Australia’s ad tech market may be small, but it’s highly dynamic. As the industry heads into a transformative 2024, familiar global themes like transparency and AI are set to dominate discussions. Yet, despite this forward-thinking approach, Australian brands are trailing behind in harnessing AI to enhance customer experiences.
According to Adobe’s State of Digital Customer Experience report, a mere 6% of brands in Australia and New Zealand (ANZ) are using AI to improve customer experiences, compared to 18% globally. This gap highlights a missed opportunity for ANZ brands, as businesses in Europe and the US are investing heavily in AI integration. Despite the buzz surrounding artificial intelligence, Australian brands are struggling to match both the consumer interest and global momentum around AI adoption.
The Impact on Brands
Generative AI can do much more than simply generate custom content at scale. When properly utilized, AI trained on first-party customer data can significantly enhance a brand’s understanding of its audience. 56% of executives believe that AI will lead to more personalized digital experiences, while 52% expect to incorporate AI into their strategies within the next year.
The digital advertising industry has already started to embrace AI, with advanced models capable of predicting the success of an advertising campaign before a single dollar is spent. AI can accurately forecast consumer interests and even predict the likelihood of a purchase during a browsing session. This allows advertisers to optimize campaigns in real time, aligning them with specific marketing goals. By deploying predictive AI models, brands can ensure ads are served only when they’re most likely to achieve KPIs, improving the customer experience by delivering more relevant content.
Challenges in AI Adoption
So, why are ANZ brands lagging? One reason could be the failure to recognize AI’s long-term value. According to Accenture, implementing AI solutions could take businesses up to 18 months, and many companies want faster returns on investment. Extended timelines often deter brands from making the initial leap.
Another roadblock is the lack of high-quality data. The ad tech industry faces limited access to the data necessary to train AI systems, which can result in unreliable models. Additionally, ensuring AI systems integrate smoothly with existing infrastructures can be a challenge.
A shortage of AI skills in the workforce also plays a role. Without hiring or upskilling employees with a strong grasp of AI solutions, brands risk falling short in their AI initiatives. Regulatory hurdles and concerns about data security further compound the issue, discouraging brands from adopting robust AI strategies.
Practical Steps for AI Adoption
For businesses looking to leverage AI to improve customer experiences, a few key steps can ensure success. Most companies already use AI or plan for tasks like attracting new customers (81%), campaign planning (79%), audience definition (73%), and experience delivery (66%).
Hiring the right talent or investing in upskilling existing employees is critical. Businesses should also consider partnering with AI experts to guide the rollout of new systems and learn from successful case studies in their industry. Comparing technology infrastructure with those who’ve successfully adopted AI will provide a clearer picture of what’s feasible.
Once AI is embraced, businesses must establish clear policies around its use. Allocating a dedicated budget for AI initiatives is crucial for long-term success.
Lessons from Connected TV (CTV)
Australia’s hesitation to fully embrace AI mirrors its approach to Connected TV (CTV). Although nearly five million Australians have used FAST channels or platforms in the past year, there remains reluctance to adopt CTV due to misconceptions about the platform’s quality and management.
However, a study by Samsung Ads found that brands advertising on streaming platforms are seen as five times more modern and innovative compared to those advertising in traditional environments. Moreover, brands advertising on streaming are perceived as three times more relevant, premium, and unique, presenting a missed opportunity for companies that have yet to explore CTV’s potential.
Addressing Sustainability Concerns
Sustainability is another growing concern for Australia’s ad tech industry. According to Scope3, the country’s programmatic advertising industry ranks second in carbon emissions, only behind the US.
To tackle this, the industry must adopt frameworks that measure and optimize both economic and environmental outcomes, ensuring long-term sustainable media solutions. Transparency in data collection and more efficient processing technologies can help reduce the energy consumption associated with AI and digital advertising.
As AI and other technologies continue to evolve, Australian brands must act now to close the gap between customer expectations and their own capabilities. By addressing the current roadblocks and embracing a future-focused approach, brands can position themselves as leaders in both the AI space and the broader digital advertising landscape.
With the right strategies in place, brands can turn 2024 into a year of transformation and growth, emerging stronger and more innovative as they meet the demands of their AI-ready customers.