At the turn of the year, one question always arises in the digital age: What will happen in the next 12 months? Marketers, in particular, are dependent on recognizing and using new trends and technologies to conduct their business faster and more efficiently. And even if many trends and hype are often announced in big letters, only to fizzle out again without a sound, one thing is clear: In terms of marketing, there is no way around artificial intelligence (AI).
The trend survey at last year's DMEXCO showed, for example, that 76 percent of German marketers consider AI to be the most important trend in their industry, immediately followed by personalization (75 percent) and customer experience (71 percent). This order makes sense because AI-based algorithms are the basic prerequisite for personalized marketing – and crucial for a convincing customer experience.
AI in marketing = Machine learning
The term "artificial intelligence" is first and foremost a buzzword, the exact meaning of which remains unclear in most cases. When we talk about AI in a marketing context, we are actually talking about machine learning (ML). ML is based on statistical methods and has existed since the 1960s. However, the technology has been unfolding its enormous potential for digital marketing for a few years now, with the ever-increasing computing power of networked systems in the so called ‘cloud.’ In fractions of a second, machine learning can be used to answer the most important question that marketers have always asked themselves: "How do I get the most valuable content to the right recipient at the best time?”
Before the era of digitalization changed our lives massively in almost all areas, the answer was still relatively simple, because the technical possibilities to address customers were just as limited as the sales channels and touchpoints. But long gone are the days when everyone sat in front of the television at prime time, and we could be sure that appropriately placed messages in the main advertising block would achieve the desired effect.
New challenges in the mobile age
Today we live in the mobile age and the rules of the game for marketers have fundamentally changed within a few years. Consumers are online around the clock, using a wide variety of devices and choosing from countless providers, who in turn find it increasingly difficult to differentiate themselves from one another through products or prices. Consumers are increasingly networked, while the topic of customer satisfaction is linked to ever-higher demands. If you don't reach your customers where they are and provide them with a consistent customer experience across all channels, you will fall behind the competition in 2020. For brands today, the customer experience is no longer just a distinguishing feature, but a basic prerequisite for being able to hold their own against the competition.
The DMEXCO trend survey and many other studies make it clear: above all else, the satisfied customer counts for brands today and in the future. The requirements are constantly growing, because of the higher number of sales channels and contact points. Never has it been more difficult to offer a personalized and consistent brand experience. Marketers quickly face limits that cannot be overcome with traditional methods.
No personalized customer experience without AI
The foundation of a personalized customer experience consists of customer data. This data is available in every company. Often this flood of data inhibits customer communication instead of inspiring it. But the only way to make the masses of data usable for marketing purposes is automated processing via ML. Here, AI-driven marketing platforms prove to be an indispensable tool. Via machine learning, it is possible, for example, to segment target groups on the basis of behavioral or location data and to create detailed customer profiles in real time. Far more interesting is the opposite way. Many marketers have specific content and products that they communicate in a targeted manner. ML can help here, as well, by automatically calculating and addressing target groups.
Of course, not all that glitters is gold. Even though machine learning has long been established, this methodology also has its limits. The human factor is indispensable, despite all the progress. ML is based on statistics and can therefore determine correlations. But only humans can put these correlations into an overall context and thus create relevance in customer communication.
An online book chain is a good example of this. All recommendations on the online shop were based on ML, using customer behavioral data. Consequently, recommendations for adult books from the adult-only section were regularly recommended for popular children's books. Fact is, children's books are very often bought by adults. It turned out that there was a strong correlation between Harry Potter and the Kama Sutra. This recommendation was obvious for a machine; hence it used it as a recommendation. For a human who knows the overall context, this recommendation makes less sense; and for parents who visited the shop, it caused an outrage. Therefore, machine learning should be seen as a tool and not as a substitute for humans. Only in this way can we harvest the full potential of this technology.
Voice, privacy are top of mind for consumers
Another trending topic, which will gain further importance this year, is "Voice"; i.e., speech assistants. In 2019, speech assistants and devices made their breakthrough globally. Germans, on the other hand, remain skeptical about data protection. Our Selligent Global Connected Consumer Index 2019, in which we surveyed 5,000 consumers from around the world, showed that 45 percent of them use voice assistants - but 51 percent fear that the devices will be tapped without their consent (various media reports show that this concern is often not entirely unfounded). Furthermore, marketers need to be aware that although the channels have great potential in communication, they do not belong to them. They are dependent on the influence of the Big Four (Amazon, Google, Facebook, Apple) and from one day to the next they can shake the whole business model up.
Consumers will demand more privacy in 2020, and not only because of the ever-emerging issues of data misuse. Marketers need to think carefully about how to use data as the key to their omnichannel communication strategy. They are walking a thin red line when it comes to privacy and data protection. On the one hand, they need to protect their customers' data; and at the same time, create relevance based on the data they have to protect. This topic will also occupy marketers against planned data protection regulations in 2020.
One thing remains the same in any case. In 2020, consumers will continue to be even more demanding and fast-moving in their needs. Relevance and convenience for the consumer through individual personalization will play a decisive role. The earlier you prepare for this, the better you can stand out in the market. The same applies in the other direction.
With this in mind, have an exciting 2020.