In 2017, global corporations spent over $209 billion on digital advertisements, easily surpassing the amount spent on television advertising. A significant amount of this money was wasted by targeting the wrong audience — a problem that IBM has now set out to solve for good. This week, IBM announced they have been testing a blockchain-centric AI program set to reduce the amount of money wasted on digital advertising campaigns.
Half Of Digital Ad Spending Goes To Waste
Over the last couple of years, we have seen digital advertising grow significantly. Hundreds of platforms have been released to help people reach their target audience on the internet. It was, however, only last year that we saw global annual digital ad spending surpass the amount of money that was spent annually on television ads. Last year, an estimated $209 billion was spent on digital ads, while TV advertising reached a total of $178 billion.
In the 19th century, a famous merchant known as John Wanamaker said that half of all the money he spends on the advertisements of his products and services were being wasted. At the time, he was not aware of “which half was being wasted.” With the internet at our disposal today, one would think that businesses would be able to gain a much more accurate answer to such questions — yet, a majority of the advertising cost used to promote a brand on the internet is still going to waste.
Here’s an excellent example of digital advertisements can often be ineffective — JPMorgan Chase recently reported that its digital ads appeared on 400,000 websites over the internet. After closely examining the activity and relevancy of those sites, the financial giant eventually ended up permitting its ads to be displayed on only 5,000 websites. This means that during the initial ad campaign, the firm wasted most of its marketing budget — as 395,000 of the websites that were displaying their ads did not bring them any business.
IBM Plans To Reduce Digital Ad Spending Waste
This week, IBM announced that they have been working on an artificial intelligence system to possibly reduce ad spend wastage. The company used its in-house Watson AI system for their experiment. The idea of the system was to utilize blockchain technology in order to deliver a “programmatic ad buying experience” to businesses and individuals, who aim to utilize internet advertising services.
The system they have created is unique and allows for advertising space to be purchased in an instant. No human interaction would be needed, as the artificial intelligence used to power this new venture would handle all processes in the backend.
During their testing, they allowed the new AI-powered blockchain platform to handle various tasks related to advertising on the internet automatically. This includes the automation of choosing the best media sources where ads should be displayed. This platform also included the most advantageous placement of ads on these websites, as well as the optimization of the advertisements before publishing. Furthermore, the system was also initiated to automate the bidding process.
The results were impressive, to say the least. As IBM now reports, this new blockchain platform reduced the placement of ads on “non-working media.” Additionally, ads were seen on relevant sites where more interaction was obtained from visitors. In the end, the amount spent on advertising was also significantly reduced, which was the firm’s goal all along.
Taking this aforementioned move, along with IBM’s recent partnership with financial institutions into account, it becomes evident that the firm’s drive to utilize blockchain in traditional systems remains unmatched.