Retailers are accelerating AI-supported campaigns. Here are the 4 steps they follow
The evolution of year-end shopping from a five-day extravaganza to a multi-season event is reshaping the strategies of retailers around the world. Although it is important to attract traffic in the early period, the first priority for brands that want to increase their profits should be to collect quality traffic. But this can be difficult to do as channels continue to proliferate and intermingle. In response, many industry leaders are increasing their investments in AI-powered campaigns to engage top spenders as they move between touchpoints.
One of these leaders is Leon Wharton Hallen, media and advertising director of Dutch retail brand Scotch & Soda. Hallen explains: "The 2022 year-end period presented some challenges on a macroeconomic level. We saw a shift in customer confidence; shoppers are looking for value earlier in the season and customer acquisition costs are rising. Since not all traffic is equal, channels are needed to find the right customers and filter out the rest." "We had to dig deep. AI helps us identify and reach consumers who are willing to buy, rather than consumers who are just browsing."
To fully realize the potential of AI, companies need to reimagine their business models and disrupt the way business is done.
Michelle Hernandez, director of omnichannel digital marketing at Deckers Brands, is among those relying on artificial intelligence during the year-end period. According to Hernandez, "Brand awareness, review and sales are converging. Consumers are demanding that point of need and point of sale come together as part of their daily navigation across digital and physical channels. AI to attract high spenders regardless of their location." "We started to give more importance to supported campaigns."
Hallen and Hernandez's success is supported by recent McKinsey research, which confirms that the overall value from AI is strong and largely consistent. But to fully leverage the potential of AI, companies need to reimagine their business models and disrupt the way business works. Due to this situation, retail marketers who are torn between two options are expected to experiment with new ways to both increase business value and maintain stable profitability.
Fortunately, this change doesn't have to happen all at once. For a step-by-step look, we asked 12 industry leaders to share how they are gradually testing AI-powered campaigns in preparation for a successful year-end season. These interviews helped us identify four different phases, plus essential tips and strategies for success.
Step 1: Explore
The best way to get started with AI-powered campaigns is to stick to a starting point. Some of the proven methods that will allow room for experimentation are as follows:
Start testing new strategies early
At the beginning of 2022, French delivery service company Chronopost decided to carefully test AI-powered campaigns just before the end of the year, when the company's B2B customers were sending high volumes of packages. This forward-thinking perspective paved the way for success. Eva Bossy, head of the brand's digital department, explains: "Despite the uncertain economic scenario, we increased our sales revenues by 85% and improved our profitability."
"Good enough" shouldn't be enough for you
Online retailer Fragrance.com was advertising with successful, profitable Standard Shopping campaigns. That's why the marketing team was initially hesitant to use AI to define the image of this luxury brand across channels. “But with the economic headwinds and increased competition, we knew AI-powered ads would give us the upper hand,” says CMO Michael Nadboy. "The focus on before-and-after analysis guided our decision to move campaigns before the 5-day cyber shopping period, and our strategy paid off. We were able to increase our revenue by 40%."
Base your hypotheses on previous lessons learned
To attract highly valuable customers in real time, North American department store chain Michael's has historically relied on tried-and-true solutions like broad match keywording, Smart Bidding, and responsive search advertising. The brand learned lessons from these that it can use as a basis for future experiments. “We were excited to experiment with cross-channel campaigns in our next iteration of AI-powered advertising,” shares Kathleen Moler, head of media and digital marketing. “Our customers draw art and hobby inspiration from all digital channels, so it makes perfect sense for us to evolve with them to efficiently grow revenue.”
Step 2: Trial
Rapid learning enables innovation. Here are ways to embrace a learning-by-testing culture.
Find ways to succeed safely and learn quickly
Scotch & Soda, which we mentioned earlier, believes that experimenting with innovation is the way to succeed and stand out from the rest in a competitive environment. “By testing new approaches in a controlled environment, we learn quickly from failures and stay focused on key metrics by increasing investment in those that succeed,” Hallen says. For example, when the key success metric was revenue, "our experiments initially showed that traffic dropped, but knowing that AI is about finding quality customers, we let the testing run its course. We eventually realized we were generating more revenue more efficiently."
By testing new approaches in a controlled environment, we quickly learn from failures and increase investment in successful ones.
Start small and optimize throughout
Marketers at Singapore-based beauty brand Coco & Eve were familiar with AI-powered campaigns, but worried that adding more channels would reduce their profitability. To alleviate these concerns, "we started with just a few SKUs, doing before-and-after testing and comparing the performance of the same units to our previous campaigns," says Philip Nguyen, vice president of growth. In parallel, the company optimized video and other assets to power AI with the best creative possible. They finally got their reward. “We increased revenue by 32% with a 26% lower cost per conversion, while our team had time to focus on other strategic priorities,” says Nguyen.
Use the Trial feature to make informed decisions
Bol.com, a popular online marketplace in the Netherlands and Belgium, was using Standard Shopping campaigns to advertise its products to over 13 million consumers. Before switching these campaigns to an AI-powered solution like Maximum Performance, the company needed to justify its decision with real data. Arend de Ruiter, search engine advertising and measurement leader, explains how they did it. “We implemented an intensive testing approach using the new Experimentation feature to automate the testing process and ensure accurate results. After three months, our doubts faded and we began implementing Maximum Performance at scale. By the end of the year-end period, we had a 64% increase in revenue compared to Standard Shopping campaigns. "
Step 3: Application
Experiments are successful when all stakeholders have the same expectations and are committed to exceeding them. Let's look at how successful brands make their artificial intelligence strategies permanent.
Benefit from rapid developments in artificial intelligence in every field
Demonstrating the tangible business impacts of AI initiatives helps marketers build consensus across their organizations. Scandinavian shopping mall Boozt.com is one example. “We informed senior management about testing of AI-powered campaigns and shared the results with our commercial management group,” explains media and digital marketing director Jesper Jensen.
Another way to improve regularly is to move towards a specific business goal. In this regard, you can follow in the footsteps of subscription-based bicycle company Swapfiets. “One of the biggest challenges in subscription-based businesses is growing the customer base at low costs,” says Debora Copercini, the company's performance marketing expert. “I was pleasantly surprised to reach new customers in just two weeks with the new customer acquisition target and reduce our cost per acquisition by 44%.”
Continue tweaking even after seeing positive results
Brands that are already confident in the effectiveness of cross-channel campaigns can take advantage of best practices to make their AI-powered campaigns even more profitable as they prepare for the end of the year. Marketing performance company Jellyfish used this approach when helping its retail clients. “We loaded store details and local products feeds to increase companies' omnichannel capabilities, and we also used seasonal adjustments to scale spend when sales were high,” says Sara Furney-Howe, Senior Director of Paid Search. “We also fine-tuned the seasonal messaging by serving it alongside the creative we always use. By augmenting human input, AI enabled us to robustly achieve revenue targets across the business' customer portfolio.”
Transfer what you learn to other areas of your organization
Testing AI solutions can create an opportunity for your entire company to operate more efficiently. This was the case for eyewear leader EssilorLuxottica. “It took us over a year to do extensive A/B testing on automated campaigns. I don't regret the time we spent analyzing the business impact of changes we made to bidding automation, campaign structure or feed management,” says Andrea Orlunghi, the brand's global director of performance marketing. “Testing new solutions allowed us to create a common definition of success across all departments.”
Step 4: Expand
Marketing teams that run successful experiments can leverage their rapid developments to manage even larger initiatives.
Capture cross-channel demand by breaking down the barriers separating channels
Going forward, Scotch & Soda will continue its efforts to break down channel barriers and experiment with new ways to connect the company with its valued customers. “Our app customers have higher average order value and lifetime value,” Hallen explains, “so this year we're focusing on creating seamless web-to-app journeys and measuring the overall business impact of app downloads.”
EssilorLuxottica is also rapidly moving towards an omnichannel approach to reflect customer behavior. “We are breaking down the silos between online channels as well as the silos between online and offline channels. We integrate multiple sources of first-party data to shed light on the customer journey,” says Orlunghi. "We could have achieved this in any other way, but thanks to artificial intelligence, we achieved this goal in one year instead of 10."
Scale your successful strategy globally
When L'Oréal Vietnam piloted a successful omnichannel strategy during the "12.12 mega sale" period, the company wanted to replicate it in the Asia-Pacific region. By scaling the strategy in five different markets, the company reached more customers across channels and achieved more profit potential.
Thanks to artificial intelligence, we broke down the barriers between channels in one year instead of 10.
Online marketplace Fruugo implemented a similar approach last year. "The Fruugo marketplace enables sellers to gain global reach for their products. We advertise millions of products to shoppers in 40 countries with AI-powered campaigns," says Tony Preedy, managing director of Fruugo. "After a successful trial in Japan, one of our most demanding markets, we quickly rolled out the Maximum Performance solution, running campaigns in over 20 languages. The resulting billions of ad impressions will fuel Fruugo's year-over-year revenue growth by 2.1x in 2022 ."
Her perakende kuruluşunun kendine özgü öncelikleri ve ihtiyaçları bulunduğundan yapay zeka çözümlerini test etmek, bu kuruluşların gerçek dünyadaki etkilerini ve performanslarını kapsamlı bir şekilde gösterebilir. Sunduğumuz farklı görüşler bize markaların küçük ve kademeli adımlarla, 2023 ve sonrasında pazardaki rotalarında uzun süreli etkiler yaratabileceğini gösterdi.
