When implemented correctly, the potential benefits that Artificial Intelligence (AI) can bring to the digital advertising industry are significant. Enhancing a digital advertising platform's ability to efficiently target the correct audience, while detecting fraudulent publisher activities, would be a huge advantage.
According to the latest worldwide market study by Juniper Research, the use of AI for advertising purposes overlaps with the development of other applications. For instance, as bots and digital assistants are mechanisms for human to machine communications, the opposite may also be true -- where the AI machine, aware of the user's interests, can be used as a tool for brand advertising.
However, the applications of AI in advertising extends beyond this use case.
AI for Advertising Market Development
That said, what's primarily driving the demand for AI apps in advertising? The Juniper Research study found that advertisers will lose an estimated $19 billion to fraudulent activities next year -- that's equivalent to about $51 million per day. This annual revenue loss, representing advertising on online and mobile devices, will continue to rise, reaching $44 billion by 2022.
Juniper claimed that the 'Walled Garden' -- a closed system approach whereby advertising platforms restrict the flow of ad performance data to advertisers and publishers -- must be abandoned to stimulate true transparency between all stakeholders.
The Juniper study findings also found that advertising fraud rates will continue to increase as a result of this dysfunctional activity, further hindering stakeholder efforts in tackling fraud.
Additionally, the research predicted that AI will be crucial in analyzing the vast amounts of data generated from advertising activities daily and minimizing loss due to fraud. Juniper believes that fraudsters will increasingly innovate in their approaches to imitate genuine advertising activity -- including simulated clicks, mouse movements and social network accounts.
"Fraudsters will continue to heavily invest in domains, user accounts and bot farms in order to appear genuine," said Sam Barker, senior analyst at Juniper Research. "Advertising stakeholders will demand constant vigilance against the threat of ad fraud, which will only be achieved through the correct implementation of AI services."
The research also predicted that platforms leveraging AI for targeting purposes will account for 74 percent of total online and mobile advertising spend by 2022.
However, as the adoption of AI solutions become saturated, only platforms demonstrating the most effective algorithms will be able to charge premium prices to advertisers and marketers.
Outlook for Effective Ad Fraud Solutions
According to the study, these platforms will need to focus on machine learning training via new data sources to improve the proficiency of their AI algorithms. Data from Internet of Things (IoT) devices, information sharing partnerships and cross device user identification could become highly sought-after.
Furthermore, the other obvious solution for B2B marketers is to reduce their use of advertising, given the diminished effectiveness of typical ad investments. In contrast, more savvy CMOs are investing in proven digital transformation and content marketing methods that have a significantly better return-on-investment.