AI in Paid Search advertising: maximising opportunities and managing challenges

The growing impact of AI

The effect of AI on employees, businesses, and society has been at the forefront of debate since the launch of AI chatbots, ChatGPT and Bard, last year. Therefore, it could be assumed that AI’s involvement in Paid Search advertising is just as new. However, AI has been at the core of Google Ads for a number of years now; AI native Responsive Search Ads were launched in 2018, and Performance Max became available in 2021.

The recent updates at Google Marketing Live 2023 confirmed AI’s potential in Paid Search is still huge, and demonstrated why its development is at the top of Google’s priorities this year. 

This article will examine some of the advantages, and potential risks, of AI’s increasing role in Paid Search, and present why AI is at the heart of Journey Further’s value proposition:

“Our international team of experienced Paid Search experts specialise in enhancing AI’s decision-making process to address your business challenges by applying the right data, creative and technology to your Paid Search campaigns”

Advantages of AI in Paid Search

One major benefit of AI to advertisers is enhanced campaign performance. It is easy to take for granted, but AI’s ability to analyse vast amounts of data for effective keyword selection and ad creation goes far beyond the manual methods that preceded it. 

“More than 60% of paid search analysts at Journey Further already use AI chatbots for keyword research and inspiration”

For instance, RSAs have been under scrutiny since launch due to the inability to perform a clear ad copy split test, as you could with the sunsetted Expanded Text Ads. However, Google AI now uses RSAs to rotate and test 43,860 different combinations of headlines and descriptions, which aims to create the right ad for the right user at the right time and improve click-through rates.

Ad and campaign performance is also boosted by real-time bidding and budget allocation. Instead of setting bids on a daily or less frequent basis, AI algorithms now adjust bids in real time and allocate budgets dynamically based on performance indicators. This then allows advertisers to optimise towards CPA and ROAS targets, which makes aligning to business goals and monitoring campaign performance much simpler.

Audience targeting and segmentation is another helpful tool to enhance campaign performance. For example, utilising AI-powered algorithms to identify and target specific audience segments, such as affinity or in-market, for personalised ad experiences, increased relevance, and better conversion rates.

Senior PPC Analyst, Hannah Bray: “Increased AI could benefit advertisers by allowing Google to gather more user data, which can be used to better target ads”

Expanding AI capabilities

Speakers at GML 2023 conveyed how this is just the beginning of AI driven performance. They announced conversational AI will soon help advertisers easily generate effective keywords, headlines, descriptions, and other assets at a depth and quality never seen before, simply by typing a website URL into Google Ads.

Google’s new generative AI was also demonstrated at GML 2023, showing how it can augment and create new imagery for advertisers using Performance Max campaigns. This is likely to save advertisers time and resources, and especially help smaller businesses who may operate under tougher budget constraints.

Limitations & challenges of AI

Although there are a number of clear benefits to AI in Paid Search, there are also potential disadvantages. Firstly, there can be a lack of human judgement and creativity because of AI’s limited intuition and contextual understanding. For example, Performance Max auto-generated videos are created by Google AI if the advertiser doesn’t upload a video to the campaign. Images which are already uploaded are stitched together, and music is overlaid, which can be distinctly off-brand and potentially nonsensical, thus frustrating advertisers. This is another reason why we need to make sure we are feeding AI the best creative and data possible, which is central to Journey Further’s proposition.

Clearly, lack of human judgement can also lead to branding and tone challenges, which is one of the major push-backs against Google’s new generative AI shown at GML 2023. Many brands have unique voices which require being written under specific brand guidelines. If not, they can fail to resonate with the target audience. For example, Innocent Drinks recently conducted a Twitter poll asking their audience to choose their favourite copy between two ads. The human-written copy overwhelmingly (89%) won, suggesting AI’s copy might still tend to be too formulaic for certain brands. As a result, human involvement is likely to still be required to maintain brand consistency and an emotional connection with their audience.

Addressing privacy and ethical concerns

Another challenge of the increasing role of AI in Paid Search is the dependency on data and algorithms. AI algorithms heavily rely on historical data, which can be biased or incomplete.

For example, it can be difficult to show the value of a new RSA whilst running it alongside an established one, as Google can often continue to serve the legacy ad due to all the historical data it has behind it, potentially stifling innovation. 

Privacy on the internet has been of increasing significance for a number of years now, and the collection and utilisation of user data raises privacy concerns and ethical implications. So, as AI advances, the need for transparent and responsible data handling practices is more important than ever. One of the ways in which Google is addressing this is with the launch of Google Analytics 4. As shared at GML 2023, Google AI is at the heart of GA4’s ability to surface relevant insights and predict likely future consumer behaviour – all while adapting to an evolving privacy and technology landscape.

PPC Analyst, Alex Pegg: “Collecting valuable user information is more important than ever given the imminent end of 3rd party cookies”

Our approach to AI

To conclude, AI already plays a pivotal role in paid search, but as demonstrated at GML 2023, will become even more ingrained as it inevitably advances. Some major advantages to its involvement include enhanced campaign performance through intelligent keyword & ad optimisation, real-time bidding and budget allocation, and audience targeting and segmentation; as well as the time and resource efficiency advertisers gain from AI. Nevertheless, there are also some challenges presented by AI such as the lack of human intuition, judgement and creativity which can manifest as branding and tone issues. Not forgetting the dependency on data which can lead to algorithmic biases and privacy concerns.

As a result, advertisers must leverage AI’s strengths whilst mitigating its limitations which is where the role of a PPC Analyst comes in. An analyst guides AI’s decision-making by feeding it the highest quality data possible, optimises its performance with the strongest creative possible, and intervenes when it is needed.