AI to transform retail marketing - just not yet

David Reed, director of research and editor-in-chief, DataIQ

Marketers in retail and ecommerce have big expectations for the impact of artificial intelligence on their sector, with 88% forecasting that it will reinvent the industry and 81% looking to AI to reinvent what their company does. But while big changes are ahead, only 11% of practitioners are classed as already AI marketing experts according to a new survey.

This leading group has already shown excellence in its digital capabilities across strategy, organisation and technology. By contrast, 27% are classed as laggards and 28% as novices, with the rest opportunists. The event horizon when AI becomes mainstream seems likely to be late 2018 and, even then, most plans are focused on the automation of existing marketing activities, rather than innovative new ways of delivering the customer experience. 

Marketing automation vendor Emarsys commissioned Forrester Consulting to survey 717 business decision makers in a marketing role within retail and ecommerce organisations, 15% of them in the UK. Commenting to DataIQ on the findings, Stephen Ledgerwood, managing director UK, Emarsys, said: “The survey shows people are more ready than we thought they were, but a lot of businesses don’t understand the solutions. People are fearful about what they can do, but the gap is not as big as they think.”

“It is always assumed that organisations are doing amazing things, but if you break it down, they are doing the basic ones.”

Currently, a small majority are using AI marketing technology to personalise the customer experience (54%), to understand cross-channel and cross-device customer behaviour (54%) and to manage real-time interactions. As Ledgerwood noted, “it is always assumed that organisations are doing amazing things, but if you break it down, they are doing the basic ones. Advanced marketing is coming from a low percentage. AI can transform marketing, but a lot are not willing to risk that. The experts are willing because they are drivers of change.”

He added: “For the other marketers, there is a fear factor. They are not sure what AI is going to bring and what the machine will automate, what it will mean for their profession in the future. But as marketers get more confident in their understanding of what AI can do, that will go.”

A clear expectation emerged from the survey that AI will bring major benefits for marketers, such as making marketing teams more efficient, which 86% overall agreed with, rising to 96% of the expert group, while the same number anticipate improved effectiveness. In addition, 82% overall believe AI will liberate marketers to focus on value-generating tasks as it automates workflows and 80% say it will revolutionise their role, with 79% saying marketing will move towards more strategic work.

“If marketers don’t start to adopt AI in the next six to 12 months, they will be left behind.”

Ledgerwood says that such a transformation will take place, whether marketers like it or not. “I believe strongly if marketers don’t start to adopt AI in the next six to 12 months, they will be left behind,” he said. Marketing automation, including AI, is no different from the way other technologies have been adopted - Ledgerwood drew a parallel with GPS mapping systems which used to be an added extra in new cars, but are now built in. “That shows how technology is developing and what the customer experience will be in the future,” he said.

To get there, retail and ecommerce marketers will have to overcome a barrier that is facing every sector - a lack of skills. Two-thirds (66%) identified a lack of technical skills as among the top five barriers they face to their AI marketing strategy, with 64% arguing that AI technologies have been designed for data scientists and do not have marketer-friendly interfaces. 

But Ledgerwood believes this issue is overstated: “If you drill down into what technical skills are needed to implement a solution like ours, it looks similar to what organisations were doing before AI and machine learning. Clients need to give us data, put a script on their web site to track the movements of their customers - they have been doing that for some time - and we provide back the output to the end-user and automate it. The barrier is not necessarily greater than it was before.”

If so, then that event horizon for the marketing profession and the retail sector may not be quite so far off, not least as a result of companies like Emarsys delivering user-friendly solutions. Retailers certainly have some significant objectives against which they want to deploy AI, from driving revenue growth and serving existing customers better, through remaining competitive and meeting rising customer expectations down to strengthening their business. That is a sizeable to-do list - a little automation could go a long way to getting it realised.

Knowledge and strategy director, DataIQ
David is developing the framework for soft skills and career development among data and analytics practitioners. He continues to be editor-in-chief and research director for DataIQ.