By Moe Nagle
Competition for eyeballs is fierce. Just ask Deloitte, noting in its 2025 Digital Media Trends report, studios and streaming providers are facing off while social video platforms are proving contenders. Streaming and on-demand viewing are shifting traditional ad models. The surge in recent years in streaming on-demand video has resulted in fragmented pay TV audiences, higher costs on studios and thinned margins.
The rise of AI is enabling personalized, scalable and dynamic ad placement which is driving a shift in the advertising landscape. We’re witness to an era of dynamic ad insertion (DAI), virtual product placements (VPP), contextual AI and live content adaption.
Firsthand CEO Jonathan Heller told AdExchanger’s Allison Schiff in a recent interview, “Generative AI isn’t just a technology…It gives us a brand new way of engaging with the consumer.”
The Rise of Dynamic Ad Insertion
What is dynamic ad insertion (DAI)? The technology enables advertisers to insert ads into digital video content – think streamers and podcasts, for example – at specific points without having to re-edit or re-publish the content. Advertisers are empowered with the ability to update or change ad content dynamically, without impacting the original content.
How does DAI work? Ad insertion points are identified in the content. Then based on a viewer’s profile, location, etc., the system selects an appropriate ad. And, because the ad is “stitched” into the stream, the viewer has a seamless viewing experience.
Why are we seeing a rise in DAI?
- Flexibility & Control – Advertisers can easily change or update ads without having to re-publish content, saving time and resources on campaigns.
- Targeting & Personalization – Available data allows advertisers to target specific locations, interests and demographics.
- Increased Revenue – Due to more efficient ad delivery and targeting, the bottom-line receives a boost.
- Better Audience Experience – Improved targeting enables more personalized and relevant ads, viewers are less likely to “turn the dial,” and have a more pleasant viewing experience.
- Scalability & Efficiency – DAI is capable of supporting copious volumes of ads and content, giving small and large content providers a capable solution.
Let’s use Prime Video as an example. The streamer collects vast amounts of user data ranging from viewing history and browsing patterns, to demographics, which is then analyzed and leveraged to create user profiles. From the user profiles, AI selects and delivers relevant ads. The platform offers what it refers to as dynamic creative optimization (DCO) that permits advertisers to store multiple versions of creative, then based on audience preferences, adapt them to specific audience segments. Advertisers are no longer beholden to the limits of static ads.
Virtual Product Placement and the “Magic” behind it
Everything consumers engage with is fair game, and virtual product placement (VPP) extends brand reach to virtual environments like video games, movies and augmented reality applications. Shopify defines VPP as a “digital advertising strategy that uses AI to contextually place brand integrations (in the form of product, signage, 3D modeling, and more) directly into video content.
What makes VPP so impactful is the power of AI. Starting with context analysis, AI performs scene segmentation (lighting, camera angles and other visual cues to better understand the context of a scene. Furthermore, with object and action recognition, algorithms identify actions objects and actions within a scene to not only understand a situation, but the emotional tone of said situation.
Additionally, AI will perform camera angle analysis, analyzing angle and perspective, composition and framing, as well as movement and dynamics to enrich emotional awareness. AI will also complete emotional tone analysis, taking in voice tone, gait, facial expressions and micro-expressions to possess a more complete emotional picture.
Once completed, AI takes all the data collected to craft an overall emotional assessment using Machine Learning (ML) modeling to connect the dots between cues and emotion.
According to AI-powered product placement firm Mirriad, some of the key benefits in implementing VPP are seamless integration into existing content, making advertiser access fast, scalable and flexible. It allows content creators the freedom to create a narrative, and blend intuitive and non-disruptive advertisements into their story. We see Mirriad’s work on Prime Video and ITV.
Another company underpinning the VPP movement is KERV. KERV’s proprietary AI technology analyzes and identifies actionable moments in video, capturing metadata across every frame to match context and objects to immersive, shoppable advertising. Its partnership with NBCUniversal, the AI-powered interactive Video company has made a number of your favorite shows shoppable. You’ve experienced their efforts in shows like “Below Deck”, “Love Island USA”, “Winter House”, “Summer House”, “Southern Charm” and “Top Chef.”
Real-Time AI Ad Placement in Live Content
Years back, Marc Andreessen famously said, “Software is eating the world,” and it is taking the world of sports by storm. As uniqFEED explained in The Sports Business Journal, “The novel technology creates ad space out of thin air in a more efficient manner than current methods, giving rights holders unprecedented customization abilities.”
Static banners are replaced with geo-targeted or behavior-targeted ads. For example, someone watching a broadcast in the United States would see a different ad than a viewer in the United Kingdom.
One of the primary benefits of using AI in real-time ad placement is managing latency, minimizing the delay between request and response. Leveraging edge computing to perform processing closer to the data source and parallel processing, ads are displayed seamlessly and quickly to maximize impact and ensure quality of the viewing experience.
The Tennis Channel partnered with Amazon Prime tech to take advantage of the opportunity. Similar to what Supponor is doing for the NHL (among other leagues) and Vizrt with news, sports and corporate broadcasts.
Why Media Sellers and Advertisers will love AI
With AI buy-in, comes new monetization opportunity for media sellers. They can revive back catalog content with updated branding. There is no such thing as outdated content; anything that is old can easily be made new again. Additionally, historical data fuels AI to spot patterns and trends in audience behavior.
WideOrbit explains, “Sellers can leverage AI-driven insights to set dynamic and competitive pricing based on audience demographics, campaign objectives and market conditions, ensuring that the proposed pricing aligns with the perceived value and potential return on investment while maximizing yield for the seller.”
With enhanced personalization and deeper engagement ROI is improved immensely. The waste is trimmed across campaigns. Going beyond, there is greater transparency, as AI introduces deeper insight into enhanced performance analytics and targeting. Have the peace of mind to know the people who should be seeing specific content, will see the specific content.
Copy and creative can be award winning, but if not targeted properly it may as well have never left your hard drive. Targeting is just as, if not, more important than the content.
As an advertiser, one shouldn’t simply be throwing spaghetti at the wall to see what sticks. AI, ML algorithms promise to analyze ad performance across platforms and make suggestions for your next best step.
In the past two years we’ve seen big agencies like Omnicom and WPP make robust investments in the AI space. Both view the nascent technology as a game changer.
Challenges and Ethical Considerations
It’s not all sunshine and rainbows for AI. With every evolution comes challenges, and will AI, more specifically Generative AI (GenAI), ethical roadblocks exist, as well.
Should AI-generated placements be disclosed? MIT’s Sloan Management Review took a deep dive into the topic recently. Surveying its panel of 32 AI experts, 84.4% believe disclosures are necessary.
Tshilidzi Marwala United Nations University stated, “Companies should disclose their use of AI in their products and offers to customers for transparency, trust, informed consent, accountability, ethical considerations and consumer protection. Disclosures help companies comply with laws and regulations, ensure ethical practices, and encourage investment in robust, ethical, and reliable AI systems.”
Amit Shah Instalily.ai took the opposing position, “Mandatory AI disclosures would impede innovation and overburden businesses, especially smaller ones. Rapidly evolving AI technology means that requirements could quickly become outdated, leading to high compliance costs and legal risks. Such disclosures would clutter interfaces and create unnecessary confusion, potentially overwhelming average consumers who lack the technical understanding to interpret this information meaningfully. Mandating AI disclosures … could lead to notification fatigue, diminishing the impact of more critical disclosures.”
Is AI artistic? Does it risk altering artistic intent? Surrealist Molly Crabapple refers to Gen AI as vampirical, “feasting on past generations of artwork even as it sucks the lifeblood from living artists. While that sounds a touch extreme, in a way, Crabapple is not wrong. AI must learn from what’s available to create. The reality is, AI accelerated creation, opens doors for non-artists to create something visually appealing, and is a great brainstorming tool.
Let’s move from meta to a more tangible concern: privacy. There is the ethical question of using personal data to create and deliver targeted ads. This is quite the can of worms, where some believe ethical Gen AI is impossible, and others are leading the charge to find a solution. The day we see universal regulation in place, will be the day this question is answered. And hopefully the debate finally put to bed.
Looking to the Future
Innovation and advancement in Quantum Computing, Blockchain and 5G will push 3D modeling forward, empowering more automatic processes, predictive design and AI-assisted customization… and more immersive and engaging real time viewing experiences.
Keeping on my future forward hat, the more investment in AI we see in the media industry means more integration, more impact. Greater integration with programmatic ad exchanges will drive home the AI wins. Areas like cost-effective advertising, the continuation of improved targeting and personalization as well as improved ad creatives.
AI is about experience, efficiency and impact. While questions still remain, there is no denying its ability to deliver seamless advertising experiences, create efficiency via automation, and make deep impact. It is not a crystal ball, but by accurately identifying areas of opportunity, and precisely pinpointing pain points in the advertising ecosystem the future is bright.
In Closing
AI is revolutionary. It is transformational not just how ads are delivered, but where and when they appear. AI allows for smarter, more relevant brand integrations. The future of advertising will be less about interruptions, and more about becoming part of the narrative.
