Transforming tomorrow: The evolution of AI in Marketing

The marketing industry is currently undergoing a significant transformation with the rise of artificial intelligence technologies like ChatGPT and intelligent marketing tools. AI marketing, which leverages capabilities such as data analysis, machine learning, and natural language processing, is poised to revolutionise how businesses engage with customers and make strategic marketing decisions.

The impact of AI deployment is projected to add trillions to the global economy by 2030, driving local GDP growth significantly. From social media listening to content generation and automation, AI is reshaping marketing functions, offering benefits like improved targeting, cost savings, enhanced ROI, smarter decision-making, and enhanced customer experiences.

Despite challenges like data quality and ethical considerations, the future of AI in marketing promises rapid advancements in computer vision, conversational AI, and predictive analytics, emphasising responsible AI practices for sustainable business growth and enhanced customer satisfaction.

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The marketing industry is undergoing a massive transformation in the Industry 4.0 era. With the introduction of generative AI platforms like ChatGPT and intelligent marketing tools, artificial intelligence (AI) marketing is becoming more prevalent.

AI marketing is the process of delivering customer insights and automating crucial marketing decisions by leveraging AI capabilities such as data collection, data-driven analysis, machine learning (ML), and natural language processing (NLP). AI technologies are being used more broadly than ever before to produce content, enhance user experiences, and produce outcomes that are more accurate.

According to PwC, the impact of AI deployment in businesses will add US$ 15.7 trillion to the global economy and increase local GDP by 26% by 2030. And now, with advancements such as generative AI, artificial intelligence is experiencing a period of rapid expansion.

While the use of AI as a daily tool for business functions such as marketing is a recent development, the practice of using intelligent machines to perform routine tasks for humans is not.

According to Dr. K. Abdul Waheed, Professor of Marketing, Shiv Nadar University, comments, “AI is revolutionising marketing strategies by enhancing customer engagement, personalisation, and predictive analytics. With AI, businesses can analyse vast data sets to understand individual customer preferences and behaviours. AI streamlines marketing campaigns by automating data analysis and decision-making processes. Machine learning algorithms adapt and optimise campaigns in real-time, ensuring maximum impact while minimising costs.” In this manner, AI empowers businesses to deliver personalised experiences, streamline operations, and achieve better results.

McKinsey, which conducted research on the economic impacts of generative AI, asserts that the technology “is poised to transform roles and boost performance across functions”—including marketing, sales, and customer operations.

Dr. Rajendra Prasad Sharma, Professor & Head at IIFT, Kolkata concurs, “AI has the power to transform marketing. It can make things faster and give customers more personalised experiences… Modern marketing is becoming more scientific, with technology playing a big role. AI is changing how businesses work and making marketing more efficient by targeting the right people and using data smartly.”

However, he also adds that there are significant challenges, including privacy, security, and ensuring that customers feel more comfortable with personalised advertising. In order to address them, better laws should be adopted and people should use technology wisely.

Benefits of using AI in marketing

Generative AI can generate content such as text, images, audio, and video. This technology enables companies using AI for marketing to analyse marketing data, create personalised campaigns, and improve customer interactions with far greater efficiency, speed, and scale.

Recommendation software was an early application of AI in digital marketing. Companies such as Amazon and Netflix fully embraced aspects of machine learning to maximise the wealth of data they were collecting about their customers’ preferences and behaviours. They used this to suggest other products and content they might enjoy or find useful and might not have discovered on their own. The trend has ultimately caught on.

A recent Salesforce and YouGov survey found that more than half of marketing professionals (53%) see generative AI as a game-changer. Marketers surveyed also estimated that the technology can help them save about five hours of work every week, which translates to about one month per year. Other benefits are as follows:

• Improved Targeting and Personalisation: Personalisation and effective targeting of consumers are key goals for marketing functions. Both are easily achievable using AI.
• Competitive Advantage and Cost Savings: AI marketing platforms can automate and streamline processes, saving time and resources, which leads to cost savings and more strategic resource allocation.
• Improved return on investment (ROI) on marketing initiatives: AI algorithms optimise marketing campaigns in real time by analysing data, identifying trends, and adjusting tactics based on customer behaviour and preferences. Algorithms can track the customer’s entire journey, including phone interactions, so that marketing can receive accurate attribution for customers’ purchases.
• Smarter Data-Driven Decision-Making: AI analyses big data quickly and efficiently, picking up valuable insights, trends, and patterns that humans would take far longer to detect, or would otherwise miss. This enables and accelerates more effective decision-making in marketing.
• Improved Customer Experience and Satisfaction: AI’s predictive capability helps businesses anticipate customer needs so they can address them proactively, further enhancing the customer experience and preserving brand loyalty.

AI technologies and their use in marketing
AI technology	Application
Machine learning	Machine learning leverages statistical methods to analyse social data, providing precise insights into customer experience, audience sentiment, and other key marketing drivers.
Natural language processing (NLP)	Natural language processing in AI marketing tools helps understand social data contextually, extracting critical information from various posts, messages, reviews, or comments through lexical rules and statistical methods.
Semantic search	Semantic search algorithms in NLP extract and categorize relevant keywords into semantic clusters, ensuring accurate sentiment analysis and customer experience evaluation by understanding intent without relying solely on keywords, thus minimizing duplicates in text mining.
Named entity recognition (NER)	NER is crucial for AI platforms to identify entities like people, places, and things in large datasets, even if they are misspelt. It generates knowledge graphs by establishing relationships between entities, enabling the extraction of context and insights from data.
Neural networks	Neural network algorithms, designed to emulate human brain functions, store interconnected data points in their knowledge database, enhancing their ability to learn and process information efficiently.
Sentiment analysis	Sentiment analysis involves measuring customer sentiment from feedback data to aid in reputation management. Algorithms analyse social listening data like survey responses, reviews, and messages in real-time and historically to gauge customer sentiment.

Source: Sproutsocial

A game changer for SMEs?

Large corporations like Amazon, Nike, Netflix, and Google are using AI in marketing extensively. According to Dr. Gaurav Sood, Director & Professor at Asia Pacific Institute of Management, “Big firms use AI-driven analytics tools to analyse large amounts of data for informed decision-making, automate marketing campaigns through personalised content generation and targeted ad placements, deploy AI-powered chatbots and virtual assistants for effective customer support, use predictive analytics to forecast market trends and optimise inventory management, and deploy AI algorithms for hyper-personalisation, tailoring marketing messages and offers to individual customer preferences and behaviours.”

However, the technology is a game-changer for small and medium-sized enterprises too. With affordable solutions like IBM’s Watson and Salesforce’s Einstein, SMEs can optimise processes, boost efficiency, and compete effectively.

“The myth that AI is only for large organisations is debunked, SMEs can easily harness its potential. By leveraging AI technology, SMEs can analyse customer data, personalise offerings, and even automate marketing tasks, all within budget. It’s about aligning business operations with AI capabilities to thrive in today’s competitive market landscape,” says Dr. K. Abdul Waheed.

AI can also assist SMEs in providing personalised campaigns in real-time, enhancing their product and brand visibility. This leads to greater operational efficiency and a more enjoyable customer experience. AI can be an invaluable tool for SMEs facing marketing budget constraints, as it enables them to achieve targeted customer engagement even with limited financial resources.

In this context, Dr. Saikat Banerjee, professor at IIFT, adds, “Although big enterprises are early adopters of AI because of their financial and infrastructural strength, SMEs may equally take advantage to increase their operational efficiencies. They have a range of tools at their disposal, including voice, virtual reality, chatbots, avatar marketing, and image recognition, to enhance customer engagement and management. Customer trust in AI agents is on the rise, indicating a growing trend.” However, he cautions that, to establish effective customer relationships, SMEs must prioritise ethical implications and security requirements when utilising these agents.

Challenges of using AI

Despite the benefits of adopting AI in marketing, there are a few challenges that can accompany embracing this evolving area of technology. These are:

• Training AI Solutions: Like humans, AI requires significant training to learn new tasks, necessitating investment in time and resources.
• Ensuring Data Quality and Accuracy: AI solutions are only as effective as the data on which AI is trained. If the data it’s been trained on isn’t accurate and of good quality, the answers and decisions it generates will be of low quality and ineffective.
• Complying with Privacy Laws: Strict adherence to consumer data regulations is essential to avoid heavy fines and reputational damage.
• Data Privacy and Security: AI’s ability to gather vast customer data raises concerns about data handling and protection, requiring robust security measures and transparency with customers.
• Integration with Existing Systems: Some AI tools may not integrate seamlessly with existing tech stacks, leading to performance issues and disruptions.
• Ethical Considerations: Personalised marketing via AI raises ethical concerns about privacy, data manipulation, accuracy, and potential manipulation of consumer behaviour, necessitating a strong code of ethics.

The future of AI in Marketing

The future of AI in marketing is poised for rapid advancement through developments in computer vision that are revolutionising operations, from enhancing product quality inspection to implementing facial recognition for security purposes. Conversational AI, including virtual agents and chatbots, is reshaping traditional marketing by offering personalised messaging and round-the-clock customer support, fostering improved engagement and loyalty. Predictive and prescriptive analytics empower marketers with invaluable insights derived from past data, facilitating highly targeted advertising campaigns and strategic decision-making.

“AI’s transformative capabilities have begun reshaping traditional marketing practices, promising unprecedented efficiency and effectiveness. The technology’s ability to interpret data, predict trends, and adapt strategies in real-time presents a game-changing opportunity for marketers worldwide,” as per Prof. (Dr.) Aftab Alam at Jamia Millia Islamia University.

Moreover, emphasising responsible AI practices ensures fairness, security, and inclusivity, highlighting the importance of ethical considerations in AI implementations.

The future of AI in marketing holds tremendous promise for driving business growth, enhancing customer experiences, and promoting ethical practices in the use of AI technologies. By embracing these advancements responsibly, businesses can leverage AI to stay ahead in an increasingly competitive market landscape.