Is Mad Men’s Don Draper turning in his grave? The creative process of the advertising industry might be one of the last places you would expect to find an artificial intelligence tool now replacing a traditional approach, but the entrepreneurs behind Pencil claim to be doing exactly that.
Pencil’s AI-backed software, available through the Machine Generated Creative Platform that the company has just launched, uses sophisticated algorithms to help brands create new online advertising. “We make it quicker and cheaper to produce your ads and we’ll also ensure they are more effective,” says Pencil chief executive and co-founder Will Hanschell.
In fact, says, Hanschell, advertising agency executives – the modern-day, real-life descendants of Draper – are excited by what Pencil has to offer. “The truth is that creatives have always enjoyed using the latest technologies,” says Hanschell, who also points to the low morale in large parts of the advertising industry in recent times. “That reflects the reality that so much of the work is grinding out new assets, so if we can free up people’s time with a more automated solution, they can get back to being more creative.”
Importantly, Pencil sees itself as more than a provider of technology that simply helps clients – both agencies and individual advertisers – to make ads. While its software fulfills that role, Hanschell is also keen for brands to work with the company to create unexpected ideas and generate results.
Importantly, Pencil’s technology not only helps advertisers to optimise their campaigns, but also to create new ideas. It takes clients’ content, such as video, branding materials and copy, to create batches of new ad ideas that share characteristics with its analysis of what has worked in the past; it can then track the performance of each new batch, honing in on the most successful examples to develop further rounds of the ads that resonate most strongly with customers.
“Each of our ads costs $10 and takes one minute to generate on our platform,” explains Hanschell. “Because that’s so cost and time-effective, advertisers are in a position to try a variety of ads and then to focus on the ones that generate the most attractive returns.”
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The proof, of course, is in the results. Pencil’s data suggests that its approach to ad generation is 10 times quicker and cheaper than traditional ways of working. And the company says the ads identified by its software as resonating most strongly with customers delivered twice the return of comparative slots elsewhere.
The company thinks its software will be of particular appeal to small and medium-sized enterprises. In particular, it is targeting firms that aren’t large enough to maintain their own in-house advertising specialists but which devote enough budget to advertising to make working with Pencil worthwhile. A monthly fee of $1,000, which secures 100 ads, is within the reach of most SMEs.
“We’ve deliberately steered clear of traditional advertising fee structures such as share of spend, which many advertisers don’t like,” adds Hanschell. “We think charging in this way aligns our interests with our advertisers, since they will want to make more of the most successful ads.”
Pencil has also worked with large companies such as Unilever, trialling new ways to target consumers. A number of the world’s largest consumer packaged goods companies are increasingly keen to sell direct to consumers rather than only through wholesalers and retailers, Hanschell points out. Pencil’s technology may provide a means with which to pursue such strategies.
Pencil’s software is currently English-language only, so the company – based in Singapore – has been targeted English speaking markets, with the US leading the way on adoption. However, advances in linguistics technologies provide a route for Pencil to expand into new geographies in the near future.
There is certainly plenty of business to go after – Facebook alone sold $80bn worth of advertising slots to more than 10 million advertisers last year. Research from Nielsen suggests the effectiveness of these slots may be almost 50% determined by the creative design that generates them.
“Our uniqueness is that we originate new narrative as well as helping advertisers to optimise the performance of their existing campaigns,” Hanschell says. “As digital channels proliferate – and the opportunities to place content proliferate, including in television and billboard advertising – that is going to become more and more important.”