In a world where every penny spent on advertising matters, in terms of yield which could be lead or revenue, over the years, performance marketing has managed to build a significant place. Now, this is only expected to grow as performance marketing has further found solid support in artificial intelligence (AI). In an era dominated by digital proliferation, marketers are in constant pursuit of innovative methodologies to optimise their advertising strategies and amplify return on investment (ROI). “With the use of generative AI (GenAI), I believe burgeoning brands can elevate their performance without exorbitant marketing expenditures. From a customer journey perspective, AI in performance marketing revolves around content generation and visual languages. Any sector with a substantial number of stock keeping units (SKUs) can derive benefits from the utilisation of GenAI for performance marketing,” Gaurav Mehta, former CMO, Noise, a smartwatch brand, shared with BrandWagon Online.
The integration of AI into performance marketing holds the potential to transform campaign targeting, customisation, and analytical capabilities, ushering in a new era of marketing efficacy and efficiency. According to Maximize Market Research, a market research and business consulting firm, the global AI in marketing market is anticipated to reach £104.85 billion by 2030, with a compound annual growth rate (CAGR) of 26.5% for the period 2024-2030. In 2024 alone, the international AI in marketing market is projected to generate revenue worth £36 billion, as reported by Statista, a data and business intelligence platform.
Through the Lens of Time
The incorporation of AI technology in digital marketing has empowered businesses to devise new strategies to achieve their corporate objectives. According to WebFX, a tech-enabled digital marketing solutions provider, 90% of marketers across 35 countries leverage AI applications for automating customer interactions, with over 80% of global marketers employing some form of AI for online marketing purposes. It’s believed that performance marketing has become a cornerstone of brands’ digital marketing strategy in today’s world.
In layman’s terms, performance marketing is a data-driven marketing approach that delivers results based on lead acquisition, increased clicks, or sales generation. Typically, performance marketing brings on board precise targeting, enabling businesses to reach their intended demographic with tailored advertising programs. What’s more is that it allows marketers to leverage analytics and feedback mechanisms to track the performance of marketing endeavours meticulously. With the integration of AI into performance marketing, advanced analytics can delve into complex data sets and enhance personalisation. This advancement can refine the accuracy of predictive analytics and enable real-time campaign optimisation, maximising marketing effectiveness. “Predictive models on digital behaviour can help identify target segments based on intent and interest, which are leveraged as per brand target groups. I believe that the application of AI has accelerated the experimental design of campaign constructs, aiding in testing multiple strategies. Paired with multi-touch attribution models, brands can identify the strategies that are working best and optimise them to drive better value. With the mainstream introduction of GenAI, brands can create personalised advertisements, resulting in a higher call to action,” Anish Roy, director of analytics, MiQ, noted.
The Indian advertising industry grew 8.6% over 2022 and presently holds a market size of Rs 93,166 crore, as per the latest Dentsu-e4M Digital Advertising report. By the end of 2025, it is expected to further grow at a compounded rate of 9.86% to reach Rs 1,12,453 crore. The digital advertising industry clocked a growth of 36.6% over 2022 with a market size of Rs 40,685 crore and is estimated to reach Rs 62,045 crore, growing at a compounded rate of 23.49% by 2025. Social Media dominates digital media spending accounting for a 30% share at Rs. 11,962 crore, closely followed by online video at 29% and paid search at 23%.
Numbers and Examples
As per an article on LinkedIn, a social media platform, a survey revealed that 72% of marketers endorse AI-oriented personalisation to increase conversion and involvement metrics. Additionally, companies implementing AI in their marketing strategies have seen a 30% rise in revenue. Market reports indicate that AI-oriented tools, such as Tableau, Google Analytics, and IBM Watson Analytics, play a role in the performance marketing strategies of companies. WebFX stated that 15% of US-based B2B marketers attribute a 30% rise in lead generation to AI chatbots. Moreover, Teads introduced the concept of ‘Brandformance,’ a fusion of brand building and performance marketing. The report suggests that this approach is radically altering the playbook for agencies and marketers, with 74% of marketing executives planning to increase budget allocations in the next year to capitalise on this evolving trend. Adding to this is Performance Max by Google, which’s a goal-based campaign type that allows performance advertisers to access all of their Google Ads inventory from a single campaign.
Moreover, Google has found a way to use AI for its performance marketing applications such as Google Ads and Analytics, through leveraging machine learning (ML) paradigms. Google’s AI-based resources introduced in early 2023, include Predictive Analytics, which helps anticipate customer behaviour for marketers to strategise accordingly, and Smart Bidding, which ensures real-time bid optimisation for an increase in conversions. “Today, we’re introducing a new, natural-language conversational experience within Google Ads, designed to jumpstart campaign creation and simplify Search ads by combining your expertise with Google AI. Simply add a preferred landing page from your website and Google AI will summarise the page. Then, it will generate relevant and effective keywords, headlines, descriptions, images and other assets for your campaign. You can review and easily edit these suggestions before deploying. Now, you can chat your way into better performance — ask Google AI for ideas, just like you might ask a colleague,” Jerry Dischler, vice-president and general manager – Ads, Google, stated in an official blog.
Even Facebook has entered the AI in performance marketing with applications such as Dynamic Ads, providing users with ads for products they use based on prior patterns, and Lookalike Audiences, which extends consumer demographics for introducing more products and services. Global brands have largely benefited from AI’s usage in performance marketing. For example, Nike utilised AI and augmented reality (AR) to enable users to scan their feet and receive tailored shoe suggestions. Nike also leveraged AI technology for an advertising initiative titled “Never Done Evolving,” featuring Serena Williams. In this campaign, Nike orchestrated an AI-oriented match amongst Serena’s younger version, notably from her 1999 debut Grand Slam, and a contemporary version of herself, present in the 2017 Australian Open. International players such as Coca-Cola and BMW have also directed AI towards their performance marketing strategies. Coca-Cola participated in the global partnership, which happened in February 2023 between Bain & Company and OpenAI, unveiling a competition titled “Crafting Authentic Enchantment” where users merged vintage Coca-Cola advertising creations with DALL-E and ChatGPT, to develop new artworks. BMW collaborated with Goodby, Silverstein & Partners, an advertising agency, to project AI-based artwork onto vehicles for their 8 Series Gran Coupé campaign.
“I believe AI-driven personalisation has enabled and continues enabling brands to become more customer-aligned and cut through the clutter through proper segmentation of its customer base. The current trends in AI technologies can ensure that brands, despite their marketing budget, remain audacious, and achieve the scalability in their marketing efforts that they could only aspire to attain in the past. With the current changes which seem to be leading to a cookie-less future, I think data privacy and security is not going to be an issue to an extent which was there,” Shrayav Sikdar, performance marketing manager, Adbuffs, a performance creative agency, stated.
Much of the inventory is sold via programmatic, even in the case of performance marketing, especially in the world of Google and Meta. Programmatic buying of digital media accounted for 42% which is Rs 17,088 crore to the digital media industry by the end of 2023, experiencing a growth rate of 37% over the previous year, as per Dentsu-e4m Digital Advertising 2o24 report. It is that this segment will grow at a compound rate of 27.51%, reaching a share of 45% that is Rs 27,782 crore by the end of 2025.
The Path Forward
Additionally, the need for transparency is considered important to striking a balance between personalised user experiences and safeguarding consumer data privacy and security. Moreover, obtaining explicit consent from consumers before using their information for personalised marketing is believed to be crucial. Brands can mitigate the risk of data breaches and unauthorised access by collecting only the crucial information for effective personalisation. “I think that marketers can adjust their marketing strategies in accordance with changing consumer demands by deploying AI tools and techniques. These help in identifying emerging patterns that can be used in extracting actionable insights, anticipate changes in consumer preferences and incorporate adjustments to marketing strategies accordingly. Brands should not shy away from experimenting with AI-driven marketing technologies and techniques,” Delphin Varghese, co-founder and chief revenue officer, AdCounty Media, a digital marketing company, concluded.
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