AI’s Secret Sauce for Advertisers: Multivariate Testing
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Anyone paying attention to the advertising trade media knows that artificial intelligence (AI) is poised to revolutionize our industry. In fact, nearly 80 percent of marketers in the U.S. believe consumers are ready for this new technology now.
Not only can AI automate customer interactions through the likes of chatbots, but these self-learning models can also spot audience patterns and help advertisers continuously improve their targeting. All this happens in a fraction of what it would take most humans and eliminates costly mistakes.
The proliferation of AI also comes at a time when people are clamoring for more targeted advertising. According to Accenture, 50 percent of consumers are more interested in ads that match their personal interests, yet 74 percent say that most advertising fails to meet this standard.
So how do we get there? The answer lies in multivariate testing driven by AI.
The Multivariate Muscle
At times talked about but frequently forgotten in practice, multivariate testing involves splitting a campaign into smaller pieces to help advertisers understand different factors at play.
While the concept of optimization is nothing new, most advertisers fail to realize its full potential. To start, they lump all their targeting dimensions together. Then, they “set it and forget it” once a campaign goes live.
This results not only in higher prices and weaker performance but also in campaigns that conclude without any real insights. Think about it: It would be impossible (or at least impractical) to parse through the various elements of a monolithic campaign to know what did and did not drive results. All this should have been accounted for on the front end.
AI makes multivariate testing both possible and practical. Through AI, advertisers can atomize a campaign into hundreds of micro-campaigns based on different combinations of factors, such as age, gender, location, device and audience targeting.
Advertisers can then compare performance for one group (females, ages 18–24, on a desktop, who are interested in sports) to another (males, ages 35–44, on a tablet, who are interested in fashion). Such specificity can be attained through the wealth of information we now have about audiences, but it can be difficult for the average human media buyer to get there.
The benefits of an AI-driven, multivariate approach to advertising are manifold.
- You can optimize campaigns in real time: You can’t manage what you can’t measure. Thus, without multivariate testing, your campaigns are binary — they either worked or didn’t. By analyzing specific variables, you can determine the exact causes of success or failure. Even better, you can see what’s working in real time and shift your ad dollars accordingly.
- You can reach new audiences without risk: Too many marketers hold fast to $40,000 customer personas. While a core audience is a good start, there are other groups to consider: niche audiences, aspirational audiences and prospective audiences just within reach. With multivariate testing, you can dip your toe into the water before fully diving in.
- You can save time and money: With AI-optimized campaigns, you free up a lot of resources. In doing so, you can shift both people and dollars to areas focused on strategy, making your whole operation work a lot smarter.
No Excuses, No Time to Waste
While many media buyers get by with antiquated practices, that will end very soon — and to everyone’s benefit. Relegating campaign testing to AI systems makes better use of resources, helps advertisers set smarter strategy and improves the connection between brands and consumers.
All this is becoming increasingly necessary. In fact, a third of marketers say personalization is the capability most important to the industry’s future. Moreover, Gartner predicts that CMOs soon will outpace CIOs in technology spend. At the same time, 2017 will be the first year that digital advertising surpasses that of TV.
With the benefits of AI for advertising now clearer than ever, there are no excuses not to make use of this technology. And there’s no time to waste in getting started.
Learn even more about the convergence of technology and branded content at the FUSE Enterprise summit. Artificial intelligence and personalization will be featured among many other techniques and technologies.