10 things marketers need to know about AI

For years, marketing was considered more art than science. But more recently, as marketing automation software has proliferated, marketers have had to blend the art of storytelling with the science of data. Lots and lots of data.

Then along comes artificial intelligence (AI) and machine learning, which promise to help marketers make sense of all that data. Some experts believe AI's impact on marketing will be hugely significant, that it could even change the nature of marketing entirely — enabling brands to break through the noise and deliver a more personalized experience to customers.

Not surprisingly, though, there are challenges ahead for organizations seeking to add AI to their marketing technology stack. Here are 10 things CMOs, CIOs and others should know about AI and marketing in 2017, and the years ahead.

1. AI in marketing must deliver highly personalized and relevant messages

Today's consumers want highly personalized content. Case in point: A late 2015 VentureBeat study found that 77.5 percent of digital natives — Gen Y and Gen Z consumers — want marketers to give them "a truly personalized experience, both on your website and within messages."

"Customers are demanding personalized experiences from brands, but the number of channels through which these interactions take place and the sheer volume of touchpoints are growing," says Chandar Pattabhiram, CMO at Marketo, a marketing automation software provider. "In order to continue to engage customers effectively as the volume of touchpoints grow, marketers will lean more heavily on AI and machine learning to help make sense of all this data at their disposal. The ultimate result, if this is done effectively, will lead to a new level of personalized marketing with interactions tailored to the exact wants and needs of the individuals that brands are trying to reach."

2. AI will help eliminate 'marketing waste'

There's a lot of noise out there. From websites, blogs and videos to text messages, social media and TV ads -- you name it. Alas, the days of big marketing campaigns for the masses are over.

Broad marketing campaigns are expensive, ineffective and create a lot of 'waste,' notes John Marshall, chief strategy and innovation officer for Lippincott, a global creative consultancy.

Digital marketing technologies over the past few years have reduced some — but not nearly all — of those wasted marketing efforts, Marshall explains.

"What takes waste out of the system is a deeper understanding of who the human is on the other end of the marketing pitch, and what that person wants," he says." AI will accelerate that level of insight, so that waste is dramatically reduced from the marketing mix."

3. Chatbots and virtual assistants -- ‘the face’ of AI marketing

When it comes to consumer-facing AI that brands can use for marketing purposes, chatbots and virtual assistants like Siri are getting most of the attention — both from consumers and marketers.

"Bots generate a lot of excitement because they're very science-fiction-like, and virtual assistants attract attention because of their human interactions," says Ed See, a principal with Deloitte Digital's Digital Marketing and Customer Analytics group.

They're generating a fair amount of spending, as well. In 2017, marketers will collectively spend more than $250 million on these types of virtual agents and other "conversational technologies," according to a November 2016 Gartner report.

Gartner also predicts that mobile search queries performed via virtual assistants will grow from 20 percent to more than 50 percent by the end of 2017. Screenless devices such as Amazon's Echo will be in more than 10 million homes by year-end 2017 and "account for a growing share of commercial traffic," according to the report. And by 2020, Gartner projects that virtual agents will participate in most commercial interactions between people and businesses.

4. A glut of AI marketing technology, but integration lags

Aside from chatbots and virtual assistant platforms from Google, Facebook and others, AI-assisted marketing technology entails software with machine learning models designed to automate, target, and personalize marketing initiatives.

In a report published late last year, Forrester highlighted the efforts of vendors like Adobe, Google, IBM, Persado, Salesforce and Squirro for "embedding cognitive computing capabilities into their solutions."

"This isn't just technology for technology's sake," Forrester wrote. "AI will drive faster business decisions in marketing, ecommerce, product management and other areas of the business by helping close the gap from insights to action."

Salesforce notes that its Einstein AI technology is "built into the core of the Salesforce platform." Meanwhile, IBM’s Watson AI technology is being put to work in various marketing campaigns and products.

For example, last year, global communications company Havas Group announced a technology partnership with IBM called Havas Cognitive to help "brands tap into artificial intelligence data and use it more effectively," according to an Adweek report. TD Ameritrade, an early adopter of the technology, created what Adweek called the "first cognitive marketing program," which was targeted to football fans.

Examples of these types of pilot projects are proliferating, but experts caution that these are still the early days in terms of AI-enabled marketing technologies. While nearly every major marketing technology vendor offers "some flavor" of AI, the integration and orchestration across the various offerings simply "isn't there yet," See explains.

But it's coming. "In the next few years, we're going to see AI and machine learning become part of the core 'fabric' of software platforms in the marketing industry," says Dharmesh Shah, co-founder and CTO of HubSpot, an inbound marketing and sales software provider. "In the coming years, artificial intelligence will feel a lot more intelligent and a lot less artificial. It'll be a natural part of many of the technologies we use."

5. Marketers have mixed feelings about AI

Eighty percent of marketing executives believe AI will revolutionize marketing by 2020, according to a Demandbase and Wakefield Research survey of 500 business-to-business marketers published in December. But just 26 percent are highly confident they understand how AI is actually used in marketing, and only 10 percent say that they are using AI in their marketing programs.

What could explain that low level of adoption?

"AI in marketing is confusing and often speculative and overhyped," says Gartner Vice President Andrew Frank.

6. Chatbots don't always click with consumers

For all the enthusiasm for AI in the marketing community, the consumer segment seems less exuberant. A recent study from the marketing firm Boxever highlights that gap.

In that survey, 79 percent of marketers said they believe consumers are ready for AI and are either "excited or very excited" about chatbots. On the other hand, nearly 50 percent of consumers say they're "very unexcited or somewhat unexcited about chatbots." Why the disconnect?

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"Marketers are attending conferences, hearing pitches from vendors about AI in tangible, practical terms that apply to their work," says John Callan, Boxever's vice president of marketing. "They understand that machine learning algorithms can better resolve customer identity, aid decisions, and help you decide which offer should be delivered to which consumer based on behaviors, historical interactions with the brand, and so on."

Consumers, on the other hand, still have "fantastical sci-fi" visions of AI, often in the form of movie robots and self-driving cars, Callan adds.

While not all marketers are fully conversant about and comfortable with AI, Callan notes, they might not have to be. "Over the new few years, you'll see more people who aren't particularly tech-savvy using tools that are extremely powerful under the hood," he explains.

7. CMOs face challenges in adopting AI

The Demandbase/Wakefield Research study helps quantify some of the concerns that markets have about rolling out AI technology. In that survey, 60 percent of marketers polled said that they worry about integrating AI into their existing technology stack. Large portions of respondents also cited concerns over training employees (54 percent) and the difficulty of interpreting results (46 percent).

Frank, the Gartner analyst, also suggests that the automated technology could be seen as a threat to well-established roles within an organization.

"I think the biggest challenges CMOs and CIOs will face in adopting AI in their digital marketing efforts is grappling with loss of control," Frank says.

"Both roles are accustomed to exercising authority over activities in their respective domains -- in the CMO's case to protect the brand, and in the CIO's to enable smooth operations," he adds. "Both roles understand intuitively that whatever tricks an AI can manage, machines are still nowhere near possessing a human-like understanding of the subtleties of communication. So both roles have good reason to be suspicious of autonomous AI applications, especially where customer interactions are concerned. Getting comfortable with these systems will be a big challenge."

8. CIOs will face their own challenges with AI

CIOs have been grappling with some significant changes over the past decade, to put it mildly. That includes the emergence of sophisticated new mobile devices and the galaxy of apps they support, cloud computing and the internet of things, to name a few.

Marketing automation technologies have proliferated over the past few years, as well. So while marketers have had to become more tech-savvy, CIOs have had to become savvier about marketing.

Adding AI to the marketing mix requires CIOs to face some new challenges. "CIOs have dealt with smart automation before, but not much beyond call center bots," See says. Now, a company’s CIO "needs to understand what all the customer touch-points are, what the role of the marketer is, and how they can be supported by great data, great analytics and integrated AI." Figuring all that out will likely take a few years, he says.

Getting one "single customer view" pulled from a variety of sources, such as CRM and customer acquisition databases, "will be essential but also fairly difficult" to achieve, adds Lippincott's Marshall.

"One of the biggest challenges for CMOs and CIOs will be tackling the data challenge," says Shah of Hubspot. "In order to get the most value out of machine learning, organizations must first get a rich variety of data into a common platform that can then feed the AI algorithms. Often, this data is sitting in disparate data silos across the organization."

In addition, "there are very few AI use cases that prove the technology's ROI for marketers," notes Marketo's Pattabhiram. "This can be a non-starter for CMOs and CIOs who must ensure that any new technology is worth the investment of time, money and IT resources."

What's more, 42 percent of American marketers cited reporting and analytics as critical needs when proving ROI, according to a recent Marketo Future Tech survey. As a result, "it's crucial that executives understand how best to measure the success of their AI programs in order to justify their spend," Pattabhiram says.

Ultimately, CIOs must "have the right IT infrastructure in place to make sure AI applications have access to the data they need to deliver personalized experiences, wherever that data may live," he says. "This may mean simplifying an existing tech stack, rather than tacking on disparate technologies that don’t effectively integrate with one another."

9. AI could change the nature of marketing

Some believe AI will ultimately fundamentally change the nature of marketing and thus, the job of the marketer.

In the near future, AI will routinely make buying decisions for consumers based on what's known about them, Marshall predicts. For example, consider a task as simple as checking the weather. Not long ago, you'd likely have watched The Weather Channel for your local forecast, where you'd see an ad for a product that may or may not be of relevance to you, he says.

More recently, you might go to Weather.com, where you'd see an ad for an antihistamine. The ad would be displayed to you because you had previously visited the allergy part of the website.

A few years from now, an app or virtual assistant would know if you have allergies, when you're traveling to a certain city and what the pollen count currently is in that city. Then, if needed, it would recommend or even automatically purchase your preferred antihistamine medication,.and have it delivered as well.

In that situation (and endless variations of it), the consumer doesn't need to make a brand decision -- an AI platform does it for them based on what it knows about the consumer, Marshall says. Consequently, "it gets harder and harder to build a brand through marketing." In the age of AI, then, marketing will become much less about promises and claims and much more about outcome and performance.

"AI will and is entirely changing the nature of marketing organization in a way that's tremendous,” Marshall says. Over the new few years, he expects that AI will take on many activities such as targeting and messaging. That means that some marketing jobs dependent upon those activities will disappear. So who survives? Those who focus on what the target customer's "next need" is, and those who deliver against that need with better outcomes, will be well positioned for the future, according to Marshall. Likewise, he foresees a shift in the nature of the marketing role from "persuasion" to "insight."

10. AI is about truly knowing your customers and making them fans

As marketing and technology chiefs come to terms with some of the disruption that AI will bring, they can move toward the real value that the technology could bring. That, according to See, will be a more tailored personalized approach to customer service that will help the firms that get it right stand out from their competitors.

"As the world moves forward, being able to differentiate your most-valued customers will be key," according to See. "AI will help marketers find those folks and give them a different level of treatment. It will help them deliver a differentiated experience that will in turn build customer loyalty. And it will do it at scale and cost."