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  • Writer's pictureSav Banerjee

RAG Intro Part 1: What Agencies Should Know About the Game-Changing AI

This series uncovers the most sought-after AI technologies in advertising today. We share our hands-on experiences, key learnings, and strategic implications for the industry.

Impact of AI on Advertising: How RAG is currently configuring the Agency model.


RAG AI magazine cover
Made with Adobe Firefly. Prompt: Futuristic Retro magazine cover for a modern technology called RAG

What is Retrieval-Augmented Generation (RAG)?


At its core, RAG is a powerful AI framework that combines the capabilities of large language models (LLMs) with the vast knowledge stored in external data sources.

In technical terms, it is a hybrid machine learning model that combines the best of two worlds: the ability to pull in relevant information from a vast database (retrieval), and the capacity to generate new content based on that information (generation).

In the context of advertising, RAG can dynamically produce ad content that speaks directly to a consumer's needs, interests, and behavior by tapping into current data and trends. As NVIDIA explains, "RAG improves generative AI models' accuracy and reliability by incorporating facts".

The Underlying RAG Technology Explained


At its core, RAG works in a two-step process. First, the retrieval component sifts through an extensive database to find pertinent information related to a given query or context. Then, the generation component uses that information to create original content that is both relevant and creative.

This process is enabled by large language models (LLMs) which have been trained on vast amounts of text data. When combined with RAG, these models become even more powerful. They're able to produce content that isn't just coherent and contextually aware, but also meticulously informed by the most up-to-date and relevant data available.


Technology Companies Operating RAG Technology

  • Perplexity, focused on developing RAG to compete with Google in knowledge seeking

  • Microsoft, Google, and Amazon, each with their own RAG solutions

  • C3.ai, with CEO Tom Siebel discussing RAG's role in addressing AI risks

  • Top RAG startups funded by Y Combinator


What Problems does RAG AI solve for Agencies?


- Handling the enormous scale of data in terms of volume, velocity, and variety.

- Reducing model hallucinations by providing contextually relevant data.

- Overcoming data scarcity to improve machine learning model training efficiency.

- Enhancing the accuracy and reliability of generative AI models with external data sources.

- Addressing challenges of un-automated analysis of large and complex data volumes.

- Improving information retrieval systems' effectiveness and precision.


Examples

- Question-Answering Systems: Uses RAG to source accurate information from large datasets for precise responses.

- Information Retrieval: Improves search systems by integrating large language models with data search capabilities.


How Agencies can implement RAG


Ad agencies can integrate RAG AI technology into their workflows to:

  • Create hyper-personalized ad campaigns that dynamically adjust to changes in consumer behavior or market conditions.

  • Generate content at scale, reducing the turnaround time and human effort typically required in content production.

  • Enhance A/B testing with more creative variants of ad copy and imagery, leading to more effective optimization of campaigns.

  • Provide clients with data-driven insights, showcasing how content generated through RAG resonates with target audiences.


For Strategy teams, RAG can be highly effective in analyzing dozens of large PDF files and/or research external data to extract highly specific insights on a brand or audience.


Here's a scenario of how that might work: The Strategist provides instructions to the AI model to perform a task using uploaded files. The AI then accesses the relevant databases to retrieve the necessary information and reports the insights back to the Strategist, completing the task efficiently and accurately.


RAG Framework diagram for Strategists
RAG Framework for Agency Strategists (Designed using Figma)

Data Shows RAG is Effective for Agencies


Research indicates that RAG technology can improve engagement rates and ROI for ad campaigns. Studies have shown that personalized content, a hallmark feature of RAG, can lead to a 20% increase in sales opportunities. In the digital space, click-through rates for personalized ads exceed those of generic ads by 14%, demonstrating RAG's potential to drive better results.

How Enso is using RAG for Data Analytics & Strategy


Embracing RAG technology is no longer a choice but a necessity for agencies looking to stay ahead in the advertising game. As ad agencies look to stay competitive, embracing RAG could be the key to unlocking explosive marketing success. Stay tuned for our next post, where we'll explore how RAG is transforming data analytics and strategy in the industry.


Have you already implemented RAG technology in your agency's workflows? Or are you considering adopting RAG to enhance your content creation and data analysis processes? Share your experiences, thoughts, and questions in the comments section below, or join the conversation on our social media channels. We'd love to hear your perspective on this game-changing technology!


Sav


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