Whether it be facial recognition on your phone, that cool new VR experience, or your Alexa device, AI and its many applications have become integral to our society. When talking about AI, we typically refer to narrow AI, which is AI focused on one task — in contrast to general AI, which has the ability to apply intelligence to any problem. Alexa is a good example of narrow intelligence: It operates within a limited, predefined range of functions and, while being extremely sophisticated, it has no self-awareness.

When it comes to the advertising ecosystem, AI is ubiquitous. From chatbots, to forecasting, to hyper-targeted advertising, AI has numerous applications that help make marketers’ lives easier. In this blog post, I’m going to focus on two of the most attractive applications of AI for marketers: predictive and prescriptive analytics.

What Are Predictive and Prescriptive Analytics? 

Let’s start by defining predictive analytics, for those who may not be familiar with the term. Predictive analytics is the use of data, statistical algorithms, and machine learning techniques to identify the likelihood of future outcomes based on historical data.

An application of predictive analytics for marketers, for example, is a measurement solution that’s able to go beyond real-time campaign monitoring to proactively anticipate outcomes, such as understanding campaign incrementality and predicting if and how a campaign is changing consumer behavior for each individual consumer. With predictive analytics, marketers gain access to valuable KPIs such as incremental visits, campaign effect on consumer behavior, cost per incremental visit, and customer acquisition cost.

Over time, predictive analytics can inform prescriptive analytics, which go a step further to recommend one or more possible courses of action based on a given outcome. An application of prescriptive analytics, for example, is a measurement solution that provides budget allocation recommendations based on past and current campaign performance. 

How Predictive and Prescriptive Analytics Benefit the Advertising Ecosystem 

The reason predictive and prescriptive analytics are so attractive to the advertising ecosystem is due to the massive potential they hold. Let’s take a real-life example: AI’s capability to automate and optimize media and consumer acquisition strategies. By leveraging data from first, second, and third parties, an AI-driven prescriptive-analytics marketing assistant can help solve challenges such as:

1. Choosing the Right Media Mix Allocation

By continuously issuing recommendations on how to refine the media mix, AI can help advertisers better determine the optimal media mix strategy. This in turn enables them to increase their digital advertising ROI, since it consistently evaluates the media mix and reallocates dollars accordingly. In this way, the marketing mix allocation can be completely automated — and save brands and agencies valuable time. 

2. Optimizing Audience Strategy by Channel

Within each channel, advertisers can then use prescriptive analytics to identify audiences of consumers who will have a high lifetime value for their brand. This in turn enables them to optimize their audience strategy by channel. For example, a movie studio could move away from targeting just “moviegoers” to targeting the specific audience that wants to see a given movie.

How does this work? The AI can identify the right audience to optimize a certain function, taking into account not only short-term attribution — whether the consumer will convert right away — but also including long-term effects such as churn and consumer lifetime value. Over time, it can learn consumer patterns and identify those consumers who will be loyal to the brand, and have high lifetime value. Marketers can then optimize their audience strategy accordingly.

Stay tuned for the next installment in our series to learn about best practices for an AI-driven ecosystem. In the meantime, you can check out this blog post by our Chief Product Offer for more on campaign incrementality.

The post Artificial Intelligence: The Fuel for Predictive Analytics appeared first on Cuebiq.

Earlier this week, I attended the third installment of Adweek and Bloomberg Media's ongoing Breakfast Series, Marketing in an Interruptive World. The event featured insights on the retail industry from Bloomberg's Intelligence sector as well as a panel of brand & marketing experts tackling the art of creating human connections. It was a very enlightening breakfast with some amazing intel on the consumer journey which led me to believe that the retail apocalypse we've all been hearing about...might not be so apocalyptic.

Avoiding the Retail Apocalypse

Not all in the retail industry are hurting according to Poonam Goyal, a Consumer Retail Analyst from Bloomberg Intelligence. While apparel and department stores have seen a sharp decline in recent years, there is hope on the horizon as consumer confidence remains high. As Goyal puts it, "Consumers are still spending; what’s different is how people seek out value – and how much they value experiences over things."

Adapting to New Consumer Behaviors

Technology, automation and personalization are shaping the future of retail by adapting to new consumer behaviors - the old brick and mortar business model is now a thing of the past. As we look to the future, we can already see brands and retailers leveraging new technologies and experiences to attract customers.

This week it was announced that Lord & Taylor agreed to start selling merchandise on Walmart.com - setting up what they call a premium fashion destination. While this move may seem odd to some, the pairing of these brands makes sense in today's economy. Consumers are looking for new experiences and now Walmart customers can purchase high-end premium fashion alongside their groceries and home needs.

Enhancing the In-Store Experience

Retailers are also experimenting with new store concepts to boost foot traffic by offering new in-store experiences. Nordstrom Local has unveiled their new concept store which is merchandise free and focused on consumer services like alterations, tailoring, beauty and style consulting. The idea is to create a high value and unforgettable customer experience. Customers at Nordstrom Local can seamlessly order merchandise in-store that is delivered the same day while they are enjoying a salad or getting their nails done.

American Eagle is another great example of store innovation - recently they opted to put laundry machines into some of their stores to attract Millenial consumers. So as their customers shop for a new pair of jeans, they can now do their laundry. This new concept ties back to what matters most in today's economy and that is the experience.

Not only are brands changing their store concepts but they are leveraging new technology to get the product into stores faster. Instead of waiting for the normal 4-6 months for new products, brands like Zara make it a priority to get a new product every 2 weeks! As Goyal puts it, "That’s the future of retail – the consumer is changing, and you have to change with them, it’s about being able to move as fast as customers do.” Brands like Zara do this by investing in new technology and automation allowing them to keep up with consumer's changing behaviors.

Technology, Automation and Personalization

The old business model employed by brick and mortar brands must be forgotten. Consumer habits and behaviors are changing at a very fast pace due to new technology and the availability of goods. It's up to brands to make that change and deliver new experiences to their customers. Through technology, automation and personalization - retailers now have the ability to take huge leaps that were never before possible.

I've heard that we've have moved from an industrial economy to a connection economy where the new currency is attention. According to Goyal, "Competing today is about connecting with the customer,” she said. “Emotionally, through your marketing, and through product.” That sounds about right to me...

For a full recap on the insights from Marketing in an Interruptive World - please click here.

For more industry news and insights from the Cuebiq team, visit our News & Events page.

The post Adapting to the Future of Retail: Adjusting to New Consumer Behaviors appeared first on Cuebiq.