Twilio’s 2023 Growth Report on AI in Marketing

Artificial intelligence and its more human-like derivative, Generative AI, have stormed onto the scene, capturing marketers’ imaginations with visions of effortlessly personalized customer experiences, perfectly timed outreach, and seamless conversations. But is the hype overblown?

According to new research from Twilio Segment, businesses are in fact flocking to AI-powered solutions, with 88% already using some form of AI in their marketing this year. Over half (54%) expect to increase spending on AI even further.

The findings suggest leaders anticipate AI will tangibly benefit their bottom lines through time or cost savings. An impressive 90% believe AI will deliver in one or both areas.

Chatbots Lead the AI Charge

Of all the AI applications in marketing, chatbots have broken away as the most popular. 38% of the 2,450 U.S. and international business leaders surveyed by Twilio Segment said chatbots are the main way they currently use AI for marketing purposes.

AI chatbots can field customer inquiries, schedule appointments, process payments, and drive conversions. They enable brands to engage audiences on a 24/7 basis without exhausting human agents. The data shows they’ve won over marketers as a flexible, scalable communication solution.

Cisco is one brand venturing into conversational AI by building a chatbot to advise customers on upgrading or purchasing new products. The bot taps into Cisco’s product analytics data to understand user behavior and predict optimal times to interact.

This highlights another key AI application brands are activating: predictive analytics based on customer data. Over one-third (34%) of companies are implementing predictive AI, which identifies trends and future outcomes to inform messaging and personalization.

Quality Data: The Key to Unlocking AI’s Potential

But even the most advanced algorithm cannot conjure intelligence out of thin air. The survey found 40% of businesses struggle with data infrastructure and quality, which hampers AI effectiveness.

In fact, 71% said higher quality data would make their AI systems more useful. This demonstrates why customer data platforms (CDPs) have become indispensable in today’s martech stacks.

CDPs consolidate fragmented customer data into a unified view. They ensure brands have accurate, comprehensive profiles to feed their AI engines.

The data bears this out. Companies using a CDP saw 32% growth over the past year, compared to 21% for non-CDP users.

In a sign of the technology’s ascendance, nearly one-quarter of respondents plan to downgrade traditional CRM platforms in favor of more flexible, intelligent CDPs.

Privacy Concerns Temper AI Enthusiasm

For all AI’s promise in marketing, it does not come without controversy. More than one-quarter of business leaders (28%) voiced apprehension around data privacy with AI adoption.

This is likely tied to high-profile cases of algorithms run amok, from Microsoft’s Tay chatbot spouting racist tirades to Facebook’s ad targeting allowing discrimination.

While most feel customers would appreciate the superior service enabled by AI, brands must be thoughtful in how they deploy it. This begins with securing first-party data and ensuring transparency around how insights are collected and used.

The survey found data privacy is top-of-mind, with 85% aiming to build up first-party data reserves this year. Earning consumer trust will separate the winners from those left behind in the AI revolution.

The Time for AI is Now

Summarizing the report’s findings, Katrina Wong, VP of Marketing at Twilio Segment, said:

“AI has taken the world by storm in 2023, and the data is clear that businesses have embraced the technology wholeheartedly as a means to attract, engage, and retain customers. The challenge now is ensuring those AI efforts bear fruit. Businesses must prioritize data quality just as much, or even more, than the AI itself. Otherwise, they’re leaving money on the table.”

The Bottom Line

Twilio Segment’s research makes clear that AI has crossed the chasm from buzzy novelty to essential element of today’s Martech stack.

Consumer-facing AI applications, particularly chatbots, are leading the way as companies seek to boost efficiency and better understand customers.

But AI is only as smart as the data behind it. Brands must place equal importance on consolidating accurate, unified data in a CDP.

With the right foundations in place, AI has tremendous potential to help businesses anticipate customer needs, customize experiences, and drive sustainable revenue growth. The time to implement AI is now.

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Read more: Twilio’s 2023 Growth Report on AI in Marketing