Deconstructing the Black Box of Marketing

Across industries, from finance to healthcare, the term “black box” universally denotes complex models shrouded in mystery. Marketing is no exception, with artificial intelligence-fueled campaigns that can fly fast and on auto-pilot while largely remaining an enigma to their human users. The fact is, many AI-based ad-buying tools aren’t known for their transparency.

It may seem counterintuitive: the most advanced systems are designed to facilitate, but their opaque nature can equally frustrate. And this lack of transparency poses significant challenges for marketers who want to optimize the decision-making processes of these tools. Google’s Performance Max (PMax) and Meta’s Advantage+ are prime examples. While these platforms promise enhanced performance through automation and machine learning, they often leave marketers in the dark about how decisions are made.

Recognizing the Black Box of AI-Driven Campaigns

Leveraging its leadership in search, innovation and user experience, Google offers a boon to advertisers with PMax, which utilizes sophisticated machine learning algorithms to optimize marketing campaigns across many channels. PMax analyzes vast amounts of data to pinpoint the most effective ad placements, allocate budgets efficiently, and target the most relevant audiences. By learning and adapting, PMax works to maximize conversions and return on investment.

Despite its benefits, PMax also poses some black-box limitations. These include how budgets are distributed, which specific audiences are targeted, even where ads are placed. This lack of transparency hinders making informed decisions. Another drawback is the inability to break down PMax data into specific channels such as search and display. This makes it challenging to assess the performance of individual channels and identify areas for improvement.

Related story: Rethinking Ad Success: Why Retailers Should Prioritize Lifetime Value Over Conversions

The Hidden Trade-Offs of AI Campaigns

AI has become an indispensable tool in the marketing industry. In its 2023 State of Marketing AI Report, the Marketing AI Institute relayed that 77 percent of marketers believe AI is crucial for success and nearly all marketers, 98 percent, use AI in some capacity to save time and improve efficiency. It’s clear that AI-driven campaigns offer competitive benefits, but they also come with hidden trade-offs. Metrics like low cost-per-click and high conversions can be misleading if they don’t align with actual business outcomes.

Strong conversions are a cornerstone of any successful marketing campaign. If these aren’t tied to desired customer profiles or high-quality leads, however, it’s like a high number of followers on a “popular” Instagram page despite many of them being bots. A mismatch between metrics and business outcomes highlights the need for a more nuanced view of campaign performance.

Consider a PMax campaign designed to drive e-commerce sales. While it might achieve a high conversion rate across desired Google-owned channels, it could attract customers who make low-value purchases or those who fail to return for repeat business. This underscores the importance of evaluating the quality of leads and long-term customer value rather than simply focusing on short-term metrics.

The Case for Complementary Campaign Management

It’s easy to be mesmerized by new automated technology, like Waymo’s self-driving robotaxi, until you recognize the real limits when a human isn’t in the mix, from implicit concerns about safety to the inability to ask for personal travel advice or local restaurant recommendations. Despite advancements in AI-driven marketing, traditional campaigns remain essential, such as branded and nonbranded search, display, and YouTube campaigns, which can offer valuable insights into customer behavior and segment performance across different channels.

A balanced approach blending traditional campaigns with AI-driven ones provides a far more comprehensive perspective, not to mention transparency, allowing marketers to analyze and understand how different channels contribute to overall performance. Traditional campaigns offer the granularity and control needed to make informed decisions, helping identify trends, optimize strategies, and ensure that AI tools are aligned with broader marketing goals.

There’s no doubt that AI can crunch data faster than any human. However, where is the expertise to analyze that data and bring experience to formulate strategic advice? Human intelligence is still best for truly understanding other humans. Traditional campaigns allow marketers to track how customers interact with different channels, then to analyze and predict how they might behave down the road.

Strategies for Transparency and Control

To navigate the complexities of AI-driven campaigns, marketers need strategies that enhance transparency and control, some that can be facilitated by digital management tools:

• Integration With CRM Systems: Tools that integrate with CRM systems or e-commerce platforms can provide deeper insights into customer attributes and advanced metrics, bridging the gap between AI-driven and traditional campaigns.
• Revenue Impact: By analyzing customer attributes and revenue impact, digital tools can provide a broad understanding of campaign performance, allowing marketers to make data-driven decisions and optimize their strategies.
• Holistic Optimization: Aligning AI-driven campaigns with traditional ones brings the best of both worlds together, gaining efficiencies and insights from both types of campaigns.

Black-box marketing can never be a new paradigm that wholly replaces an old one. The benefits of AI and automation are too numerous and robust, and neither brands nor marketers want to give any edge to the competition. Like a 747 guided by humans and technology together, the best approach is holistic. For marketers, this means adopting the right tools and strategies to ensure a high level of transparency, control and desired results so that campaigns take off flawlessly and land where they should.

Mitsunaga Kikuchi is founder and CEO of Shirofune, the digital advertising management tool that automates ad campaigns through an easy-to-use interface for management, budgeting, monitoring and analytics.