How AI Is Reshaping the Advertising Industry

2.36 - 28.536 Unknown

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31.233 - 33.916 Alex Ossola

Hey, What's News listeners.

34.217 - 52.7 Alex Ossola

It's Sunday, February 8th. I'm Alex Oseleff for The Wall Street Journal. This is What's News Sunday, the show where we tackle the big questions about the biggest stories in the news by reaching out to our colleagues across the newsroom to help explain what's happening in our world. On today's show, artificial intelligence is reshaping the advertising industry.

53.141 - 61.071 Alex Ossola

We get into the visible and subtle ways AI is changing commercials and what it means now that AI companies themselves are getting in on the action.

62.857 - 83.66 Alex Ossola

It's Super Bowl Sunday, which means it's the advertising industry's, well, Super Bowl. This year, 30 seconds of Super Bowl ad time costs more than $8 million for many companies. And that's just for the time. They can spend tens of millions more on making the ads themselves. So increasingly, companies are turning to artificial intelligence to cut the cost of making an ad.

84.201 - 109.375 Alex Ossola

At the same time, AI companies themselves are getting into the advertising game, too. I sat down with WSJ journalists Katie Dayton and Suzanne Vernizza, who cover advertising all year round, about what this year's game has in store and how the industry is changing. Katie, Suzanne, thanks for being here. Have you seen any of the ads ahead of this year's Super Bowl?

109.616 - 112.138 Alex Ossola

And what are some of the big takeaways? Katie, let's start with you.

112.579 - 126.214 Katie Deighton

Yeah, we have definitely seen the ads. We are getting this similar variety that we've had for the past few years. So a lot of tech brands in there, but also a lot of brands that people would probably think of as household names.

146.543 - 161.704 Alex Ossola

But over the past year, at least, it seems like something's been shifting, right? The amount of AI in advertising seems like it's really having its momentum. So, Suzanne, I want to ask you a little bit about how AI companies themselves are getting in the Super Bowl this year.

162.105 - 181.069 Suzanne Vranica

Every year there's a big category that comes out, and this year it's going to be the AI Bowl, definitely. You've got Anthropic that's making their Super Bowl debut. OpenAI is expected to air a spot. Microsoft is going to be pushing Copilot, so that's a lot. Is it new that these companies are getting in on advertising like this?

181.049 - 199.746 Suzanne Vranica

Over the last two years, there has basically been an ad battle that's starting to form. They're pouring billions of dollars into creating these companies, and now there's a death match going on for users because they have to make sure that users know which products Do you like chat GPT? Do you like Claude?

216.611 - 237.668 Suzanne Vranica

The ads have to really be good because there's so many competing for attention, right? And so if they're not good, you're going to get negative stories the next day or worse, no one's even going to remember them. So there's a big competition on whose are going to be the most creative. And like that's why you see lots of companies putting multiple celebrities, hoping that helps them stick out.

237.884 - 241.708 Alex Ossola

And for these AI companies, are they using AI to make their ads?

241.728 - 260.586 Suzanne Vranica

They are not in most cases. What they're using AI for is like the research or to brief their agencies or some of the grunt work that happens. Obviously, we've seen lots of companies put AI creative out there, and it doesn't look great in many cases. That's the future, there's no doubt. But right now, people are using it on the back end more than the front end.

288.037 - 301.084 Katie Deighton

Yorgos Anthimos directing a beautiful black and white spot starring Emma Stone and then right afterwards you put something AI produced, it's going to be really clear that it's not quite holding up creatively.

301.722 - 306.088 Alex Ossola

Katie, why are companies turning to AI to make ads in the first place?

306.108 - 328.742 Katie Deighton

Cost is pretty much it. The amount of money it does take to produce a 30-second ad is a lot. The location, the actors, the amount of times they have to rerun the same line, the catering, all of that adds up in a way that it adds up for a Hollywood production. If an agency can come along and go, you know what, we're just going to do that on a computer, they can save so much money.

363.681 - 385.512 Katie Deighton

With the Coca-Cola ad that came out at Christmas time, it actually tested very well with normal audiences. However, it's very important to point out it was using creative that we've all seen before. we're nostalgic for, and it's got that music, it had the holidays are coming music. So up until now, I think it can be used to remind people of ads that have come before.

385.592 - 407.384 Katie Deighton

We haven't really seen AI ads that have done something like completely original that people have loved yet. And in the Super Bowl, one of the advertisers that is doing what they are calling the first predominantly AI-generated ad this year, which is the vodka brand Svedka, they're using a character which is a fembot robot, which has existed already.

407.645 - 424.908 Katie Deighton

They're just putting that into an AI generator and getting it to produce an ad around that. So again, it's an example of a trope that's already been used. The audiences may say that they like it, But we'll see if AI can produce something really captivating emotionally that's completely brand new.