For too long, online consumers have been pitched the same kinds of clothes, the same types of opinions and the same sort of songs and over again, thanks to a like, an ad click or a Google search. We’ve been living in topical bubbles where our interest data is too often used to maintain our sensibilities rather than expand them. The fake news phenomenon is one of the biggest ramifications of these bubbles, but algorithms don’t just impact our political leanings, they also influence our purchase decisions and almost everything we do with tech.
What’s more, an internal conflict among consumers puts businesses in a precarious position. On the one hand, 53 percent say they are concerned by data-driven ad retargeting and widespread support for new privacy legislation in GDPR and the California Consumer Privacy Act of 2018 makes it clear that people are wary of how marketers use their information. On the other hand, the majority of millennial and Gen X consumers are willing to exchange data for more relevant experiences from brands. Marketers must strike the right balance: customize what people see without over-personalizing.
This balance is key to applying artificial intelligence, which should be used to inspire discovery instead of insulating people from new things. Technology can help us stretch beyond our comfort zones, and while many brands aren’t there yet, a handful of innovative players are beginning to approach marketing with this lens.
Spotify tunes in
Until recently, I saw recommendations for indie or emo bands on streaming music platforms that closely resembled other bands I liked. But my interests go far beyond those underground styles of rock—for instance, I love hip-hop, jazz and classical music, too. Sometimes I bored with those genres and would like to explore country, bluegrass, etc. Despite my variety of tastes, music “discovery” services put me in a music box.
However, Spotify is now helping me expand my musical horizons. I routinely see concert promotions and album recommendations on Spotify that complement my favorite songs and artists rather than repeat them. I feel like I am growing as a music buff, and it makes an incredible difference in my loyalty to the Spotify brand.
Spotify, which has 75 million customers who pay to listen to music without ads, has positioned itself as a recommendation engine that helps you discover new music based on your tastes. It curates the songs you already like into playlists and uses AI to recommend other playlists based on the time of year, time of day and trending songs and genres. Spotify has hit that personalization sweet spot with the right mix of what I already like, what I might like and what’s outside of my musical comfort zone but deserves a listen.
AI shakes up shopping
What if marketers were to approach personalization with the Spotify model? It’s a hard transition to make, but not impossible. For example, a bevy of emerging retailers are focusing on recommending items to people seeking new fashion styles.
Many of these companies are using voice-activated AI to interact with consumers more conversationally. The digital clothing marketplace Poshmark offers a best-in-class example. The Poshmark Alexa app (or “skill,” in Amazon’s parlance), called Stylist Match, utilizes AI to connect shoppers with a few of the company’s numerous partner stylists. When asked, “Alexa, ask Poshmark to style me,” the stylists create customized looks for special events like a date night, holiday work party or casual weekend. Stylist Match uses data to pair shoppers with a stylist who reflects their preferences, and an exploration of new fashions ensues.
Facebook and Instagram have now gone beyond retargeting, taking social shopping to new levels. I was recently looking for bathing suits on various retailer sites, and I later saw Facebook and Instagram ads for new brands that, to my surprise, matched my style leanings. The ads weren’t just saying, “Hey, you clicked on bathing suits—here’s more of them!” These ads represented a complex data set that AI was able to synthesize into a type of personalization that grew my wardrobe thinking rather than stunting it.
Smart recommendations beyond music and fashion
All digital brands should aim to help consumers break out of familiar territory. How can marketers who are just beginning to explore AI catch up? How do you get brands out of retargeting ruts?
Marketers must first get out of the retargeting mindset and approach AI-powered personalization as a way to expand consumers’ horizons rather than limiting them. Primary channels like phone calls, social media and email are excellent places to start. Banking giant HSBC, for example, is using AI to recommend more personalized email offers from numerous third-party merchants and has seen a 70 percent conversion rate.
Indeed, AI can solve lousy personalization, which will only become a bigger problem for companies that wait to act. Seventy-six percent of consumers already expect brands to understand their needs. Marketers who master personalization and broaden consumers’ horizons will be at the forefront of business in the years to come. Loyalty will not be based so much on what you offer, but what you recommend.