5 Ways AI is transforming marketing
There’s an old saying in marketing that 50% of your budget is always wasted, you just don’t know which 50%. AI is changing that — to the benefit of businesses, marketers and consumers. Here’s how:
1. One-to-One Advertising
It used to be that a marketer’s best way to “target” ads was to choose where to place them. If you had a big budget, you might be able to make multiple versions of an ad but you still had to choose where it would show up. Now, AI algorithms can automate ad targeting and serving, and can even create and adapt ads in real time from a repository of words and images. The same shampoo brand can serve an ad with a blonde model for color-care shampoo to one woman on Facebook while serving an ad with a Hispanic model and a strength & shine message to another — with minimal incremental cost. AI also has the potential to predict when a woman might be in the market for shampoo based on her purchase history, so ads can be timed for the perfect moment. As the algorithms get more sophisticated, we will see truly personalized ads that are tuned to the individual preferences of specific users, served to them in precisely the context and at the time when they are most relevant.
2. Flattening the Funnel
Now that we can embed truly intelligent chat into an ad – and integrate a seamless hand-off to a human if the interaction needs to escalate to that point – it’s possible that rather than follow a winding “path to purchase” with multiple touch points across different media or even going down an all-digital purchase funnel, consumers can now go through the entire cycle of awareness, consideration and purchase in one ad. This is especially powerful for specialty retailers whose assortment of product and expertise make them credible advisors on purchase decisions. For example, Best Buy could target consumers who are in the market for a flat screen TV, consult them on which set meets their needs, and overcome any potential barriers to purchase in a real-time interaction. If a customer has interacted for 10 minutes via chat but isn’t ready to pull the trigger, the agent could offer him a unique discount code valid only for the duration of the chat to try to move him to purchase.
3. Making TV Better
It used to be that the TV spot was the crown jewel in any ad campaign, taking up the lion’s share of both the production budget and the media spend. In 2018, eMarketer predicts that digital ad spend will outstrip TV ad spend for the first time, which will likely drive a shift in production budgets and approach. Where TV spots used to be selected based on scripts and storyboards with big bets placed on 7-figure productions, now, marketers can live-test ads in the digital environment before scaling up for TV. The “scrap” that ad agencies used to put together for testing — an assemblage of existing footage that approximates the narrative of the proposed spot — can be run online. AI can map users’ attention and pinpoint the precise moments when they lose interest or engage further, prompting important creative changes before millions are spent on TV media buys. And those 7-figure production budgets? They will keep shrinking as consumers adapt to the more rough-and-ready style of video that they see daily on Snapchat and Youtube.
4. Benchmark Competitive Campaigns
With AI, marketers can unlock insights from competitors’ campaigns that would otherwise be invisible. Big trends like market share and dollar sales are easily visible, but more nuanced trends like sentiment, or share among a particular age cohort or demographic might be impossible to see with the naked eye. Using Watson platforms, consulting firms like LPA are able to ingest billions of data points from social platforms and public domain sources to bring these kinds of insights into focus – and give companies a window of opportunity to act on them. In one recent case, they helped a small retailer with no digital presence benchmark the performance of their largest competitors’ digital campaigns and determine which media channels, demographics, and messages were performing best. They identified areas of opportunity and then overlaid weather and zip code data to fine-tune coupon offers to maximize ROI. This gave their client confidence that their limited media dollars would be well spent.
5. Automating Discovery
Just as Spotify and Pandora are turning us on to music based on our listening habits and feedback, many retailers are now tailoring product recommendations based on our purchase history and reviews. This does two things: 1) makes it easier for a consumer to discover new brands and products they like and 2) makes it easier for a new market entrant to reach their audience – without a huge ad spend. It used to be that to make consumers aware of a new product, a company either had to spend big ad dollars to drive consumer awareness or be big and important enough that a retailer would dedicate significant display space to the launch. AI is leveling the playing field – bringing consumers more choice in the process.
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