Hike #10: The Future of Advertising: AI, VR and Personalization

Hello and welcome back dear readers to the last edition of the marketing summit trail. Over the past 10 weeks, various topics have been discussed in the rich landscape of marketing. But now the time has come that we have reached our final station. And in order to finish in style, one last topic remains to be discussed. This weeks topic will be about the applications of AI and VR and advertising, and how they will shape the future of advertising. Another topic that will be discussed is related to privacy, and what role privacy will play in the future of advertising. To conclude this weeks edition, the focus shifts to future trends in advertising, the future of this blog as well as my own perspective for the future.

The main reason that this topic is so relevant today, is the fact that AI revolutionizes how advertising is executed, and provides various applications. Some ways in which AI can be used to assist advertisement goals are: applying predictive analytics to find certain patterns in consumer behavior, personalization to provide tailored content to people, as well as implementations of voice and visual search within advertisement campaigns (Baldassarre, 2024). These applications can make a big difference in how marketing campaigns will be created now in the future. Therefore, the following hypothesis will be analyzed:

"AI and VR applications are able to generate a deeper customer connection by means of personalization, emotional appeal and interactivity"

The hypothesis above can help demonstrate the extensive capabilities of AI and VR in advertising, how companies can implement them, and how they will impact us as individual consumers.

The Future of Advertising: AI and VR are ready to take over

In the introduction of this article, a few applications of AI and VR in advertising are already mentioned. But in order to get a proper insight into how AI and VR will shape the future of advertising, we have to dig a little deeper.

One of the main benefits of using AI for creating marketing campaigns, is the major potential for streamlining efficiency and automation. For example, nowadays it is possible to generate entire ad banners or video-advertisement by using AI. This is revolutionary for marketers, as it used to be impossible to create these type of ads without using writers and designers (Guzenko, 2024). The appeal to marketers is understandable. However, creating fully AI generated ad-campaigns can feel a little soulless, lifeless or static. So marketers must ensure to implement 'human elements' into their campaigns as to increase acceptance among the target market. However, it can also contribute to a powerful campaign. A brand who managed to do so is Nutella, they let AI create unique for each Nutella jar as to emphasize the uniqueness of Italians:

Source: Dezeen (YouTube)

Another notable aspect of AI, is its capability to analyze substantial amounts of consumer data and use it to create personalized advertisements, predicting future customer needs, trends and outcomes. Large amounts of consumer data are overwhelming for humans to process, but easy to tackle for AI as it is able to analyze and run tests tirelessly. Meaning that marketers can spend more time into properly executing their campaigns rather than spending hours on consumer research. Personalized advertisement can contribute to increased consumer engagement (Dodda, 2024), sales and deeper customer connections (Dodda, 2024). Being able to predict future trends, behaviors and customer needs can assist brands in optimizing the customer experience as well (Dodda, 2024).

Radically reshaping how marketers approach consumers. In the video below it is illustrated how Starbucks uses personalization to enhance their customer experience:

Source: Microsoft

For a company like Starbucks, it can be very beneficial to invest in personalization as to tailor the offer to specific customer wishes. They even manages to take contextual factors into account such as the current store conditions, the weather and more. This can be highly effective, as consumer needs are likely different at a various times of day or with bad weather. For example, people might prefer an espresso in the morning or early afternoon but not in the evening. This is due to the fact that people usually want to limit their caffeine intake closer to bedtime. These tailored options would make me more motivated to return to the store, as it fulfills my exact needs at a certain point in time. Which increases the odds of leaving a positive impression in my mind.

VR in advertising: Interactivity brought to the next level

The opportunities regarding AI in advertising are profound. However, VR is also a force to be reckoned with. The main reason why VR should be considered by advertisers for their future campaigns, is its capabilities for interactivity and creating a unique way for customers to experience a product. Ways in which VR can do this, is by means of letting customers have an interactive experience with a product or service that they are interested in buying, without going to the store or location of interest. For example, being able to visit a hotel in VR before actually going there. Other applications of VR can relate to creating fully immersive showrooms which includes various VR-worlds with which the consumer can engage with. But there is also substantial emotional appeal, as VR engages with the senses and can truly make a story come to life (Panel, 2024). Therefore, VR can revolutionize advertising as it make a consumer truly experience a product, service or message rather than passively trying to convey their message to the public.

Some examples of successful VR applications in advertising can be found below:

Source: mbryonic (YouTube)

Now, VR obviously has a lot of potential to implemented in advertising. But there is also a danger of emotional manipulation. This is due to the fact that VR triggers all of your senses and can create a very realistic story or experience. This also means that brands can trigger your emotions to reach any of their goals. However, the question remains whether or not this is ethical to do, and whether marketers should have the tools to emotionally manipulate you into buying their products. According to me, these strategies should be bound to strict legislation as it can have exploitative effects and make consumers buy products that they do not need.

Privacy In the Future of Advertising:

AI and VR applications within marketing will only gain popularity in the future, therefore it is important to analyze some of the privacy risks that are involved with these technologies. The biggest privacy issue in the context of AI, is related to the personalization capabilities that AI has and how this could be invasive on people’s privacy. In order for AI to create a personalized message to individuals, it first needs to gather and analyze vast amounts of customer data. And that is exactly where privacy infringements may take place. At least, when companies are not being completely transparent about the way that they gather the information and what it will be used for (Team & Team, 2023). When looking at VR and AR applications in marketing, similar patterns can be recognized. For example, VR applications might track various behavioral patterns, biometric information, data about location and possibly also emotional responses. All of this information is very useful to create a tailored customer experience, and therefore assist various marketing objectives. But it also has a lot of potential for serious privacy infringements (Navigating Privacy Issues in AR and VR Marketing, n.d.). The same issue exists for AR applications for marketing objectives. AR is less visual than VR, but it still creates an alternate reality based upon the real world. An example of AR is the Pokémon Go hype from a few years ago, in which virtual Pokémon's could be captured within real world environments. The privacy risk for the application this technology for marketing purposes, is the possibility of capturing sensitive information like the user's location or personal interactions (Navigating Privacy Issues in AR and VR Marketing, n.d.). The video below nicely sketches some additional insights about AI and cybersecurity, which is very relevant for marketers to keep in mind for their future endeavors.

Source: TED

This creates some challenges for marketers in the future, as they are going to have to walk the tightrope between delivering a personalized enough experience without invading people's privacy. However, this does not mean that AI should be completely banned from being used for analyzing, gathering and making predictions based on consumer data. This is due to the fact that AI is capable to make behavioral predictions without requiring consumer-level data (Taylor, 2021).However, if companies still choose to gather data via AI for marketing purposes they should be fully transparent about the use and the storage of the data as to maintain a good customer relationship and prevent breaking the law. VR applications for advertising goals should also be very transparent about which data is gathered, how they will use and provide customers with options to decline gathering of certain data. The bottom line is that AI and VR can be used for data gathering, but only when guaranteeing full disclosure while also complying to legislation. One way to minimize privacy infringements is by only gathering the data that is necessary for the functionality of the platform. This to prevent

The Next Big Thing In Advertising

Some notable trends that are taking place in the landscape of advertising are the disappearance of cookies. The main reason for this, is the fact that cookies have gained a reputation of being too invasive when gathering customer data, and are deemed to be a threat to customer privacy (Kirk, 2021). In order to keep on gathering and analyzing customer data, AI is most likely to be used more over the coming years. Other trends for the future contain the usage of AI for programmatic advertising. Programmatic advertising is related to buying ads that are targeted at specific audiences at optimized times and places. Due to the strong analytical capabilities of AI, it is perfect for using it as the driving force behind programmatic advertising (Howarth, 2024). Another application that is likely to gain popularity in the future is voice optimization. One survey found that 58% of Americans between 25-34 use voice search every day (UpCity, 2024). Meaning that there is a significant opportunity for marketers to generate profits, if they choose to optimize their advertising for voice searches. Short-form video ads can also be expected to gain popularity, as they are perfect for being used on platforms that put out bite-sized content, such as social media platforms (Howarth, 2024). The video below, discusses some additional views of the effect of AI on the future of marketing:

Source: TED

Meaning that AI will continue to have a pertinent role and grow its presence in advertising in the future. Consumers can expect an increased tailored experience regarding the advertisements that are put out there, as AI will become increasingly better at predicting and analyzing consumer behavior as to create the most relevant ads. Marketers will also make use of our behaviors in using social media platforms and voice searches on our phone. Meaning that we must be aware that advertising will become more prominent in all aspects of our life, and could possibly cause changes in our behavior. Especially, in the case of AI there are some ethical concerns like: AI could be used to manipulate consumers into buying certain products, enables possibilities for discrimination, and the erosion of human agency (Clark, 2024). With 'the erosion of human agency' is meant that AI will better predict and influence consumer behavior. Which will make it harder to make autonomous decisions due to the heavy influence of AI on our thought processes.

Personally, I find it quite frightening that AI is able to craft such a personalized message to the extent of influencing your behavior drastically. Therefore, I feel like AI should be very strictly regulated and debates about the ethics of AI should become more frequent. It should be avoided that we become puppets of our own creation and lose our ability to think to a certain extent. It should not be the case that our behaviors will become mostly shaped by algorithms and marketers being able to use it to sell us anything they want. Generative AI can also become problematic as it can evolve into creating videos from anyone, doing anything. Which could lead to possible identity theft or using it to create political chaos. In marketing it will most likely be less threatening but should be regulated nonetheless, as to prevent displaying people that have not agreed to appear in the ad.

The Future: What's Next?

Now that all the trends of AI, VR and the future of advertising have been discussed. It is time to shift the focus to the future of this platform. As some of you know, this platform has been created as part of one of my courses at McMaster University. Over the last four months I have been on exchange at McMaster in Canada, and the semester is approaching its end. Meaning that the platform will also begin to close down. It has been an informative journey in which I have learned to approach various marketing topics with a critical mindset, and analyzing them from various perspectives. Most of the topics discussed in the course were known to me, but I have never done an in-depth analysis on these topics. Regarding my own future, I will soon be traveling back to my home country, the Netherlands, where I will be finishing my bachelors degree in International Business Administration at Tilburg University. I would like to thank you all for reading my blogs over the past 10 weeks, my Roots campaign team as well as the teaching staff that has made this amazing exchange possible. Until we meet again!

---

References (APA 7th)

·       AR Security & VR Security. (2021, May 25). /. https://www.kaspersky.com/resource-center/threats/security-and-privacy-risks-of-ar-and-vr

·        Baldassarre, R. (2024, August 13). How AI is revolutionizing digital advertising in 2024. Forbes. https://www.forbes.com/councils/forbesagencycouncil/2024/04/09/how-ai-is-revolutionizing-digital-advertising-in-2024/

·       Business News Today: Read Latest Business news, India Business News Live, Share Market & Economy News | The Economic Times. (n.d.). The Economic Times. https://economictimes.indiatimes.com/?back=1

·       Clark, E. (2024, August 27). The Ethical Dilemma of AI in Marketing: A slippery slope. Forbes. https://www.forbes.com/sites/elijahclark/2024/03/14/the-ethical-dilemma-of-ai-in-marketing-a-slippery-slope/

·       Dodda, R. (2024, August 13). How to embrace AI intentionally to grow customer engagement. Forbes. https://www.forbes.com/councils/forbesbusinesscouncil/2023/10/16/how-to-embrace-ai-intentionally-to-grow-customer-engagement/

·       Guzenko, I. (2024, August 13). Intelligent Advertising: How will AI-Powered Ads reshape the market? Forbes. https://www.forbes.com/councils/forbestechcouncil/2023/07/07/intelligent-advertising-how-will-ai-powered-ads-reshape-the-market/

·       Howarth, J. (2024, October 1). Future of advertising (2024-2027). Exploding Topics. https://explodingtopics.com/blog/future-of-advertising

·       Kirk, E. (2021, December 15). Looking toward the future of advertising. Forbes. https://www.forbes.com/councils/forbesbusinessdevelopmentcouncil/2021/12/13/looking-toward-the-future-of-advertising/

·       Navigating privacy issues in AR and VR marketing. (n.d.-b). Futurism. https://vocal.media/futurism/navigating-privacy-issues-in-ar-and-vr-marketing

·       Panel, E. (2024, August 13). 16 Innovative ways virtual reality could revolutionize advertising. Forbes. https://www.forbes.com/councils/forbesagencycouncil/2023/05/05/16-innovative-ways-virtual-reality-could-revolutionize-advertising/

·       Taylor, C. (2021, March 2). How online privacy issues will shape future use of artificial intelligence in advertising. Forbes. https://www.forbes.com/sites/charlesrtaylor/2021/03/01/how-online-privacy-issues-will-shape-future-use-of-artificial-intelligence-in-advertising/

·       Team, A., & Team, A. (2023b, May 30). The Ethics of AI Marketing: Balancing personalization and privacy. AIContentfy. https://aicontentfy.com/en/blog/ethics-of-ai-marketing-balancing-personalization-and-privacy

·       UpCity. (2024, May 31). 50% of U.S. consumers use voice search daily: 2022 survey. https://upcity.com/experts/consumers-and-voice-search-study/