Robots are now ready to take media buying in-house
Source: John McGee
The ad industry had better get used to the idea of platforms powered by artificial intelligence competing for a slice of traditional budgets
Blackwood Seven might sound like the name of a covert operation in a Jason Bourne movie, but its name masks an entirely more congenial type of activity that allows advertisers to use an artificial intelligence-powered platform to buy advertising.
Despite this intriguing but benign process, the three-year old Danish company is striking fear into the heart of the advertising industry worldwide in a manner that Jason Bourne would be proud of.
With 200 staff working across offices in Copenhagen, New York, Munich, Barcelona and, more recently, London, the company boasts that its platform manages in excess of €400m in billings a year and its clients include Volkswagen, Amazon, Zillow, Groupon and Dollar Shave Club.
Where Blackwood Seven differs to the traditional media-buying agency, however, is that it offers its software as a service platform to companies that want to do their own media buying in-house.
On paper, it seems a good idea. Blackwood charges the company a fee to use the platform and doesn't get involved in taking commissions or dabbling in the often opaque black art of media rebates and trading arrangements.
Blackwood's platform uses a wide range of data sources to inform its algorithm, including anything from the weather and previous sales figures right through to research sources such as Nielsen. All of this data allows ad campaigns to be optimised in real time while it also predicts a forecast of the expected business results of a media plan. Basically, the more data you feed it, the smarter it becomes, and clients can expect to see a 25pc-50pc improvement on their campaign's effectiveness, according to Blackwood.
While Blackwood's growing presence in the media market is ruffling feathers, the advertising industry had better get used to artificial intelligence.
Although artificial intelligence is still in its early stages, the wider marketing community is starting to embrace it with open arms. Not only does it help marketers make sense of large amounts of data and learn more about markets and customers, but it also helps generate leads, optimise campaigns and streamline operations.
Some of the main applications of artificial intelligence include business intelligence, customer acquisition, programmatic advertising, campaign optimisation and multichannel communication. Programmatic advertising, for example, has been growing in its sophistication and reach, and accounts for a growing chunk of the digital display market.
In the UK, for example, eMarketer forecasts that growth in programmatic digital display will hit £2.67bn (€2.96bn) this year - 70pc of the total digital display market. According to Justin Cullen, digital and data director with Core Media, Ireland still trails other more digitally mature markets on the programmatic front. Here, it accounts for an estimated 20-25pc of total digital display. But it is growing.
"Programmatic will evolve and grow in this market as it has done in other more developed markets. It will likely be over 50pc of the display market in the next three years. The success of programmatic will be predicated on ad tech and data capabilities," said Cullen. But when it comes to the true possibilities of programmatic and artificial intelligence, we are still only scratching the surface.
The arrival of what IBM calls "cognitive advertising" is being hailed as a watershed moment in marketing by The Weather Company, which IBM bought in 2015. In June this year, The Weather Company announced it had developed Watson Ads - the first advertising application for IBM's much-vaunted Watson computing platform.
The artificial intelligence-powered digital ads enable customers to ask Watson voice and text-based questions and receive relevant answers and information, as well as conduct other interactive and brand-specific conversations. According to IBM, Watson Ads would allow marketers to uncover consumer and product insights faster than ever before, "revealing connections previously invisible to human data scientists".
"Artificial intelligence is here already. Anything that uses algorithms is effectively using a form of machine-learning or artificial intelligence. The influence of such technologies is in the ascendancy and will lead to more results-led marketing that has agility as its core. But, remember, the machines need to be told what to do," Cullen said.
While many marketers and advertisers fear that the adoption of artificial intelligence will result in job losses, it's still too early to know. But with companies such as Blackwood Seven developing client-faced solutions, it's entirely conceivable that some media-buying functions could move in-house.
"It's a possibility, but it is also a highly complex area and one that requires a lot of investment in talent and technology. It's also essential that the whole media ecosystem is managed in a coherent manner with all channels together," said Cullen.