How E-commerce Brands are Getting Value from AI

Michael Becker
Michael Becker
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Not long ago, artificial intelligence was viewed as promising technology but a solution that only hi-tech companies or industry giants like Google or Tesla could invest in and benefit from.

That presumption is fading fast. Today, the biggest hurdle facing AI marketing is understanding its true value amidst so many lofty promises and pervasive misconceptions.
The history of AI dates back further than most realize, but for all intents and purposes, the development of modern AI was really catalyzed in the 1950s with The Turing Test — a measure which quantified a machine’s intelligence.

Fast-forward to 2010: Microsoft begins tracking human body movement using a 3D camera and infrared detection. In 2011, IBM’s Watson defeats two Jeopardy! Champions and Apple launches Siri. In 2014, Amazon releases Alexa. In 2015, Google DeepMind’s AlphaGo infamously beats human competitors in the game Go. In 2017 and 2018, Facebook, Google, Samsung, and Alibaba all launch AI technologies.

And, for the first time, over the past five years (and entering the next five), marketers are using AI to drive value in a multitude of ways. The Fourth Industrial Revolution is here, and it’s unfolding fast.

twitter#Marketers are using #AI to drive value in a multitude of ways – the Fourth Industrial Revolution is here      CLICK TO TWEET

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What Is Artificial Intelligence & What Does It Mean for E-commerce Marketers?

Artificial intelligence is a blanket term referring to algorithms, technologies, and techniques that give computers or machines the ability to reason in human or superhuman ways.

For years, marketers have known that mass segmentation and one-size-fits-all email blasts weren’t fulfilling their customers’ need for true personalization — and data segmentation isn’t the reason most creative types got into marketing.

If ever there was a silver bullet that could restore marketers’ time back to creativity and which could deliver personalization all in one shot, AI is it. But to actually ‘do’ this thing called personalization, we have to embrace the revolution.

Artificial intelligence enables marketers, developers, and inventors to fully harness the power of data and transform it into useful tools and information for the masses but on an individual level.

From an innovation standpoint, many entrepreneurs have been using AI for years to drive their businesses forward. Jeff Bezos has reshaped the way customers shop and has realigned their expectations for how they interact with brands. This is evident with Amazon Prime and Alexa. Elon Musk sees AI as means by which we can get from point A to B with self-driving cars.

These AI pioneers lead the way for marketers to follow in kind. Artificial intelligence is the primary driver in what has been dubbed the “Fourth Industrial Revolution.”

AI takes marketing to the next level

There are a number of subsets of AI within a marketing context including machine learning, deep learning, and NLP to name a few.

As an enabling technology, AI helps marketers to fully harness the power of data and transform it into useful tools and information for audiences, customers, and users.

Jim Sterne“AI is not what you see in the movies – the science fiction of a machine that acts like a human. Instead, it’s a machine doing things in an interesting way because of a new way of programming… machine learning is what marketers will be mostly involved in. Think of it as the next level of computing capability.”

Jim Sterne • Keynote Speaker, Author, Founder, eMetrics Summit, Co-founder and Board Chair, Digital Analytics Association • @jimsterne

The biggest hindrance hasn’t been a lack of inventiveness or development; but hyped-up, inflated expectations and a general, overarching misunderstanding of its tangible potential. To understand real application, let’s turn our attention to the Five P’s.

Practical application of AI: The 5 P’s

Paul Roetzer, Founder of Marketing AI Institute dubbed “The 5 Ps of AI Marketing” which include planning, production, promotion, personalization, performance. They span the spectrum of most use cases for modern marketers looking to implement AI solutions.

1. Planning → helping to inform and even build intelligent strategies
2. Production → curating content for audiences
3. Promotion → execute intelligent cross-channel and cross-device promotions
4. Personalization → automation, target content, deliver product recommendations
5. Performance → turning data into tangible takeaways

According to Roetzer, AI is important to start learning about because it will alter and augment the work marketers do (or will be doing) every day.

Paul Roetzer“A lot of what we do is trying to predict what’s going to work and analyze what we’re doing — those are all things AI can enhance… but brands have to accept that AI is not a magical thing you sprinkle on everything, and suddenly everything gets better. We have to get comfortable with change in ways we’ve never had to as marketers before, and we’re going to have to have systems in place to be on the lookout for ways to bring greater value to the end user.”

Founder and CEO, PR 20/20 & Founder, Marketing Artificial Intelligence Institute@paulroetzer

Brands like Netflix are leading the way by personalizing recommendations and improving the customer experience based on what viewers are likely to want to watch.
Companies like Uber are leveraging AI for dynamic pricing, optimizing the cost for rides based on context, demand, and other variables. Retailers are personalizing content with 1-to-1 campaign targeting and right-time, right-place ad placement, helping increase relevance by satisfying unique preferences of each customer.

The focus for e-commerce brands implementing AI is mainly on the latter three of the Ps: promotion, personalization, and performance. Let’s explore each in greater detail.

Promotion
There are several ways AI is helping e-commerce teams in terms of promotion. They include:

  • Dynamic pricing and incentive recommendation.
  • Incentive usage prediction.
  • Defecting buyer detection.
  • Next-best product recommendation. Cross-channel product offers based on what has the highest propensity to be bought by an individual.
  • Automatic replenishment reminders.

Personalization
Personalization is not an isolated, standalone “tactic.” It’s an underpinning of AI-enabled solutions. Here are a few examples of personalization in action:

  • Personalized email content. Emails can be sent at the optimal send time for each individual, and can include dynamic content at time-of-open. For example, you can initiate a triggered email campaign with product and content recommendations that are optimized for each individual user – but only target users who browsed your website and didn’t purchase and who engaged with your Google AdWords campaign or Facebook/Instagram retargeting campaign.
  • Web engagement. Spare money on CRM Ads by suppressing “highly likely to visit” or target disengaged web visitors on different channels.

Performance
Analyzing campaign success and predicting value is a key tenant of AI. Where can this occur?

  • RFM modeling (recency, frequency, and monetary value). This analysis helps to assess, at scale, which customers are of highest value.
  • Predicting customer lifetime value (CLTV), acquisition cost, or churn to understand which customers are worth spending more money on.
  • Behavioral psychology (finding the “why” behind the “buy”) to show the best message to individuals.

In these ways, AI is helping marketers move from a channel-centric approach to a consumer-first one. It allows for scalable, repeatable, hands-off orchestration of campaigns across all channels, while putting the onus on the machine to do the tasks it’s best suited for.

Ashwin Ram
“We’re moving from a channel-first mindset in marketing to a consumer-first mindset. Marketing used to be about one-to-many conversations — you’d take a bunch of messages and find a way to broadcast them out to your audience. Now, marketing is shifting to be [about] one-to-one conversations. We want highly personalized, individual interactions with people when they want them, where they want them, about what they want. You need AI to help make sense of this complex world we live in to be able to interact with people where they are without being intrusive. That’s the big win for marketing!”


Ashwin Ram • Technical Director of AI, Google, AI Researcher, and Entrepreneur •
@ashwinram

twitter“You need #AI to make sense of this complex world & interact w/ people without being intrusive,” says @ashwinram       CLICK TO TWEET

Ready to Embrace AI?

A number of perceived blockages have kept e-commerce organizations from testing or piloting AI solutions, including:

  • A perceived lack of technical skills among the team
  • Complex or inflexible business processes like pulling from a centralized CDP for a single customer view
  • An internal unwillingness or reluctance to try a relatively unproven technology
  • Uncertainties about tying existing tech together and how AI would impact them
  • Misconceptions or fears about “handing over” customer communications to a machine

Still, 88% of marketers believe AI has already, or will, reinvent the marketing industry (AI Marketing Readiness In Retail And E-Commerce). These marketers know something that the minority of the rest do not… that AI creates measurable impact right now.

For marketing practitioners, AI is revolutionizing the operational execution of content, campaigns, and communications. Intelligent automation handles manual, menial tasks since the machine does them better than any human ever could.

But that’s not all – executives are also able, for the first time, to work with AI to accurately predict customer value, growth, and revenue, all while optimizing spend and tying channels to investment to ROI.

For those willing to take a leap of faith, AI offers revolutionary possibilities. Whether we like it or not, AI is here to stay. The only question is, are you prepared?

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Michael Becker

About the Author


Michael is Digital Content Manager at Emarsys. In conjunction with his team, he manages the Marketer + Machine content hub and podcast – creating best-of-breed, educational material for e-commerce and digital marketers. Michael is a published author on industry publications including Content Marketing Institute, JeffBullas.com, Business2Community, and others. 

Connect with Michael: LinkedIn@mjbecker_

Michael Becker
Michael Becker
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