Decoding advertising’s efficiency illusion
Tony Miller
Since Hollywood sci-fi envisioned a new Artificial Intelligence-powered world, AI has been acknowledged as an abstract concept; something for a future time we haven’t yet reached. Well, the future is well and truly here. Through continuous innovation, AI is applied to real-world tasks across almost every industry, every day. While we’re a way off of any Spielberg interpretations, the tech is ready to transform the lives of marketers and advertisers.
Yet, we’re still in a strange place with AI. Applications exist at different poles; while ChatGPT and its competitors provide a surface-level ‘toe-dipping’ into how AI can be harnessed, other, solution-oriented platforms are challenging the very way our sector functions.
Marketers are paralyzed by the binary options available. Do they go all in and take full advantage? Or wait to avoid any risks (and regulation pitfalls), sticking to the status quo. Either way, marketers are under pressure to form an AI strategy fast, not least because ‘everyone else has one’ and the fear of being left behind is all too great.
The turbulent business landscape can’t be ignored. For marketers, tighter economic conditions have added pressure to get results fast, whilst marketing budgets continue to tighten. This has led to over-measuring both valuable and less valuable metrics to justify spend, forming a narrative of how advertisers do ‘more with less’.
AI is heralded as a way to move beyond ‘vanity metrics’ that don’t support the marketer’s aim to align efforts with true business objectives. If programmed and used correctly, AI can drive more productive conversations in the boardroom by enabling marketers to produce results demonstrating real business value driven by using metrics that matter as evidence for their marketing effectiveness.
Therefore, AI requires a thorough and deliberate approach for implementation and needs to be used as a solution to solve a challenge, rather than shoe-horned in because it’s the next big thing. The technology should empower marketers to harness it as a tool for unlocking access to valuable insights, increased efficiency, improved results, and optimized marketing budget, particularly considering resource and spend challenges marketing currently faces.
It is up to the brands using AI to innovate the sector, like Adludio, and independent data and marketing trade bodies, such as the DMA, to provide the right resource, guidance, and tools to help navigate the landscape and create a reality where AI is used effectively.
I’m excited about this report because it does just that - it provides the tools marketers can use today to get true value from AI to transform the LTV of campaigns, shift the narrative away from vanity metrics into metrics that matter, and take their rightful seat in the boardroom.
A word from our CEO
As advertisers, we’ve strived to produce the best campaigns possible, support overarching business aims, and leverage adtech to its full potential, in its current form, for the best part of three decades. In that time, we’ve seen advertising campaigns transcend mere business activation and influence the world we live in, the decisions we make, the brands we patronize, and the activities we pursue.
Advertising is facing a new dawn. AI promises to revolutionize the speed, accuracy, and effectiveness of how brands can interact with a diverse range of customers on a global or street-by-street scale. By harnessing AI, the marketing department can finally produce an efficient, viable, and effective method of implementing campaigns, evidencing the true impact they deliver.
We are now at the convergence of advertising and technology in its most powerful form. The current innovation within our sector will change how organizations and people perceive the power of advertising for years to come.
Methodology
Adludio commissioned a survey with independent research house Censuswide to reveal the current strategies, tools, and perceptions around AI that are used in marketing. A total of 400 marketing and advertising decision-makers at US brands with more than 500 employees and an annual revenue of between $100-500 million were polled, to offer a comprehensive view on the current state of AI in advertising.
The Efficiency Illusion
Before diving into AI and how marketers can transform the way they operate, it’s important to get a lay of the land and understand why new approaches are needed.
From inception to launch, it takes senior marketers an average of 5.23 months just to create an advertising campaign and an average number of 19 people involved in its creation. To put that into perspective, it takes nearly half a year and an entire football team just to create one advertising campaign. There is a clear issue here.
To add to the challenge, it takes 47% of marketers a moderate amount of time to scale campaigns across different formats and languages, and 27% of marketers a significant amount of time. This is particularly worrying when format adaptation can now be automated.
Limitations to current campaigns
This is reflected in the limitations marketers experience, citing the top three as quality assurance, format adaptation and language translation, closely followed by cost of scaling (24%) and creativity (24%).
When it comes to optimization, barriers include a lack of resources (46%) - despite 19 people involved in each campaign - lack of technology (46%), and an absence of benchmark data (44%). Marketers feel restricted despite having a lot of time and resource on each campaign.
So how about the results? Worryingly, nearly half (48%) of all campaigns fail to meet KPIs.
There’s a real struggle here. Marketers appear to have a lot of time and resource dedicated to each campaign and yet feel severely limited in what they’re able to achieve.
But what do marketers actually think about their overall efficiency?
Despite major challenges, including nearly half of KPIs missed across campaigns, 92% of marketers are satisfied with the efficiency of their creative advertising process.
There is clearly a huge misalignment between how marketers feel they’re performing compared to how they’re actually performing, creating an efficiency illusion.
Why is this the case? How are marketers operating under this false sense of security? Well, a huge contributor may just be the results they are relying on.
Moving Metrics from Vanity to Value
The metrics marketers use might be what’s clouding their judgment here. Data has undeniably transformed the way marketing operates, but data needs context, and if we measure everything, everywhere, all at once, it becomes very difficult to see the wood for the trees.
It also becomes much easier to select the metrics the board most wants to hear about, and that might not necessarily be the best measurement for the brand.
According to our research, there are six most-used metrics to track the success of their campaigns: conversion rate, return on ad spend, engagement rate, clickthrough rate, non-financial ROI, and bounce rate.
“We know that 189 different effectiveness metrics are being used across the board and with a focus on short-term wins, the lion’s share of the budget is going to response effects (ROAS, conversions, leads, etc) and campaign delivery effects (reach, likes, shares, impressions, etc),” says Tony Miller, Chair of the DMA. “This means investment in the measurements that truly matter, that are crucial to brand health, is falling short.”
Marketers’ favourite metrics
It appears the efficiency illusion has crept into the way marketers measure too. Most do not act on insights immediately, with the majority (42%) reacting on a monthly basis and 12% reacting quarterly.
Despite this, 90% believe they are getting the most actionable insights from their campaigns as possible. If metrics were truly actionable, more than 12% of marketers would be acting on campaign insights immediately.
The fear of AI may be holding marketers back from truly realizing the full potential of what they can achieve, and the real actionable insights they’re able to leverage and act upon in real-time.
The C-suite Report
The C-suite would benefit from:
We know that marketing is still seen as a cost rather than an investment (WARC, 2024).
The way this changes is not in the minutiae of vanity metrics - they’re a short-term solution to the problem.
It’s in changing perceptions of what is ‘good’ inmarketing and using the true metrics that will have a real impact on business outcomes
AI’s biggest internal blockers
From A/B to AI
Other than metrics, an important part of measuring the success of an advertising campaign is historically A/B testing or dynamic creative optimization (DCO). This has radically transformed the effectiveness of advertising and has already reduced time wasted on launching campaigns without clarity on whether it would be successful or not.
But that doesn’t mean there isn’t room for improvement. In our research, we wanted to understand how marketers currently use A/B testing, how much they spend and whether they’re aware of any alternatives.
In regards to how much they spend, it’s significant. Marketers allocate over a quarter (26%) of their entire marketing budget to A/B testing. On top of this, they are spending an average of 6.3 days a month A/B testing - almost an entire week each month. If we were to take the average salary of a senior marketer in the US according to Indeed (2024), we can assume that it cost organizations a minimum of $2,721 in salary a month excluding the quarter of the marketing budget already spent on A/B testing. This also assumes that only one senior marketer within the 19-person team conducts A/B testing, so the estimate here is likely a lot higher. While it’s important, there are tools that offer an improved version of A/B testing, doubling results and slashing time. And a lack of awareness is not the cause here. According to our research, 86% of marketers are aware of alternatives, but there are several reasons why they don’t invest:
- Resource bandwidth (34%)
- Lack of hypothesis (34%)
- Business buy-in (32%)
- Lack of expertise (32%)
- Lack of actionable insight (31%)
A/B testing is taking too long and costing too much. With a quarter of time and money spent on it, marketers need a solution that’s going to give back time and budget to focus on improving brand value and hitting KPIs.
The overall cost to business
Combining a quarter of the marketing budget with at least $32,655 annually, A/B testing - a task that can easily be automated through the use of AI tools - is racking up quite the bill for US businesses.
AI in Advertising: Perceptions and Fears
Current perceptions on AI in marketing and advertising are fairly mixed. On the positive side, 36% of senior marketers believe it’s useful for targeting, 34% see its value in A/B testing, and 34% see it as useful for generating content. A further 33% see it as alleviating manual work through automation, which is its general use across industries.
On the not-so-positive side, 30% of marketers see AI as a threat to their job and 28% see it as a tool that is completely out of reach for them. However, this does mean 70% do not see AI as a threat to their job, and perhaps this is the right way to look at AI from a marketer’s perspective. After all, as we come to find out, this isn’t the root fear of what might be holding marketers back from fully embracing this new technology.
However, this does mean 70% do not see AI as a threat to their job, and perhaps this is the right way to look at AI from a marketer’s perspective. After all, as we come to find out, this isn’t the root fear of what might be holding marketers back from fully embracing this new technology.
Currently, AI is largely dedicated to market intelligence or analytics (47%) within US organizations Nearly half (45%) of firms boasted AI expertise within various departments and 41% outsource all AI-related tasks.
Perceptions of AI in advertising
Overall, marketers are satisfied with the level of AI resource both within their own teams and organizations as well as in the wider industry; 85% of marketers believe the advertising industry has enough AI resource to meet demand.
AI is also well funded within marketing departments; 22% of budget goes towards AI-related investments and 88% of marketers say they are investing in AI-related training for their workforce.
While 97% want to invest more into AI, perceptions are still not quite where they should be; 44% believe its critical for future strategies but the majority (53%) still see it as just a ‘nice to have.’
The job fear is not what is holding marketers back. The level of investment makes that really clear. Then... what?
Barriers to investment in AI
The biggest barriers to AI investment are concerns around data privacy and ethical implications, a lack of understanding around the benefits, and uncertainty on how to scope an AI project.
Here, marketers are under no illusion. There are some clear barriers to inest in AI, and there are departmental blockers too; compliance/legal are the biggest blockers closely followed by data and IT teams and the creative department.
The perceptions of AI have been influenced by fast, recent developments that have resulted in legitimate concerns from all departments within an organization. There are so many different AI tools out there that it’s created confusion as to what AI really is, what data is needed, and how it’s trained.
It has generated a feeling of a loss of control over IP, privacy, creativity, resources, and more. As a result, marketers continue to operate under the efficiency illusion, ignoring the best tools available out of fear of fragmentation. But there are now tools that require no fragmentation at all.
The Future is Creative Intelligence
The findings of this report show how marketers are at an inflection point. They are grappling with the efficiency illusion, investing significant time and resources into traditional processes like A/B testing, and relying on vanity metrics that do not fully capture the impact of their efforts. There needs to be a paradigm shift towards creative intelligence, where the synergy of human creativity and artificial intelligence can redefine advertising success.
We’re past the point of AI being a nice to have: if marketers are to overcome the significant challenges this report has uncovered, it has to be a critical part of future strategies, but that does not require fragmentation.
End-to-end AI tools, like Lorenzo from AdSapiens, allow marketers to run campaigns from start to finish with machine learning, making sure you always stay on-brief, on-brand and on the upward trajectory.
It tracks hundreds of metrics and optimizes design, messaging and targeting continuously. Campaigns convert more and budgets go further, while vanity metrics are removed from the equation through one simplified, accurate metric: Composite Attention Score (CAS).
If you want to take the guesswork out of running campaigns, design without subjectivity and optimize your campaigns in real-time, get in touch today.
About Adludio
AI has the power to transform how we plan, design and run campaigns. Making them faster and more precise. And creating experiences that engage and inspire.
Adludio is on a mission to unleash that power for brands. Making it easy to deliver highly targeted, high-performance advertising at scale. All powered by the unique intelligence of Lorenzo - our AI super engine.
Our studio Adludio has been making campaigns more intelligent since 2015 – from LA to London, Sao Paulo to Singapore. And now, trained on the learnings, Adludio empowers brands to do it for themselves.
External references
WARC (2024) - Lost in translation: Three ways marketers can bridge the gap between the city and the C-suite
Indeed (2024) - Senior marketer salary in United States
