December 3, 2018 | Written by: IBM India
From retailers such as Carhartt to LEGO, hundreds of brands are making their data work harder and smarter for them through the power of artificial intelligence and smart analytic tools. While many marketers are still hesitating when it comes to AI, either because they’re uncertain about its real benefits or because they’re not comfortable with the idea of an “intelligent robot”, the reality is, AI is instrumental and indelible to the marketing function.
Deon Newman, CMO and VP of strategy at IBM Asia Pacific, spoke to Marketing about the dystopian misconceptions about AI and to help us understand it for what it is: a powerful tool that can help marketers gain the insights and information they need to create stronger and more meaningful experiences for consumers.
From your vantage point, what are the key issues your clients are raising with you?
All around the world, the issues marketers are dealing with are very similar. We’re all dealing with way too much data. What should have been emancipating for us has resulted in an absolute flood of information that’s now coming from not just transactional history or external sources, it is now coming from the internet of things as well, and marketers have all this gold buried in so much data. That’s one thing that we see everywhere.
Second, there’s been a proliferation of marketing tools over the past five to 10 years that don’t necessarily integrate, provide different information from a profiling standpoint, are fragmented, and don’t necessarily offer a holistic experience for their end customers.
In addition to that, the marketing role has grown. Marketers are now responsible for creating differentiated experiences. We’re not just competing with traditional vendors anymore, we’re competing with Instagram, and Google and Facebook, and other companies out there that are creating new experiences. Brands are fighting for attention to create the best experience whether that be digital or offline.
The final trend I’m seeing that’s fast becoming a permanent reality is this fear people have of, “what are companies going to do with my personal information”. On one hand, you’ve got people freely sharing their experiences with each other on a day to day basis. On the other hand, personal trust in brands has degraded, with new regulations coming in such as GDPR with countries all around the world following suit. I think this is a challenge a lot of companies are facing as well.
What digital marketing trends are you keeping an eye on?
I really think the biggest trend is getting more from data, getting more insights using technology to give back the power to the incumbents. We’ve watched for the past decade the platform giants (Google, Facebook, Netflix, etc) grow in terms of control over the data they have, but the reality is that public data really only represents about 20% of the data that’s available, while 80% of the data is actually inside each of the incumbents doing their marketing. It’s also the most valuable type of information, about how customers consume their products and interact with brands.
So I think the most important trend we’ll see is how insights are gained from that data, and I’ll give you an example which is Carhartt, a merchandise company that invests a lot of time on its digital merchandising strategy. In the past, the brand was very spreadsheet bound, and it was hard for the team to spot trends quickly. A good example of this was when the Interstellar film came out, and there was a Carhartt jacket that Matthew McConaughey’s character wore. This wasn’t a best-selling jacket that was high on its radar, but it just blew up and started clearing out of the stores. The brand couldn’t work out what was going on, and it took the team a week of pouring through the spreadsheets to actually make the link back to this movie. By that time, it was a little late to optimise revenue around the opportunity. So now the company has implemented AI-based tools, and is able to spot and capitalise on trends like that much faster.
What are businesses doing well with their data, and what could they be doing better?
That’s the million dollar question. The first point is that businesses are not mining their data in the way they could. The gold is in the incumbent data they have, and the marriage of that data with externally available data, and then looking for trends and nuggets inside there using some of the new analytic and AI tools that can allow them to spot trends.
Companies need to do more with that, and have deliberate strategies around it.
A second thing for companies to think about is to be very clear about how they’re using that data. What will it be used for? Are they keeping it private? What is their policy towards protecting it? I think every company should be very open about that kind of information.
Digital marketing makes it easy for companies to deliver tailored communications, but often brands struggle to deliver truly personalised experiences. What are your thoughts on this?
We just finished our fifth annual customer experience study, where we surveyed more than 500 retail and consumer product brands over 2,500 different companies, and what we found is personalisation was one of the top areas that retailers felt they really needed to catch up on. Around 71% of the brands in this study only provided generic marketing messages to their customers. In another example, among the brands that offer loyalty programmes, 70% don’t allow customers to choose their own preferred form of rewards.
So, the industry has been talking a lot recently about artificial intelligence tools to build more personalised products and marketing offers, and I think now is the time we need to make that real.
A great example of this is some of the work we’ve been doing with LEGO. LEGO is one of the first brands that has activated an artificial intelligence-based ad system. The brand is looking at its digital marketing landscape using something called Watson Ads Omni, which started around the Black Friday period, one of the busiest shopping days of the year.
What the brand has done is train this Watson Ads Omni to know the 35 different LEGO products that it is focused on, and craft different responses based on different areas of interest and needs that consumers may have.
This is so that when consumers go onto the digital experience and they start to key in questions, the system can actually analyse them, and say, based on different parameters (which might be about age, product types, etc), they can actually have a one-to-one conversation with that consumer, and help them decide which path to pursue. So it’s a way of serving up ads in a much smarter way, based on how consumers are approaching the LEGO experience.
With the proliferation of marketing tools, one of the things we advocate is an open ecosystem, so that brands have a connected and open marketing ecosystem designed around the customer. Brands have plenty of great customer data from email to mobile to shopping apps to social media to call centres, and more. Leveraging so much disparate data to improve the customer experience is a huge challenge. With IBM’s Universal Behaviour Exchange, it allows brands to combine data generated from many integrated business partner ecosystem solutions such as MediaMath, Google Doubleclick, Line and Sprinklr, to name a few, to get a more complete picture of the customers’ behaviour to create more personalised messages to improve engagement.
What are some of the aspects/barriers to entry that marketers need to be aware of when it comes to AI?
Whether we realise it or not, all of us are experiencing AI now and interact with AI-based systems all the time. They’re being used in customer call centres for customer queries, or by farmers to get recommendations around yield increase. The way to think of AI is less about artificial intelligence and more about augmented intelligence. It’s a machine helping humans do things better and faster.
For example, automating the task of finding stuff or managing and securing personal information can help with better navigation. The latest AI report that we brought out shows that four out of five enterprises are planning on moving ahead with some form of AI adoption, and it’s all about creating better business value, better revenue growth, but there are some fears out there as well. About 63% of those companies called out a lack of skill or said they don’t know how to begin. So one of the misconceptions that we see across marketing peers is that AI “might be for somebody else”.
But it’s not like the old days where you wait for technology to get more mature before you embrace it because AI technology becomes more powerful the more it learns about your business and the more information you feed it.
People are also worried they don’t have the skills on board to fully leverage AI, but the system has the capability to understand natural language, which is important, as voice is also a very powerful interface. So it’s about being willing to experiment so that you can allow the technology to learn and improve and give you real outcomes.
What marketing trends are you most excited about?
One of the most exciting trends is the ability to implant the brand experience into things. I’m seeing more and more use of intelligent assistants embedded into things such as a hotel room to allow the hotel brand to provide everyone with their own personal concierge, built into the phone/wall and bringing that to life; or for a car company to build an assistant into your car that knows your favourite route to work and where you get your favourite coffee from.
These are the things that allow experiences to become personalised experiences for you. It’s one to watch out for in the future. It’s got a bit of an Iron Man feel to it right now, but it’s certainly becoming a reality.
Last, any final advice for your fellow marketers out there?
The first is to recognise that our roles as marketers are changing. We are moving beyond traditional marketing to that of being the chief experience officer for our brand, so we need to delight our audiences through experiences.
Second, artificial intelligence or as others would call it augmented intelligence, is real today. It can help you differentiate and learn about your business and do a better job of understanding your clients. It’s also easy to get started now, as we’re embedding this augmented intelligence capabilities into all of our marketing technology tools.
And then third, when you think about companies who work within a very large marketplace, it’s important that you’re working with a connected and open marketing ecosystem that is designed to help you centre around your customer and not just a single vendor.
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