How AI is transforming the ad tech stack & revolutionising digital advertising

It is clear today that artificial intelligence is the engine that will power the new and rapidly evolving era of marketing in the coming years. What started with tools like automated bidding has now evolved into something much bigger, reshaping how brands engage with their audiences, fine-tuning campaigns, and making sense of an increasingly complex digital ecosystem. AI now plays a role at every level of the ad tech stack, influencing everything from creative strategy to real-time optimisation. It’s changing the game by not just making advertising more efficient, but smarter, more personalised, and deeply aligned with how people interact with content today. With third-party cookies fading into the past, AI is stepping up in a big way to let advertisers connect with audiences in new ways, offering powerful, privacy-friendly tools that still deliver precision targeting without compromising user trust.

The new AI-driven ad tech stack

AI's ability to shift through massive amounts of first-party data and real-time behavioral signals is transforming the way brands find and connect with their most valuable audiences. Instead of relying on guesswork or broad targeting, marketers can now build highly sophisticated lookalike models that zero in on the traits of their best customers and then scale that insight to reach similar people with incredible accuracy. The result is ads that feel more relevant, campaigns that perform better, and a smarter, more efficient path to driving engagement and conversions.

Here’s how AI makes sense of what people buy and how they browse to uncover patterns and predict what they’ll want next

Imagine you're an online retailer selling everything from sneakers to smartwatches. One of your customers, Uday.H, visits your site every few weeks. AI quietly tracks his journey - what he clicks on, how long he lingers on a product page, what ends up in his cart (and what doesn’t) and, of course, what he actually buys.

Over time, the system notices a pattern: Uday.H tends to buy running shoes every three to four months, usually during sales. He also spends a lot of time browsing fitness trackers but hasn’t made a purchase in that category yet.

Behind the scenes, AI uses this data to connect the dots. It groups Uday.H with similar customers people who are fitness-focused, price-sensitive, and tend to shop seasonally. Based on this behavior, the system predicts he’s likely to purchase a fitness tracker soon, especially if there’s a promotion.

So next time Uday.H logs in, he sees a homepage banner highlighting a sale on wearables and gets an email offer for 10% off a top-rated fitness tracker. That nudge, powered by AI insights, just might be what converts browsing into buying.

Creative optimisation and personalisation

AI ads are getting a whole lot smarter and more personal. With Dynamic Creative Optimisation (DCO), brands can create and deliver customised ads in real time. Instead of one-size-fits-all messaging, AI-powered tools can generate copy, visuals, and even video content that speaks directly to each user’s interests.

Generative AI takes it a step further by crafting these elements on the fly, so every ad feels timely and relevant. This drives higher engagement, better performance, and a more meaningful connection with the audience, no matter the channel.

Imagine a fashion retailer using AI-powered DCO to tailor ads based on shopping behavior. A user who’s been browsing winter coats sees an ad featuring the latest insulated parkas, styled for cold weather, with a message like 'Stay Warm in Style – 50% Off This Week.' Meanwhile, another user who’s been eyeing summer dresses is shown a vibrant ad with flowing sundresses and a caption like 'Hello – New Arrivals Just Arrived.'

Both ads come from the same campaign, but AI personalises the content - images, text, even the offer to match each person’s preferences. It’s like having a digital stylist who knows exactly what you’re looking for, before you do.

Media planning and forecasting automation

AI automates the heavy lifting in media planning, from predicting campaign outcomes to optimising budget allocation. Advanced algorithms analyse historical data and market trends to identify gaps and opportunities, ensuring every dollar spent delivers maximum impact.

Measurement and incrementality testing

In today’s fast-moving ad landscape, knowing what’s actually working is more important than ever. That’s where AI steps in, helping marketers move beyond simple clicks and last-touch attribution. With AI-powered multi-touch attribution, brands can see the full journey a customer takes, and tracking every ad they saw, every channel they interacted with, before finally making a purchase. It gives a much clearer picture of which touchpoints are truly driving results.

AI also makes incrementality testing smarter. By comparing audiences exposed to ads versus those who weren’t, marketers can measure the true lift from their campaigns. On top of that, newer attention-based metrics like how long someone looks at an ad or how they engage with it, are becoming more reliable with AI, offering even deeper insight into what grabs people’s focus. Instead of giving all the credit to that final click, AI analyses the full journey and shows brands how much impact their Instagram teasers, podcast ads, and YouTube trailers had on a consumer that decided to finally subscribe to their spotlighted TV show, for instance.

Incrementality testing reveals actionable insights, such as that users exposed to the campaign were 30% more likely to subscribe than those who weren’t, proving the campaign’s real impact. With that insight, the marketing team knows where to double down and where to scale back, all backed by data they can trust.

Supply Path Optimization (SPO)

AI is streamlining the programmatic supply chain by identifying the most cost-effective inventory paths. By minimising hidden fees and inefficiencies, brands achieve better media efficiency and transparency in their ad spend.

AI-Powered commerce and shoppable ads

Shoppable ads are changing the game when it comes to turning interest into action, and AI is the engine behind it all. By powering real-time product recommendations, AI makes these ads smarter and more relevant, connecting directly to e-commerce platforms so consumers can go from browsing to buying in just a few clicks.

Instead of sending people on a hunt across different pages, shoppable ads bring the store to them. The result? A smoother shopping experience and better results for lower-funnel campaigns focused on conversions.

Let’s say a skincare brand is running a campaign on Instagram. A user scrolling through their feed sees a sleek video ad showcasing a glowing skincare routine. But here’s the twist: AI detects that this user has recently searched for moisturizers and has dry skin tagged in their profile data. So, the ad dynamically features the brand’s hydrating night cream, complete with a “Shop Now” button.

The user taps the button and lands directly on the product page - no extra steps, no need to search. Just a seamless, personalized path from discovery to purchase. That’s AI-powered commerce in action: timely, relevant, and frictionless.

Privacy-centric targeting and AI in clean rooms

As digital privacy becomes a top priority, marketers are under pressure to find new ways to reach audiences without crossing the line. That’s where AI steps in, offering smart, privacy-first solutions that still deliver results. Instead of relying on third-party cookies or personal data, AI uses techniques like federated learning and contextual analysis to build accurate audience models. That means brands can still deliver relevant ads based on behavior or content without ever needing to see individual user data.

Then there are clean rooms - secure environments where brands and publishers can safely analyse data together without ever sharing raw information. AI plays a key role here too, helping both sides uncover insights, track performance, and make better decisions, all while staying fully compliant with privacy regulations.

A sportswear brand for instance, can understand how its ads are performing on a popular fitness app by using an AI clean room instead of sharing user data back and forth between companies and servers. The AI analyzes behavior within each platform, what users are watching, what products they engage with, what content they prefer, and surfaces shared insights without revealing any personal details.

At the same time, the AI uses contextual cues (like whether someone’s reading articles about marathon training) to show ads for the brand’s new running shoes, without ever needing cookies or direct identifiers. The brand gets effective targeting, the user gets relevant content, and privacy stays fully intact. Win-win.

Finally, AI is transforming the advertising world not just by making things faster or more efficient, but by helping brands think bigger and smarter. It enables marketers to go beyond basic automation and focus on the full picture: reaching the right people, delivering creative that resonates, and doing it all in a way that respects privacy and builds trust.

Whether its predicting what audiences want, personalising content in real time, or ensuring campaigns meet ethical and privacy standards, AI gives brands the tools to create advertising that’s not only effective, but meaningful. By embracing these innovations, marketers can stay ahead in a fast-changing digital landscape moving with more agility, acting with more transparency, and making a greater impact where it counts.

 

This article is penned by Uday Kumar Haliga, Associate Director - Trading, MiQ Digital

Disclaimer: The article features the opinion of the author and does not necessarily reflect the stance of the publication

 

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