Why should we care about Artificial Intelligence technology
Artificial intelligence (AI) is creating the fourth industrial revolution by shaping every single aspect in the world. AI is taking away jobs, and revolutionizing businesses only to create new human-driven creative opportunities.
The new technology has influenced the way we drive cars, grow vegetables, detect cancer. It can even speak, and recognize emotions in speech. AI technology is disrupting right now all industries including digital marketing.
So what is Artificial Intelligence?
Simply put, Artificial Intelligence (AI) is building machines that are intelligent to think and act in a rational way. Similar to humans at much greater scale and speed.
Within AI, you will come across two terms: Machine Learning & Deep Learning.
Machine learning is a subset of AI that is fed structured data by humans to come up with an algorithm to learn and analyze massive data.
Deep learning is a subset of machine learning, in which no structured data is needed. It relies on various layers of neural networks to digest massive unstructured data. The learning and analyzing process of this data happens independently of human intervention.
The relationship between AI & Digital Marketing
We’ve seen the evolution of marketing in the past years and its transformation into the digital space. Companies shifted their strategies, tools and budget from traditional to digital marketing.
Today, AI is pushing further the digital marketing transformation to a new level and in various aspects.
So if you’re wondering how Artificial Intelligence is Disrupting Digital Marketing.
Here are 6 ways Artificial Intelligence is changing the digital marketing industry that every marketer should know:
1- Automating Content:
In the digital marketing industry, content is king. AI aids marketers in 2 roles: Automating content creation, content curation and delivery.
Content creation using NLG (natural language generation), a process that generates content from data automatically. The marketer will choose the content type, topic, number of words and data to be used. The AI-driven platforms such as NLG then uses an algorithm to produce unique articles. The content produced will simulate human-written content saving company time & money.
For example, Washington Post published more than 850 articles written by Heliograf, its AI-driven robot author.
Content curation is the process of collecting quality published articles and spinning the content while adding your own opinion. Not only did AI help automate the content collection process but also customized it depending on the targeted audience. AI harvests the audience’s social media activities, engagements and interactions on the web. Then it ensures individualized content is delivered to each target audience.
2- Mass Personalisation:
The value of personalisation lies in its ability to greatly influence the behavior of consumers. Prior to AI, marketeres used tools to segment their audience in clusters. Based on location, interests, preference, demographic and other attributes and then create various customized offering to each segment of this audience.
Today, marketers are able to provide each of their million users a personalized experience specific to them. The availability of this technology replaced general audience segmentation into personas. Powered by AI, specifically machine learning, unique offerings to each customer are created based the users digital footprints. The ability of AI to review and analyze a mix of overlapping attributes “finding patterns inside patterns” which humans are not capable of doing. These AI capabilities help companies implement digital marketing campaigns based on micro-segmentation. This technique ensures marketers know what kind of message resonates with their audience and delivering to them exactly their needs.
3- Advertising & Product offering:
In digital marketing, online ads is one of the key channels for lead generation. Platforms that offer ad services such as publishers, and social media websites are competing to offer marketers more targeted advertising. Targeted ads generate higher conversion rates for companies.
For example, suggested products / articles used to appear to users based on their transactional history only. While now, websites are deploying machine learning (ML). ML considers the users behavior history along with their implicit and explicit intent into consideration thus delivering more relevant suggestions.
Bidding is another aspect within online advertising that consumed most of marketers time as its manually handled. Artificial intelligence automated the process leveraging smarter bidding. AI combines user based info (signals) such as device, location, language and other data that can also be collected from third parties. This improves ad performance and campaign outcome while saving marketers time to focus on more valuable campaign aspects like content & layout.
4- User Tracking & Data Analytics:
Another aspect of digital marketing that has been massively transformed with AI and Machine learning. A buyers journey is a funnel that includes various steps. Starting from brand awareness, to showing interest and interacting with a brand to purchasing.
Digital marketing altered the funnel by simplifying purchase, increasing interaction channels, offering comparison and review tools which helped users move faster in the funnel. However, these digital marketing advancements missed a vital aspect which is the ability to track and analyze results. Not only is Artificial Intelligence able to integrate huge data collected from different sources. But also it can analyze the type of content users mostly interact with, the products searched for, and each users preferred marketing channel.
The availability of this filtered, structured and simplified analysis of huge data enabled marketers the ability to create data driven marketing campaigns and make intelligent decisions, reduce testing phase and eliminating speculations.
5- Customer Service & Chatbots:
AI plays an important role in leveraging customer satisfaction in multiple phases. Social listening is the process of monitoring consumer conversations on social media and online about your brand which includes feedback, experiences, reviews… Machine learning has helped brands process huge data. This even includes recognizing images that include your brands logo, and intelligently extract relevant conversations.
AI is also used for voice authentication to verify clients and expedite the support process bypassing security and password process.
Deploying AI chat bot support, powered by deep learning and NLU (Natural Language Understanding). NLU is also part of AI and allows the machine to understand human language, analyzing written sentences or voice and interacting with humans. So the AI driven chat bot interacts with customers providing relevant information. This alone solves repetitive questions and queries which account to more than 30% of the support cases and deliver a seamless, and consistent support experience.
6- Predicting Customer Behavior:
Marketers no longer develop strategies to meet customers needs and wants based on their own understanding solely but rather relying on concrete data and information.
AI, specifically deep learning has enabled marketers not only to analyze but also to predict future customer behaviors accurately. This has become possible due to the availability of massive data.
There’s more users Facebook than the population of the United States, China and Brazil combined. Companies are now able to sort huge detailed data like customer interactions, likes and dislikes to identify various metrics that identifies a user behavior. Then transform these findings into actionable insights to connect with their consumers on a deeper level and predict their future actions. Machine Learning’s ability to provide real-time predictive analysis combined with continuous learning is impacting digital marketing immensely.
Today’s Digital Marketing: AI vs Human or AI with Human
AI, machine learning and deep learning are helping marketers build data-driven digital marketing strategies. While brands can leverage AI to optimize their digital marketing, and streamline online business growth. However, brands must know that marketing is still about humans and the value of human interaction is a key to successful marketing.
Luxury which includes clothing, footwear as well as cosmetics and fragrances has been a successful industry long led by creativity, art, emotions and inspiration. However, data driven marketing is the latest trend as more than 45% of all luxury sales are influenced by digital marketing. So the ultimate question is;
How far should the luxury industry rely on data driven marketing strategy while retaining its brand values.
When trying to understand luxury, it’s sufficient to analyze the French brands to draw broad conclusion on the evolution of this industry. (prior to the impact of protests). Driven by an increase in consumer demand, international growth, online sales, market expansion and tourist growth. France became the top performing country in luxury goods sales with 18.7% year on year growth (FY2017).
According to a report published by Deloitte ‘Global Powers of Luxury Goods 2019‘, 4 French companies are among the top 11 luxurious companies in the world. L’oreal, LVMH (Louis Vuitton, Givenchy…), Kering (Gucci, Yves Saint Laurent…) and Hermès (2017).
Why Luxury marketing needs to be data driven?
Unlike grocery shopping, spending a month’s salary or more on a luxurious item is a big decision that will require considerable time of thinking & research before purchasing.
The consumer ‘buying signals’ that reflect their intent to purchasing is what digital marketing can make use of to help generate more sales. Buying signals are everywhere. From accessing the website and spending time reading product details, to google search for reviews & trends, browsing history, location data, lifestyle interests, in-store visits, and actions on social media. These signals along with the right analysis of data can help brands anticipate the user journeys of successful buyers, and understand customer behavior prior to purchasing.
There are various forms of new channels that brands have been utilizing like influencers, content aggregators, reviews websites. As online shopping grows in the luxury industry, along with these new channels, grows the need for clear data. Data that will explain how did these customers reach to your store or website, and what steps did the customer take prior to purchasing.
Data driven marketing will allow you to reach out to the most profitable customer. Although targeted marketing is more expensive than broad targeting with the hopes of reaching your customer. The return of investment for targeted campaigns is definitely worth the investment.
The number of rich people globally is rising rapidly which means more money can be spent on luxury. According to Capgemini’s World Wealth Report 2018, for the first time in years, the high net worth individual wealth rose to 10.6%.
But luxury consumers are changing. To grow, luxury needs to meet the demands of millennials, those born between 1981 and 1996 are their new customers. These young customers are high earners but not rich yet (HENRY) & form around 75% of Luxury brands customers. The millennial generation are educated, tech savvy, short attention span, & value experiences over things. What makes this segment extremely valuable for luxury brands is that most rich started out as ‘HENRY’. Therefore identifying these long term prospect customers is important to ensure the brands future growth. Millennial luxury shoppers invest a lot of their time and money online, on mobile apps and on social media. Luxury brands should not only listen to what their customers are saying, be present where its customers are, but to also thrive in the digital universe.
Age Breakdown Luxury Buyers: % who say they mainly purchase luxury items
Although Luxury has been very slow to adopt eCommerce and embrace the digital wave. It’s obvious that most brands are making up for the time lost pretty fast. Even well established luxury brands that firmly opposed eCommerce operations and said will never sell online, have all launched their online stores with the exception of Chanel. Not only that but also invested deeply in the digital industry such as eCommerce, social media, and digital marketing. Brands are also partnering with luxury-specific technology tools (augmented reality mirrors, AI-based counterfeit-spotting) and mobile apps along with their traditional in-store business.
The above mentioned digital tools are not separate from the core brand positioning. The online experience should be complementary to that in-store reflecting the brand values. This concern has driven luxury brands to handle their digital activities internally instead of relying on third party websites which they have little control on.
How can Luxury brands be data driven
A successful case would be that of Versace. Their objective was to increase sales by identifying among their current and potential customers, the high end segment. This segment would be more likely to make a “big/high ticket product” (items having high selling prices & profit margins). Their data driven marketing campaigns resulted in a 35% increase in sales, 400% increase in ROI, & 3.3K increase in in-store visits. Below are few tips inspired by this campaign:
First Party Data:
The starting point for any data driven campaign is always using the first-party data. This allows you to leverage the valuable data of your current customers, website visitors, and ad results. Ensure data is stored in a useful format & then identify the most useful metrics.
Analyze transactional & customer data to identify best customers (spending more, purchasing more frequent..), and understand their buying journey. Then used this data & algorithms to create a ‘lookalike modeling‘. A method that allows you to find more people (prospective customers) similar to the existing ideal customers. Both audiences (existing & potential) will share close behavioral characteristics and specific attributes; preferences, interests (more detailed, the better).
Launch targeted campaigns:
Targeted campaigns with an incentive/offer that is based on the LTV (lifetime value of existing customers). This states the expected revenue to be generated over time or what is a customer worth. LTV helps in determining profitability and how far can a company can go when giving special offers/discounts. Note that targeted campaigns are always more expensive than broad campaigns but higher in conversion rate.
Use Geo-fencing to target your in-store visits, competitors or any other location. Once a consumer (app installed & opt-in for location sharing) walks within the geographical fence, a push notification is sent that can even be laser targeted. Otherwise brands can run ads targeting unknown users in this geographical fence that could even be a competitors location, a method that incentives in-store visits.
Luxury brands can easily drive traffic online unlike regular fashion. However driving the right traffic that will lead to potential sales has been the ultimate challenge for luxury brands. Brands should transform visits into experience that fit Luxury of being exclusive, emotional, quality & rare,
Deep Analysis & Improvement
Therefore, it is significant that brands have outcomes that will automatically require a certain ‘metric’ to measure, such as purchases, consumer behavior, channel responsiveness, or campaign ROI. Analysts should present deep data insights to apply campaign enhancement & improvement before investing a higher budget.
Privacy & GDPR
With the rise of privacy regulations worldwide & GDPR, luxury brands must persuade its consumers to share their data. This can be done in exchange for a value such as a special offer and data must be well protected.
In 2025, online sales will account to 18% of the total luxury sales and in the next ten years online sales of luxury goods will triple!McKinsey & Company
No brand is able to withstand the potential growth possibilities. It is expected that luxury brands will pull money out of print and move it to digital next year. The difficulties of undergoing digital transformation should not be underestimated. Powered with customer data & tech, luxury brands will be able to easily embrace online selling and adopt a data driven marketing strategy.
Even when marketers prefer to rely on their experiences rather than research, that is too, the usage of data collected through years of experience.
The future of luxury brands online: Looking to into the leading French Luxury Groups
Kering‘s success through Gucci’s digital strategy helped the brand generate 50% of it’s sales from millennial. 35 year olds and younger, which is a segment that has been a concern for luxury brands. Gucci became the best performing digital luxury brand according L2 Research, a company that specializes in data driven analysis.
In 2017, LVMH launched 24s.com. A multi brand ecommerce platform / marketplace that offers products from over 200 luxury brands & is not limited to LVMH’s owned-brands. The website is successfully growing and providing a new luxury shopping experience similar to that of physical store.
How many of the luxury products purchases take place in a physical store, online from a computer or mobile device:
The Facebook – Cambridge Analytica privacy scandal dominated headlines for weeks already. The scandal has shed light on how Facebook is a political tool.
Cambridge Analytica, a British data analytics company helped elect President Donald Trump by collecting data from around 50 million Facebook and using their information to be targeted with personalized anti-Clinton and pro-Trump propaganda.
So Facebook is a political tool?
Couple months ago, a government website in Lebanon that collects detailed information about Lebanese expats to register for the upcoming elections has included a Facebook Pixel. The Lebanese government website didn’t include any privacy details about the ownership and usage of this pixel. If the pixel is used to retarget users with personalized ads. Facebook will become a political tool that can affect the results of the upcoming parliamentary elections in Lebanon.
Amid Facebook’s data breach scandal:
- #DeleteFacebook hashtag is trending on Twitter. Users are deleting their Facebook accounts.
- Lawmakers and regulators across the US and Europe are calling for an investigation.
- Facebook lost 8% of its market value this week, or nearly $35 billion.
- Cambridge Analytica Suspends C.E.O.
- Peru’s President Pedro Pablo Kuczynski has offered his resignation after being implicated in a vote-buying scandal.
- Mark Zuckerberg admitted Facebook “made mistakes” but didn’t apologize.
The Facebook and Cambridge Analytica has exposed the role of online political advertising and how Facebook can be a powerful political tool.