How AI Has (Already) Become The Foundation Of Digital Advertising | AdExchanger (2025)

Tuesday, December 31st, 2024 – 8:00 am

Generative AI is quickly becoming the bedrock of the digital advertising landscape.

That might sound like a bold statement – after all, generative AI only hit the mainstream two years ago. But while many industries are just beginning to explore the potential of generative AI, advertisers have been leveraging AI and machine learning for years.

Moreover, with the advent of generative AI, we’ve moved beyond simple automation to a new era where AI can generate fresh, dynamic content tailored to individual users and evolving in real time.

This new era will see generative AI rapidly make advertising more efficient, creative and inclusive, as the democratization of advanced AI tools empower businesses of all sizes to connect with audiences in more meaningful ways.

Why generative AI lives up to the hype in advertising

If ad tech leaders have been using AI for years, why is generative AI such a transformational shift?

First, the massive increase in data and computing power has led to the development of highly accurate AI algorithms. These next-gen AI algorithms can now analyze massive data sets and real-time signals with incredible accuracy. This allows us to understand customer needs and preferences like never before.

Second, we’re no longer limited to optimizing existing campaigns. Generative AI now allows us to create entirely new content – from text and images to videos –personalized for specific audiences. This is a game changer for teams with limited in-house resources, allowing them to launch more dynamic and varied campaigns.

Finally, generative AI is now truly mainstream –more specifically, the tech is no longer confined to data scientists. User-friendly tools are empowering marketers of all skill levels to harness the capabilities of these algorithmic powerhouses.

Why these tools are so crucial for the advertising industry

This democratization of generative AI unleashes a great amount of value across the advertising industry, helping advertisers level up their campaigns in a few critical ways.

Generative AI uses large language models (LLMs) and deep learning to analyze vast amounts of information to understand what may be helpful for customers. Advertisers will see their ability to create dynamic, relevant content increase many-fold –meaning they can create more ads that are better targeted to shoppers’ current needs and interests.

LLMs can also distill insights from customer reviews to guide thematic inspiration for future marketing opportunities.

Moreover, AI can optimize campaigns using real-time signals, freeing up advertisers’ time to focus on product development and storytelling.

Connecting advertisers with their target customers

At Amazon Ads, we’ve been at the forefront of AI-powered advertising for years now, using AI across our tech stack to enhance product discovery and drive sales for advertisers.

Our AI models take advantage of our billions of first-party data signals to assist with everything from bid optimization to ad placement and targeting, automating these critical decisions to help put time and money back into advertisers’ pockets.

For instance, in Sponsored Products, we use deep learning and LLMs to surface relevant keywords and bid suggestions, leveraging historical shopping patterns and vast information in the Amazon catalog. These models are constantly updated to identify trends and ensure that ads are matched with shoppers’ intent. Similarly, while serving ads, Amazon Ads uses AI to match relevant ads with shoppers’ intent and rank them based on parameters such as estimated click-through rate and conversion rate.

We’ve only just entered the generative AI era

We’re already witnessing the remarkable impacts of generative AI tools across the advertising landscape. Small businesses without large resources now have access to tools to help them create content faster and at scale, while larger ones can test, experiment and innovate with them.

But we’ve only scratched the surface of what generative AI will do for advertisers in the coming years. As the technology continues to evolve, we can expect even more groundbreaking capabilities to emerge, further transforming how we connect with audiences and optimize campaigns.

Empowering creativity and innovation

For leading innovators in the digital ad world, a key theme in the development of generative AI tools is the fostering of creativity. This innovation focuses on providing advertisers with unprecedented flexibility and control over their content creation process.

In the coming years – if not the coming months – the new crop of generative AI tools will reshape paradigms for advertisers:

• Content creation will become effortless: Advertisers will easily generate high-quality creatives across various formats, from text and images to videos, with just a few clicks.
• Inspiration will be readily available: Generative AI tools will provide a wealth of inspiration, suggesting different themes, designs and formats to spark creativity.
• Customization will be limitless: Advertisers will transform simple product shots into captivating visuals, tailoring them to specific audiences and platforms.
• Experimentation will become standard: The ease of content creation will enable greater experimentation, allowing advertisers to easily and cost-effectively test different variations and optimize their campaigns for maximum impact.

Better storytelling for better consumer connections

It’s already clear that generative AI will profoundly reshape the digital advertising world. Of course, it can be easy to get lost in the technical details of the use cases and applications. But when we look back at this revolutionary moment, we won’t talk in terms of ROAS or CPC. Rather, we’ll recognize that generative AI ushered in a future where all advertisers —big and small —have the tools they need to tell better stories that build more meaningful connections with their audiences.