| May 7, 2018

How Artificial Intelligence is Transforming Modern Marketing

Alexandra Savidge

Alexandra is Head of Marketing at DAP. She uses her background in digital marketing, UX, content and e-commerce to create... Alexandra is Head of Marketing at DAP. She uses her background in digital marketing, UX, content and e-commerce to create impactful digital experiences for our clients.

Are your marketing strategies taking advantage of the massive leaps in technological innovation to reach your customers when—and where—it matters?  In the arms race that is modern marketing, failure to capitalize on advances in emerging technologies such as artificial intelligence can result in customer engagement levels far behind your tech-enhanced competitors.  


For decades, the standard model for targeted advertising has been to find indicators of behavioral similarities (a subscription to a magazine in a particular subject matter, for example) and produce mass content that appeals to the perceived needs of your targeted demographic.  


But in today’s hyper-personalized world, this “good for the goose, good for the gander” approach no longer cuts it. Yet, the human effort required to craft truly personalized, large-scale marketing and advertising has made it virtually impossible to target buyers with surgical-like precision.


Thanks to artificial intelligence, however, we now have the tools to do just this—making it easier than ever to find, connect with, and convert prospects.


Just as importantly, artificial intelligence is allowing for the streamlining of marketing processes, lifting the prohibitive costs that once impeded efforts to enhance 1:1 communication and individualized content.  


In this article, we’ll cover the various ways companies are using artificial intelligence to improve both the precision and effectiveness of their marketing campaigns for better 1:1 communication, taking a glimpse into how AI will transform the way businesses interact with customers in the years to come.  



Artificial Intelligence and why it matters to the future of your marketing

AI is an indispensable tool companies can use to extract important insights and cutting-edge strategies from troves of data.

interconnected data points on digital representation of brain

There’s been a lot of hype around artificial intelligence (AI) as of late, but few people actually know what it is. 


Artificial intelligence is a subset of computer science that revolves around creating software capable of learning and improving its performance over time. Though computers are very good at quickly gathering large volumes of data, knowing what to do with that information and how to use it to pursue of a specific goal has traditionally been reserved solely for the human mind.


That is, until now.


In the 1950’s, computer scientists began searching for ways to create software capable of problem solving and mimicking the ways humans think. Early AI programs assisted with “simple” tasks such street mapping and, by 2003, the technology that would serve as the bedrock for cyber-helpers like Alexa or Siri had been put in place.


Today, AI’s algorithms are able to continuously learn and adapt to various “inputs”—whether it be the human voice, x-ray images, or other forms of data. And the potential of AI to transform every part of business, from production to customer service, is enormous.


Companies are already using AI to track customer movement, predict demographic compatibility, anticipate purchases, and to provide top-tier customer service. In fact, through a variety of AI offshoots such as machine learning, deep learning, and natural language processing (NLP), the technology is already responsible for powering the everyday technologies that we know and love, including Siri, Cortana, PayPal, Google Maps, and more.


This of course begs the question: If AI technology is so powerful, how can I use it to advance my company’s marketing strategy?



How companies are using AI to improve their marketing ROI

With the introduction of AI, companies have gained the ability to not only interact directly with individuals, but to transform the data they leave behind into a blueprint of how to better serve them in the future.

marketing team discussing AI & Marketing ROI

As AI algorithms continue to evolve and advanced computational power becomes more commercially-available, companies are progressively increasing the role of artificial intelligence in their marketing strategies. Often used to interpret the messages lurking beneath oceans of data, artificial intelligence lends a key competitive edge by providing keen predictive insights to correctly anticipate the behavior of customers.



Use predictive analytics to predict purchasing patterns

Predictive analytics uses vast quantities of data to forecast future outcomes. Companies such as Target have shone the spotlight on predictive analytics to masterfully predict the purchasing patterns of buyers. In fact, in 2012, the retailer made headlines when they were able to correctly predict the pregnancy of a teenager based off of her purchasing habits, before she had even discovered she was (unexpectedly) expecting.


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This incident reveals both the precision of the algorithms used by marketing companies, as well as the continued need for human oversight during the usage of these burgeoning technologies.



Use deep learning for sophisticated object recognition

Deep learning enables a computer to “learn” to recognize patterns in images, text, voice, and other data to extract valuable information. No conversation about the use of deep learning is complete without mentioning the way that social networking giant, Facebook, is employing a sophisticated object-recognition engine using user-submitted photos from Instagram.  


While the company asserts that the information gleaned isn’t being used to better understand user behavior, their recent open-sourcing of the platform opens up the gates to the possibility that other companies can leverage this predictive technology as well.



Use chatbots to enhance the customer experience

It’s not just mainstays of the tech industry, however, that are using artificial intelligence to enhance the customer experience. With the help of intelligent chatbots, companies are providing customers with intuitive, responsive, and dynamic 1:1 communication that addresses their needs and helps them identify helpful services.


Last year Shell, the multinational oil and gas company, introduced a new chatbot known as “Shelly” to help customers identify which enhancements are most effective for their vehicles.


Not only does Shelly assist with promoting 1:1 customer engagement for the brand, but, according to Mansi Madan Tripathy, Managing Director of Shell India, Shelly’s intelligent assignment of products reduces downtime, cutting customer operational costs by 25-30%.


Tripathy also asserted that Shelly’s use of sensor-driven data consolidation will enhance both the safety and operational efficiency of fleets that integrate the new technology into their company’s physiology.  




As AI’s prevalence grows, so too will the expectations from customers that companies replicate the quality of service it provides. In the same way that businesses are expected to have websites, online shopping, and other omnichannel avenues for purchasing, customers will expect intuitive, relevant communication from companies.


Moreover, the efficiency AI enables simply cannot be matched by humans. And even if humans could match their robo-brethren, the resource-intensive nature of this work favors companies that use the skills of their workers for non-programmable tasks.    


It’s necessary for modern marketers to begin exploring the various ways in which AI can advance their organizational objectives, and begin to actually use them. Waiting to adapt after an industry-wide paradigm shift can leave companies scrambling to catch up.



Improve the customer experience with artificial intelligence

Companies are changing the way customers experience their brand, with the incorporation of intelligent chatbots, predictive analytics, and other personalized offerings providing more intuitive customer experiences.

woman holding smart phone with chatbot on screen

Ultimately, customers will defer to companies that provide the most intuitive, valuable services at the lowest costs. Artificial intelligence will become the key tool that allows companies to not only meet their customers’ needs, but their own.


We recently discussed how Shell is using chatbots to enhance their customers’ experience. Let’s now take a look at how Shell, or any other company in the oil and gas industry, could continue to integrate AI into their marketing strategy to further optimize something used by most customers at least once a week: the gas station.



Use artificial intelligence to interpret customer card data

Many companies already offer customer incentives to encourage use of brand-specific cards, both at and away from the pump. These loyalty cards provide companies with an invaluable window into the behaviors of individual consumers, and the data generated by buyers often holds the key to predicting their future purchasing patterns.


In fact, AI has already demonstrated its ability to draw predictive insights from transactional data using sophisticated algorithms that far outperform previous marketing models.


In the past, customers were targeted with advertisements that matched prior purchases with upcoming promotions (for example, people who had purchased from iTunes found themselves targeted with promotional materials for U2’s newest album).


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This new generation of AI-driven marketing technology, however, allows marketers to employ sophisticated algorithms that convert customer purchasing data into indicators of which actual products they may be interested in, bringing custom targeting to a whole new level.

British Bank HSBC, in partnership with Maritz Motivation Solutions, conducted a loyalty program experiment in which 75,000 clients were sent rewards points that could be redeemed for a host of products and services. Some of the clients had their rewards plan generated by AI, while others used conventional promotional emails.  


The results echoed an overwhelming preference for the AI-rendered suggestions. Roughly 70% of the participants who ultimately redeemed their rewards package preferred the robo-enhanced recommendations.


The research uncovered that AI-powered predictive analytics can be used to acquaint customers with what they want, before they even know it exists.



Tailor marketing to clients’ moods with voice recognition 

Even more astonishingly, voice-recognition software enhanced with sentiment analysis can be installed at gas station pumps to both assist clients with their orders and to detect their emotional state.


Depending on the emotions detected, screens at gas pumps could provide product recommendations that best suit a particular mood. Consequently, AI will enable marketers to surmount hurdles presented by the dissonances between their marketing strategy and their customers’ emotions.

Similarly, voice-recognition software can be used to hasten the speed of customer orders, allowing for a faster flow of customer traffic. Instead of requiring clients to manually select the grade and quantity of gas they need, transactions could be expedited by implementing contactless credit cards and voice-recognition software that allow customers to simply and quickly describe their needs to the system.  

Moreover, repeated contact with an AI bot (such as “Shelly”) increases brand engagementpersonifying your brand to the customer through one-on-one, personalized interactions.


Help customers see the big picture with deep learning and visual recognition 

Let’s face it: day-to-day life makes it easy to lose track of important vehicle details such as upkeep and scheduled maintenance.


Using strategically-placed cameras imbued with object-recognition software, gas stations can help passing drivers keep track of important services they may have forgotten about, such as the replacement of worn tires, the changing of blown out headlights, or simply a much-needed cleaning.  

However, visual analyses need not be limited to vehicle inspections. Visual-recognition software could also be used to make inferences about customers themselves. For example, a mother with two kids could be presented with an advertisement for tasty, healthy snacks inside the gas station store.


Additionally, the benefits of object-recognition can be harnessed to streamline the shopping process inside the store. Using a proprietary app, customers could simply photograph items inside the store, have these items immediately recognized by the app, then matched against a pricing index and paid for with the customer’s credit card—without the customer ever having to wait in line.  

Amazon has already demonstrated the virtues of this model with AmazonGo, which combines AI, information derived from sensors, and data vision to liberate customers from the inconveniences of waiting in line.  This technology allows companies to collect more data on individual buying patterns—gaining insight into what individual shoppers buy, what parts of the store they visit first, and so on.



Out of sight no longer means out of mind

Finally, by partnering with existing GPS-equipped services such as Waze or Google Maps, oil companies can monitor the distances traveled by drivers since their last refueling, sending drivers reminders to refuel or directions to the nearest gas station at just the right time. Incentives to opt in to the brand’s gas—such as coupons, packaged deals, or redeemable rewards points—can then be accrued on the customer’s app-based account.



Soon, companies will be using AI to improve virtually every facet of the customer experience. As demonstrated by Maritz Motivation Solutions and HSBC, AI can be used to sift through huge amounts of data to detect behavioral overlaps between customers, including their purchasing patterns.


Incorporating similar technology into your own marketing strategy not only increases the chances of successfully selling to customers, it increases the value you provide. It’s cheaper, more efficient, and more personalized. And it’s a winning strategy if we ever saw one.  


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Strengthen your loyalty program with big data

As brand loyalty programs continue to evolve, AI is helping companies capture critical consumer information across platforms.

customer holding loyalty reward card

According to Jesse Wolfersberger of Maritz Motivation Solutions, AI is a game-changing force that will become ubiquitous in the evolution of customer loyalty programs.  

Their research with HSBC’s customer rewards initiative shows that AI is able to interpret a much wider breadth of data, in far greater depth and at far faster speeds, than humans ever could. Because of this, AI is able to elevate a loyalty program into a relationship, constantly analyzing troves of data to make the best offers to customers at a given point in time.

Wolfersberger also submits that AI’s refined insight into consumer behavior will help expose loyalty points fraud, giving companies an important tool in the battle against program fraud.


Traditional anti-fraud methods work in a manner similar to a tripwire, in which rules are established and, when violated, an alarm is raised. Artificially intelligent anti-fraud methods are different; they’re able to learn and develop dynamic, evolving safeguards against fraud, providing customers with up-to-the-minute, real-time protection.

Finally, the integration of AI into a brand’s marketing strategy helps companies develop well-honed omnichannel communications that allow brands to build loyalty into every potential purchasing platform. Cosmetics company Tarte transformed ordinary consumers into loyal, brand ambassadors by offering redeemable points to those willing to share positive information about the brand on their social media networks.  



Money talks, and so do your customers. While customers are compelled to promote a brand because of their positive experience with the company, their enthusiasm is likely determined by how well the business rewards them for their efforts. A well-geared incentive program is a quick way to encourage stronger customer loyalty. 



Final thoughts: artificial intelligence in marketing 

As more companies embrace AI, the marketplace will become progressively less forgiving of those that refuse to adapt.


One notable cautionary tale is the story of fallen-from-grace movie rental company, Blockbuster, who chose to pit conventional operational models against Netflix’s AI-assisted innovations.


Within a decade, they had become a shell of their former empire, and in November of 2013, officially went out of business.


Similarly, sharing economy pioneer Uber drove down taxi costs as it drove around customers at prices set by machine learning algorithms. Unlike taxi meters, these algorithms digested data drawn from customer behavior to accurately determine demand at any given moment. This enabled price flexibility based on market demand.


Taxi drivers, by contrast, were unable to keep pace with the intelligent pricing of Uber, and soon found their passengers jumping ship. Uber’s intelligent pricing structures were so effective at capturing client demand that professional drivers saw earnings decline 10%, while the profits of Uber drivers soared by 50%.


In the same way that forward-thinking businesses and start-ups have used AI to revolutionize their industries, savvy marketers have started wielding the predictive powers of AI to increase brand engagement, humanize their company, improve the viability of suggestions, and streamline purchasing processes.  


AI is taking the guesswork out of identifying and targeting customers, and pulling back the veil on the answers contained in big data. Featuring revolutionary advances such as object recognition and voice-recognition, AI is allowing once-faceless companies to, quite literally, speak with, see, and understand their clients.


Now is the time for companies to lay the groundwork for what will only become a more sophisticated, intelligent, and effective marketing machine. Companies that try to adapt after the market has already changed will find themselves struggling to catch up.


The ability to see the future of marketing will determine which companies survive to experience it.


How can AI help position your marketing strategies for success in the years to come? Drop us a line at [email protected] to learn more. And for more on how artificial intelligence is transforming industries, check out our blog.  

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