it would be broadly in marketing.
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Kevin Yalowitz
I think it's more impactful from a creative perspective and a production perspective. And I'll tell you why. As we think about what's driven the rise of digital advertising, it's performance, direct response advertising that has brought an entire generation and segment of new advertisers online. Largely SMBs. Right? And those SMBs do not have the massive capabilities to build great creative that large enterprises and agencies do. So it's an unlock for them. It's an unlock for them to be on par with the best of the best and reach audiences that frankly weren't reachable before. And that comes down to a format perspective. Right. Think about video. You don't engage with a video ad that's mediocre. You engage with a video ad that's compelling and has compelling content and tells a story that's now something with AI and with gen and many of these tools are baked into the platforms that's possible today. It's exciting.
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Benjamin Shapiro
Yeah, it's interesting. I thought you were going to go a different direction. My assumption would have been that the evaluation piece is what's farther along in advertising. Just because there's so many variables that can impact an ad. What's the color of the background, what's the creative, what's the message, what's the copy? So all of this multivariant testing that helps you understand why an ad is impactful seems like something that is specifically valuable in advertising. And maybe this is chicken of the egg. If you have good creative, you get better evaluation. So then it becomes self fulfilling.
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Kevin Yalowitz
You're not wrong. But I would argue that the path to better evaluation we started down that road with AI and machine learning that has been improving materially year after year for really the past half decade. Gen AI has been the unlock for that production and creative, I think is a material, a step change difference.
- [04:56]
Benjamin Shapiro
Yeah, I hear you. It's easier to create more variables. It's easier to create different creative. And now we're getting into, as you mentioned, the video production recently Google just lost, I think it's called VO3, the new sort of standard in video production. I'm curious to hear your perspective. How do you think consumers feel about AI generated content in advertising? Are we okay with the ads being generated by a machine as opposed to a human?
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Kevin Yalowitz
So we, we like to keep our finger on the pulse of both how consumers are thinking about AI and advertisers. In order to do that, we commission research every year to dive into that. And a couple of months ago, we looked at this both from an advertiser lens and from a consumer lens. And I'll be very honest with you, I was somewhat surprised by the results. So 70% of consumers have had some exposure to Gen AI self reported. Right. Which is actually pretty high if you.
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Benjamin Shapiro
Think about, I mean, 30% have been exposed and just don't realize it was Gen AI.
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Kevin Yalowitz
Correct. But if you look within that 70%, about 50% are now using it weekly. And within that 50%, 70% think that AI generated content can be better than consumer generated content, which is shocking. Right? I don't actually know that I would necessarily even agree with that. Today we need to maybe have a little debate about the human element of creativity. Broadly speaking, though, there's excitement among consumers around Gen AI. The one sticking point is this, though. There is still a reticence to trust generative content. And disclosure, when you disclose that the content is from AI dramatically increases the trust in that content, Meaning it goes from about 25% trust to 80% trust among users of AI.
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Benjamin Shapiro
I got to ask you about this. Hang on, because I just had an experience yesterday, of all things, and this is trying to drive organic interest and traffic. I had a LinkedIn post. I was copying somebody else's post. The meme was podcasts, and it had moths going towards one of those bug zappers. And it basically said podcast was the bug zapper and the moths were vendors. So anybody that wants to be on a podcast is a vendor. And I was like, that's a little insulting to podcast producers. And the person that published it was a newsletter creator. So my joke was to create the exact same meme, but to have it be newsletters and bots. So I went to ChatGPT and created moths to a flame with newsletters and bots. And it got a creative rights tag or whatever GPT puts on it. So when I published the image to LinkedIn, it said, hey, this is made through artificial intelligence.
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Kevin Yalowitz
Right?
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Benjamin Shapiro
LinkedIn didn't share that content at all. I think the meme was hilarious. So no fault of the creative. It was Funny, but it was no circulation. So my InReference is that LinkedIn specifically does not want AI generated content to flow flood the zone. And I'm assuming that also is how consumers feel in advertising. And you're saying the opposite, that if you can say, hey, this was generated through artificial intelligence, it creates more trust. Walk me through that.
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Kevin Yalowitz
That's right. I mean, that's what consumers are telling us. But let's be clear. The path to getting to an ideal end state is not simple. I would suspect that the reason why a company might block that type of content is they haven't reviewed whether you have the rights to actually share what's in it, which is a major tipping point that I would say most tech companies are taking a bit more of a conservative approach on. That's the first point. The second point, and this is where things get quite interesting, is this is early days. So what we've not seen yet is if you disclose that the vast majority of creative in a Netflix episode that you are watching is generative, we've not really seen yet. Is that something that's going to touch a third rail with consumers or not? They're stating they're comfortable with it, but we're evolving a bit as we go is my point. I actually think that's okay. To be very candid with you, the balance will be how do you mix the volume of content that is generative with disclosure in a way that's not detrimental to the user experience? And there's experimentation going on on that, but it's going to evolve as we go. Since we're moving so quickly here, it's.
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Benjamin Shapiro
A really confusing time and I think there's a debate to be had of what is AI generated content. I have this concept. I use generative AI, then I edit it. Is it AI generated content? Or I produce an image and then I have AI refresh it? Generative AI is in everything we do. So how do you classify something as gen AI created content?
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Kevin Yalowitz
It's like a Napa Cabernet or Champagne. When you're above a certain threshold of grapes, you have to disclose that that's where it came from. But there is a little bit of gray area, more than a little bit of gray area today about what is that line where that disclosure is required? Let me ask you this. If you were to think about everything that you consume in your daily life, Whether it's your LinkedIn content or video content on YouTube or Netflix, what percentage would you say has some generative AI component to it?
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Benjamin Shapiro
80 plus percent. I'm assuming in media people are using generative AI for research, for post production editing, like thumbnail. It's in everything.
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Kevin Yalowitz
I think you may have been a respondent to our survey because it's interesting. That's the exact number that consumers gave us that roughly 80% of what they consume has some sort of generative component to it. Now, I would submit to you that that number is very hard to discern. And I would argue that content that is wholly generative AI created is far lower than that.
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Benjamin Shapiro
Is this interview generative AI created? Like it's just me and you sitting here on a squadcast call recording our conversation. But I use generative AI to figure out what questions to ask you and what I think is going to be relevant to our audience and how I should write our titles. And it's probably used in our thumbnail production. Like, is this interview generative AI? You're not a bot. I'm not a bot. We're not machines. We're two people talking to each other.
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Kevin Yalowitz
How do you know? Are we not bots? Do you know that for sure?
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Benjamin Shapiro
I'm real.
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Kevin Yalowitz
Me too.
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Benjamin Shapiro
100% human.
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Kevin Yalowitz
Me too.
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Benjamin Shapiro
No, hard. Actually, I take it back. I was going to say no hardware. I broke my ankle. I have a metal plate in my ankle. I'm part machine.
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Kevin Yalowitz
Now, I would argue, and this is a personal opinion, that the answer would be no. The core of what we are discussing here is our original IP that you and I developed and it's us putting it in our own voice. But yes, some of the prep that goes into that is supported by generative AI, but that doesn't make the content itself generative content.
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Benjamin Shapiro
My takeaway is consumers are comfortable with generative AI when they feel like things are labeled appropriately, when they have an understanding of how it was produced, but the labeling is very confusing. Let's also talk about the platforms. What do advertisers want from the platforms in the AI era?
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Kevin Yalowitz
This is another interesting dynamic that again surprised us. First and foremost, advertisers are using gen AI at a much higher degree than I would have expected. So 60% of ad buyers are using generative AI to do planning and analysis of ROI outcomes today. That's really high in my view. So there's a clear step towards making this real. And most advertisers are starting to make decisions about where they place ad ad buys based off of the AI features that those platforms offer. So that's a really important product implication for those in the audience that run an ad product business that advertisers are making decisions on this now. And I would argue what's compelling about getting this right now is that advertisers are fickle, particularly performance advertisers. They're after ROI and outcomes. What's interesting though is they're willing to move budget very quickly, meaning in a given month in adverts, 55% of advertisers are actually willing to shift budgets between platforms within a month. There's even a 20% within that that are willing to do it on a weekly basis. So if you have a compelling story to tell about how AI will improve outcomes for advertisers, the results of that can manifest very quickly.
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Benjamin Shapiro
I think there's two components to it. One is, does generative AI integrated into an ad platform help me drive more roi? I think there's also an ease of use component. Talk to me about some of the tools that the platforms are integrating that just makes the process more efficient.
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Kevin Yalowitz
So what we're seeing is it's sort of on the front end of the process from onboarding and product usage. Let me give an example. If you take an ad manager that is broadly used, like Google Ads Manager for instance, a lot of performance advertisers are familiar with how to use the product. It's been perfected and refined. But if you look at advertisers that sit in more of the experimental bucket, right, where advertisers are placing net new bets to reach new audience, maybe it's an audio, maybe it's towards Gen Z. Advertisers in that segment are using Gen AI to make the process to becoming proficient and an expert in using the platform just faster. So it's that usability angle that we've seen the most. To be totally honest, what I'm hearing.
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Benjamin Shapiro
From you is Gen AI built into programmatic audio advertising as an example for a channel or if I'm trying to reach Gen Z, the experience of onboarding and starting placing a TikTok ad by like that's where Gen AI is really making the platform more effective. It's getting through that first onboarding funnel is a little easier. Hey, here's who we suggest your audience should be. Hey, here's creative we can produce for you. We're going to optimize the campaign for you. And that's where advertising platforms are iterating. Talk to me about how the balance of power has changed in advertising based on some of the platform changes.
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Kevin Yalowitz
Before I do, I have to inject one point. It's a little bit contrarian. So despite all this Advertiser excitement around using Gen AI to better their outcomes. 90% still really value human interaction.
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Benjamin Shapiro
Where is there human interaction in the ad buying process? Are we still going to people having media buyers buying our ads?
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Kevin Yalowitz
If you're spending a lot of money on a platform and you're running into a problem or you are not meeting your ROI objectives, they want to be able to pick the phone up and talk to a human. So I think there is an interesting dynamic here. Right. That ad platforms have to balance, which is you can't pull the humans out of the process entirely today because at least now advertisers still really do genuinely value that.
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Benjamin Shapiro
Yeah, it's interesting. In customer success, humans are still relevant. People don't want to talk to bots, we want to talk to people.
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Kevin Yalowitz
Yeah.
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Benjamin Shapiro
Now the question is, are the people on the other end actually more efficient than whatever optimization tactic you might get from machine learning from AI? Who knows? But tell me about the balance of power.
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Kevin Yalowitz
Yeah, I think that it would be worth prefacing this discussion with sort of what's happening from a macro perspective. So we came into the year with most of the market analysts saying there was going to be around 10 to 13% growth in digital advertising. Right. EMarketer was at 13% and those estimates have already been revised down to roughly the 8% range.
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Benjamin Shapiro
Less money going into advertising.
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Kevin Yalowitz
And why is that? Right. You drive down consumer purchasing power and there's less ad dollars that are going to chase the consumer spending. So that's 101. But it's an important point to get to your question. Why? Because when you have a constrained environment, we would argue that it shifts more of the power to the advertiser. Right. It gives the advertiser the ability to say I am only going to play on these platforms where I know there's considerable upside opportunity. And frankly, we might not take as many bets on experimental platforms unless there's a compelling reason to do it. This is an interesting ties back to what we were talking about before. If you're able to enable an SMB to do really compelling audio creative, that's now something that's no longer experimental. It's real. So I think there's a definitive shift of power to the advertiser. But platforms still have the ability tearily attract new segments of advertisers by doing everything we just talked about around Gen AI.
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Benjamin Shapiro
What I'm hearing from you is there's less cash flowing through the economy, so the total volume of media buying has gone down. So the advertisers have more power, but they're also a little bit more risk adverse. It also sounds like you're saying they're spreading the peanut butter thin, right? They're not just going to Google and Facebook. I understand you might not be able to comment on specific advertisers, but the dominant players in digital advertising, they are choosing not experimental but verticalized advertising platforms and not just relying on the mega winners of the platform wars.
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Kevin Yalowitz
That's correct. However, let's talk about market share in this space. Still the vast majority of digital ad dollars and on two platforms. You mentioned them, right? Google and Meta Properties. But it has been interesting over the past several years. We've seen real growth in players outside of that. So we are entering a potential downturn with power having been spread out across the landscape for sure. But if we look back at what has happened in previous downturns or declines, we have seen advertisers concentrate their spend on where they feel it's the safest and that does accrue to larger players that have not made that compelling case yet that they can reach a different audience or provide better ROR than the big platforms.
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Benjamin Shapiro
Yeah, it's interesting. I'm reading the room thinking that there's more segmentation and more options than ever between retail media networks, Programmatic, a bazillion social networks. You mentioned TikTok, but Pinterest having deeper E commerce integrations and X has kind of gone by the wayside. But there's all these different verticalized social channels now that have more relevant advertising platforms. So I want to think that. All right, well, that balances the power a little bit. But then your message is people are going where they feel like there's safety. People are comfortable with the bigger platforms being Google and Meta. We're at an interesting time with the advertising landscape because it's so dependent on how the economy performs and yet there seems like there's more competition. So I wonder if the reliance on the mega platforms for that sense of safety and stability changes as the economy hopefully picks up. Talk to me a little bit about what's coming next. What do you think the next impact of AI is on advertising?
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Kevin Yalowitz
Put simply, I think there's going to be two dynamics that AI will drive next. One is the expectation of ROI and measurement is going to get ratcheted up. This allows advertisers to have better visibility into where their dollars are actually performing and we've seen that slowly ratchet up over frankly the past decade. This is going to be a step change. Ratcheting of that that has major implications for ad platforms because if you fall in the group that is not evolving and enabling advertisers to use AI to drive better roi, better creative, you're not going to meet those expectations. And the fickle nature of advertisers and we talked about the speed of shifting is going to change. So to me, that is a major dynamic. I think the second though is we've talked a lot about advertising and ad tech, but let's think back to the basics here. Where advertising occurs in our daily lives, that's wildly changing due to AI.
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Benjamin Shapiro
Yeah, it's interesting. Yesterday Google made an announcement that they are enabling an AI mode in search. And then today people started realizing that they're already integrating ads into AI mode in search. And so now there's an entire different delivery mechanism for one of the biggest platforms. And obviously there are startups that are nipping at Google's heels with Perplexity and ChatGPT OpenAI as well with their search platform. I don't think that the monetization path is necessarily clear for search. I do think that there's going to be a ton of evolution and then the question is, how do all these companies figure out how they're going to monetize?
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Kevin Yalowitz
Exactly. But it would be hard to argue that that is not going to be the largest impact to digital advertising going forward. It's basically the basics of it, right?
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Benjamin Shapiro
Yeah, absolutely. We have these behemoth, very expensive to produce, very expensive to operate companies that are changing the entire world and putting pressure on the incumbents that have no monetization strategy other than subscriptions. Right. We all have our GPT subscriptions and maybe that's just the way of the world and everybody has to pay their licensing fee to be able to operate. Google doesn't have a subscription to be able to search. Maybe GPT can have that as their primary methodology. I do think that the monetization levers are going to change in advertising dramatically over the next few years. And that wraps up this episode of the Martag Podcast. Thanks for listening to my conversation with Kevin Yalowitz, the Senior Managing Director of Global Software and Platforms at Accenture. If you'd like to get in touch with Kevin, you can find a link to his LinkedIn profile in our show notes or on martechpod.com or you can visit his company's website, which is Accenture.com. if you haven't subscribed yet and you want a daily stream of marketing and technology knowledge in your podcast feed, hit the subscribe button in your podcast app or find us on YouTube and we'll be back in your feed every week. All right, that's it for today, but until next time, my advice is to just focus on keeping your customers happy.
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Kevin Yalowitz
Foreign.
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Benjamin Shapiro
Thanks for listening to the Martech podcast and I hear everything. Production Looking to launch or scale a podcast like this one for your brand? Then visit iheareverything.com.