The transformative power of machine learning in digital advertising

Criteo, a commerce marketing technology company, has commissioned IDC to conduct a study to investigate the current and future impact of machine learning on advertising. The results were in the IDC white paper "Can machines be creative? How technology is changing personalization and relevance in marketing". The document describes the goals and concerns of using programmatic advertising content. It also demonstrates the potential of using machine learning and mass personalization of advertising media to permanently change the advertising of the future.

The study concludes that marketers are increasingly using machine-produced content. They are also planning to provide consumers with individual creative content automatically and personalized as online ads. 64 percent of respondents see optimized targeting of advertising messages and personalized advertising in real time as the key business benefits of machine learning by 2020.

Alexander Gösswein, Managing Director Central Europe at Criteo, comments on the results: "Smart technologies such as data analysis, automation and machine learning continue to converge. This dynamic change is constantly transforming marketing and advertising and changing these areas for the long term. Machine learning and automated personalization will reach a point where they are so advanced that they not only produce personalized content, but also play it out in real time and continuously optimize this process."

Although marketers are aware of the benefits of machine learning for personalization, only a few are using this technology to date. This is due to both a lack of expertise in companies and a lack of trust in machine learning: there are still concerns about brand security and the necessary protection of user data.

According to the white paper, "IDC believes that brands' concerns will gradually disappear as machine learning for online advertising becomes more mainstream. IDC predicts that machine learning will be ubiquitous in all areas of advertising technology over the next five years to 2022."

"The time is approaching when machine learning will be fully operational and will significantly shape the global economy, not just the advertising industry. Companies should therefore develop growth strategies that take machine learning into account and drive competitiveness, profitability and - most importantly - customer dialog in the digital age. This is possible with machine learning, for example through chatbots, improved customer profiles and customer segmentation or speech recognition via digital assistants. Machine learning also helps companies to process, evaluate and visualize customer interaction data, which enables more efficient processes," continues Alexander Gösswein.

IDC expects a global annual growth rate (cumulative average growth rate, CAGR) of 54% for machine learning software in marketing and similar areas. Expenditure will rise from around 360 million dollars in 2016 to over two billion dollars in 2020.

Some key findings of the study:

• Digitizing personalized marketing communication is a key factor today - 34 percent of respondents use digital technologies to personalize marketing communication.
• Digitalization makes it possible to personalize content automatically - 50 percent of survey participants use digital technologies to automate the personalization of content. Over 30 percent of them plan to use digital technologies for personalization.
• Machine learning applications are generally known, but rarely used - 83% are aware of applications for the personalization of communication, but only 14% are already using them. 33% of marketers are planning to invest in machine learning technology. This shows that the latent demand is strong and that the market will grow significantly in the coming years.
• Machine learning applications are already available, and the number will increase by 2020 - 66 percent of respondents are of the opinion that technologies for personalized headlines and ads or personalized design formats such as layout, colors and sizes are already available today.
• Data-driven advertising will increase customer loyalty and brand relevance - Currently, the advertising agenda of brands is focused on strengthening customer loyalty (according to 41 percent of participants), collecting user data (36 percent) and remaining in the minds of consumers as a relevant brand (34 percent).

The use of machine learning for automated, targeted and personalized content and its creation is the next area that machine learning technology will transform. This offers brands the opportunity to strengthen customer loyalty and increase customer lifetime value (CLV), which in turn secures revenue and cash flow for the company. In addition, machine learning offers early adopters a powerful approach to enable sustainable growth and competitiveness for companies in the digitized world.

More information: Criteo.com

About the study:

The IDC study sponsored by Criteo examines the acceptance and potential of new machine learning technologies for brands' online advertising activities. The focus is on how marketers can use it to create more relevant and personalized user experiences. IDC is also investigating the extent to which marketing managers are planning to make greater use of such software. For the global survey, 459 marketing managers were interviewed. The focus was on their views on the evolution of advertising and marketing through smart technologies in the digital marketplace. Of those surveyed, 30 percent were Chief Marketing Officers (CMOs), Marketing VPs or Heads of Marketing, 35 percent worked in marketing management and the remaining 35 percent held various positions in digital or online advertising. 58% were the highest decision makers responsible for advertising investments and 33% had a direct influence on online advertising decision making.