As IBM Ramps Up Its AI-Powered Advertising, Can Watson Crack the Code of Digital Marketing?

As much as we might want to try, nobody can change the weather. However, weather does have the ability to change us—our moods, our health, our daily routines—and those that know its effects might in turn be able to affect us.

In recent years, The Weather Company, which produces forecasts for 2.2 billion locations every 15 minutes, has been using its troves of data in ways that go far beyond what’s happening outside. Since its acquisition by IBM in January 2016, the company has also begun swirling deeper and deeper into the world of advertising with the help of Watson, IBM’s artificial intelligence service that’s working on everything from diagnosing diseases to crafting movie trailers. Now, IBM is finally bringing several major components of The Weather Company’s data capabilities under the Watson umbrella with the launch of Watson Advertising this week.

The new division—encompassing data, media and technology services—will offer a suite of AI products for everything from data analysis and media planning to content creation and audience targeting. By integrating The Weather Company’s signature WeatherFx and JourneyFx features along with all of the other data at IBM’s disposal, the company is hoping to transform what is in many ways still a legacy business into a cutting-edge advertising powerhouse.

“Weather impacts your mood and your emotions, and your moods and your emotions are a huge input into your decision-making modality,” says Cameron Clayton, the former CEO of The Weather Company who is now general manager of IBM Watson’s Content and IoT Platform.

Watson Advertising promises to kick start the era of cognitive advertising, a field that has both legacy tech companies and startups seeking to transform every aspect of marketing from image and voice recognition to big data analysis and custom content.

While there are countless ways to use Watson—through dozens of APIs or studio-like projects that can cost millions of dollars—its new advertising division is structured into four units. The flagship service, focused on audience targeting, will utilize Watson’s neural networks to analyze data and score users based on how likely they are to take an action (like purchasing a product, viewing a video or visiting a website). Another piece of the business will use AI for real-time optimization. A third, Watson Ads, will build on a service that launched last year with a number of high-profile brands, employing AI not just for data analysis or targeting but also for content creation. As part of a Toyota campaign, for example, Watson became a copywriter, crafting messaging for the carmaker’s Mirai model based on tech and science fans’ interests.

“The Watson Ad opportunity is an exciting first-to-market idea that advances our learning opportunities in the AI space,” says Eunice Kim, a media planner for Toyota Motor North America. “Not only are we able to create a one-to-one conversational engagement about Prius Prime with the user, but we’re able to garner insights about the consumer thought process that could potentially inform our communication strategies elsewhere.”

There have been plenty of other advertising opportunities for Watson. Earlier this year, it transformed into a doctor, promoting Theraflu while answering questions about various flu symptoms. For Campbell’s, Watson put on its chef’s hat, personalizing recipes within display ads using data about consumers’ locations and what ingredients they had on hand. For a major partnership with H&R Block, Watson turned into a tax expert, deploying an AI smart assistant to help clients find tax deductions.

“Brands are looking to AI as a feature that they might add and what that can do to distinguish them, modernize them and to give them a new look and a competitive edge,” notes Marty Wetherall, director of innovation at Fallon, which created H&R Block’s campaign.

As more marketers become interested in the potential of AI, the rebrand to Watson Advertising allows IBM to separate the advertising capabilities of The Weather Company from its other less-known operations—industries including aviation, insurance, energy, finance—explains Watson CMO Jordan Bitterman. Earlier this year, IBM created the Cognitive Media Council, a group of senior-level executives from agencies and brands that meet a few times a year to shape how marketers think about the future of AI.

“I was a mobile believer early,” Bitterman says, “and I can tell you that cognitive technology and AI will be 10 times bigger than mobile.”

The forecast for AI seems to be just heating up: According to Statista, revenue from AI services worldwide is expected to grow from $2.4 billion in 2017 to $4.1 billion in 2018 to $59.8 billion in 2025. Meanwhile, the market for Big Data is projected to grow from $33.5 billion in 2017 to $88.5 billion in 2025.

“We could certainly call AI the ‘new black,’” remarks Forrester analyst Joe Stanhope. “And marketers are getting pummeled on a daily basis with AI-type things.”

One of the first agencies to sign on for Watson Advertising is UM, which has been testing several of IBM’s new offerings for clients, including an unnamed auto brand. Since earlier this year, the agency has been piloting cognitive capabilities for localized ad campaigns at scale, meshing Watson data with client stats to analyze metrics across a large number of car dealerships in a way that optimizes ad spend while also checking local inventory to see whether or not it should personalize an ad to someone in that market.

According to Kasha Cacy, U.S. CEO of UM, the company’s 100 data scientists aren’t always enough to manage the level of complexity that Watson offers on its own. She says that bringing Watson Advertising onboard allows the agency to “take the shackles off” and be more creative with how they use data, citing one client that is already using a combination of weather data, Google searches and pollen counts to trigger when media should be bought in various markets.

“There are things that we would love to be able to do that we just can’t right now because we don’t have the human or technology processing to be able to do it,” Cacy says. “That was kind of the impetus for us talking to the Watson folks, because I think as I looked across the business I saw all these places where the thinking was there, the strategy was there, the ideas were there, but the implementation was just too onerous and I hate the idea that we’re limited by implementation.”

Indeed, it seems like AI is on most marketers’ to-do lists, whether that means researching ideas, meeting with AI companies or spending actual money. However, Stanhope cautions, the space is so new that there is also a lot of room for over-hyping it.