AI in, humans out? AI is reshaping the role of the marketer

41% of C-level execs say they will employ fewer people in 5 years because of AI.

In 2024, AI hit the mainstream: hard. Research from The Conference Board found that 87% of marketers have used AI tools. The impact it's already having is undeniable, but marketing leaders must now focus on implementing it in a smart, systematic way to drive bottom-line results. In this section, we unpack what this looks like for retail, talk through some of the specific use cases, and explore the case against AI.

Changing staff, changing skill sets

It's not hyperbolic to say that AI is revolutionizing employment and the way people work, and one of the most hotly debated aspects of that revolution is its impact on headcount.

Though companies may be reluctant to announce it publicly, over the next 5 years many companies will be working towards downsizing their workforce thanks to the productivity gains generated by AI.

However, automation doesn't only mean downsizing. The savviest retail leaders are looking beyond AI as purely a cost-cutting tool and seeing it in terms of augmentation, not elimination. They're looking at how they can empower their people to be more effective with AI. Research by Deloitte reveals that 67% of firms embracing AI-related organizational shifts plan to retrain or upskill their workforce for fresh roles.

This approach of hiring AI into your team is a well-considered one. With AI often handling the more menial administrative tasks, teams are freed up to focus on more creative or strategic work where human input is most valuable; building the creative direction of a brand new product campaign, for example.

When it comes to AI, the biggest winners will be those that take a holistic approach to its implementation. Our recommendation is to think beyond the sensational headlines about AI replacing humans, and instead prepare and upskill your team to thrive beyond the shift. After all, it’s the utilization of AI that will give you an edge, not just AI itself.

With that in mind, let’s take a look at some of the retail-specific use cases for AI.

“Teams are finding that the integration of AI into their day-to-day is actually making their job simpler. As a result, they have much more time to focus on the things that excite them and actively fuel their career growth.”

Julie Channing
Fractional CMO and former Global VP of Marketing for Allbirds

Use Case 1

Better analysis, better insights

As we'll cover later in the report, marketers are not short on customer data – the real difficulty comes with analysis and actioning it.

AI can identify patterns and draw insights that would be impossible for humans to detect. One of the most powerful aspects of this is predictive insight, where billions of data on customer behavior are taken in to predict how they might act in the future. For example:

Customer Lifetime Value

Identifies how much a customer is likely to spend and highlights those with high-spend potential.

Product and category affinity

Forecasts which products and categories a customer is likely to shop next.

High-value customer segments

Pinpoints high-value customer segments, enabling focus to be placed on the most lucrative groups.

Omnichannel analysis:

Identifies patterns in online, in-store, and omnichannel customers and how best to market to them.

“AI has pushed our team to be better and to really think about how to improve our ability to make recommendations and to deliver on those recommendations”.

David Meir Sasson
CEO - Kindthread

Use Case 2

Campaign orchestration

Using AI, marketing campaigns that previously took months for content design, insight generation, and customer targeting can now be launched in days or even hours. You can gain the customer insight you need, and couple that with optimization which runs in the background to make your campaigns even more impactful. For example:

Best channels

Individually selects the best channel to contact a customer on.

Send time optimization

Identifies the best time to send a marketing message to a customer.

Next best action

Selects the next best marketing action for a customer based on their likelihood to convert.

Discount optimization

Deploys discounts strategically, such as withholding offers if a purchase is likely without a discount.

"We have to move forward and utilize the tools that are being developed in the best possible way before we spend too much time worrying about who's not going to be here because of it."

Ron Thurston
Co-founder - OSSY

Use Case 3

Generative AI for content creation

Without a doubt, the most well-publicized use for AI in marketing is content creation. Adoption is widespread, with 74% of marketers using AI for some aspect of content generation, and the impact is clear, as marketers using generative AI save 3+ hours per piece of content.

Some of the use cases for gen AI will likely be familiar to you: from generating email subject lines based on the content to brainstorming ideas for a social media campaign.

However, there’s so much more to experiment and innovate with, and we’re seeing some brands taking big swings to become pioneers in this space. In July 2024, Spanish clothing brand, Mango, released a campaign for a collection it says was created entirely with gen AI - becoming one of the first fashion brands to do so. In the same month, Toys 'R' Us unveiled the first-ever brand video to be created with SORA.

So, are the risks paying off? Public opinion is still mixed on creative work which leans on generative AI, with many scrutinizing the ethics of the technology and the integrity of those that use it. On the productivity side, 96% of marketers using generative AI say they need to make edits to the text before it's publish-ready, indicating the tech still has a way to go.

Given this, could consciously avoiding the use of AI in your organization be an advantage? Let's explore the other side of the AI gold rush.

"AI is critical, particularly for personalization, but it also needs to be controlled and overseen with thorough governance and guidelines."

Mike Dupuis
CDO - Sparc Group LLC

Are you in or out?

Research by Gartner suggests that by 2027, 20% of brands will lean into positioning and differentiation based on the absence of AI in their business.

Whilst going completely AI-free in every sense is nigh-on impossible, from a brand positioning standpoint this strategy has its merits. With a growing undercurrent of mistrust in AI, some consumers will begin to purposefully seek out 'AI-free' brands and interactions. Brands can capitalize on this by leaning into an 'AI-free' identity, conveying a commitment to integrity and humanity whilst painting competitors as homogenous and impersonal.

This means that brands must weigh AI's advantages against the potential costs to public sentiment. The Forbes Communications Council calls on CMOs to lead the development of AI guidelines to prevent brand erosion caused by AI missteps. Key strategies include:

• Ensuring continuous human oversight of AI operations;
• Prioritizing data privacy;
• And assessing the ROI of AI in marketing through more than just efficiency metrics.

By enforcing strict AI ethics policies and emphasizing unique, AI-free aspects of their brand, companies can harness AI's benefits while maintaining consumer trust. These next few years will challenge marketers to navigate AI's potential and its risks, and the brands that proactively address ethical AI issues will be well-positioned to gain consumer confidence.

Meet the platforms

The four biggest players in the social commerce market are Facebook Shops, Instagram, TikTok Shop, and Pinterest, each with their own demographic makeup, functionality, and features. Check the chart below to assess which one aligns most with your needs.

These platforms all offer some fantastic tools to capture and convert customers, but brands should think carefully before putting all their eggs in one social commerce basket. Handing over the end-to-end transaction to a social platform might be convenient, but it’s not without its drawbacks:

• You lose control over the customer experience, which could lead to inconsistencies in your branding.
• You don’t have complete oversight of your customer data, limiting your insight into purchasing behaviors, preferences, and trends.
• Providers can and do shutter features, meaning you may be forced to pivot your strategy to their whims.

Our advice is not to lose sight of social’s role in the wider customer journey, and think beyond just enabling customers to transact in-platform. Now more than ever, you need to think about offering customers a joined-up experience across all your brand touchpoints - whether that's on-site, email, social, SMS, app messaging, and beyond. And with 5 billion people on social media today, your presence on social - whether you lean into social commerce or not - is very important.

Social’s evolving role in the customer journey

From a paid perspective, 'walled gardens' (a closed advertising ecosystem where the platform owner controls all aspects of the environment) make up the vast majority of advertising opportunities available and are incredibly powerful tools for targeting and acquiring new shoppers. Marketers can run sophisticated campaigns based on extensive and accurate audience data, but they sacrifice control over who the content is shown to and gain very little data to illuminate their impact on the customer journey.

So, to effectively target existing customers, the savviest brands are using their proprietary data to deliver tailored cross-channel experiences to shoppers, and they’re achieving this by pushing customer audiences to social media via their customer data and experience platform (CDXP).

There are many exciting campaigns you can create when you activate your proprietary data in this way, including:

• Re-engaging high-value shoppers who have not been responsive to email campaigns.
• Targeting existing shoppers to activate them around key seasonal dates such as Black Friday.
• Targeting shoppers with replenishment-based content to reactivate them to make a follow-up purchase.

Marketers don’t need more data: They need more action

68% of data available to businesses goes unleveraged.

Marketers are drowning in data. And yet, they’re still not getting the most from it. Why is that? In this section, we explore the structural issues holding marketers back from their data, the role of technology and AI, and why a customer data platform (CDP) might not be the answer the industry needs.

Dude, Where’s My Data?

Marketers today have an abundance of data, but accessing it, analyzing it, and actioning it isn't as easy as it should be. Data is often locked away in systems that are anything but marketer-friendly, which is holding their campaigns back. Let's take a look at some examples:

Data warehouses

Data is captured, but sits in data warehouses requiring technical expertise to access.

CDPs managed by non-marketing teams

Tech teams become gatekeepers to the data, creating a bottleneck effect.

Fragmentation

Data is siloed across your various solutions, resulting in a fragmented understanding of customer behavior.

So why is this a problem?

Ultimately, if you want to create hyper-personalized campaigns and build authentic connections with your customers, access to data is non-negotiable. And beyond that, it needs to be stored in a way that makes pulling out actionable insights effortless. In our view, there are 3 key ingredients to getting your best data:

1. A fully comprehensive view of each customer that incorporates every single data source possible;
2. The means to use that data in marketing activity (for personalization, segmentation, etc.);
3. The means to do so at scale, with minimal human intervention.

AI is only as good as the data that trains it. As a leader, it’s essential to understand that the quality, diversity, governance, and operational pipelines of your data will determine the success of your genAI initiatives. In other words, if you want world-class results from genAI, you need world-class data.

"Best-in-class retail brands will be creating a 360° view of the customer. If not, they'll become irrelevant."

Jaap van Riel
Chief Technology Officer - Knitwell Group

The importance of first-party data

Over the past few years, we’ve seen a fundamental shift in the tech sphere towards prioritizing and safeguarding consumer privacy. Though third-party cookies (3PCs) might have clung on for now, the slow march of progress will see them become obsolete eventually, and marketers need to prepare for the 'cookieless future', however, it may look.

This means that from here on out, first-party data is king. First-party data is gathered on a foundation of trust and explicit consent from your customers, plus it's fully compliant with data privacy regulations like GDPR and CCPA. Without 3PCs, having high-quality, organized, and actionable first-party data will be essential to continue building effective, targeted marketing campaigns.

"First-party data is crucial to building a loyal customer base, and ideally, not in huge segments, but on a more personalized level to understand and go deep with your customers."

Jamie Gersch
CMO Rothy’s

Is a CDP really the solution?

 So, we’ve established what the problem is, and what marketers need to fix it. But what does the solution look like in practice? Under pressure to shift toward data-driven marketing, the need to deliver an omnichannel experience, and the growing number of customer channels, many marketers will turn to a CDP for the answers; in fact, as much as 59% are focusing their efforts on building out a CDP.

However, CDPs come in all shapes and sizes and can be configured in a hundred different ways to serve a hundred different purposes. Some will prioritize technical applications, whereas others will be built for marketing use cases.

If you’re considering implementing a CDP, we recommend zeroing in on the following 3 factors:

Real-time data

Seamless data integration between the CDP and systems used by marketers to engage customers as part of their everyday work. 

Access without barriers

Marketing teams should be empowered to retrieve data independently, minimizing reliance on technical gatekeepers.

Fragmentation

Cross-channel journeys should be able to be orchestrated from a single platform, rather than spread across multiple point solutions (e.g. email, SMS, social platforms, etc). This empowers personalized experiences as well as ongoing feedback loops

In-store invigorated: Physical retail was never dying

72% of total US retail sales will (still) happen in physical stores by 2028.

Physical retail has endured a tumultuous few years. With the impact of the COVID-19 pandemic and the rise of e-commerce, many have been ready to declare that brick-and-mortar shopping has had its day. But what if the story isn't over…it's just beginning a new chapter. As brands increasingly integrate tech to create more convenient and immersive shopping experiences, let's dive into this exciting space and how it's changing the shape of retail.

Consumer expectations are changing

Have you heard of the ‘zero consumer’? Even if you haven’t, the chances are that you might actually be one.

The ‘zero consumer’, a term coined by McKinsey, is a fast-growing customer archetype known for having zero loyalty to brands, high expectations for customer service, and a preference for omnichannel experiences. These consumers are digitally savvy and channel-agnostic, and they expect excellent customer experiences that are as fluid as they are.

Omnichannel: The best of both worlds

Omnichannel experiences connect the dots between on and offline experiences and create interactive customer journeys that combine the ease and personalization of digital with the emotional and tactile benefits of in-store shopping.

The truth is, people still want to shop in person - Forrester predicts a staggering 72% of total US retail sales will happen in physical stores by 2028 - but when they do so, they want an elevated experience. They want digital to supplement their physical shopping experience, not replace it entirely.

In short, physical retail is coming back: But not as we know it.

Shoppers want omnichannel experiences:

62% of customers think experiences should flow naturally between both physical and digital spaces.

Retailers are addressing old problems in new ways:

Research shows that shopping experiences that use AR have a 40% reduction in ecomm returns.

Consumers are open to innovation:

Click-and-collect sales are expected to surpass $200 billion by 2028.

“The physical store, despite the digital shift in customer behavior, still offers the highest revenue and profitability potential. This underscores the critical need for distinctive store design, captivating visual elements, curated product assortments, and, most importantly, exceptional teams"

Ron Thurston
Co-founder - OSSY

From in-store to online and back again

The best omnichannel initiatives combine utility and novelty to delight the customer. How you do this will depend on your brand, strategy, and goals, but here are some of the developments we’re most excited about:

 "We're exploring opportunities to reduce the return rate. One way is to play with augmented reality to determine fit when going into a physical store isn't possible. I think AI is going to help make that better and more realistic."

Julie Channing
Fractional CMO and former Global VP of Marketing for Allbirds

The battle for customer attention: New channels, same mistakes

Over a third of brands and agencies see frequency management as their greatest challenge

Research suggests that when it comes to messaging volume, more isn’t always more. As we look ahead to 2025, it’s essential that when you communicate with customers, you’re coming in at the right time, in the right place, with the right message, and crucially - at the right frequency. In this section, we explore the technologies available now to make this simpler than ever, and the strategies leading retailers are using to deliver messaging that really resonates.

Saying goodbye to batch-and-blast

While brands have long been warned of the negative impact of over-messaging their customers, it’s become painfully clear that you can’t simply batch-and-blast your way out of poor channel performance going into 2025.

• Volume and performance are inversely correlated: 51% of buyers say they unsubscribe because emails come too often.
• Leaders know it’s an issue: 36% of brands and agencies consider reach and frequency management one of their greatest challenges in 2024.

With the demise of the “more sends = more revenue” mantra, what can marketers do to reach ever-increasing channel revenue targets? The answer lies in working smarter, not harder.   

Making customers excited to open your messages again

According to analysts at McKinsey, 'The era of the tyranny of averages is over'. This means investing in data and advanced capabilities to really understand consumers at an individual, small, or microsegment level’.

Personalization has long been touted as an antidote to poor engagement, but the integration of AI capabilities in marketing software has made scaling personalized marketing a feasible reality for retail brands.

Next-gen personalization in action

Predictive behavioral targeting to catch customers at the right moment

Using AI to profile customers and predict their future behaviors – from their next purchase date to when they're due to replenish a product to when they become at risk' of lapsing. This enables marketers to target shoppers with contextually relevant messaging rather than relying on generic batch-and-blast messaging to activate them.

AI-based product recommendations and content

Using AI to understand customer tastes on an individual level and recommend highly relevant products, categories, and content within marketing messages to increase the chance of click-through.

Predictive frequency modeling

Using AI to model the optimal frequency for messaging shoppers – weighing up factors like revenue generation against negative engagement like unsubscribes – to guard against over-messaging.

Avoiding old mistakes with new channels

As new channels emerge on the scene promising marketers more opportunities for targeting shoppers, marketers must resist the temptation to simply treat them as another chance to mass-message customers until their patience wears thin.

Clever orchestration is key here, guided by two core principles:

• Consistency of messaging and personalization – marketers must ensure that they offer a consistent experience across all channels, ensuring the messaging and the products they recommend remain in lock-step.
• ‘Best channel’ rather than ‘every channel all at once’ – marketers can leverage AI to target shoppers on the channels they’re most likely to engage on.

Breaking the discounting doom loop

The natural consequence of saturating customers' inboxes with messages has been a reliance on discounting to cut through the noise. While this might be a sure-fire way of grabbing your customer's attention, the negative impact can be large:

• A growing dependence on discounting that ends up damaging engagement with non-offer-based messages.
• A need to offer increasingly large discounts to maintain your customers’ attention, cutting into your margins.
• Potential damage to your brand image.
• Attracting a large cohort of customers who are unlikely to ever pay full price without a significant amount of nurture work.

Breaking the over-messaging habit goes hand-in-hand with breaking the over-discounting one – and should focus on the quality of messaging, personalization, and targeting shoppers at the right moment in the buying journey.

Key tactics include:

1. Using offers sparingly to activate key customer segments at the right moment (for example, to re-activate regular shoppers who are at risk of lapsing).
2. Using offers to reward ‘good’ customer behaviors – like making a second or third purchase.
3. Using non-discount-based rewards (such as free gifts or delivery) that eat less into margins.
4. Creating post-purchase automation campaigns for discount shoppers that encourage them to make full-price purchases. 

“If we have something to shout about, it's good to increase the volume, but we don't want to increase the volume for the sake of increasing the volume. That's something that hasn't worked for us.”

David Meir Sasson
CEO - Kindthread

Even triggered campaigns can't escape frequency fatigue

Although automated emails outperform broadcast, the relationship between frequency and performance is not exempt from this trend. Ometria clients who adopt intelligent automation and personalization practices, while also optimizing frequency across segments, are seeing the greatest gains in performance.