AI Advertising: The Benefits and Challenges You Need to Know

Fun fact: Among the U.S.-based marketers we surveyed, 50% already use AI for their campaigns.

As more marketers use AI and integrate it into their marketing strategies, you probably wonder if it’s time for you to jump on the AI bandwagon. Should you start using AI for your digital advertising efforts?

This blog post can answer this question for marketers like you who are considering using AI advertising. We’ll discuss these topics:

• Benefits of AI in advertising
• Challenges of AI in advertising
• How is AI used in advertising?
• 3 AI advertising tools for 2025

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The benefits of AI in advertising

AI provides a host of benefits for businesses. When used in advertising, AI lets you enjoy these advantages:

• Improved ad targeting
• Faster ad performance analysis
• Optimized ad campaigns

Improved ad targeting

Want your ads to reach the right audience? Improved ad targeting is one of the benefits of using AI advertising.

AI algorithms can analyze your digital ads’ performance and tweak ad placements and bids. As a result, you reach your target audience with the ad most relevant to them.

Need more convincing? In a survey conducted among marketers in the U.S., U.K., India, and Canada, 47% said they trusted AI with ad targeting.

Faster ad performance analysis

Among the U.S.-based marketers we surveyed, data analysis is the most cited use case for AI in marketing.

With machine learning algorithms capable of rapidly analyzing your ad campaigns’ performance, you can make informed decisions when you develop your next ad campaigns. Faster ad performance analysis also lets you pivot your advertising strategies if needed.

Optimized ad campaigns

Which advertising channels are driving results? If you advertise on social media channels like Facebook, LinkedIn, or Instagram, what ad types do your audience find engaging?

AI algorithms can analyze large amounts of ad performance data and answer these questions — and more — so you can optimize your ad campaigns. It can also create charts that report on your ad campaign’s performance and draw out insights, enabling you to improve your strategies and campaigns. As a result, your return on investment (ROI) also increases.

The challenges of AI in advertising

Now that we’ve gone through the benefits of using AI in advertising, let’s go through the potential challenges you’ll face when using AI in advertising:

• Data privacy
• Concerns of biases and inaccurate content
• Getting management’s approval to use AI in advertising

Data privacy

When discussing AI, it’s inevitable not to talk about data privacy. That’s because AI can collect and analyze advertising campaign data. That said, they might inadvertently gather sensitive customer information.

As AI becomes more integral to marketing, businesses should address AI ethical concerns and prioritize data privacy to maintain customer trust.

Ensure you’re collecting, using, and safeguarding ad campaign data ethically by establishing and maintaining guidelines for data security.

Concerns of biases and inaccurate data

Another challenge with AI advertising is bias and inaccurate data.

Does your advertising data represent all your varied customer groups and their journeys? Are you verifying the accuracy of your ad campaign data?

Marketers must address these questions and ensure they use accurate and proportionate data representing different groups. After all, AI systems can only be as good as their data and training.

In addition, understanding how algorithms work can help marketers identify the possible biases in their AI advertising models and remain objective in their decision-making.

Getting management’s approval to use AI in advertising

Demonstrating how AI advertising contributes to a business’s bottom line may not be as straightforward.  As a result, marketers face the challenge of demonstrating the value that AI advertising investments can bring to the business.

Thankfully, tools like our proprietary IBM Watson AI-powered platform RevenueCloudFX can track your ROI from online and even offline sources, so you can attribute your results to your advertising efforts.

In addition, different people have different attitudes toward AI. Management teams may be wary of AI ethical issues, so marketers must assure management that they’ll use AI advertising ethically.

Marketers must also have processes to audit the company’s AI systems and protect customer data to avoid breaches.

How is AI used in advertising?

AI has various use cases for advertising. If you’d like to reap the benefits of AI advertising, here are some use cases:

1. Audience segmentation
2. Ad placement
3. Ad campaign optimization
4. Interactive ads
5. Personalization

Let’s discuss each use case:

1. Audience segmentation

You can use machine learning to look at your audience’s behavior toward the ads you’re running. Then, AI can further examine their demographics and spot patterns to identify and segment your audiences.

Spotify is a key case of using AI to segment audiences. They use listener preferences and behavior to segment their audience and show them music they will enjoy, all to create a better customer experience.

With the help of AI, you can create more relevant ads for your different audience segments!

2. Ad placement

Programmatic advertising platforms typically use AI to manage real-time ad buying, selling, and placement.

The New York Times is doing this already by investing in AI-powered contextual targeting. Their tool allows them to evaluate what customer profiles are more relevant to an advertisers brief. This way, they can better target ads without relying on third-party data, which was the way of the past.

As a business, you must understand the AI algorithms affecting your ad spend and placement. This way, you can ask questions and discuss how to optimize your ad strategies with your provider.

3. Ad campaign optimization

Another handy use case of AI in advertising is ad campaign optimization. Machine learning algorithms can evaluate your ads’ performance across different ad platforms. It can then provide recommendations on optimizing your campaign to deliver better results.

Coca-Cola uses tools like Adobe Sensei to monitor and optimize their social media campaigns. This platform evaluates engagement metrics, and recommends changes automatically to improve the metrics over time.

This investment led to a 39% increase in revenue and a continual loop of helpful information for their advertising team.

4. Interactive ads

Interactive marketing is a great way to engage your audience and provide a delightful customer experience. You can use AI and machine learning to optimize your interactive ad strategy.

Many companies use interactive, augmented reality (AR) ads on social sites like Instagram. Customers can see what products look like in their space and get a better experience before buying.

By having the ability to collect and analyze your audience’s behavior and interaction with your ads and website, AI can identify the interactive advertisements that work best for them.

Watch Now: How To Gamify Your Marketing

5. Personalization

AI can analyze your customer data and interactions with your business so you can provide relevant and personalized ads to them. Since 72% of customers say they only engage with personalized messaging, this is an easy win for many companies.

Amazon uses personalization in their retargeting ads. For example, if a user searches for a particular type of shoes and doesn’t purchase, Amazon will show them personalized listings featuring that shoe and similar options.

This strategy helps users get what they want and keep them from existing the sales funnel.

Watch: What Is Personalized Marketing?

3 AI advertising tools for 2025

There are countless tools that currently leverage AI to give you better PPC insights and results. Here are a few great options for those who want to try out AI features for automating their campaign:

1. AdCreative.ai

Price: 10 free downloads for new accounts. Paid plans start at $39 per month.

Best for: Creative ad generation and design

AdCreative.ai is an A-powered advertising platform that helps you create high-converting generated PPC ads. You can use this tool to create a wide variety of ad types with stock images and AI-generated text.

This tool also integrates with your ad accounts to connect your creation and tracking in one space.

2. Narrative BI

Price:Try for free with a 7-day account. Paid plans start at $49 per month.

Best for: Simplifying your PPC data

Narrative BI connects with your Google Ads account to help streamline your data analysis and implementation. With this tool, you can analyze competitor strategies, monitor changes in your campaigns, and condense your data into accessible reports for the whole team.

3. Creatify.ai

Price: Free plan available. Paid plans start at $39 per month.

Best for: Creating video-based ads

Creatify.ai is an excellent tool for businesses who want to build out their video advertisement campaigns. With Creatify.ai, you can transform product URLs into creative videos and gain access to their powerful AI editing software.

Ready to use AI in your advertising efforts?

AI can benefit your advertising efforts when used ethically and set up correctly. If you’re considering leveraging AI to optimize your advertising campaigns, consider teaming up with WebFX.

We’re a full-service digital marketing agency that has helped our customers successfully run over 650 ad campaigns. Our team of 500+ digital marketing experts is committed to providing excellent customer service and helping you use AI for your campaigns and drive bottom-line growth.

Contact us online or call us at 888-601-5359 to speak to a strategist about our AI services and other digital marketing services!