AI in digital media buying shows troubling signs for advertisers

AI is playing a growing but potentially worrisome role in digital ad buying and effectiveness, according to a new report from performance marketing agency Tinuiti. Overall, more advertisers are adopting AI tools to buy media, particularly on Meta. But early evidence suggests Google’s AI Overviews platform may be depressing clicks on some ads. Also read: Google’s cookie reversal causes uncertainty Ad Age Leading Women Luncheon Join us Aug. 7 in New York as we recognize this year’s honorees Buy your ticket today Meanwhile, despite the looming threat of a shutdown or forced sale, TikTok ad spending still increased 10% year over year last quarter, which was strong but still below the growth of most other digital platforms, according to Tinuiti. Snapchat and Pinterest were among the strongest performers overall on a percentage increase basis. Overall, most of the biggest digital platforms saw spending growth slow compared to the first quarter, in part because of tougher year-ago comparisons. The exception was YouTube, whose surge in connected TV fueled growth for Google. Amazon Prime’s wholesale entry into CTV advertising also drove growth in that space, but Walmart Connect outpaced Amazon in retail media. Tinuiti’s data is aggregated from the performance marketing agency’s clients along with other observable data for the broader market, such as client search auction results. Here are some of the key takeaways. AI marketing blog How brands are using ChatGPT, DALL-E 2 and other tools Read more here AI’s role grows but with issues Artificial intelligence played a growing role in digital media buying last quarter but also showed some signs of potential trouble for advertisers. Meta’s AI-driven Advantage+ shopping campaigns accounted for 23% of all spend for retail advertisers on its platforms in the second quarter, according to Tinuiti, up from 19% a year ago. Google’s Performance Max campaigns continued to be adopted by close to 90% of users (89%) of Google Shopping advertisers, though adoption actually has slipped since late 2023 and began to recover slightly from first-quarter levels, per the agency’s data. The slight decline in PMax adoption since late last year likely stems from some advertisers that experimented with the AI tool not liking the results, said Simon Poulton, executive VP of innovation for Tinuiti. But he said it still accounts for about 30% of spend within Google Ads. “I don’t know at what point it goes beyond 30% or 40%,” Poulton said. “For certain advertisers, it just doesn’t make sense, like franchise businesses, where there are hundreds of owners in those environments. They make it very difficult for Pmax to learn adequately and effectively.” A November report by media analytics firm Adalytics that found search ads directed to Google Search Partners in some cases went to porn and other troublesome sites could have had “a slight impact” on PMax, Poulton said, given that, at the time, users of the AI platform could not opt out of using the partner network. Read more: Google served brand search ads through porn sites Adoption did start to tick back up again in March after Google gave Pmax users the ability to opt out of using its search partners. And the share of Tinuiti client overall non-shopping search and display spending showed a similar dip starting in November and recovering to prior levels in April following the Google policy change allowing opt outs from Google Search Partners on PMax. But Poulton said conversations with clients indicated the main reasons driving any of them to opt out of Pmax had to do with performance. On another Google AI front, Tinuiti found a “meaningful decline” in click-through rates in May on ads during the rollout of its AI Overviews search product to all U.S. users. The CTR decline was most severe on phones, where AI Overviews have been most common. Tinuiti’s report noted that CTR trends can waver significantly in the short term, so it’s too soon to tell how AI Overlays on search will affect performance long term. The two-month CTR drop for unbranded text ads on phones “has been large,” according to Tinuiti, and if it were to continue, the case for AI Overlays hurting performance “will be more compelling.” PMax puts more on Google properties PMax, meanwhile, also showed a significant change in shifting far more non-search ad placements in formats such as video to Google owned and operated sites, mainly YouTube, as opposed to mobile apps and other non-Google partners, according to Tinuiti. The share of such placements going to Google properties went from 45% to 60% between the first and second quarters and was up from 40% a year ago. That move brought with it a corresponding major increase in conversion rates on such ads, but also an increase in cost per click that brought a substantial decline in return on ad spending. The why behind those moves is hard to know without visibility into the drivers behind PMax, Poulton said. YouTube CTV spending surges Google also benefited from a surge in spending on YouTube, particularly CTV. The TV share of YouTube spending surged 14 percentage points compared to a year ago as overall CTV spending on the platform more than doubled, up 115%. YouTube spending on TV screens accounted for 35% of its overall take, according to Tinuiti, compared 48% on phones. It’s not hard to envision YouTube CTV spending overtaking spending on mobile devices, Poulton said, as more inventory opens up on the big screen thanks in part to younger millennials and Gen Z users buying TVs and using the YouTube app as their primary streaming option. Also read: Inside the state of Netflix’s ad sales Amazon also drives CTV spending surge Even outside YouTube, CTV spending grew 17% year over year in the second quarter, accelerating from a 12% growth rate in the first quarter. The rollout of ad-supported Amazon Prime was a major contributor to the growth, which included a 20% increase in inventory and 2% decline in cost per thousand impressions (CPM). Amazon Prime CPMs were almost three times the overall average for CTV, though still not as pricey relatively as Netflix, which remained the overall leader with CPMs that averaged 255% of the average for CTV. Max also commanded a premium, almost double the average, while Disney+ CPMs ran about 30% ahead of CTV overall. The party goes on for TikTok, despite threat Despite the looming threat that TikTok could be forced to shut down if not sold, advertisers are still ponying up at an increasing rate, according to Tinuti data, which showed a 10% increase in spending on the platform year over year. That said, other digital platforms grew faster last quarter, including Snapchat (up 22%) and Pinterest (up 26%). Google search (up 14%) and Meta’s Instagram (up 24%) also grew faster than TikTok. But generally, major digital platforms saw declining growth rates compared to the first quarter, with the exception being YouTube, up a whopping 28% year-over-year on the strength especially of rising connected TV inventory (more on that later). Only Facebook, up only 4%, grew more slowly than TikTok last quarter among major digital platforms in Tinuiti’s data. Walmart and others gain on Amazon Outside of Prime, Amazon also saw an 8% increase in spending on its primary search product, Sponsored Products, last quarter, according to Tinuiti. While many media companies would be happy with such an increase on a giant business, it’s below the apparent pace for overall retail media spending, which Madison and Wall estimates will be 18% this year, albeit with a substantial amount of spending coming from third-party sellers from China unlikely to be reflected in the Tinuiti data. Walmart Connect, coming from a much lower base than Amazon, saw much stronger growth in the second quarter, with spending on its Sponsored Products format soaring 45% from a year ago on a 30% increase in cost per click. Media measurement blog Tracking TV, social and digital updates Click here

AI in digital media buying shows troubling signs for advertisers

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