[AI Revolution](43) Entrusting Advertising Videos to AI... Even US Walmart Was Impressed

V-Cat, Insert URL and Get an Advertisement Video in 1 Minute
Major Corporations 'Love Call' for Well-Selling Automated Ads

A, who sells clothing on Naver Smart Store, was troubled by social networking service (SNS) advertisements. They wanted to create SNS ad videos for platforms like TikTok and Instagram but didn’t know how. Hiring a professional company was too costly. Then, they discovered a service that automatically creates ad videos. It took only one minute to generate a video by inputting the product URL. After uploading it to SNS, sales soared. A, a novice seller, became a power seller with sales exceeding 20 million won in just three months. The service A used was 'V-Cat,' which creates ads instantly using generative artificial intelligence (AI).

Generative AI that plans ad strategies and creates materials

Chanseok Jeon and Beomjin Jeong, co-CEOs of Pion Corporation, which provides V-Cat, are veterans in the advertising market. They were founding members of Korea’s first mobile advertising platform, 'Kauli,' in 2007. Kauli is a solution that analyzes user data to display personalized ads and was listed on KOSDAQ in 2016. While targeted advertising like Kauli quickly automated, ad production still required significant human effort. In 2019, the two teamed up to solve this problem and embarked on their second startup.

From the left, Jeon Chan-seok and Jeong Beom-jin, co-CEOs of Pion Corporation
[Photo by Pion Corporation]

Pion Corporation integrated various AI technologies into V-Cat. First, it combines optical character recognition (OCR) with AI to select ad materials. The AI scores images based on criteria such as the proportion of human models, whether the product overlaps with descriptive text, and only uses images that pass the threshold. They also employ GPT-4, the brain behind ChatGPT, and the image-generating AI 'Stable Diffusion.' GPT-4 recommends templates based on advertising goals. For example, if the discount rate exceeds a certain level based on product information, it suggests ad templates emphasizing the discount. Stable Diffusion adds images needed for customized ads. For the same beer ad, it inserts a baseball stadium background for baseball fans and a camping site background for campers. CEO Jeong emphasized, "We focused on automating ads that sell well rather than simply pretty and stylish ads."

Videos produced by V-Cat have exceeded 100,000 within a year and a half of launch. Interest from large corporations is also high. LG Electronics, Lotte On, Amorepacific, Naver, and Gmarket have partnered with V-Cat. Hyundai Motor and Shinsegae are also in discussions. Gmarket used to outsource production to create 600 product ad banners daily. After adopting V-Cat, two in-house designers handle this workload. They plan to increase banner production to 1,500 per day starting this September.

Entry into Silicon Valley, USA... aiming for automated ad execution

Recently, they have started expanding overseas. In March, they established a corporation in Silicon Valley, USA, and entered the American market. Their first client is expected to be Walmart, the largest retailer in the US. This opportunity arose from participating in the Consumer Electronics Show (CES) held in Las Vegas earlier this year. Although Walmart is strong offline, it is a latecomer online and is currently discussing video production integration after seeing V-Cat’s technology. Full-scale collaboration will begin in September.

Jeong Beom-jin, CEO of Pion Corporation, introducing V-Cat at CES 2023
[Photo by Pion Corporation]

Global big tech companies like Google and Meta are also eyeing the generative AI advertising market, but Pion Corporation believes it has competitiveness. The ad material production market alone is huge, worth around 100 trillion won, and startups have advantages. Since trends change frequently in this market, they can adapt quickly. CEO Jeong said, "When we created Kauli, people asked if we could compete against Naver or Kakao," adding, "The advertising market is like a large rolling stone with big gaps, so we will target it with sharp services."

The next goal is to automate ad execution as well. This engine will measure performance by advertising channel and automatically run ads. For example, if men were expected to prefer beer ads with a soccer stadium background but responded more to ads with a resort background, the system would automatically switch to resort background ads. CEO Jeong stated, "Our vision is to automate the entire marketing process using AI," and added, "We are even aiming to conquer video editing, which is difficult for AI."