The rise of artificial intelligence in marketing

Heath Barlow

2nd Aug 2017

As a business, imagine knowing how your customers will respond to content before they see it. What about being able to tap into an understanding of the thoughts, emotions and comments consumers have about your brand?

This is not some far off futuristic fantasy. We live in an age of machine intelligence capable of deeper and more meaningful market understanding than ever before. And tools such as artificial intelligence (AI) have emerged to help us in our quest to know it all. The only question is, how do we implement these new technologies to improve communications with the customer?

An artificial understanding

Marketing algorithms and machine learning can already collate huge volumes of data such as browser history, resulting in a wealth of actionable insights for marketers. AI has the capacity to provide marketers with detailed character profiling of individuals as well as insights into physical behaviours that enable us to personalise content to make it more effective.

Advanced AI and bots, reduced computing costs, and lower price points will lead to the rise of AI, creating a new norm for digital marketing. Research firm Markets and Markets estimates that, as a result of the rising adoption of machine learning and natural language processing technologies in media, advertising, retail, finance, and healthcare industries, the AI market will grow from $420 million in 2014 to $5.05 billion by 2020.

Companies are already taking steps to implement AI for customer interaction. Take Mastercard as an example, which announced in October last year that it will launch an AI bot to provide personalised, AI-driven conversations for its messaging platform. While AI does not have the same capacity as a human customer representative yet, they offload the pressure on human employees and can answer certain questions quickly and accurately.

Where we are and where we’re going

Last year, industry research revealed 55 per cent of CMOs expect AI to have a “greater impact on marketing and communications than social media ever had.” Marketers must prepare for the coming disruption and consider how they can integrate AI into existing technology. While the use of AI in marketing settings is still in the infant stages, many firms are already seeing results from even the most basic implementations.

Global lingerie chain Cosabella is using AI capabilities to execute omnichannel campaigns at scale and power integral marketing insights. The retailer implemented AI enabled marketing automation to enhance customer engagement and acquisition. As a result of the implementation, Cosabella gained an increase in new subscribers, doubled its subscription base, and grew the luxury brand’s email-led revenues by more than 60 per cent compared to 2015.

As well as driving sales, a combination of machine learning and AI can convert raw consumer data into a deep understanding of each customer’s identity, creating highly personalised customer experiences and journeys. In Cosabella’s case, AI-powered automation led to crucial insights about customer behaviour. For example, the firm discovered that if a customer hadn’t bought something in 62 days, they were lost. The data also shows Cosabella trends about what products are most engaging, or that high-spending customers react better to more emotional appeals, while lower-spenders tend to be more involved in what’s promotional.

Merging the human and the machine

Ideally, machine learning should supplement human marketing efforts. AI enables hyper-personalisation at scale, and marketers act as guides, ethically directing the technology to advance the business.

For example, Evolution Slimming, a gobal weight management, supplements and meal replacement provider, took their incentive strategy to the next level using AI to generate smart, personalised offers. Identifying which clients would best respond to discounts wasn’t humanly possible with their existing tools and resources, leaving the marketing team with limited incentive management options. The company used AI for incentive recommendations, and the technology took care of the decision making, execution, and analytics to streamline performance over time without the need for human intervention.

Building highly personalised offers into discounts boosted engagement and drove conversions. Evolution Slimming saw a 31.2 per cent uplift in revenue from leads, 7 per cent uplift in revenue from active buyers, and 6.5 uplift in revenue from defecting buyers.

The ability to include smart discounts in campaigns gave the team more confidence during campaign creation, as they no longer had to perform labor-intensive cost/benefit analyses before determining incentive thresholds and could focus their efforts elsewhere.

As algorithms increasingly augment marketing and the industry becomes more data-driven, it inevitably raises the question of whether machines will supplant human beings. In an AI system, everything must be concrete and specific, while humans are capable of abstract thinking required in non-standard situations. Similarly, machines are limited in their creative output and cannot produce new ideas and directions that a human being can.

As for the current functions that will be replaced by machines, AI will create new roles and require specialist management. It will necessitate different skill sets based on a higher degree of quantitative and analytical understanding to see the overall trends of markets. For example, human marketers will be required to provide strategic guidance and to instruct AI to find the right datasets or target a specific audience segment. Machines provide function, they still need humans to provide direction.

To survive in the new landscape, marketers must be proficient with the data and understand how to use it to meet both customer expectations and achieve business objectives.

Speaking to the individual

The potential for machine learning is constantly evolving with advanced profiling algorithms, machine learning and AI. These progressive developments are to fulfil a function unchanged since the dawn of marketing: connecting with the customer.

The customer will always be the centre of the business, and marketing is the way the company connects to consumers; the stronger the message, the stronger the connection. With the advent of AI, our capacity for communications improve, paving the foundation for strong customer relationships.

Heath Barlow is market lead in Australia for Emarsys.