How the generative A.I. boom could forever change online advertising

Published

2 years ago

July 8, 2023

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Sebastien Bozon | AFP | Getty Images

Shortly after ChatGPT hit the market last year and instantly captured headlines for its ability to appear human in answering user queries, digital marketing veteran Shane Rasnak began experimenting.

As someone who had built a career in creating online ad campaigns for clients, Rasnak saw how generative artificial intelligence could transform his industry. Whether it was coming up with headlines for Facebook ads or short blurbs of ad copy, Rasnak said, jobs that would have taken him 30 minutes to an hour are now 15-minute projects.

And that’s just the beginning.

Rasnak is also playing with generative AI tools such as Midjourney, which turns text-based prompts into images, as he tries to dream up compelling visuals to accompany Facebook ads. The software is particularly handy for someone without a graphic design background, Rasnak said, and can help alongside popular graphic-editing tools from Canva and Adobe’s Photoshop.

While it’s all still brand new, Rasnak said generative AI is “like the advent of social media” in terms of its impact on the digital ad industry. Facebook and Twitter made it possible for advertisers to target consumers based on their likes, friends and interests, and generative AI now gives them the ability to create tailored messaging and visuals in building and polishing campaigns.

“In terms of how we market our work, the output, the quality and the volume that they’re able to put out, and how personalized you can get as a result of that, that just completely changes everything,” Rasnak said.

Rasnak is far from alone on the hype train.

Meta, Alphabet and Amazon, the leaders in online advertising, are all betting generative AI will eventually be core to their businesses. They’ve each recently debuted products or announced plans to develop various tools to help companies more easily create messages, images and even videos for their respective platforms.

Generative A.I. startups are driving VC deals

Their products are mostly still in trial phases and, in some cases, have been criticized for being rushed to market, but ad experts told CNBC that, taken as a whole, generative AI represents the next logical step in targeted online advertising.

“This is going to have a seismic impact on digital advertising,” said Cristina Lawrence, executive vice president of consumer and content experience at Razorfish, a digital marketing agency that’s part of the ad giant Publicis Groupe.

In May, Meta announced its AI Sandbox testing suite for companies to more easily use generative AI software to create background images and experiment with different advertising copy. The company also introduced updates to its Meta Advantage service, which uses machine learning to improve the efficiency of ads running on its various social apps.

Meta has been pitching the Advantage suite as a way for companies to get better performance from their campaigns after Apple’s 2021 iOS privacy update limited their ability to track users across the internet.

‘Personalization at scale’

As these new offerings improve over time, a bicycle company, for example, could theoretically target Facebook users in Utah by showing AI-generated graphics of people cycling through desert canyons, while users in San Francisco could be shown cyclists cruising over the Golden Gate Bridge, ad experts predict. The text of the ad could be tailored based on the person’s age and interests.

“You can be using it for that sort of personalization at scale,” Lawrence said.

Meta’s Advantage service has been gaining traction with retailers using it for automated shopping ads, according to data shared with CNBC by online marketing firm Varos.

In May 2023, roughly 2,100 companies spent $47 million, or about 27.5% of their combined total monthly Meta advertising budgets on Advantage+, the Varos data showed. A month earlier, those companies directed 26.6% of their budget, or $44.9 million, to Advantage+.

Last August, when Meta formally debuted its Advantage+ automated shopping ads, companies put less than 1% of their Meta ad spend into the offering.

Meta Platforms CEO Mark Zuckerberg speaks at Georgetown University in Washington, Oct. 17, 2019.

Andrew Caballero-Reynolds | AFP | Getty Images

Varos CEO Yarden Shaked said the increase shows Facebook is having some success in persuading advertisers to rely on its automated ad technology. However, Shaked said he’s “not sold on the creative piece yet,” regarding Meta’s nascent foray into providing generative AI tools for advertisers.

Similarly, Rasnak said Midjourney’s tool isn’t “quite there yet” when it comes to producing realistic imagery that could be incorporated into an online ad, but is effective at generating “cartoony designs” that resonate with some smaller clients.

Jay Pattisall, an analyst at Forrester, said several major hurdles prevent generative AI from having a major immediate impact on the online ad industry.

One is brand safety. Companies are uncomfortable outsourcing campaigns to generative AI, which can generate visuals and phrases that reflect certain biases or are otherwise offensive and can be inaccurate.

Earlier this year, Bloomberg News found that AI-created imagery from the popular Stable Diffusion tool produced visuals that reflected a number of stereotypes, generating images of people with darker skin tones when fed prompts such as “fast-food worker” or “social worker” and associating lighter skin tones with high-paying jobs.

There are also potential legal issues when it comes to using generative AI powered by models trained on data that’s “scraped from the internet,” Pattisall said. Reddit, Twitter and Stack Overflow have said they will charge AI companies for use of the mounds of data on their platforms.

Scott McKelvey, a longtime marketing writer and consultant, cited other limitations surrounding the quality of the output. Based on his limited experience with ChatGPT, the AI chatbot created by OpenAI, McKelvey said the technology fails to produce the kind of long-form content that companies could find useful as promotional copy.

“It can provide fairly generic content, pulling from information that’s already out there,” McKelvey said. “But there’s no distinctive voice or point of view, and while some tools claim to be able to learn your brand voice based on your prompts and your inputs, I haven’t seen that yet.”

An OpenAI spokesperson declined to comment.

A spokesperson for Meta said in an email that the company has done extensive research to try to mitigate bias in its AI systems. Additionally, the company said it has brand-safety tools intended to give advertisers more control over where their ads appear online and it will remove any AI-generated content that’s in violation of its rules.

“We are actively monitoring any new trends in AI-generated content,” the email said. “If the substance of the content, regardless of its creation mechanism, violates our Community Standards or Ads Standards, we remove the content. We are in the process of reviewing our public-facing policies to ensure that this standard is clear.”

The Meta spokesperson added that as new chatbots and other automated tools come to market, “the industry will need to find ways to meet novel challenges for responsible deployment of AI in production” and “Meta intends to remain at the forefront of that work.”

Stacy Reed, an online advertising and Facebook ads consultant, is currently incorporating generative AI into her daily work. She’s using the software to come up with variations of Facebook advertising headlines and short copy, and said it’s been helpful in a world where it’s more difficult to track users online.

Reed described generative AI as a good “starting point,” but said companies and marketers still need to hone their own brand messaging strategy and not rely on generic content. Generative AI doesn’t “think” like a human strategist when producing content and often relies on a series of prompts to refine the text, she explained.

Thus, companies shouldn’t simply rely on the technology to do the big picture thinking of knowing what themes resonate with different audiences or how to execute major campaigns across multiple platforms.

“I’m dealing with large brands that are struggling, because they’ve been so disconnected from the average customer that they’re no longer speaking their language,” Reed said.

For now, major ad agencies and big companies are using generative AI mostly for pilot projects while waiting for the technology to develop, industry experts said.

Earlier this year, Mint Mobile aired an ad featuring actor and co-owner Ryan Reynolds reading a script that he said was generated from ChatGPT. He asked the program to write the ad in his voice and use a joke, a curse word and to let the audience know that the promotion is still going.

After reading the AI-created text, Reynolds said, “That is mildly terrifying, but compelling.”

Watch: Social media showdown: Instagram to launch direct competitor to Twitter

Technology

Chinese tech giant Baidu to release next-generation AI model this year as DeepSeek shakes up market

Published

3 hours ago

February 12, 2025

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Chinese tech giant Baidu to release next-generation AI model this year as DeepSeek shakes up market

Men interact with a Baidu AI robot near the company logo at its headquarters in Beijing, China April 23, 2021.

Florence Lo | Reuters

BEIJING — China’s Baidu plans to release the next generation of its artificial intelligence model in the second half of this year, according to a source familiar with the matter, as newer players such as DeepSeek disrupt the segment.

Ernie 5.0, called a “foundation model,” is set to have “big enhancements in multimodal capabilities,” the source said, without specifying its functions. “Multimodal” AI can process texts, videos, images and audio to combine them as well as convert them across categories — text to video and vice-versa, for instance.

Foundation models can understand language and perform a wide array of tasks including generating text and images, and communicating in natural language.

Baidu’s planned update comes as Chinese companies race to develop innovative AI models to compete with OpenAI and other U.S.-based companies. In late January, Hangzhou-based startup DeepSeek prompted a global tech stock sell-off with the release of its open-source AI model that impressed users with its reasoning capabilities and claims of undercutting OpenAI’s ChatGPT drastically on cost.

“We are living in an exciting time … The inference cost [of foundation models] basically can be reduced by more than 90% over 12 months,” Baidu CEO Robin Li said at the World Governments Summit in Dubai this week. That’s according to a press release of his fireside chat with Omar Sultan Al Olama, UAE’s minister of state for artificial intelligence, digital economy, and remote work applications.

“If you can reduce the cost by a certain percentage, then that means your productivity increases by that kind of percentage. I think that’s pretty much the nature of innovation,” Li noted.

Baidu was the first major Chinese tech company to roll out a ChatGPT-like chatbot called Ernie in March 2023. But despite initial momentum, the product has since been eclipsed by other Chinese AI chatbots from startups as well as large-tech companies such as Alibaba and ByteDance.

While Alibaba shares have soared 33% for the year so far, Baidu shares are up 6%. Tencent has notched gains of about 4% for the year so far. ByteDance is not listed.

Goldman Sachs: China stands to gain as AI focus shifts toward applications layer

Baidu’s Ernie model already supports the integration of generative AI across a range of the company’s consumer and business-facing products, including cloud storage and content creation.

Last month, Baidu said its Wenku platform for creating presentations and other documents had reached 40 million paying users as of the end of 2024, up 60% from the end of 2023. Updated features, such as using AI to generate a presentation based on a company’s financial filing, started being rolled out to users in January.

The current version of the Ernie model is Generation 4, released in Oct. 2023. An upgraded “turbo” version Ernie 4.0 was released in August 2024. Baidu has not officially announced plans to release the next generation update.

The latest version of OpenAI’s ChatGPT, GPT-4o, was released in May 2024. OpenAI CEO Sam Altman said in a Reddit “ask me anything” session earlier this month that there wasn’t a public timeline for GPT-5’s release.

Baidu did not respond to a request for comment.

Technology

Super Micro ‘confident’ it will meet SEC deadline and reach $40 billion next fiscal year

Published

8 hours ago

February 11, 2025

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Super Micro 'confident' it will meet SEC deadline and reach billion next fiscal year

Super Micro Computer CEO Charles Liang at the Computex conference in Taipei, Taiwan, on June 5, 2024.

Annabelle Chih | Bloomberg | Getty Images

Super Micro Computer gave optimistic commentary for its fiscal 2026 and delayed annual report that overshadowed its slashed fiscal 2025 revenue guidance in Tuesday’s preliminary second-quarter results.

CEO Charles Liang said he is “confident” that the company will file its delayed annual report by the U.S. Securities and Exchange Commission’s Feb. 25 deadline. The company also said it expects to hit $40 billion in revenue in fiscal 2026. Analysts polled by LSEG expected $30 billion in revenue for the period.

Shares of Super Micro were up as much as 10% in extended trading.

For the near term, however, the company slashed its guidance for fiscal 2025 revenue. The company said it expects revenues to range between $23.5 billion to $25 billion for fiscal 2025. That was down from a previous forecast of $26 billion and $30 billion. Analysts polled by LSEG expected revenues of $24.9 billion for the year.

The company also said it expects to report net sales between $5.6 billion and $5.7 billion for the quarter that ended Dec. 31. Wall Street expected $5.89 billion, according to analysts polled by LSEG. The company also offered weaker-than-expected guidance for the current period.

Super Micro also said that it “continues to work diligently” to meet the deadline to file its delayed fiscal 2024 annual and fiscal 2025 first and second quarter reports as it faces the possibility of a Nasdaq delisting.

Shares of the company, known for its servers powered with Nvidia graphics processing chips, have been on a rollercoaster ride since Hindenburg Research revealed a short position in the stock and the company delayed releasing its annual report in August. The company’s auditor quit in October, citing governance issues, and Super Micro’s drop in share price spurred the possibility of a delisting from the Nasdaq exchange.

The rollercoaster continued into Tuesday’s release. The stock is up about 27% in 2025 but down from its March 2024 high.

Super Micro’s prime position in the artificial intelligence world catapulted the stock to new heights as ChatGPT’s 2022 debut set off a craze for AI infrastructure. Recent earnings reports and commentary suggest that megacaps Meta, Amazon, Alphabet and Microsoft plan to invest as much as $320 billion into AI projects this year.

WATCH: Super Micro Computer cuts full year revenue guidance

Technology

Tesla drops 6% after BYD partners with DeepSeek, Musk adds to DOGE distractions with OpenAI bid

Published

9 hours ago

February 11, 2025

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Tesla drops 6% after BYD partners with DeepSeek, Musk adds to DOGE distractions with OpenAI bid

Tesla and SpaceX CEO Elon Musk joins U.S. President Donald Trump during an executive order signing in the Oval Office at the White House on Feb. 11, 2025 in Washington, DC.

Andrew Harnik | Getty Images

Tesla shares dropped 6% on Tuesday after Chinese rival BYD announced plans to develop autonomous vehicle technology with DeepSeek, and said it would offer its Autopilot-like system in nearly all of its new cars, adding to fears that Elon Musk’s company is falling behind the competition.

There’s also growing concerns surrounding Musk’s distractions outside of Tesla, after news surfaced that the world’s richest person is offering to lead an investor group in purchasing OpenAI, while he steps up his work with President Donald Trump’s White House.

Tesla’s stock price has slid for five straight days, falling close to 17% over that stretch to $328.50, and wiping out over $200 billion in market cap.

BYD, which has emerged as Tesla’s fiercest rival on the world stage, said on Monday that at least 21 of its new model vehicles will come equipped with its partially automated driving systems that include features for automatic parking and navigating on highways.

Tesla doesn’t yet offer a robotaxi and its EVs currently require a human driver to remain at the wheel, ready to steer or brake at any time. On Tesla’s earnings call last month, Musk said the company is aiming to launch “Unsupervised Full Self-Driving,” and a driverless rideshare service in Austin, Texas, in June. Alphabet’s Waymo already operates a robotaxi service in Austin as well as in parts of Phoenix, San Francisco.

“In our view, competition between Waymo, Tesla and a host of Chinese players is a key driver on the path to commercialization” of robotaxis,” Morgan Stanley analysts wrote in a note to clients after the BYD announcement. The firm recommends buying the stock and has a price target of $430.

Waymo said on Tuesday that it added 10 square miles of coverage to its robotaxi service in Los Angeles.

The rise of Phoenix as a major tech hub with chips, autonomous cars and drones

In a report on Tuesday, Oppenheimer analysts wrote that the “autonomy competition may limit [Tesla] profitability.” Even if Tesla meets its June 2025 timeline for driverless cars in Texas, the company is “one of several autonomous technology providers, suggesting competition on price and performance,” they wrote.

In addition to running Tesla, Musk is CEO of SpaceX, owns social media company X and is head of artificial intelligence startup xAI. He’s also spending significant time these days in Washington, D.C., running the “Department of Government Efficiency” (DOGE) as a special government employee, aiming to slash federal spending, personnel, regulations and even entire agencies.

Many projects, many distractions

Investors already concerned about Musk’s hefty commitments beyond his trillion-dollar EV company have more reason for trepidation after events that unfolded on Monday. Musk’s attorney, Marc Toberoff, confirmed to CNBC that Musk was leading a consortium of investors in a $97.4 billion bid for OpenAI.

Musk was among the founders of OpenAI in 2015, when the AI startup was created as a nonprofit research lab. Musk sought to have Tesla acquire OpenAI, and he later departed the organization’s board.

OpenAI has since commercialized numerous products, most notably ChatGPT. Co-founder and CEO Sam Altman is seeking to restructure OpenAI as a for-profit entity. Musk has sued OpenAI to prevent that transition, and started xAI as a direct competitor.

The Oppenheimer analysts wrote that, “While [Tesla] has shifted focus to being a Physical AI play, we view Elon Musk’s bid for Open AI as a distraction from [Tesla’s] challenges.”

Altman told employees in a memo on Tuesday that OpenAI’s board hasn’t received an official offer from Musk and reminded staffers that “Elon has a history of making claims that don’t hold up.”

Later on Tuesday, Toberoff said in a statement that he emailed the bid for OpenAI on behalf of the Musk-led consortium a day earlier to OpenAI’s outside counsel William Savitt and Sarah Eddy “for transmission to their client.” Toberoff said the bid was “in the form of a detailed four-page letter” and was addressed to OpenAI’s board.

“Whether Sam Altman chose to provide or withhold this from OpenAI’s other Board members is outside of our control,” he wrote.

Oppenheimer’s analysts also highlighted the added risks associated with Musk’s extensive work with the Trump administration.

While Musk’s behavior “has fans in certain circles,” his public life “risks alienating consumers and employees as the Trump administration tests the limits of its power,” they wrote. For example, they referenced recent vehicle registration data that showed steep year-over-year declines in California and across several European markets.