tag:www.econsultancy.com,2008:/topics/digital-transformation Latest Digital Transformation content from Econsultancy 2018-06-13T15:37:00+01:00 tag:www.econsultancy.com,2008:BlogPost/70089 2018-06-13T15:37:00+01:00 2018-06-13T15:37:00+01:00 The digital transformation of Accent Group: A retail case study (part 3) Jeff Rajeck <p>This is the third and final part in this series (after <a href="https://econsultancy.com/blog/70087-the-digital-transformation-of-accent-group-a-retail-case-study-part-1/">one</a> and <a href="https://econsultancy.com/blog/70088-the-digital-transformation-of-accent-group-a-retail-case-study-part-2/">two</a>) and in it we discuss the group's ongoing digital transformation initiatives and the future of retail in a rapidly-changing and increasingly digital world.</p> <p>We've talked about franchisees, but I wanted to ask Teperson how much the group's global brands a part of this (predominantly Hype DC and Platypus) - do they have their own digital transformation going on?</p> <p>"About 6 months ago," said Teperson, "we built a digital hub or centre of excellence in Melbourne. It is a purpose-built facility that concentrates our digital expertise under one roof.  </p> <p>"The way that we run the business model here is that there are two different streams. The first one is the dedicated resources that sit at each of the brands, a Skechers ecommerce manager and a Platypus ecommerce manager, and they align completely with the business unit. So, they are part and parcel of the operational cadence of that business.</p> <p>"To complement that and leveraging the size and scale of the business, I introduced effectively a shared service layer which is where we bring in more senior and very competent resources in different specialties. So, performance marketing, digital marketing, project management, omnichannel managers and strategists. We support each of the businesses with a shared service, recruit the very best talent in the market and share those resources across the business where the individual business unit would not be able to afford them.</p> <p>"In a lot of instances, we would certainly look to follow and look to align to a global initiative and directive. Our brand partners have been fantastic and collaborative with us in working with us because they acknowledge that in some areas we are ahead of where they are and there are learnings to be had to them by enabling us to do it.</p> <p>"And so, that has created a wonderful opportunity for us to get closer to our brands, but also feel like we are giving some value back at the same time."</p> <h3>Marketplaces - are they right for the brand?</h3> <p>I asked Teperson about the Accent Group's relationship with marketplaces. He replied that they "actually are not participants in any marketplaces", and elaborated on why.</p> <p>"We are looking very closely at the space and I think for us it is just a matter of time - not if, but when - and how we decide to go about executing that.</p> <p>"I think that marketplaces are an important part of the new paradigm and certainly where you find and reach consumers especially new consumers. But the mechanics around that and the brand protection that you look for insofar as just making sure that your brand isn't the piñata of the marketplace - as a loss leader for the marketplace to attract customers to their brand.</p> <p>"We are still really sensitive and mindful about first and foremost wanting to create brilliant consumer experiences. Making sure that we are doing the right thing by the brand so that we have longevity in the market.</p> <p>"Our CEO, at the moment, is really focused on what is called 'lazy retailing'. In Australia, you can walk into a shopping centre 365 days a year and see sale and promotional signage up. Anyone can sell something when its discounted (i.e. ‘lazy retailing’), it's when you can sell things when they are not discounted that really speaks well for your brand.</p> <p>"And particularly in our younger and more fashion and trend related business, sales and promotion are often seen as things that aren't on trend or cool. Because if it is discounted then, clearly it can't be popular or on trend.</p> <p>"And so, there are really interesting nuances taking place. In the context of the marketplace, it is about giving us an opportunity to reach more customers without devaluing our brand through a price model that is really about a race to the bottom. That is inconsistent with our brand ethos."</p> <p><img src="https://assets.econsultancy.com/images/0009/5226/retail-digital-transformation-3-1.jpg" alt="" width="800" height="493"></p> <h3><strong>Driving growth</strong></h3> <p>When asked about the most important factor for driving growth, Teperson talks about making more of the inventory they already have.</p> <p>"I go back to all the things that we spoke about - click-and-collect - where we are taking demand that existed on the website and improving conversion and sales through supplying the product in that market.</p> <p>"What was wonderful about that was that we did that without investing a dime more in stock. We just plugged in inventory that we already owned. Omnichannel retailers really do have a competitive advantage if they just rethink how they flex their muscle.</p> <p>"And that has been the most profound change. So, it’s all the things that we have been able to execute because we are a physical retailer, because we have stores, because we own stock - that has given us the biggest increase and the biggest lift in sales.</p> <p>As opposed to a fantastic new merchandising tool – yes, those things give you efficiencies and drive improvement but not at the scale we have seen.</p> <p><strong>But is there any particular channel which drives the most revenue - digital, traditional?</strong></p> <p>"It is a combination of factors," remarks Teperson.</p> <p>"I think great retail will always remain those things. Everyone looks for the silver bullet, but I don't think it exists.  </p> <p>"A retailer is a conductor of a very complex symphony. All of the instruments have to be playing in order to make that music loud, emotive and connect with the audience.</p> <p>"I feel like because we are an omnichannel retailer we have more opportunities to influence that. As an example, if we were to have 40 million visits to our store in a 12-month period we will have a similar number coming to our digital assets.</p> <p>"You have twice as much opportunity as a pure play online merchant to reach customers, connect with them, and deliver those experiences.</p> <p>"It's not one single thing - it's about being mindful of all your assets."</p> <p><img src="https://assets.econsultancy.com/images/0009/5227/retail-digital-transformation-3-2.jpg" alt="" width="800" height="455"></p> <p>So, what about conversion rate optimization, does the group have an A/B testing lab? "Yes," says Teperson.</p> <p>"I think those things are table stakes. That is, they are mandatory to see improvement. We work with an external partner who is a specialist in this space. Working on A/B testing and site optimization.</p> <p>"We run a series of tests every month across of our assets. It's an important part of a strategy, but in today's market, it feels like that is the cost of entry.</p> <h3>The future of ecommerce</h3> <p>The big question for Teperson is what will the future look like. He is aware of profound changes to come...</p> <p>"There was a video which crept into my LinkedIn feed about Google's foray into AI and conversational commerce. If I think about that work we did around demographics and behaviours, what does the future look like?</p> <p>"It's quite possible that my children and grandchildren will never use a keyboard. Everything will be done by voice command.</p> <p>"So, when you think about commerce experiences at that level, that will bring profound change to the market. If you think about how powerful mobile has been in consumption - that didn't exist 10 years ago - and now it’s the most influential part of the consumer journey. I don't think we are going to need to wait 10 years for the next technology to make a dent on the market and I think voice and AI is one of those things.</p> <p>"I've watched with much interest over the last three years the maturation of AI, but now it is combined with voice and what that enables brands to do - namely create experiences for consumers.</p> <p>"Retail has always been about exciting the customer, creating an emotional connection and then removing friction points with consumers. So, if AI and voice go some way to being able to eliminate more friction points, it can only be a more powerful thing for retail.</p> <p>"What that means from a DT perspective is that we have come a long way, but we have a long way to go to make a seamless experience for consumers.</p> <p>"That's what keeps it interesting and that's what keeps me motivated."</p> <p><strong> </strong></p> <p><strong>This is part three in a series. Read parts <a href="https://econsultancy.com/blog/70087-the-digital-transformation-of-accent-group-a-retail-case-study-part-1/">one</a> and <a href="https://econsultancy.com/blog/70088-the-digital-transformation-of-accent-group-a-retail-case-study-part-2/">two</a>.</strong></p> <p><em><strong>If you are interested in how Econsultancy can help you with your own digital transformation journey, <a href="https://econsultancy.com/training/digital-transformation/">get in touch</a>.</strong></em></p> tag:www.econsultancy.com,2008:BlogPost/70088 2018-06-12T14:29:00+01:00 2018-06-12T14:29:00+01:00 The digital transformation of Accent Group: A retail case study (part 2) Jeff Rajeck <p>I started by asking Teperson whether there was an end in mind when he started (such as implementing 3-hour delivery, as he mentioned in part one) or if the transformation is ongoing?</p> <p>"Much like people say your website is never finished," Teperson replied, "I don't think the transformation journey ever ends."</p> <p>"I think by definition if you're not going forward you're going backward. If you're not constantly changing and evolving with the consumer then you are going to fall behind. </p> <p>"We are fortunate in so far as we are ahead of a lot of other businesses - and our competitors in the market - which is a great competitive advantage for us. But your work is never finished.</p> <p>"In Australia, we have The Bureau of Statistics. Using its data, we looked at the demographic shift over the last five years and then fast-forwarded that five, 10 and 15 years into the future to get a sense of what is happening in the market.</p> <p>"I don't think the transformation journey ever ends."</p> <h3>Generation Y, the largest cohort</h3> <p>Teperson discussed this transformation journey in the context of a changing consumer profile:</p> <p>"If you look at what has happened over the last 5 years, Generation Y overtook baby boomers as the largest cohort by number in terms of the representative population in the market.  That's a pretty extraordinary statistic; it's the first time in history that a generation has been skipped in terms of becoming the largest representative cohort in the market.</p> <p>"And if you look at that from a retailer's perspective, retailers went from a market of baby boomers which had the largest disposable income and the largest share of purchasing dollars to suddenly that purchasing cohort dropping by two generations to Gen Y who had grown up very au fait with digital consumption. They were the first generations who had grown up in which everything was digital.</p> <p>"Fast-forward that behavior over the next five years and Gen Z grows in its influence in the market. Gen Z grew up with a mobile in their hand and will soon be the largest cohort in the marketplace."</p> <h3>Preparing for change</h3> <p>Teperson refers to this generation shift as "a wonderful lens to sober you up for how much change is still ahead of us."</p> <p>"Yes, we have done a great job of building a strong foundation and we have set ourselves on a fantastic path," he continues, "but I think the transformation that we have seen thus far will pale in comparison to the transformation we will need to make over the next five to 10 years to make sure we are relevant for the next generation."</p> <p><img src="https://assets.econsultancy.com/images/0009/5362/taf.jpg" alt="" width="800" height="600"></p> <h3>Challenges to come</h3> <p>Next I asked Teperson about what other challenges he sees on the horizon. At a high level, he admitted there are two things that keep him awake at night:</p> <h4>1) Competition</h4> <p>"The first is the competition that doesn't exist today. If you are well capitalized and well-funded and don't carry 20 years of legacy systems, you can do things differently.  You can enter a market differently, you can be more nimble and you can be more responsive to a target market. So, the competition that doesn't exist today and how those distribution models build out that is something that keeps me awake at night."</p> <h4>2) What the customer wants tomorrow</h4> <p>"The second thing is what the customer wants tomorrow.  Again, I suppose I am aware of a lot of quotes that sum this up, but one stands out: 'It's far easier to invent the future than it is to predict it.'</p> <p>"That's where innovation comes in. Now, click-and-collect wasn't necessarily innovative but ship from store was, and 'endless aisle' is an extension of that. Then, how do we get the product to the customer faster? Well, let's do it in three hours.</p> <p>"If we listen to the customer and reinvent or re-imagine what the experience might look like, we stand a better chance of predicting what the future holds.  It's so easy to fall into patterns of saying that we have done it now, surely, we can sit on our hands - well you can't.</p> <p>"So, while it's tempting to work on becoming more operational and efficient, the consumer doesn't wait, and the competition doesn't wait either in picking holes in your customer experience.</p> <p>"I really do believe that one of the best competitive advantages that we have in being an omnichannel retailer is our store network. There is a lot of commentary around this - is it a competitive advantage or a weakness - and a threat?  I think that we have demonstrated that we have been able to grow sales and profit by leveraging our asset base and rethinking/re-imagining how we deploy those assets in the market.</p> <p>"If we listen to the customer and reinvent or re-imagine what the experience might look like, we stand a better chance of predicting what the future holds.</p> <p>"Our stores are always important. They are the physical manifestations of our brand. In a retail experience, you can play with so many of the senses. You can touch things, smell things - new products, new cars - and it creates a very emotive connection. There are even examples of retail bringing sensory experiences to taste. There are 'ice cream pairings' with a sneaker experience.  It can be a wonderful playground to connect with consumers.</p> <p>"But, equally, you can re-imagine how you can utilize that asset base and that brand awareness and really flex your muscle digitally. Accent Group is the envy of every pure-play retailer that is looking for ways to engage consumers through a physical presence.</p> <p>"So, we have to challenge to really continue to re-imagine what those experiences can look like."</p> <p><img src="https://assets.econsultancy.com/images/0009/5223/retail-digital-transformation-2-2.jpg" alt="" width="800" height="541"></p> <p><strong>Customer experience benchmarks</strong></p> <p>Teperson named NPS as one of Accent Group's key <a href="https://www.econsultancy.com/blog/69889-what-is-customer-experience-how-can-it-be-measured-and-who-should-own-it">customer experience benchmarks</a>. "NPS is certainly one [of them]," he said, "and that's a universal measure that we look at. We track NPS across all of our businesses some in real-time, some in polls. We have some of the highest NPS scores in the market. TAF has an NPS score of an 82. The only brand who is above that is Apple.</p> <p>"We also look at other measures such as the traffic to our site. What is the interest in our brand? When you have growing traffic numbers, you want to see whether your normal metrics, such as conversion rate, is in line or growing. You don't want to see a dilution of your conversion rate.</p> <p>"We also look at metrics across different devices. Some of our brands have mobile usage in excess of 70% and so looking at the conversion metrics across devices is also really critical and important to us. Also, how much revenue we generate from each visit. All the quantifiable measures around growth are important.</p> <p>"From a digital transformation perspective, another benchmark that is really important to us is what percentage of sales is digital. We set a target of being able to get to 15% in the next few years. We are well on our way to achieving that. I think we will do it ahead of our target date. </p> <p>"But again, going back to the original question, each of the brands performs a little bit differently. Our pure brands in market don't have as high of a percentage of digital of their total transactions. The younger, faster brands in our stable are growing much faster and digital represents a much larger share of that wallet.</p> <p>"And so those indicators actually provide us with a great decision-making lens for how fast we need to accelerate things or in what order we can roll things out."</p> <p><em>This is part two of a three part series on the digital transformation of Accent Group. Read parts <a href="https://econsultancy.com/blog/70087-the-digital-transformation-of-accent-group-a-retail-case-study-part-1/">one</a> and <a href="https://econsultancy.com/blog/70089-the-digital-transformation-of-accent-group-a-retail-case-study-part-3/">three</a> here.</em></p> <p><em><strong>If you are interested in how Econsultancy can help you with your own digital transformation journey, <a href="https://econsultancy.com/training/digital-transformation/">get in touch</a>.</strong></em></p> tag:www.econsultancy.com,2008:BlogPost/70087 2018-06-11T15:00:00+01:00 2018-06-11T15:00:00+01:00 The digital transformation of Accent Group: A retail case study (part 1) Jeff Rajeck <p>Yet evidence of changes in the retail customer experience are difficult to find. Most aspects of retail shopping haven't changed much in the past five years.</p> <p>Accent Group, which manages multiple footwear retail shops and brands in Australia, has, however, pushed ahead with digital transformation and is now offering its customers a very different shopping experience, enhanced with digital technology.</p> <p>To find out more, I spoke with Mark Teperson, the Chief Digital Officer of Accent Group and discussed many aspects of their digital transformation programme.</p> <p>In part one of our talk, we discuss the group's digital transformation journey, the reaction of the international brands and what Teperson felt were the key characteristics of a successful digital transformation.</p> <h3>The business models</h3> <p>Accent Group consists of nine different retail brands and it has distribution rights for 10 international brands - including TAF, Skechers, Merrell - and it has a total 445 stores across Australia and NZ. I asked Teperson what the digital transformation journey has been like for a company with so many moving parts?</p> <p>"It's a good question and one which I get asked more often than any other. I think what is important to know is that in the makeup of the businesses and stores, we operate using a number of different models.</p> <p>"For The Athlete's Foot (TAF), Accent Group is a 'franchisor' with about 100 franchisees. So, with them, we have been doing digital transformation in a franchise business - that in and of itself could be a case study.</p> <p>"Accent Group is also a licensee and, for example, we were the first distribution license for Skechers internationally and we have been so for 20 years. We work with global brands but manage them locally in Australia with very stringent brand guidelines.</p> <p>"Our third business is those brands which we own locally in Australia, predominantly being Hype DC and Platypus Shoes. In these cases, we own that retail format and we can drive and dictate how that evolution comes to light.</p> <p>"So, there are several competing business models and many variables that we have to contend with when we go about this."</p> <p><img src="https://assets.econsultancy.com/images/0009/5213/retail-digital-transformation-1.jpg" alt="" width="800" height="485"></p> <h3>Follow the customer</h3> <p>Teperson talks about the digital transformation journey starting and ending with the consumer. This isn't just a soundbite. Here, he elaborates:</p> <p>"Everybody says that they have 'customer-centric strategies' and talk about 'putting the customer at the heart of everything you do'. I don't know if you have seen a picture in my presentations - on my wall in my office there is a quote from Sir Terry Leahy, former Tesco CEO: “Follow the customer, and you will never have to look for growth.”</p> <p>"And that principle, that very salient principle, is what has underpinned all the innovation that we have brought through digitizing our business. </p> <p>"What do I mean by that? Our customers told us that they wanted click-and-collect, so we implemented it.</p> <p>"And then, off the back of click-and-collect, our customers were looking for more product to be able to be purchased online. So, we then turned all of our click-and-collect stores into distribution points. We started thinking of our stores not only as experience centres for our customers but as distribution centres for our product. This means we are able to get products to customers faster, but we also open up the inventory pool.</p> <p>"Doing so had a transformational impact, not only on the business in terms of the sales and the momentum that it built for us, but importantly for the customer as well. We were fulfilling more of their demand online.  </p> <p>"And digital transformation has been built off the momentum that we have seen off of these innovations. Click-and-collect started and it was a great incremental lift. We saw overall about 10%-20% lift in our digital sales when we launched it. Then, when we did ship from store, we saw another 30-50% lift in our digital sales as a result. And so, this is why you should 'follow the customer'."</p> <h3>Same-day delivery and 'endless aisle'</h3> <p>On top of click-and-collect, Teperson expanded on what's next for tech and logistics at Accent:</p> <p>"Consumers invariably value choice and service and so Accent Group is next launching same-day delivery and then 3-hour delivery. That will not just be from a warehouse, it will be from every single one of our stores across the country. This means that we'll have approximately 80-90% coverage of the consumer market and be able to get product to them within three hours across the country - which is a pretty amazing transformation.</p> <p>"And because one of the learnings from ship-to-store or click-and-dispatch was to make all of our inventory available to customers online, we next want to solve the problem when we don't have the inventory in the store a customer is at, but we have it somewhere else.</p> <p>"To do so, we are going to launch 'endless aisle', where a team member in one of our stores has access to every piece of inventory we own across the business. So, if the customer is standing in front of them, they can fulfill that desire for that customer and have it delivered to them free of charge next day, make the customers life and the experience better.</p> <p>"So back to your question around digital transformation across the group. The take up of these pieces of innovation has been a little bit different across each of our brands, but it is always driven by what the consumer wants."</p> <p><img src="https://assets.econsultancy.com/images/0009/5214/retail-digital-transformation-2.jpg" alt="" width="800" height="617"></p> <p>I asked Teperson if these initiatives get different reactions at different brands, stores and franchisees.</p> <p>"You touch on an interesting paradigm," he said. "Comparing our own brands Platypus or Hype DC to the more complex franchise model, there are a lot more stakeholders involved in a franchise model and so digital transformation is a more complex journey.</p> <p>"The brilliant thing about it though is that because we have done it before in all our company-owned businesses and licensees, we had a history of results. So, we could say 'this is not what we think - it's what we know'. And to be able to go to these businesses with a definitive case study or model around how something should or will operate makes the digital transformation business case easier."</p> <h3>Accelerating digital transformation</h3> <p>Next Teperson picked up the theme franchisees and their possible reluctance to accelerate their transformation.</p> <p>"Regarding The Athlete's Foot (TAF), I was responsible for our first ecommerce execution five years ago.  At a national TAF conference they took a poll in the room asking the franchisees if they thought they should be online and, if so, in what time period.  The response was 'yes we should be there', but only sometime in the next 5 years. Within a few months after that, though, being online became the most important issue in the business to get solved and we deployed a website for them.</p> <p>"To be able to go to these businesses with a definitive case study or model around how something should or will operate makes the digital transformation business case easier.</p> <p>"But the challenging piece in that model is that the website, which had profit share with franchisees, was seen as a competitor to their business. So, we then changed the model so that all the fulfillment comes out of stores, the orders are allocated according to the proximity of the delivery address and the franchisee gets 100% of the benefit.</p> <p>"That in and of itself has been a transformational change for our franchisees who no longer have to fear digital - and changes in consumer behavior - as being a threat to their business. They can now capitalize on these changes."</p> <p>Teperson was pointing out that for Accent group, digital transformation is not only a digital issue but has elements of appeasing existing stakeholders in the business.</p> <p>"I think this whole concept of digital transformation is such a profound topic," he says. "It's the biggest buzzword in the market at the moment and arguably every business is dealing with it. But when it comes to the really simple principles around what makes a successful transformation, what are the ingredients for those things, I think there are a couple of kind of key characteristics of it."</p> <h3>Characteristics of successful digital transformation</h3> <p>Teperson laid out these two key characteristics.</p> <h4>1) The customer</h4> <p>"The first thing is that the strategy starts and ends with the customer. More often than not, I see examples of brands which try to build monuments to themselves when they think about digital transformation. They build technology which customers don't want - and haven't asked for - but they think it demonstrates that they are digitally savvy. So, really listening to your customers around what they want is first and foremost."</p> <h4>2) Emotional intelligence</h4> <p>"But I think that what we probably don't talk about enough in digital transformation is the soft skills required to make us successful. And what I mean by that the emotional intelligence (EQ) that you need around a senior leadership table to position digital transformation in such a way that it is not a threat to the business - or more importantly a threat to someone else's job. Instead, digital transformation is a very empowering opportunity for solving business problems or customer problems or challenges that exist in the business - inefficiencies - through a digital lens.</p> <p>"When digital transformation projects are thrust into a business it can create a very awkward political tension. Most people are, naturally, scared or resistant to what they don't know or understand.</p> <p>"So, digital transformation is too often positioned as a complete change to the way we are going to operate instead of as an opportunity to discover how we can solve problems, how we can be more efficient, how we can help our consumers have better experience. It's really the lens in how you position digital transformation that can often be the difference between success and failure.</p> <p>"What most people fail to understand is that a successful digital transformation requires the alignment of every single division in the business.</p> <p>"In our vertical, it's retail operations. We have to make sure the stores are fulfilling on that seamless customer experience whether its click-and-collect or in store. Inventory levels need to be very accurate otherwise you're going to create a really poor experience for a customer who thinks something is available in the store when it’s not. </p> <p>"Finance, reporting, logistics, infrastructure, IT, and training are all key functions that need to come together to support the strategy.</p> <p>"What most people fail to understand is that a successful digital transformation requires the alignment of every single division in the business.</p> <p>"So, the customer is the most important reason around digital transformation - but emotional intelligence has to be the second most important element in terms of getting digital transformation right."</p> <h4>Momentum</h4> <p>I put it to Teperson that it's quite common to talk about senior level buy-in and technology integration as being key to successful digital transformation - but was he saying emotional intelligence is the underrated quality of a successful digital transformation project?</p> <p>"Absolutely," he replied. "The senior leadership buy-in - let's call that table stakes - it needs to happen. You have to be able to respond to the different stakeholder dispositions such as where are they today in their understanding of digital, where do you need them to be and how can you help them bridge that gap.</p> <p>"But those strategies need to be done at a very personal level on a one-to-one basis, and by building that coalition, you build momentum.</p> <p>"I think the most important thing about a successful transformation is that once you have the customer vision right, and you have the right people who have that EQ and can influence people, the next key thing is the momentum.</p> <p>"You can't do everything overnight. Where is the lowest hanging fruit? How can you prove it to the business? Not only the wins that you are delivering to the consumer but what are the financial benefits that are flowing from that? And then taking it forward from there."</p> <p>This is part one in a three part series. Read parts <a href="https://econsultancy.com/blog/70088-the-digital-transformation-of-accent-group-a-retail-case-study-part-2/">two</a> and <a href="https://econsultancy.com/blog/70089-the-digital-transformation-of-accent-group-a-retail-case-study-part-3/">three</a>.<em><br></em></p> <p><em><strong>If you are interested in how Econsultancy can help you with your own digital transformation journey, <a href="https://econsultancy.com/training/digital-transformation/">get in touch</a>.</strong></em></p> tag:www.econsultancy.com,2008:BlogPost/70082 2018-06-11T08:28:15+01:00 2018-06-11T08:28:15+01:00 The best digital marketing stats we’ve seen this week Nikki Gilliland <p>Enjoy.</p> <h3>93% of consumer-facing businesses are unable to use predictive analytics</h3> <p>According to a <a href="https://www.sas.com/en_gb/whitepapers/darkness-of-digital-shadows/download.html#formsuccess" target="_blank">new report</a> by SAS – based on the responses of 350 heads of marketing, customer service and experience - businesses are at risk of offering repeated recommendations to customers. This is because 93% said they are unable to use analytics to accurately predict what individual customers will want in future.</p> <p>Meanwhile, 54% mistakenly believe that they are ‘best-in-class’ or ‘transformational’ when it comes to using customer intelligence to shape their marketing campaigns.</p> <p>Other interesting takeaways from the report include the fact that 30% of companies say they use less than half of the customer data they hold, and 70% of organisations are typically not collecting meaningful data to personalise digital experiences. For example, just 25% are analysing previous transactions, and only a fifth are using CRM data.</p> <p><strong>More on predictive analytics:</strong></p> <ul> <li><a href="https://www.econsultancy.com/blog/69860-start-me-up-metrical-reducing-cart-abandonment-with-predictive-analytics" target="_blank">Start Me Up! Metrical – reducing cart abandonment with predictive analytics</a></li> <li><a href="https://www.econsultancy.com/blog/69228-predictive-analytics-four-prerequisites-of-an-effective-strategy" target="_blank">Predictive analytics: Four prerequisites of an effective strategy</a></li> </ul> <h3>59% of UK consumers think all brands should offer loyalty schemes</h3> <p><a href="https://yougov.co.uk/news/2018/06/05/what-the-british-think-of-loyalty-programmes/" target="_blank">A new study</a> from YouGov and Mando Connect suggests that the majority of UK consumers expect brands to reward them for their loyalty.</p> <p>In its research, YouGov discovered that 59% of adults think all brands should offer a loyalty programme, while 77% are subscribed to at least one programme already. This figure rises to 85% among women compared to 70% of men.</p> <p>Meanwhile, 72% of people think loyalty programmes are a great way for brands and businesses to reward their customers, and as a result, 59% think all brands should offer loyalty schemes.</p> <p>However, the research also shows that no one size fits all, with people citing very different motivations for engaging with loyalty programmes. For example, benefiting from discounts and offers is the top reason that people join loyalty programmes – cited by 87%. However, 55% also cited discounts and rewards from partner brands, and 52% wanted free services, products and experiences.</p> <p><img src="https://assets.econsultancy.com/images/0009/5127/loyalty_schemes_stat__1_.png" alt="consumer opinion on loyalty" width="780" height="391"></p> <p><strong>More on loyalty:</strong></p> <ul> <li><a href="https://econsultancy.com/blog/68811-loyalty-programs-are-losing-their-sway-here-s-what-brands-can-do-about-it" target="_blank">Loyalty programs are losing their sway: here's what brands can do about it</a></li> <li><a href="https://www.econsultancy.com/blog/69780-five-ways-ecommerce-brands-can-build-customer-loyalty" target="_blank">Five ways ecommerce brands can build customer loyalty</a></li> <li><a href="https://www.econsultancy.com/blog/69622-four-ways-brands-build-loyalty-engagement-without-using-points" target="_blank">Four ways brands build loyalty &amp; engagement (without using points)</a></li> </ul> <h3>Almost half of B2B buyers make their minds up before talking to vendors</h3> <p><a href="https://info.millerheimangroup.com/WP-2018-05-30BuyerPreferenceStudy.html" target="_blank">According to research</a> by Miller Heiman Group and CSO Insights, 68% of B2B buyers see little or no difference between vendors, largely due to a lack of insight provided during the decision-making process. </p> <p>In a survey of 500 decision-makers, only 23% of buyers said they identify sales-people as a top three resource for solving their business problems.</p> <p>In fact, 70% of buyers fully define their needs on their own before even approaching or engaging with a seller. Meanwhile, 44% of potential buyers identify specific solutions before engaging with sales reps and 20% don’t contact sellers until they’re ready to commit to a deal.</p> <p>It’s not all bad news for sales, however, as buyers still want fresh insight and expertise if it is relevant – 65% said they find value in discussing their needs with reps.</p> <p><strong>Related reading:</strong></p> <ul> <li><a href="https://econsultancy.com/blog/69826-could-a-pharma-company-shun-sales-reps-and-be-successful" target="_blank">Could a pharma company shun sales reps and be successful?</a></li> <li><a href="https://econsultancy.com/blog/68810-four-ways-ai-is-already-being-applied-to-sales-and-marketing" target="_blank">Four ways AI is already being applied to sales and marketing</a></li> <li><a href="https://econsultancy.com/blog/69065-five-advanced-data-and-segmentation-tactics-for-marketing-and-sales" target="_blank">Five advanced data and segmentation tactics for marketing and sales</a></li> </ul> <h3>Retail digital marketing budgets on the increase, but investment in skills neglected</h3> <p>Econsultancy’s 2018 <a href="https://econsultancy.com/reports/digital-intelligence-briefing-2018-digital-trends-in-retail/" target="_blank">Digital Trends in Retail</a> report in association with Adobe states that retailers are increasing digital marketing investment, with 72% of respondents (from a survey of 600 senior leaders) saying that they plan to do so in 2018.</p> <p>However, just 29% of respondents say that they plan to invest significantly in digital skills and education during 2018, while 24% say they will be making little or no investment in upskilling their staff this year.</p> <p>The combination of difficulty in recruiting and retaining experienced practitioners, and the fast-changing nature of digital marketing and commerce, means that a failure to invest in training and skills could lead many to come unstuck in future.</p> <p><img src="https://assets.econsultancy.com/images/0009/5126/Adobe_investment.JPG" alt="digital marketing spend for retail" width="760" height="488"></p> <p><strong>Related reading:</strong></p> <ul> <li><a href="https://econsultancy.com/blog/70071-the-future-of-ecommerce-according-to-mary-meeker/" target="_blank">The future of ecommerce according to Mary Meeker</a></li> <li><a href="https://www.econsultancy.com/blog/69778-from-growth-to-soft-skills-where-professional-marketers-should-focus" target="_blank">From growth to soft skills, where professional marketers should focus</a></li> </ul> <h3>Social marketers focused too much on sales</h3> <p>Sprout Social’s <a href="https://sproutsocial.com/insights/guides/2018-index/" target="_blank">latest report</a> suggests that marketers are still wrongly focusing on the ROI of social media activity, despite most users not falling into the ‘buy now’ mind-set.</p> <p>55% of survey respondents (from a pool of 2,000 social marketers) listed measuring ROI as a primary challenge. And while 41% of marketers note generating sales as one of their primary goals on social, only 14% of marketers say they are able to quantify the revenue from social.</p> <p>The report states that this is not necessarily because social marketers aren’t sophisticated enough to focus on conversions. Rather, it’s because social’s true value isn’t in direct attribution, but it in the awareness and consideration stages of the funnel.</p> <p>In fact, consumers’ top preference for social content falls into the consideration category, with 30% of those surveyed saying they want links to find out more information from brands on social.</p> <p><img src="https://assets.econsultancy.com/images/0009/5125/social_marketers.JPG" alt="challenges for social marketers" width="660" height="491"></p> <p><strong>Related reading:</strong></p> <ul> <li><a href="https://www.econsultancy.com/blog/69144-measuring-social-media-roi-case-studies-stats-that-prove-it-s-possible" target="_blank">Measuring social media ROI: Case studies &amp; stats that prove it’s possible</a></li> <li><a href="https://econsultancy.com/blog/69111-if-you-want-to-improve-your-marketing-roi-stop-spending-on-social-media" target="_blank">If you want to improve your marketing ROI, stop spending on social media</a></li> <li><a href="https://www.econsultancy.com/blog/68956-should-marketers-be-able-to-prove-the-roi-of-influencers" target="_blank">Should marketers be able to prove the ROI of influencers?</a></li> </ul> <h3>78% of executives struggling to execute digital transformation</h3> <p>In a survey of select CDO’s, CMO’s and IT professionals, Acquia has found that the majority of executives are still struggling to see through digital transformation initiatives. </p> <p>More specifically, 78% said that they have experienced difficulties during the implementation of their digital transformation project, with a fifth of those organisations finding executing their digital transformations projects ‘extremely difficult’.</p> <p>Despite this, marketers remain committed to completing plans, indicating a number of compelling reasons why. Overall, companies are largely motivated by a need to catch and pass competitors, as 56% of respondents admitted that they think they are behind their competitors when it comes to digital marketing. </p> <p>Lastly, 71% also said that - despite the immediate challenges - they believe digital transformation will give their business far greater freedom to innovate.</p> <p><strong>More on digital transformation:</strong></p> <ul> <li><a href="https://econsultancy.com/blog/69598-four-steps-to-successful-digital-transformation" target="_blank">Four steps to successful digital transformation</a></li> <li><a href="https://econsultancy.com/blog/69281-digital-transformation-it-s-not-a-destination" target="_blank">Digital transformation: It's not a destination</a></li> </ul> <p><em>To learn more, check out Econsultancy’s <a href="https://econsultancy.com/training/courses/digital-transformation-in-practice" target="_blank">Fast Track Digital Transformation Training</a></em></p> <h3>The majority of consumers would pay more for ethical brands</h3> <p>A new study by Media.com has found that consumers particularly value brands with <a href="https://www.retailtimes.co.uk/corporate-values-matter-consumers-are-willing-to-spend-more-with-brands-that-give-back/" target="_blank">strong ethical principles</a>, with the majority stating that they wouldn’t mind paying more for their products.</p> <p>From a survey of 1,000 consumers, 67% of respondents stated that they would pay more for environmentally-friendly products, while 68% said the same for products that do not test on animals. 60% also said they would pay more to brands which give back to the local community.</p> <p>Meanwhile, consumers also want brands to be held accountable, with 81% saying that brands should take responsibility for their environmental impact. 88% also say they expect companies to take action in order to tackle plastic waste and pollution. </p> <blockquote class="twitter-tweet"> <p lang="en" dir="ltr">So happy I've discovered <a href="https://twitter.com/_thesoapco?ref_src=twsrc%5Etfw">@_thesoapco</a> Genuinely love their exfoliating wild nettle &amp; sage soap. Not as much as I love <a href="https://twitter.com/hashtag/Edtech?src=hash&amp;ref_src=twsrc%5Etfw">#Edtech</a> and <a href="https://twitter.com/hashtag/scifi?src=hash&amp;ref_src=twsrc%5Etfw">#scifi</a>, but almost as much. Definitely recommend. <a href="https://twitter.com/hashtag/SocialChange?src=hash&amp;ref_src=twsrc%5Etfw">#SocialChange</a> <a href="https://twitter.com/hashtag/greatcustomerexperience?src=hash&amp;ref_src=twsrc%5Etfw">#greatcustomerexperience</a> <a href="https://twitter.com/hashtag/greatgiftideas?src=hash&amp;ref_src=twsrc%5Etfw">#greatgiftideas</a> <a href="https://t.co/zEKJPkiZxy">pic.twitter.com/zEKJPkiZxy</a></p> — Nina Iles (@NinaIles) <a href="https://twitter.com/NinaIles/status/1003701267384979456?ref_src=twsrc%5Etfw">June 4, 2018</a> </blockquote> <p><strong>Related reading:</strong></p> <ul> <li><a href="https://econsultancy.com/blog/69702-five-brand-campaigns-that-took-a-stand-on-social-issues" target="_blank">Five brand campaigns that took a stand on social issues</a></li> <li><a href="https://www.econsultancy.com/blog/69401-how-lush-delights-customers-with-brand-marketing-strong-values-and-digital-innovation" target="_blank">How Lush delights customers with brand marketing, strong values and digital innovation</a></li> </ul> tag:www.econsultancy.com,2008:Report/4812 2018-06-06T10:00:00+01:00 2018-06-06T10:00:00+01:00 Digital Intelligence Briefing: 2018 Digital Trends in Financial Services <p>The <strong>2018 Digital Trends in Financial Services </strong>report is a barometer of the extent to which financial services and insurance (FSI) organisations are embracing digital technology, focusing their strategies and prioritising resources for the year ahead and beyond.</p> <p>The report is based on a sample of almost 700 senior industry leaders (manager level or above) who were among around 13,000 digital professionals taking part in the annual Digital Trends survey.</p> <h3>The following sections are featured in the report:</h3> <ul> <li>The CX imperative: meeting the fintech challenge</li> <li>Data, personalisation and AI</li> <li>Capabilities, skills and budgets</li> <li>Actionable tips to help future-proof your FSI business</li> </ul> <h3>Findings include:</h3> <ul> <li> <strong>FSI companies maintain focus on customer experience (CX) </strong><strong>and the customer journey. </strong>More than a quarter (28%) of FSI respondents rank optimising the CX as the ‘single most exciting opportunity’ in 2018, compared to 18% of their peers across all other sectors. They are also significantly more likely than their peers to regard customer journey optimisation as ‘very important’ over the next few years (81% for FSI vs. 69% for other sectors).</li> </ul> <ul> <li> <strong>Organisations in this sector are neglecting content as a key requirement in the recipe for creating compelling experiences.</strong> FSI companies are less inclined than their peers in other sectors to cite the creation of compelling content for digital experiences as the top opportunity for the year ahead (7% vs. 15%). Content marketing, content management, and creation and delivery of video content are also relatively off-radar as priorities for FSI companies, when compared with those outside of the industry.</li> </ul> <ul> <li><strong>FSI industry seeks to master data-driven marketing, personalisation and AI.</strong></li> <ul> <li>Data-driven marketing is regarded as the second most exciting opportunity for 2018, registering a percentage which is higher than the equivalent figure for respondents in other sectors (23% vs. 15%).</li> <li>More than a third (37%) of respondents in this sector describe targeting and personalisation as a top-three priority for 2018, compared to less than a quarter (23%) of respondents across all sectors.</li> <li>The majority (61%) of companies surveyed are either using artificial intelligence (AI) already, or planning to do so within the next 12 months, a percentage that puts this sector ahead of others (44%).</li> </ul> </ul> <ul> <li> <strong>Technology is a barrier to digital progress.</strong> The proportion of FSI companies that have implemented a highly integrated, cloud-based technology stack is in single figures (7%). Wealth and asset management providers are particularly challenged in respect of technology, with 61% rating technology as ‘difficult to master’.</li> </ul> <p><strong>Econsultancy's Digital Intelligence Briefings, sponsored by <a title="Adobe" href="http://www.adobe.com/marketing-cloud.html">Adobe</a>, look at some of the most important trends affecting the marketing landscape. </strong><strong>You can access the other reports in this series <a title="Econsultancy / Adobe Quarterly Digital Intelligence Briefings" href="http://econsultancy.com/reports/quarterly-digital-intelligence-briefing">here</a>.</strong></p> tag:www.econsultancy.com,2008:Report/4809 2018-06-05T11:25:00+01:00 2018-06-05T11:25:00+01:00 Digital Intelligence Briefing: 2018 Digital Trends for Creative and Design Leaders <p>The <strong>2018 Digital Trends for Creative and Design Leaders </strong>report explores the priorities, opportunities and challenges ahead through the lens of creative and design professionals.</p> <p>For the first time our annual survey of digital professionals had specific questions for this cohort of respondents, to help us understand in more detail their opportunities and pain points.</p> <p>The research, conducted by Econsultancy in partnership with <a title="Adobe" href="http://www.adobe.com/marketing-cloud.html">Adobe</a>, is based on a sample of over 2,600 creative and design respondents who were among around 13,000 digital professionals taking part in the eighth annual Digital Trends survey.</p> <h3>The following sections are featured in the report:</h3> <ul> <li>Design-driven companies are outperforming competitors</li> <li>Top priorities and opportunities</li> <li>Challenges</li> <li>Actionable tips to help future-proof your creative and design capabilities</li> </ul> <h3>Findings include:</h3> <ul> <li> <strong>Design-driven companies are outperforming their peers. </strong>More than a quarter (26%) of senior creative and design professionals surveyed for this report regard their organisations as ‘definitely’ being design-driven, while a further 41% say this is ‘somewhat’ the case. Design-driven companies are almost twice as likely as other companies to be significantly outperforming their competitors (32% vs. 17%).</li> <li> <strong>Real-time personalisation is seen as the most exciting </strong><strong>opportunity. </strong>The most exciting opportunity for creative and design leaders in the medium term is delivering personalised experiences in real time, voted for by 31% of client-side and 39% of agency respondents.</li> <li> <strong>Poor processes and workflows are slowing down </strong><strong>creative and design leaders. </strong>Design-driven companies are 79% more likely than their peers to have the processes and collaborative workflows to achieve a design advantage (68% vs. 38%). Four in ten (40%) client-side creative and design leaders report that outdated workflows are a major internal barrier.</li> <li> <strong>Companies are reaping the benefits of AI. </strong>When asked what their organisations are using AI for, the most likely application is analysis of data, cited by 54% of client-side and 45% of agency respondents. For most other use cases, agency respondents are more likely than their client-side counterparts to indicate usage of AI, including for email marketing, programmatic advertising, on-site personalisation, content creation and automated campaigns.</li> <li> <strong>Creative and design talent is in short supply.</strong> More than a third (36%) of in-house practitioners cite access to creative talent as a key external challenge, while a similar percentage (37%) cite recruitment and retention of the right people with the right skills as a major internal barrier.</li> </ul> <p><strong>Econsultancy's Digital Intelligence Briefings, sponsored by <a title="Adobe" href="http://www.adobe.com/marketing-cloud.html">Adobe</a>, look at some of the most important trends affecting the marketing landscape. </strong><strong>You can access the other reports in this series <a title="Econsultancy / Adobe Quarterly Digital Intelligence Briefings" href="http://econsultancy.com/reports/quarterly-digital-intelligence-briefing">here</a>.</strong></p> tag:www.econsultancy.com,2008:TrainingDate/3541 2018-06-02T16:19:02+01:00 2018-06-02T16:19:02+01:00 Fast Track Digital Marketing - Singapore <p>This intensive 3-day course is a great place to start your digital marketing training. The course gives you a complete overview of the exciting areas of digital marketing, knowledge on how to effectively leverage the new media and integrate them into your overall marketing strategy.</p> tag:www.econsultancy.com,2008:Report/4807 2018-05-24T11:05:00+01:00 2018-05-24T11:05:00+01:00 Digital Intelligence Briefing: 2018 Digital Trends in Retail <p>The <strong>2018 Digital Trends in Retail</strong> report explores the effects of digital disruption in the sector, providing guidance to organisations that want to stay ahead of the curve.</p> <p>It highlights the key digital trends, challenges and opportunities which retailers need to be aware of during 2018, covering topics ranging from customer experience and mobile to data-driven marketing and artificial intelligence.</p> <p>The research, conducted by Econsultancy in partnership with <a title="Adobe" href="http://www.adobe.com/marketing-cloud.html">Adobe</a>, is based on a sample of almost 600 retail respondents who were among around 13,000 digital professionals taking part in the eighth annual Digital Trends survey.</p> <h3>The following sections are featured in the report:</h3> <ul> <li>Retailers focus on omnichannel</li> <li>The use of data to enhance CX</li> <li>Investment is the recipe for retail success</li> <li>Actionable tips to help future-proof your retail business</li> </ul> <h3>Findings include:</h3> <ul> <li> <strong>Retailers prioritise omnichannel approach to help them differentiate through customer experience.</strong> Content and experience management and omnichannel marketing are the top priorities for retailers in 2018. More than half of respondents indicate that each of these areas is a top-three priority and, in the case of omnichannel marketing, a quarter (25%) of all retailers surveyed make this their number one priority for the year ahead.</li> <li> <strong>Companies recognise the need to master data capabilities in order to adopt a more personalised and scalable approach to marketing.</strong> While, in hindsight, only 9% of retailers saw data-driven marketing as the most exciting opportunity for 2017, more than double that percentage (19%) regard it as the foremost opportunity for the year ahead.</li> <li> <strong>Focus on real-time personalisation to enhance the customer experience.</strong> Looking ahead three years, the most exciting prospect for retailers is delivering personalised experiences in real time (cited by 37% of respondents).</li> <li> <strong>Digital marketing budgets are on the increase, but investment in digital skills and investment is being neglected.</strong> Nearly three-quarters (72%) of respondents plan to increase digital marketing spending during 2018, a significantly higher percentage than the average across all sectors. As reported in the main <a title="Digital Intelligence Briefing: 2018 Digital Trends" href="https://www.econsultancy.com/reports/digital-intelligence-briefing-2018-digital-trends">2018 Digital Trends report</a>, around two-thirds (67%) of all companies surveyed are planning to boost their digital marketing budgets this year.</li> </ul> <p><strong>Econsultancy's Digital Intelligence Briefings, sponsored by <a title="Adobe" href="http://www.adobe.com/marketing-cloud.html">Adobe</a>, look at some of the most important trends affecting the marketing landscape. </strong><strong>You can access the other reports in this series <a title="Econsultancy / Adobe Quarterly Digital Intelligence Briefings" href="http://econsultancy.com/reports/quarterly-digital-intelligence-briefing">here</a>.</strong></p> tag:www.econsultancy.com,2008:BlogPost/69963 2018-04-25T15:02:19+01:00 2018-04-25T15:02:19+01:00 A brief history of artificial intelligence in advertising Lori Goldberg <p>Over a century later, American Jule Gregory Charney – who is considered the father of modern meteorology, teamed with his Norwegian and American counterparts in mathematics, meteorology and computer programming to develop the first computerized program derived for the prediction of weather. Their computerized approach was perhaps the first example of artificial intelligence (also known as machine learning) influencing consumer behavior through weather reporting.</p> <p>With this predictive analytics, shopkeepers and advertisers could effectively move merchandise associated with changes in weather, from simple umbrellas to pharmaceuticals, clothing, vacations, and air conditioners.</p> <p>Today, IBM’s The Weather Company provides actionable weather forecasts and analytics to advertisers with relevance to thousands of businesses, globally. Through the speed and agility of digital advertising, ad campaigns can flight and pause with the precision of changes in the weather… and as we know, the weather always changes. Ads for cold weather products can appear when local temperatures drop below 68 degrees, while ads for Caribbean vacations can target New York days before an approaching snowstorm.</p> <p>In the last 20 years, artificial intelligence has flooded the advertising market by helping to scale operations through programmatic and content creation, emulating human conversation via chatbots and virtual personal assistants, and refining advertising platforms to understand consumer intent.</p> <p>Just as our ability to forecast weather allows us to target advertising dollars, artificial intelligence is influencing more and more advertising decisions on our behalf. To this point, below is a brief history of advertising’s use of artificial intelligence and perhaps a glimpse of the future.</p> <h3>1998 - AI thinks you'll like this book</h3> <p>The concept of clustering consumer behaviors to predict future behaviors began at Columbia University in a report on “digital bookshelves” by Jussi Karlgren, a Swedish computational linguist. And it was in 1998 that Amazon began using "collaborative filtering" enabling recommendations for millions of customers.</p> <p>Today, Spotify recommends music you may like, Netflix suggests films and television programs you may like, and Facebook suggests friends you may know. This all comes from AI-based clustering and interpreting of consumer data paired with profile information and demographics. These AI-based systems continually adapt to your likes and dislikes and react with new recommendations tailored in real-time.</p> <h3>2013 - AI targets the labor of content creation</h3> <p>With the increasing popularity of content marketing, more content means more advertising opportunities. But the cost and pace of good journalism are considered too slow given volume of ads and eyeballs to be had. The solution: Yahoo’s Automated Insights Wordsmith Platform (now Verizon’s) uses artificial intelligence to scan billions of daily sports-related data points (scores, statistics) and structure the information in computer-generated articles summarizing games, informing fantasy sports fans, and reporting stats.</p> <p>Articles are produced with speed and scale never possible by human journalists. The AI produces natural language content and adjusts for tone and personality, giving each piece a specific journalistic attitude. Automated Insights published 300 million pieces of content in 2013 and has far exceeded 1.5 billion annually since.</p> <h3>2014 - AI optimizes decision-making and reduces labor in advertising</h3> <p>Artificial Intelligence is making advertising easier, smarter, and more efficient. When programmatic ad buying was popularized in 2014, it introduced us to artificial intelligence-based ad buying, effectively removing the broken, laborious manual tasks of researching target markets, budgets, insertion orders, and layers of additional analytics tracking – not to mention high prices.</p> <p>Through programmatic – a marketplace approach to buying and selling digital ads - the whole process is managed through intelligent tools that make decisions and recommendations based on the desired outcomes of the campaign. What was once used for ad remnants quickly and affordably became the new normal for digital publishers and some offline opportunities as well, with <a href="https://www.emarketer.com/Article/eMarketer-Releases-New-Programmatic-Advertising-Estimates/1015682">forecasts</a> estimating over $33 billion spent via programmatic in U.S ad dollars.</p> <p><img src="https://assets.econsultancy.com/images/0009/3899/Chat_Bot_1000px.png" alt="robot with customers" width="600"></p> <h3>2015 - A search result that understands user intent</h3> <p>Since the early 2000’s, artificial intelligence has been a compliment to search engines and their ability to provide a more logical search result. In 2015, Google introduced its latest artificial intelligence algorithm, RankBrain, which makes significant advances in interpreting search queries in new ways. Through RankBrain, Google has been successful in interpreting the intent behind a user’s search terms, making for a more relevant result.</p> <p>If Google receives a search query for a term it is unfamiliar with or lacks proper context for, it can now leverage a mathematical database derived from written language that can pair the terms with related words that give it context. Through this artificial intelligence, Google can provide a more accurate result, pleasing both consumers and advertisers.</p> <h3>2016 - AI is listening, learning and responding</h3> <p>As Amazon Echo, Google Home and Apple charge forward with speech recognition on virtual assistant devices in our homes, a whole new opportunity beckons for advertisers. Just as ads ranked in Google's AdWords, will advertisers bid to influence Alexa’s product recommendations? Amazon is currently in 15 million homes and is developing advertising opportunities for Clorox, Proctor &amp; Gamble, and others to promote their products on Alexa.</p> <p>Facebook Messenger, WhatsApp, and Slack began using AI to reduce the human labor involved in answering simple customer support questions - a cost center for any company of size. AI-powered chatbots respond to customer questions by chatting online under the auspices of customer support technicians and helpdesk prophets. These chatbots interpret the keywords in the users typed questions and <a href="https://econsultancy.com/blog/68388-how-klm-uses-bots-and-ai-in-human-social-customer-service">form likely answers to questions</a>.</p> <h3>What's next for advertisers?</h3> <p>While it's clear that AI is influencing the methods, targeting, and labor behind advertising, the future of AI may be in the ad itself. Case in point: in 2015, <a href="https://www.theguardian.com/media-network/2015/jul/27/artificial-intelligence-future-advertising-saatchi-clearchannel">M&amp;C Saatchi developed</a> what is widely considered to be the world's first AI-powered advertisement.</p> <p>Built for a fictitious coffee company, Bahio, and debuting in central London, this virtual "poster" changes based on consumer reaction, with various text and image options that elicit different reactions. Given the consumer data collected by Google, Facebook and others, perhaps custom AI-oriented advertisements are the future of advertising with language, cadence, images and colors custom designed to appeal to the viewer. Could these custom ads be triggered by the user data in our cell phones?</p> <p><em><strong>Further reading:</strong></em></p> <ul> <li><a href="https://econsultancy.com/blog/69964-marketers-beware-these-six-misconceptions-of-ai/">Marketers, beware these six misconceptions of AI</a></li> <li><a href="https://econsultancy.com/blog/69961-the-implications-of-voice-tech-for-marketers-from-brand-to-customer-service/">The implications of voice tech for marketers, from brand to customer service</a></li> <li><a href="https://econsultancy.com/blog/67422-how-argos-models-ppc-on-tv-weather-seasonality">How Argos models PPC on TV, weather &amp; seasonality</a></li> </ul> tag:www.econsultancy.com,2008:BlogPost/69956 2018-04-17T13:26:22+01:00 2018-04-17T13:26:22+01:00 Goldman Sachs buys personal finance & budgeting app to bolster its growing retail banking business Patricio Robles <p>Case in point: Goldman Sachs, which <a href="https://www.wsj.com/articles/goldman-sachs-comes-to-the-app-store-1523829570">just acquired</a> Clarity Money for a sum reported to be in the high eight figures.</p> <p>Clarity Money is the creator of a personal finance and budgeting app that helps its approximately one million users “take control of” their finances. To do that, it aggregates data from the accounts users give it access to and then analyzes that data “harness[ing] the power of artificial intelligence (AI), machine learning and data science.”</p> <p>The app allows users to set savings goals, highlights spending habits and overspending, identifies subscriptions that could be canceled, and suggests credit cards that might be a good fit.</p> <p><img src="https://assets.econsultancy.com/images/0009/3625/clarity.png" alt="" width="433" height="623"></p> <p>According to the Wall Street Journal, Clarity Money's app “is expected to serve as the smartphone storefront for Goldman's growing suite of retail products, which the Journal has reported could include wealth-management tools, home mortgages, point-of-sale loans and insurance policies.”</p> <p>Those retail products, which include high-yield savings accounts and personal loans, are being offered under the Marcus brand, which has acquired some 350,000 customers and originated $2.5bn in loans.</p> <h3>Customer acquisition <em>and</em> tech</h3> <p>Goldman believes that Marcus has the potential to become a far more substantial part of its business. How big? The firm reportedly believes that its personal loan offering has the potential to generate over $1bn in profit over the next three years – an amount equivalent to profits from its trading operations – and <a href="https://econsultancy.com/blog/69789-goldman-sachs-is-taking-a-fintech-approach-to-grow-its-consumer-lending-business">is taking a fintech-like approach to gaining traction in the market for point-of-sale consumer financing</a>, a $200bn a year business.</p> <p>But despite its lofty ambitions and process to date, Marcus' current numbers, however respectable, are a drop in the bucket for Goldman, which has been using direct mail to woo new customers, and that's where the Clarity Money acquisition comes in.</p> <p>Clarity Money's million users are all potential customers for Marcus, and if the financial giant is able to convert a good percentage of them, the acquisition could pay for itself quite quickly. </p> <p>But the acquisition isn't just about customer acquisition. As the Wall Street Journal notes, Marcus somewhat remarkably doesn't yet have any mobile apps. So if Goldman does indeed use Clarity Money as the “smartphone storefront” for Marcus, the acquisition will be a critical component of the Marcus business going forward, and one on which the Goldman's consumer venture's success or failure might rest.</p> <h3>A digital transformation study to watch</h3> <p>For that reason alone, Goldman's acquisition of Clarity Money could be one of the most important of 2018 to watch. Indeed, as the Wall Street Journal points out, other financial firms have purchased personal finance apps only to later shutter them. For example, <a href="https://econsultancy.com/blog/69874-capital-one-s-new-browser-extension-is-a-great-example-of-common-sense-fintech-innovation">Capital One</a> purchased Level Money in 2015 only to kill it off 18 months later, and Prosper ditched Billguard, which it purchased for $30m, after two years.</p> <p>If Clarity Money is to avoid that same fate, Goldman will have to navigate potential conflicts between its interest in growing Marcus and maintaining the neutral experience that Clarity Money's users signed up for. Specifically, Goldman could find it tricky to offer a Marcus-branded credit card, which it is reportedly considering, while maintaining the feature in Clarity Money that recommends credit cards based on users' finances and spending habits.</p> <p>How Goldman addresses this might provide a blueprint for other large banks as their relationships with fintechs are expected to <a href="https://econsultancy.com/blog/69680-fintechs-and-banks-to-partner-in-2018-thanks-to-open-banking">become a lot more cozy</a>.</p>