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Unlocking AI’s Potential for Retail Advertising

Tom-stock.Adobe.com

In an increasingly fast-paced advertising landscape, AI is no longer a futuristic concept — it’s here and a present-day necessity, giving those who use it effectively a massive advantage. A survey by Influencer Marketing Hub found that 60% of marketers are already using AI in their marketing.

As AI fundamentally reshapes the landscape and opportunities to engage with a brand’s customers and prospects, advertisers face a critical challenge — how to maximize their use of the technology given both the hype and confusion (the more hype, the more confusion). 

In my conversations with marketers at some of the world’s largest retailers, we’ve served as technology partners to help them cut through the noise, offering concrete strategies for harnessing AI’s power in their advertising. From overhauling creative processes to supercharging campaign performance, here’s what I’m seeing in how AI is transforming the industry and why those who adopt it are well-positioned for the future.

First and foremost, it’s important to adopt this mindset — marketers are not competing with AI; they are competing with other marketers who use AI.

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A Creative Iteration Revolution

AI is transforming creative production, drastically reducing production times and creating new opportunities. For example, one agency that previously spent 80% of its time creating ad variants for campaigns saw that drop to zero with the help of AI. The ease of adoption also contributes to this shift, as many AI creative tools can be learned over a single weekend. With the ability to use simple prompts or starter images, AI enables faster and more efficient creative work.

This transformation includes a wide range of AI-assisted tasks, such as:

  • Multi-channel ad iteration from a single image;
  • Logo generation based on prompts;
  • Creative animation from static images (as seen in a recent launch by Amazon);
  • Responsive app design;
  • Project storyboarding; and
  • Complex image creation from text prompts.

Such acceleration in asset iteration allows businesses to move at market speed, particularly during seasonal campaigns, and helps them overcome time constraints that previously hindered their ability to launch effective marketing strategies. 

Reflecting on my experience working with national brands and retailers, everyone in the market has faced common challenges in their media execution — which often has been slow, manual, non-personalized and prone to human error. In the absence of AI, bringing a single ad to market could take several weeks and involve multiple cross-functional teams. This resulted in a lack of personalized content and meant that John Quincy in Des Moines, Iowa, saw the same ad as Sue Smith in New York City — a situation that led to missed opportunities and lost revenue for brands. Too many times, I have seen brands “find” budgets at the end of year, but still be unable to get their campaigns live in time due to creative SLAs. But thanks to AI, those days are largely behind us now.

Performance Improvements

AI-based tools for performance advertisers offer faster data processing with rapid feedback, better insights, smarter targeting and increased revenue. However, advertisers should be cautious of “black box” scenarios. These AI tools often market themselves as “set-it-and-forget-it” solutions, but that can lead to significant transparency issues, leaving advertisers in the dark about critical aspects of their campaigns.

For example, national advertisers may find themselves unsure of who is actually seeing their ads — are they simply reaching existing brand buyers, which could explain inflated ROAS metrics? Furthermore, where exactly are these ads being placed? Were they shown on sites aligned with brand guidelines or in environments that might damage the brand’s reputation? Brands deserve to know these details and make informed decisions. 

That is why transparency-driven tools are essential in the industry. They provide advertisers with complete insights into their campaigns, covering aspects such as measurement, targeting and ad placement. The ideal outcome is achieving the best results without sacrificing quality or control. That, I believe, is the future that retail marketers want.

Enhanced Communication

A 2023 study by Gartner predicts that by 2027, chatbots will become the primary customer service channel for roughly 25% of organizations. In today’s information-heavy environment, clear communication between humans and machines is crucial. However, AI has evolved from simple assistants like Clippy to sophisticated chatbots and virtual assistants. 

Natural language processing (NLP) and large language models (LLMs) enable real-time answers to advertiser questions, clear explanations of AI platform functions and faster, more accurate decision-making. This level of human-to-machine communication is likely to become the norm, promising fewer mistakes and better results. We are seeing adtech platforms integrate this sort of functionality into their tools — from DSPs to data collaboration — and the result will be increased efficiency, improved campaign performance and a significant reduction in human error across the ad ecosystem.

The AI Frontier in Advertising

AI truly is revolutionizing advertising through optimized creative processes, improved performance and enhanced marketer-machine communication. Success depends on choosing platforms that offer transparency, control and efficiency without compromising quality. As retailers’ businesses speed up, marketers embracing these innovations will lead the industry.


Mike Merna is Senior Director of Commerce Media at Yahoo, where he leads a team of commerce media experts charged with developing new strategic partnerships, advising clients on industry best practices, effective data integrations and monetization opportunities. Merna brings over three decades of experience in the CPG, healthcare and retail industries, with a distinguished track record at leading companies such as Quotient Technology, Oracle Data Cloud, Pfizer and Bayer Healthcare. He most recently served as Chief Growth Officer of The Mars Agency and has led sales of retail media on behalf of major retailers including Walmart Connect Canada, 7-Eleven, Tractor Supply, Albertsons/Safeway, Ahold Delhaize, Rite Aid and Dollar General.

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