Beyond the Hype: AI and the Future of Commerce Marketing

Artificial intelligence (AI) is a hot topic in commerce marketing and may be the fastest-growing technology trend today. Experts predict it will soon have a huge impact on our daily lives, our interactions with one another and the global economy. Gartner research estimates that AI bots will power 85 percent of customer service interactions by 2020.

The technology is exciting but certainly not new. In 1983, moviegoers got a glimpse of an AI-related technique in “War Games,” when a young Matthew Broderick tasked a software program with learning the futility of nuclear war by repeatedly playing tic-tac-toe, resulting in a stalemate every time.

Machine learning (ML), the same technique shown in the movie, offers the greatest potential for commerce marketers today. Software developers are using it to build tools that can analyze millions of data points about shoppers’ preferences and actions to create a more personal experience.

And consumers are ready for it. Research shows they embrace personalization but want to feel in control of their experiences. According to Oracle Retail 2025, three in five consumers (58 percent) had a positive attitude about the idea of having their grocer suggest a shopping list for their approval based on purchase history and social and environmental data, but 54 percent felt that having the grocer automatically charge and ship those items without their approval was invasive.

So how can you find the balance and use AI to supercharge your commerce marketing efforts? First, it’s important to understand the pathway to AI is a broad and linear continuum that begins with simple, rule-based decision making and progresses through multiple stages of programming, data science and complex system analysis. To be considered authentic AI, a device or system must be able to sense its environment and take actions without human intervention to maximize its chance of success with a defined goal.

Most of what you hear about AI in commerce marketing is simple ML, which teaches software to learn. A system that uses it can change when exposed to new data. ML makes experiences more persuasive and immersive by personalizing visual results and recommendations. As consumers interact with personalized content, the software captures even more data about their behaviors to make product recommendations for a single shopper grow more relevant over time.

U.K. men’s fashion retailer Paul Fredrick paired browse recovery technology with product recommendations to automate highly relevant product content for each contact. Its resulting open rate is 130 percent higher than standard promotional emails, click rates are 218 percent higher, conversion rates are 75 percent higher, average order value is 46 percent higher and revenue per email is 15 times higher.

However, such personalization is just one example of the tremendous potential ML offers commerce marketers. ML also enhances augmented reality (AR). An estimated 100 million consumers will shop via AR by 2020. Rebecca Minkoff’s flagship New York City store allows shoppers to use smart fitting rooms equipped with an interactive mirrored video wall. They can control the lighting and notify an associate via touchscreen when they need a new size or different color.

Home improvement retailer Lowe’s uses a related technology, virtual reality (VR), to provide do-it-yourself instruction. Shoppers can put on a VR headset to interact with a 3-D representation of a bathroom, for example, where they can learn how to mix grout and install tile. ML makes these experiences more convincing and immersive by personalizing visual results and recommendations.

As technology advances and consumers use of it increases, we can expect a corresponding surge in shoppers’ demand for a more convenient, personalized experience. ML will play a vital role in creating that experience and in the use of authentic AI in commerce.

Does the rise of AI and related technologies signal a sea change in commerce marketing? In a word, yes. However, that transformation won’t happen overnight. You're the expert on your business, and until the bots take over marketing entirely, you’ll have to continue reviewing the results of your campaigns and making changes over time to improve. You must use your expertise to direct and teach the software how to achieve your business outcomes. The AI bots have arrived, but they still have a lot to learn.

Nanette George is a senior product marketing analyst at Oracle + Bronto, a commerce marketing automation provider.