The future of AI personalization is inclusive

Part 1: Your guide to advanced AI personalization in advertising 

There are a handful of questions that advertisers frequently ask me: “How can AI help grow my business? How do I deliver more personal, relevant experiences with AI? What role could inclusion play in our strategy?” 

These questions highlight the need for strategic impact in marketing as advertising becomes more conversational, agentic, and personalized. People seek curated experiences to reduce digital stress, making personalization key to delivering advertising that resonates and inspires. Generative AI has become an indispensable tool for personalization, and for me, that’s the nexus of untapped value.

The key to advanced personalization is using inclusion as essential data for customization—inclusion is personalization

To help your audiences feel understood, valued, and inspired to act, I’m sharing the first part of our guide with ideas to create more personalized connections with your customers, ways to meet some challenges we all face in a generative AI landscape, and how inclusion leads to better performance.

I’ll outline steps you can take today to start enhancing personalization in your campaigns—but first, let’s start with the “why.” 

Why you need advanced personalization

Personalization—like improving the relevance of your advertising messaging—allows you to create deeper customer connections, stronger brand moments, and more effective campaigns. Relevance in advertising delivers intelligent context, like nuanced interests, rather than rote mechanics like <insert name> in an ad.

This can positively impact campaign performance in many areas. There are limitless connection points with people that can be used to make advertising more contextually relevant and inclusively personalized.

Personalization and context go hand in hand. For example, it’s not enough for me that you know my name within ad copy. But if you add inclusive context by offering vacation packages in destinations where laws protect me to feel safe as a gender fluid, bisexual woman, that can really make an impact. Or a parent planning travel may really value when easy to schedule car seat options surface within their vacation planning journey. 

Simply put: Personalization through inclusion drives business growth.

"Personalized advertising is inclusive advertising."

— MJ DePalma, Head of Marketing with Purpose, Microsoft Advertising

Increasing your revenue generation

There’s solid proof that personalization boosts the bottom line: Companies that excel at personalization generate 40% more revenue, and personalized advertising is up to 5X more valuable than contextual advertising. (We suggest using both personalized and contextual advertising, working together.) 

One survey revealed that 86% of small or medium-sized businesses attributed revenue growth to personalized digital advertising, highlighting its importance for businesses of all sizes. 

Improving your marketing efficiency

AI-powered personalization can also help brands tailor marketing efforts to individual needs, creating campaigns and ads based on multiple customer signals. Access to behavioral data and advanced analytics tools allows companies to improve operational efficiency through personalized content and advertising, increasing conversion rates and ROI. 

Our recent playbook, A marketer's guide to chatbots and agents: from generative AI to ROI, expands on this potential: 

“Richer conversations and historical context now augment our ability to leverage behavioral insights, purchase patterns, and product preferences to support hyper-personalization at scale… Conversational AI is also helping marketers unleash their creativity and iterate fast enough to develop highly personalized campaign assets.”

Building stronger customer relationships

Personalization ensures the right message reaches the right customer at the right time, helping foster strong emotional bonds with customers. For example, customer relationship management systems integrated with advertising efforts enable businesses to launch personalized digital advertising campaigns across channels.

Opening doors to deeper consumer relationships makes renewals easier, increases the chances of conversion, and improves overall campaign effectiveness. Think of Spotify Wrapped, a well-known and successful example of personalized marketing.

While most companies want to advertise in this way, many are afraid of “getting it wrong.” But by understanding the challenges you might encounter, you can better overcome them. 

The challenges brands face with personalization

Personalization has great potential, but without the right data, advertising teams can face major obstacles. Inclusive data sets can present a promising solution; however, challenges like fragmented systems, privacy concerns, and regulatory and compliance demands can also block progress. 

The data you collect, how it’s structured, and how well you’re able to analyze it all play a critical role in avoiding bias. Incomplete or unrepresentative data sets can lead to “echo chamber marketing” that over-indexes on top-performing segments, failing to capture the full spectrum of your potential audience. 

Cross-channel consistency is another struggle for many organizations. Providing a seamless personalized experience across various devices and platforms requires integrated strategies and tools. You want to deliver personalized content in the moment while staying relevant to multiple groups of people. 

Personalization can also backfire when it crosses the line and feels overly intrusive. Ads based on broad assumptions or passive data collection can trigger concern or anger. Instead of building a stronger customer relationship, you risk damaging trust. Trust is earned in drops, but lost in buckets. 

The promise of AI personalization is real

Addressing these challenges requires technology, processes, and strategy, all while running on a responsible AI framework. Using Microsoft's Responsible AI Standards can guide you in evaluating AI-powered advertising solutions and help you improve personalization and audience engagement for maximum impact.

Generative AI enables conversational interfaces like chatbots and agents, creating less fragmented digital experiences. These interfaces allow seamless transitions between searching, shopping, and entertainment, enhancing user engagement. For example, Microsoft Advertising is launching a pilot product allowing brands to create smart, AI-based agents on their websites that can interact with users, provide personalized information, and improve customer connections and conversion rates.

Recognizing inclusion as a key data set can give you a competitive edge by powering hyper-personalization, enabling you to meet your audience’s needs precisely where, when, and how they want. 

The key to advanced personalization: Inclusion as a data set 

Consumers today want personalized, streamlined digital experiences. The new era of AI-driven personalization is shifting away from digital noise toward curated, hyper-personalized interactions. It’s no longer about just offering a discount on past purchases; it’s about recommending what customers actually need next. 

Paul Longo, GM of AI Ads at Microsoft Advertising, describes one of the generative AI trends shaping the future of marketing:

“Personalization is evolving from general experiences based on demographics to highly individual interactions based on unique search intent, preferences, and context. And generative AI-powered solutions can help brands deliver hyper-personalized experiences at scale, leading to significantly higher engagement and conversions.”

Microsoft Advertising research shows that using overlooked data sources of inclusion in your strategy enhances trust, brand love, and loyalty. This kind of data drives an increase in purchase intent and improves brand perceptions of trustworthiness, market leadership, and likelihood to recommend—especially for Gen Z.

Having multiple data-touchpoints can produce high-quality personalization, creating the right message, at the right time, and with the right touchpoints, for the right problem that a person is trying to solve. It inspires them to feel, “This is a product for someone like me.”

So advertisers should strive for a complete personalization plan that drives trust, brand love, and loyalty—reimagining audience engagement by using inclusive data to personalize across all customer groups, including loyal, at-risk, and potential customers. 

How you can start building inclusive data sets

Your advertising should go beyond basic personalization to deliver messages that foster a sense of connection or make people feel aligned with and understood. This will deliver personalized connections. 

To begin building these personalized connections in your campaigns, I recommend a few initial steps: 

1. Get familiar with Copilot in Microsoft Advertising Platform: Copilot in Microsoft Advertising Platform is your AI digital advertising assistant for creating high-quality marketing easily and efficiently, guiding you through campaign creation, and helping you uncover insights along the way.

 2. Create a real-world data set: Start by collecting privacy-compliant first-party data directly from customers and listening to their real feedback. Who’s having the best experience? Who isn’t? How are you parsing out your segments? Are you aggregating all customers to get an average view, or are you segmenting to uncover nuanced insights to drive personalization opportunities? 

3. Add inclusive data set insights: You can develop more effective advertising that drives trust, love, and loyalty by sourcing connection points across different data and insight sources, like the six outlined in the image below. Dimensions of diversity, inclusive product features, inclusive metaphors, inclusive image elements, the 50 inclusive words, and the 12 inclusive feelings are just the start to get a holistic picture for more personalized connections. (I’ll share more details on how to do this soon.)

4. Create tailored, inclusive prompts: You can develop more effective prompts to create ad copy that considers your audiences’ nuanced needs, hopes, desires, and fears. 

Tip: See our cheat sheet for inclusive prompting for marketers in our recent playbook! 

5. Re-engage your fans: Use your inclusive data sets to understand the wider opportunity for who your in-market audiences are. Apply the inclusive prompt tips for ad copy to encourage signups for a newsletter with a relevant incentive.

6. Use AI-driven analytics: Ideally, AI-driven analytics with these personalization insights will help you identify a wider range of people, with a deeper level of understanding. This allows you to target and deliver tailored and sequential advertising messaging that builds trust, connection, love, and loyalty. 

Drive hyper-personalization through human-centered AI solutions 

Scaling AI personalization requires unified data, custom reporting, and real-time insights. With the right infrastructure, generative AI can become a “co-creator” with your marketing team, breaking down silos, improving campaign effectiveness, and allowing you to truly connect with your customers. 

At the end of the day, our goal is to help brands boost engagement, increase usage, drive conversations, and achieve higher conversions. Your everyday AI companion, Microsoft Copilot, resides at the center of this epic transformation.

Here are some Microsoft Advertising solutions that deliver more personalized customer experiences:

    1. Microsoft Advertising Showroom Ads

• Interactive ads that mimic the experience of visiting a physical showroom. 
• Users can ask questions and explore products in a rich, immersive digital space. 
• Future integration with brand agents for direct interaction with virtual representatives. 
  
  

    2. Dynamic Filters

• Feature that allows users to refine their search quickly without typing additional questions. 
• Helps narrow down options based on individual preferences, driving conversions. 
  
  

    3. Dynamic Ad Generation

• Uses query signals to dynamically create ads, improving click-through rates. 
• Applies additional signals like location and seasonal events for personalized ads. 

The real revolution in AI personalization happens by taking a human-centric approach. We are redefining what human-centric advertising means for these new conversational connection points. The web is becoming more conversational, and that’s how most people will interact with their digital world. To keep up with this growing trend, we redesigned the ad experience for Copilot. 

As a core principle, Copilot’s organic responses are not influenced by ads. Our goal is for ads to feel like a natural, helpful part of the experience, which is why we introduced the concept of Ad Voice.

Ad Voice uses the full context of conversations, so the results are personalized. With the richer signals of entire conversations, we can serve more relevant messages for each person’s unique needs. Evidence shows higher click-through rates in Copilot Ads compared with traditional search. Conversion rates are also solid, showing us that we’re headed in the right direction.

While this is just the beginning of the future of personalization, one thing is true: High-quality personalization is inclusive and contextually relevant. These ideas and innovations aim to deepen customer connections through enhanced relevance and drive better performance through personalized advertising experiences. 

The future of advertising lies in creating meaningful connections through thoughtful personalization. By blending advanced AI with a human-centric lens, we can craft experiences that resonate and empower people in their digital journeys while making them feel connected with loyalty.

And this is just the start; the possibilities ahead are as exciting as they are transformative—for people and businesses alike. Stay tuned for the next part of our series, The Future of AI Personalization Is Inclusive, which covers how to reimagine audience engagement with emotional intelligence (EQ).