2023 is set to be a difficult year for retailers, as consumers continue to spend less in the face of high inflation. Though rates are slowly beginning to move in the right direction, consumer confidence and purchasing power are still likely to be reduced for the foreseeable future. For retailers, this means there will be a drop in online engagement on their sites, resulting in less data from which they can optimize their media campaigns and the potential for a further decline in e-commerce performance.
With fewer opportunities to pick up sales online, retailers will have to think more carefully about how they can use their increasingly limited marketing budgets to reach consumers that are willing to spend with their business. This is where artificial intelligence (AI) has a role to play — in helping retailers to get the most out of their digital media spend as well as for creating scalable and sustainable strategies ready for this year’s challenges.
Marketing Powered by Automation
AI can be used by online retailers to meet a range of business-specific objectives, including making first-party and measurement data from across the ad stack actionable in the buying process, and boosting e-commerce conversions. Customizable algorithms, for example, are being utilized by retailers to boost conversion rates, win over consumers that are more selective about their spending, and help streamline their e-commerce models to maintain competitiveness.
These customizable algorithms look at highly specific definitions of quality user engagement data to find patterns of successful activity. This data can then be used to inform the design of subsequent campaigns and influence more robust ad decisioning. For example, AI can analyze ad impressions of a particular campaign against a set of key performance indicators before producing insights on when the best possible results can be achieved towards these objectives.
Previously this data would have to be painstakingly extracted manually. However, because AI technology can run more calculations in mere seconds than a human could do in a lifetime, the volume of impressions that it can analyze increases dramatically. Media strategies can then be adapted and optimized in real time, providing retailers with the opportunity to achieve great scale and increased efficiencies.
The versatility of the technology also means that there’s no need to completely overhaul a business model to integrate it. Instead, these customizable AI algorithms can be seamlessly adopted without logistical disruption or required technological expertise, empowering existing tech stacks to deliver better outcomes for the business.
Adapting to the Changing World
Most importantly, the technology focuses on the context of the advertising rather than needing to identify the user in any way, as utilizing these algorithms doesn’t require the use of user-tracking and profiling or any other personally identifiable targeting signals.
This shifts away from the advertiser’s traditional reliance on trackers and identifiers, and makes AI-powered algorithms the perfect solution for not just 2023, but in the years beyond that, too. This is because, alongside offering a consumer-friendly route to maximizing return on investment, it’s also future-proofed for when Google eventually deprecates third-party cookies on its Chrome browser.
Ahead of what could be a tumultuous year for retailers, where budgets are likely to feel the squeeze just as much as any consumer, AI provides a technological solution to overcoming both this difficult economic period as well as any future challenges that retailers face. Custom bidding algorithms can help to limit media waste and increase viewable reach by ensuring only the people most likely to buy products or services receive any marketing and advertising. And with less online engagement data thanks to less frequent purchasing, AI can overcome these data shortages and ensure that retailers can continue to stand out from the competition and continue converting customers — whatever the state of the economy.
Eric Schwartz is U.S. managing director at Scibids, a cutting-edge artificial intelligence which substantially reduces acquisition costs of real-time bidding (RTB) campaigns.
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