Will AI transform retail marketing?

Mar 15, 2017
Tom Ryan

A survey from Sailthru finds more retailers using artificial intelligence (AI) to support marketing purposes.

The survey of more than 200 retail marketers showed that of the 66 percent who leverage AI for marketing purposes, the most common applications are in search (37 percent), product recommendations (33 percent), and programmatic advertising and data science (both 26 percent).

Still, the marketers leveraging AI in one or more channels/methods weren’t much more likely to have met or exceeded their 2016 marketing goals. Sailthru said this suggests “not all applications and methods are equally useful, and that simply employing AI-based solutions is not sufficient for marketing success.”

Cosabella, however, has significantly increased its subscription base and e-mail-driven revenues since shifting to an AI-enabled marketing automation platform, according to Emarsys, which provided the core marketing technology for the implementation. 

In transitioning last fall, the family-owned Italian lingerie company dropped the advertising agency that had overseen areas such as SEO (search engine optimization), CRO (conversion rate optimization) and overall e-mail campaigns.

The company collaborated with five technology providers, programming the new AI-driven platform to absorb two years of product, pricing and consumer profile data. Customers were then auto-grouped into “personas,” such as best/worst customers, slipping/gaining customers, etc., to receive tailored e-mail or mobile offers.

Courtney Connell, Cosabella’s marketing director, said that due to the system’s machine learning capabilities, the program is “constantly fluctuating,” or continually making adjustments based on responses to campaigns to optimize returns. The technology works to personalize offers to past-purchasing behavior and employs other methods to better engage customers across channels.

Allen Nance, CMO, Emarsys, admits that one challenge for AI is that many marketers trust the traditional “batch and blast” approach that is often favors human instinct over a machine algorithms.

Ms. Connell said she “always believed that a machine would make better decisions and scale the data better than I would personally.” Her marketing team can now spend more time on “emotional content” and other more creative pursuits. Indeed, she believes removing much of marketing’s repetitive tasks through AI will “force us to reconnect with what makes us human.”

DISCUSSION QUESTIONS: How do you see artificial intelligence altering retail marketing? Where can machine learning automation be being particularly beneficial across marketing processes?

"Ultimately I see AI transforming life — including retail marketing. "
"AI experts tell me that what business is calling “AI” isn’t. It’s simply algorithms applied to business. And they’re yawning amid all the hype..."
"I think a big reason why marketers don’t see better results is because many companies that claim to have AI or machine learning actually don’t."

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15 Comments on "Will AI transform retail marketing?"

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Max Goldberg

AI is not a panacea. It will not replace the need for retailers to cover the basic building blocks of any business. Retail is all about offering consumers products they want at prices they can afford, within an environment that is entertaining.

Camille P. Schuster, PhD.

AI in and of itself, especially if just used to replace current advertising, does not generate success. What do you want to learn about your consumers? What do you want to do with that information? Does the AI algorithm have the authority to make any change? using AI needs to be thought through carefully.

Ralph Jacobson

Just one example of real machine learning and artificial intelligence in retail today is one online merchant that has a publicly available app that aggregates inputs from shoppers to help determine the best gift for any occasion based upon the natural language responses shoppers type or speak for questions asked by the app. This service has become particularly valuable to the retailer because, as opposed to a call center person who typically only suggests a couple of the most popular items to the shopper, this app digs down throughout the assortment to suggest the best item for the shopping mission. We are seeing greater movement of SKUs in the bottom 80 percent of the product line than ever before.

Ryan Mathews
Ultimately I see AI transforming life — including retail marketing. If Mark Cuban was correct in his remarks at SXSW this past Sunday we are going to see the world’s first trillionaires created as AI applications flood the market. As to the second question, I think it’s the wrong question, or at least only a partially correct question. There are at least four levels of AI: pure reactive systems like IBM’s old Deep Blue; limited range systems like self-driving cars; consciously unaware systems — think R2D2; and truly conscious systems — think science fiction movies. Each level has its own limitations and is therefore better able to address certain tasks. It would be a huge mistake to confuse what AI is good at today — inventory management, personalized marketing, some customer service applications — with what retail applications it will be able to master tomorrow. So I’d say this is one area where it is better to focus on the future rather than the present — especially if you are a retailer. As they say,… Read more »
Nir Manor

AI is one of the main tech disruptions that presently and in the coming years will change the world as we know it (digital health/medical tech is another example). No doubt AI will change a lot of what we know and do in relation to retail. Early adoption of AI in different aspects of retail can be unsuccessful in the short term. But longer-term retailers will go down the learning curve, while technology will improve to become more mature and gradually AI applications will create much more value in retail, especially in data analysis and fact-based decision making processes.

We already see existing AI-based solutions that create a lot of value for retailers, such ones that automatically create personalized offers and campaigns that are sent to millions of customers based on their purchase history and “Retail DNA,” or AI systems that follow shoppers who are online shopping to improve conversion, prompt personalized offers, save “abandoned carts” and tailor customized content to the particular shopper’s needs.

Anna Tolmach

I think a big reason why marketers don’t see better results is because many companies that claim to have AI or machine learning actually don’t. You need a lot of data, which most ad-tech startups don’t have. Additionally, most AI isn’t as good as the human mind, yet. I think the key is to dig into how the product actually works and understand the value — if it sounds too good to be true it probably is.

Shep Hyken

AI is revolutionizing the customer experience. It’s not as much about automation, although that is a powerful part of AI. It’s what information can be provided to support a sales or customer support person. Machine learning and automation can make customer support better. Simple basic questions can be answered online by computers. Customers interact with the company — actually the machine — to get information quickly. The best systems simulate a “people to people” interaction. They also can tell when the customer isn’t getting what they want and quickly and seamlessly connects them to a human.

david salisbury
While you seem to focus on SEO and advertising, remember that in a mobile-first world, it’s local search, loyalty and discount deals that motivate digitally native shoppers. AI that leverages location, real-time incentives that are personalized, loyalty benefits and mobile (mobile wallet, digital receipts, mobile coupons) in my view are a significant part of the future of marketing automation in retail. Digital natives are on mobile in the store, or at the mall. At the POS, we are seeing more add-ons that are artificially intelligence based, they leverage data and personalization in new ways giving retailers added ways to deliver ROI in a fairly automated way. Chatbots that leverage SMS, not email, will take some market share from legacy email approaches. 2017 has many chatbots in beta, but as we move more into the IoT era, it’s chatbots that know us, who will be our new “shopping companions” in store. Conversational bots aren’t exactly new; Alexa will likely have 25,000 skills by the end of 2017. AI startups are partnering with POS and IoT solution… Read more »
Sterling Hawkins

Retail executives are drowning in data today as big data continues to explode. New solutions and capabilities are coming into the market that use AI to automatically surface key analytics, automate processes and focus on opportunities or concerns. AI and machine learning are taking optimization solutions to new levels of accuracy and capability, which as Ms. Connell says, frees up humans to be human and build both relationships and the business.

Brandon Rael

Ultimately, the long term impacts of AI on retail marketing will be substantial. While AI will potentially have a positive effect on both the consumer’s and retailer’s decision making process, this is an evolution, rather than a revolution. The retailer’s marketing teams should start to build up their capabilities, skill-sets and prepare to take advantage of this advanced technology before it becomes mainstream.

Despite the significant increase of AI branding, marketing, and the omnipresence of Watson, Alexa, and Google and other AI integration into the Amazon shopping experience, the process of AI taking over the world is going to be a slow one. The digital native community, and the generations of consumers to come will know a world, where AI is seamlessly integrated into their daily lives, and be an inherent part of knowing who they are, where/when/what they shop for, and offer a personalized and customized experienced beyond our imaginations.

Doug Garnett

AI experts tell me that what business is calling “AI” isn’t. It’s simply algorithms applied to business. And they’re yawning amid all the hype about AI.

Can AI transform retail? No. There are places where algorithms should be used to do good things. But now that we know big data isn’t going to deliver on the big promises, data people have renamed what they do AI. So remember, big data has huge potential risk (perhaps read the recent book “Weapons of Math Destruction” for examples where data analysis destroys far more than it builds).

What strikes me about the stories I read promoting the AI fad is it easily becomes an excuse not to do the hard work of retail — products, stores, logistics, inventory management, etc.

So let’s use data wisely. But also recognize it can only do so much — and we are still responsible for creating our own bright retail futures.

Patricia Vekich Waldron
Patricia Vekich Waldron
Retail and Marketing Expert; Former IBM Executive
9 months 2 days ago

New technologies change everything — AI or Cognitive Computing is a new era in computing that will permanently change the game for all industries and functions.

Kate Munro
The term AI, short for artificial intelligence, is a misnomer and a bit of marketing hype still, in my opinion. It’s not the AI of sci-fi movies. Big data, and faster hardware that makes algorithms run amazingly fast and offer up predictions is more real. In my view, big data, machine learning or predictive analytics — whatever you want to call it — has already transformed retail. A customer’s path to purchase used to be generally predictable, going through the stages of awareness, consideration, evaluation, purchase, and use. This traditional sales funnel now looks like it’s been thrown inside a blender. The marketing funnel is driven by digital technologies and the customer journey is dynamic, accessible and continuous because the digital touch points are always on. Customers can constantly re-evaluate their purchase options. Because of this, most retailers are adopting customer strategies fueled by analytics to derive more insight and clues on what to do next. Companies automate responses with the use of predictive analytics either for mining existing customer and social web data for… Read more »
Ricardo Belmar

Anywhere there is data related to a business outcome derived from analyzing that data, AI will bring revolutionary change to processes. The key for retailers is that it is the processes that will be improved. Whether those processes are in marketing, merchandising, assortment selection, inventory control, etc. there will still be a need for a human element to relate on a personal level to customers. Retail has always been, still is, and always will be about customer relationships. AI will greatly enhance a retailer’s way to develop the relationship, but it will not replace the need for those deep relationships cultivating a loyal customer.

Morgan Linton
We are just scratching the surface with AI when it comes to retail marketing and retail in general. While many AI technologies have actually been ahead-of-the-curve, it has taken retailers longer (and will take many even longer) to get comfortable with the concept and AI and Machine Learning. The real challenge for retailers has been understanding the importance of the feedback loop coupled with enough time to really learn and improve. AI algorithms don’t provide instant results which is what many companies are often looking for. Instead the retailers that are benefitting the most from AI are those who are willing to take the time for the algorithms to improve. Stitch Fix is a great example here and they have 50+ data scientists which has allowed them to progress so much faster than many other brands and retailers. As for how AI will alter retail marketing, I think we’re already starting to see the results. In the end there is no way that a person (or group of people) could take in so much data… Read more »
"Ultimately I see AI transforming life — including retail marketing. "
"AI experts tell me that what business is calling “AI” isn’t. It’s simply algorithms applied to business. And they’re yawning amid all the hype..."
"I think a big reason why marketers don’t see better results is because many companies that claim to have AI or machine learning actually don’t."

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