Intelligent Agents, Blended AI Factor Into A ‘Year Of Reckoning’

Despite a vibrant economy, individual companies will confront unceasing changes in technology and inflated consumer expectations—an existential threat that makes the fate of individual companies uncertain.

Intelligent Agents, Blended AI Factor Into A ‘Year Of Reckoning’

by Todd Wasserman

Posted on 11-26-2017

This article is part of CMO.com’s December series about 2018 trends, predictions, and new opportunities. Click here for more.

Despite a vibrant economy, individual companies will confront unceasing changes in technology and inflated consumer expectations. That’s why Forrester Research is calling 2018 a “year of reckoning.” It sees both as an existential threat that makes the fate of individual companies uncertain.

This environment has prompted a radical shift in what is traditionally meant by marketing; some even view the traditional role of chief marketing officer as outmoded.

To that end, Forrester also foresees a continued migration from traditional marketing to a framework that revolves around customer experience. This mega change will have multiple effects in 2018, as will artificial intelligence.

Time now for specifics. Let’s take a look at eight of Forrester’s predictions we expect will have the biggest effect on marketing.

1. CX will take center stage: Customers have become spoiled. In the high-stakes marketing world of 2018, customers will flee if they have one bad experience. In large part, this is because of Amazon. As Forrester analyst Keith Johnston noted, Amazon still claims a relatively small slice of retail—the overall figure is about 5%—but its impact is being felt broadly.

“The expectations of speed, the expectations of convenience, the expectations of the retailer really knowing what you want are driving those demands,” he said.

The shift to CX has been going on for a while, Johnston told CMO.com, but the big change now could be that delivering a great customer experience has gotten easier.

“The technology stacks are starting to synchronize, and the cloud is having an impact where it’s a whole lot easier to spin up services,” he said. Because the playing field has been leveled, it will be tougher to make your CX stand out.

2. Recommendation engines will become more important: Search engines make brands visible, but recommendation engines make them sticky. This is another case in which Amazon is leading the market. McKinsey has estimated that up to 35% of what consumers purchase on Amazon is from a recommendation generated by the company. Netflix is estimated to generate as much as $1 billion a year because it prevents consumers from canceling the service. A recommendation engine can also help improve the customer experience.

3. There will be an advertising correction: This year saw an unprecedented backlash against digital advertising centered around transparency. Next year, continued circumspection about digital and a new emphasis on CX will cut into ad budgets, Johnston predicted.

“We don’t see those dollars going away,” Johnston said of ad budgets. “They’re just going to move to another place.” As CMOs get more authority to do things besides buy media, Johnston said that media will suffer. “It’s going to be kind of a reset year,” he said.

4. Chief growth officers will edge out CMOs: The shift from traditional marketing to CX will prompt the rise of the chief growth officer (CGO). To an extent, this already has been occurring during the past few years; ConAgra, Coca-Cola, and Hershey have all named named CGOs.

According to Johnston, this isn’t just a title change. There are larger expectations around the CGO, he said, with performance linked to market, sales, product impact, and having all those pieces work as a system. Indeed, more than half of CMOs Forrester has surveyed said they have either material impact or control of the customer experience. “That’s a whole new set of skills,” Johnston added.

5. Intelligent agents will take center stage: Digital instruments have become intermediaries between brands and consumers. Johnston calls these intermediaries “intelligent agents,” and they encompass everything from chatbots to voice-based assistants. Such agents present new touch points for customer service and recommendations. Again, Amazon is moving the market with Alexa, which is now in some 10 million homes, Johnston said. Apple’s Siri, Microsoft’s Cortana, and Google’s voice assistant are also poised to become more prominent in homes, autos, and on users’ devices.

“Marketers may find themselves brokering a relationship with customers through these systems,” Johnston said. He predicts 10% of sales in 2018 will be through intelligent agents.

6. Consumers will use intelligent agents to cocoon: Intelligent agents can also be used as defense. As consumers continue to warm to ad blockers and gravitate toward ad-free platforms, such as Netflix, they will also look to intelligent agents to help ward off ads.

Johnston noted that consumers can now use Siri to omit advertising and create the world they want to experience. Google is also planning to roll out an ad blocker in its Chrome browser that will go after autoplay video ads and interstitials that take up the entire screen. In other words, Apple and Google are curating better experiences for consumers by taking more control of the types of ads that appear in their ecosystems.

“Those with money can create their own experiences with intelligent agents right now,” he said. “As these technologies mature, there’s going to be an ad-free path for those who are willing to spend enough money.”

7. Get ready for blended AI: AI is so hyped that it can be hard to tell whether it really offers anything worthwhile. It does, but Forrester predicts that businesses will have to fill the gaps between what’s currently available and what’s needed. Forrester calls this human-machine meld “blended AI.” That term acknowledges that the application of AI in sales and marketing channels will require considerable human intervention. Rather than being a “set it and forget it” technology, AI will require investment and employees to plug holes between promise and reality.

8. AI will face a reality check: Blended AI is only one symptom of the coming realized gap between AI expectations and its actual capabilities. Forrester predicts a whopping 75% of AI projects will underwhelm because of operational oversights. In Forrester’s view, AI investments in 2017 will be too focused on discrete projects and use cases to prove immediate business value.

This will cause a reset around expectations for AI applications. Johnston said that will continue to be the case until prices come down. “There is a lot of startup activity out there and a lot of smart people thinking about how you lower these costs, but until they do, the expectation is not going to meet the hype,” he said.

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