Marketing to machines: what it is & how you can use it in your company
Today, we live in a world that is ruled by algorithms. They steer our every decision, most of all our buying behavior. People who claim that they will not let themselves be influenced by them are unfortunately naïve or delusional, as I established in my former blog “Why brands need to become trusted gatekeepers”. One of the most exciting next phases will be that of automated and predictive commerce, combined with the filtering power of AI assistants. In short: about 80% of the routine shopping that we perform per month, will become automated, with very little input from humans. The algorithms behind our voice assistants and our smart fridges, will become gatekeepers between our brands and our customers.
That’s exciting, but it will also entice a new way of marketing.
From SEO to AO
Now, for those critical readers amongst us: true, influencing algorithms to get to the consumers is not new. We’ve all had to perform some Search Engine Optimization to keep afloat in Google’s sea of information. But the difference was that, with SEO we were still trying to affect humans in the end. If our fridge automatically buys new milk when the bottle is almost empty or if we tell Alexa to buy toothpaste, the algorithm could become the final decision maker. Pretty soon, marketers will need to evolve from SEO to AO: Algorithm Optimization.
The truth is that, for now, no one knows exactly what this will entail. It could even be that marketing to the likes of Alexa and Google Assistant will remain pretty much the same as before. Maybe Amazon will want to grab a piece of that delectable advertising pie, pretty much copying Google’s search advertising model approach, but via voice. Or, Amazon – forever the customer centric pioneer – could decide to play the customer card and market itself as a perfect match maker between customer and product. The reality will probably be a mix of those two, I believe.
The most important question is probably “how”? How will we be able to market to machines? Above all, there will be a lot of testing to see how we could influence our machines and their algorithms. Like I said: it’s too soon to give a clear-cut answer. But here are already some of the possibilities that I see:
Guided by product reviews
Product reviews are already playing an important role in many industries, like the hotel and restaurant sectors, but they will only gain in importance once the age of extreme filtering will take off. Why? Because the algorithms – always trying to please each target with extreme personalization – will be too smart to trust the biased product information on our websites and instead, will search for more ‘neutral’ information.
Does that mean that brands will need to start influencing product reviews, and pay to have them adapted? Certainly not. As we’re seeing an increased movement towards both transparency and trust in business, that would be a horrible idea. For me, it means that product and service quality will only gain in relevance. I’ve always been very critical of that type of occupational therapy marketing – so typical of the FMCG industry - that offers completely superfluous innovations in order to boost sales. If an innovation is not about value, it will simply not make it in the age of trusted gatekeepers. But quality will be sure to win this game.
If you do want to influence the reviews, you will need to organize that in a very transparent manner. A great way could be through product launch communities of your most loyal customers, who get to be the first to test out innovations, in return for writing reviews. Here again, quality will be of prime importance, as you will of course not be able to force them to write good reviews only.
Branding for the win
Another change I see happening is around pricing. We used to perform expensive in-depth market research around pricing. Data and algorithm-based testing will take the place of that type of research. As a lot of customers tend to be quite price sensitive, we’ll have to experiment how they react and then finetune our pricing to that. It could even be that the difference of a few cents could make a huge difference to the gatekeepers.
I believe that branding will become hugely important. The Big Question in the era of voice will be: will we ask Alexa or Google Assistant for toothpaste, or will we ask for Colgate? Only time will tell, but it’s safe to say that household names like Coca Cola, Nespresso or Heinz will have a major advantage. That’s why I also believe that classical advertising will keep on playing a big role, to make sure that a brand’s name stays top of mind in the consumer community.
Products as a service
I’m also really intrigued by how algorithm-based buying and gatekeeping could very well push the “servitization” of products. Instead of occasionally buying one off products, the age of automatic buying might trigger subscriptions to toothpaste, toilet paper and detergent. It could very well be that grocery food boxes like the ones of Marley Spoon and Hello Fresh are just the forerunners to a subscription economy boom. Brand loyalty could become all about consumers renewing their brand subscription.
Last but not least, I already see a lot of organizations jumping on the Alexa Skills bandwagon. What’s happening is basically the same thing as the explosion of apps at the beginning of the mobile age. It was recently announced that the number of Amazon Alexa skills in the U.S. more than doubled in the course of 2018: from 25,784 Alexa skills to 56,750, at a rate of about 85 new ones per day. The big idea here is that brands want to bypass the gatekeepers by joining them as some kind of additional service. Just like in the mobile age – where we use the apps on our homepage about 80% of the time – only a few skills will be left to rule them all down the lane.
First mover advantage
If your head is not spinning by now, I’m sure you’re wondering how you can enter this exciting game of marketing to machines. I see two major entrance points.
First of all: monitor your review data at all times, learn lessons from them and keep acting upon them. Start to manage your review data and your product launches as if we’re already smack in the middle of algorithm based automatic buying. Set up innovators’ communities with fans, involve them in launches and ask them to share their feedback in reviews. And like I said, keep in mind that the quality of your products will remain of the essence. Second: keep a close eye on the voice advertising models of Amazon and Google: like always, the first trials will surely be very accessible and affordable. Remember how cheap Facebook advertising used to be? Experimenting with these early advertising models will give you first mover advantage on their platforms.