Artificial intelligence (AI) is often mentioned in conjunction with big data or machine learning as a generic term for methods and applications that deal with the automation of intelligent behavior. A key feature of AI is that it is based on software that is capable of learning from its own behavior and that way constantly improves itself.
Already today, AI shapes many areas of our lives, like e.g. the language assistants of Amazon, Google & Co, new opportunities to provide faster and more precise diagnoses in medicine, or intelligent search engines that filter relevant results from the flood of information on the Internet in a matter of seconds. In marketing, AI has certainly a lot to offer as well, mainly by providing a high potential for increasing efficiency with a wide range of possible applications, data analysis being just the most important one: By using AI, for instance, a huge amount of patterns can be identified from customer and transactional data that help predict future consumer behavior and customer preferences (predictive analytics). Applying these predictions enables marketers to provide their potential customers with personalized offers and products on the right channel at the right time. At the same time, the results of a campaign can be evaluated much faster and potential for improvement can be identified easily.
Chatbots are another example of the use of AI in marketing. They can address customers around the clock, answer inquiries automatically and provide additional customer service. New data from Juniper Research found the global number of successful retail chatbot interactions will reach 22 billion by 2023, up from an estimated 2.6 billion in 2019. According to Juniper’s research, it is because chatbots can deliver high quality user experiences in a low-resource way, boosting customer retention and satisfaction whilst also reducing operating costs. A crucial enabler of this will be improvements in NLP (Natural Language Processing), which will dramatically reduce the failure rate of chatbot interactions, by making them more natural and valuable for customers. Juniper anticipates that retailers who do not adopt chatbots will face strong challenges from more technologically adept disruptors, who will use chatbots as an extension to the crucial omnichannel retail experience. (For more insights, download the free whitepaper: How AI Can Revive Retail.) In fact, Juniper expects chatbot-derived revenues to soar, predicting retail sales resulting from chatbot-based interactions to reach $112 billion by 2023, up from $7.3 billion in 2019, which represents an annual growth rate of 98%. However, the research found these sales will largely be a result of migration from other channels, rather than a new revenue stream. Accordingly, the research emphasized that while retailers must adopt chatbots for ease of use (and to reduce consumer churn), their return on investment will come from efficiencies, rather than new income. Finally, AI can also be used for sentiment analysis, for instance, in connection with social media comments and customer reviews to identify valuation patterns.
But despite AI's multiple applications, its potential to contribute to an improved customer experience and to make workflow more productive in marketing, it does still not seem to have really arrived in marketers’ day-to-day lives. Apteco interviewed, for instance, more than 300 marketing experts to find out their plans for using AI. According to Apteco, only 8% said that AI drove their marketing last year, although three-quarters of respondents planned to use AI in 2018. Not to mention that AI adoption is slow in non-marketing areas as well. Still experts are convinced that AI will change our lives significantly, despite its high complexity, hurdles regarding data protection and ethical aspects, that are assumed to be the reasons for the restraint.
Particularly, the issue of privacy could be the reason why the use of AI in marketing is not as advanced as expected. The entry into force of the General Data Protection Regulation (GDPR) in May 2018 has for sure demanded a high level of attention from marketers and regarded as a stumbling block for AI implementation. The bottom line is that the use of artificial intelligence in marketing is still more of a hype than a reality, but the potential and opportunities that it brings are undisputed.
By Daniela La Marca