In Q2 2024, Alphabet – Google’s parent company – posted turn-over of $85 billion. Almost 80% of this ($66 billion) was from ad revenue, making the Mountain View firm the leading player in online advertising, ahead of Meta and Amazon. But to retain its throne, Google is incorporating more and more AI into its advertising products. Swissquote Magazine caught up with Yves Mäder, Industry Leader Retail & Agency at Google Switzerland, to ask a few questions via videoconference.

The whole world’s talking about generative AI at the moment. Is it really shaking up the advertising market?

This year has been a real turning point. When OpenAI launched the public version of ChatGPT in November 2022, it introduced a huge audience to AI. To such an extent that in 2023, everyone was asking, "What is artificial intelligence?" But today, people want to know, "What can I do with artificial intelligence?" In other words, they’re truly starting to use the range of possibilities that the technology offers.

This trend, which can be seen across all economic sectors, is particularly prevalent in marketing. In May this year, McKinsey published a report entitled "The state of AI in early 2024", which notes that companies’ Marketing & Sales departments are the biggest adopters of AI for everyday use. Personally, I think that AI is a new wave in the advertising world, comparable to the invention of the internet or the switch to mobile. It will have a huge impact on the advertising sector in the coming years.

But what’s interesting is that AI is nothing new to Google. In 2016, our CEO Sundar Pichai said that Google was an "AI-first company", meaning that AI technology was a priority for the group. And now, 80% of advertisers are using AI-assisted products in one way or another when they advertise on Google platforms. This trend isn’t going anywhere, because we’re regularly launching new tools to help advertisers improve their ad campaigns.

Doesn’t AI risk killing off human creativity, which has long been the biggest advantage of ad agencies such as Publicis and WPP?

No – in fact, the opposite. Of course, AI means that ad content can now be automatically generated. But it won’t take the place of humans in terms of creativity, which remains the most important aspect of an ad campaign. However, AI will help creatives in a world that has become increasingly complex. In the past, businesses needed to make one ad in image format for paper magazines and another in video format for TV. But today, there are so many different ad distribution channels given all the social media sites and other platforms. Google alone has several different services with more than a billion active visitors every month (the Google search engine, YouTube, Gmail and Google Maps). And this means it’s hard for advertisers to display the right ad in the right format at the right time. AI will help them overcome this problem by instantly adapting each ad to its distribution platform, automatically choosing the right place and the right time.

"AI is a new wave in the advertising world, comparable to the invention of the internet or the switch to mobile"
 

AI also promises ultra-personalised campaigns.

I remember when I worked for Ricardo and we were clients of Google Ads. For our ad campaigns, we used to have to buy keywords, such as "tennis", for example, if we wanted to sell tennis shoes, with the ability to target categories, such as men aged 35 to 45. The question was how much we’d have to pay for each keyword (the keyword cost per click) to determine the return on investment. With the development of AI, ad targeting is being completely redefined. Now when you say what you’re going to sell, for example tennis shoes, the AI automatically determines the most profitable way of selling them by targeting your ad at the right people.

Can you give us some concrete examples of how your clients use AI?

In the telecoms sector, Sunrise used our "Enhanced Conversions" product. This system is fed data to optimise the performance of AI-assisted campaigns. With Enhanced Conversions, Sunrise was able to increase its search conversion rate by 8.2% and by 3.5% for tCPA (target cost per acquisition) campaign conversions compared to traditional campaigns. These figures might seem small, but it’s actually a really significant impact for Sunrise, and one that will improve all future campaigns.

AI’s use in advertising raises a number of ethical questions. What’s Google’s position on this?

All major changes bring risks, and AI is no exception. For example, recently we’ve seen how generative AI can give answers that are inaccurate or problematic. And yet, it can be used to generate ads. At Google, we’re aware that it’s a huge challenge, and that we need to do things in the best possible way. But AI is a new technology. People are experimenting and sometimes, of course, that leads to mistakes, including at Google. I think that what’s important is that we’re transparent and that when we make a mistake, we acknowledge it. That’s why, back in 2018, Google published its principles for ethical AI – the Google AI principles – to create total transparency around our approach to the technology. But it’s a work in progress, and things change quickly as AI offers new possibilities.

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