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63% of marketing leaders plan to invest in Generative AI in next two years

Sixty-three percent of marketing leaders are planning to invest in generative AI in the next 24 months, with slightly more than half of respondents (56%) seeing greater reward than risk in using the technology.

A Gartner survey of 405 marketing leaders conducted in May and June 2023 revealed the utilization of their organization’s overall martech stack’s capability dropped to just 33% on average in 2023, marking a second consecutive year of decline (42% in 2022 and 58% in 2020).

“CMOs recognize both the promise and challenges of generative AI,” said Benjamin Bloom, VP Analyst in the Gartner Marketing practice. “There’s a clear tension between investing more in the current tech stack to drive utilization, or reallocating their finite resources towards the coming crop of generative AI applications that may not suffer from the same utilization problems.”

Gartner’s 2023 CMO Spend and Strategy Survey found that organizations are spending 25.4% of their 2023 marketing budget on technology. With the sharp decline of martech utilization, cost optimization pressure will be unavoidable upon recognition that marketers use only a third of technology capabilities that consume a quarter of their entire budget.

By contrast, for the few organizations that use more than 50% of their martech stack, they are significantly less likely to report being asked to cut their martech budget.

Increasing an organization’s martech utilization is difficult: Just 11% of respondents reported increasing their utilization of marketing technology by more than 10% in 2023, compared to 12 months ago. Complexity of the current ecosystem, customer data challenges and inflexible governance were identified by survey respondents as the most common impediments to greater utilization of their martech stack (see Figure 1).

Figure 1: Impediments to Increased Marketing Technology Utilization (Percentage of Respondents)

Source: Gartner (August 2023)

“Marketers tend to acquire new technologies without a systematic approach for adopting them,” said Bloom. “Combined with multi-year contracts, under-utilized or abandoned technology can easily result in an unwieldy stack over time.

“CMOs should press martech teams to find opportunities to simplify so the rest of the function can flourish. Cutting underused technology within the current stack can also preserve some ‘dry powder’ for transformative applications that aren’t yet generally available.”

Generative AI leads inflated expectations on the 2023 emerging tech ‘hype cycle’

Generative artificial intelligence (AI) is positioned on the Peak of Inflated Expectations, projected to reach transformational benefit within two to five years.

The Gartner Hype Cycle for Emerging Technologies, 2023 report encompasses Generative AI within the broader theme of emergent AI, a key trend on this Hype Cycle that is creating new opportunities for innovation.

“The popularity of many new AI techniques will have a profound impact on business and society,” said Arun Chandrasekaran, Distinguished VP Analyst at Gartner. “The massive pretraining and scale of AI foundation models, viral adoption of conversational agents and the proliferation of generative AI applications are heralding a new wave of workforce productivity and machine creativity.”

The Hype Cycle for Emerging Technologies is unique among Gartner Hype Cycles because it distills key insights from more than 2,000 technologies and applied frameworks that Gartner profiles each year into a succinct set of “must-know” emerging technologies. These technologies have potential to deliver transformational benefits over the next two to 10 years (see Figure 1).

Figure 1. Hype Cycle for Emerging Technologies, 2023

Source: Gartner (August 2023)

“While all eyes are on AI right now, CIOs and CTOs must also turn their attention to other emerging technologies with transformational potential,” said Melissa Davis, VP Analyst at Gartner. “This includes technologies that are enhancing developer experience, driving innovation through the pervasive cloud and delivering human-centric security and privacy.”

“As the technologies in this Hype Cycle are still at an early stage, there is significant uncertainty about how they will evolve,” added Davis. “Such embryonic technologies present greater risks for deployment, but potentially greater benefits for early adopters.”

Four Themes of Emerging Technology Trends

Emergent AI: In addition to generative AI, several other emerging AI techniques offer immense potential for enhancing digital customer experiences, making better business decisions and building sustainable competitive differentiation. These technologies include AI simulation, causal AI, federated machine learning, graph data science, neuro-symbolic AI and reinforcement learning.

Developer experience (DevX): DevX refers to all aspects of interactions between developers and the tools, platforms, processes and people they work with to develop and deliver software products and services. Enhancing DevX is critical for most enterprises’ digital initiative success. It is also vital for attracting and retaining top engineering talent, keeping team morale high and ensuring that work is motivating and rewarding.

Key technologies that are enhancing DevX include AI-augmented software engineering, API-centric SaaS, GitOps, internal developer portals, open-source program office and value stream management platforms.

Pervasive cloud: Over the next 10 years, cloud computing will evolve from a technology innovation platform to become pervasive and an essential driver of business innovation. To enable this pervasive adoption, cloud computing is becoming more distributed and will be focused on vertical industries. Maximizing value from cloud investments will require automated operational scaling, access to cloud-native platform tools and adequate governance.

Key technologies enabling the pervasive cloud include augmented FinOps, cloud development environments, cloud sustainability, cloud-native, cloud-out to edge, industry cloud platforms and WebAssembly (Wasm).

Human-centric security and privacy: Humans remain the chief cause of security incidents and data breaches. Organizations can become resilient by implementing a human-centric securityand privacy program, which weaves a security and privacy fabric into the organization’s digital design. Numerous emerging technologies are enabling enterprises to create a culture of mutual trust and awareness of shared risks in decision making between many teams.

Key technologies supporting the expansion of human-centric security and privacy include AI TRISM, cybersecurity mesh architecture, generative cybersecurity AI, homomorphic encryption and postquantum cryptography.

Generative AI ‘revolutionising’ retail experiences

Generative AI’s ability to fabricate hyper-customised content is turning the tables in retail marketing and communication strategies, also extending its reach into tasks such as inventory planning.

Kiran Raj, Practice Head of Disruptive Tech at GlobalData, said: “In a retail environment where the product-to-experience shift is increasingly significant, genAI can enable the creation of immersive, personalised experiences, integrating virtual and physical retail spaces in a manner that resonates with modern consumers’ expectations. Moreover, it is no longer about a one-size-fits-all engagement; rather, it is about a tailor-made experience catering to individual needs”

Saurabh Daga, Associate Project Manager of Disruptive Tech at GlobalData, added: “By leveraging key data points from customers’ purchase history and preferences, genAI can facilitate building personalized shopping experiences and targeted marketing strategies. The technology can empower retailers to deliver superior service at reduced costs, leading to greater customer satisfaction.”

GlobalData’s latest Innovation Radar report, “Cognitive revolution: genAI meets retail,” offers a view of how the disruptive technology is being deployed across the retail value chain, from inventory management and personalised marketing to customer experience and support.

GenAI can transform retail operations such as inventory planning, product recommendations, and customer service. Promising genAI applications include creating new product designs based on defined criteria and sentiment analysis to predict customer trends.

It cites traditional retailers like Carrefour and IKEA are using genAI to streamline operations and augment customer support. Meanwhile, e-commerce players like Amazon, Shopify, and Instacart are leveraging genAI to improve online shopping experiences and increase cart conversion rates. Big technology companies such as Google and Salesforce are offering genAI solutions to help e-commerce players as well as retailers optimize their online customer engagement.

Daga concluded: “While there are inherent challenges in implementing genAI, particularly in consumer-facing sectors like retail, the potential for substantial progress is undeniable. Challenges such as content quality and privacy must be managed through strong governance. Small and medium retailers can benefit from strategic partnerships to overcome entry barriers required to build the supporting technology, infrastructure, and personnel for genAI implementation.”

Image by Hannes Edinger from Pixabay

OPINION: Reshaping marketing with generative AI: A new era of creativity and personalisation?

In an era defined by digital disruption, the marketing industry stands on the brink of a transformation driven by generative artificial intelligence (AI). As a technology capable of creating original content and making predictive analyses, generative AI promises to reshape marketing strategies, creative processes, and customer engagement in profound ways.

One of the most transformative applications of generative AI in marketing lies in content creation. AI algorithms can generate an array of marketing content, including product descriptions, social media posts, blog articles, and even video scripts, significantly accelerating content production and reducing its associated costs. Moreover, AI can tailor this content to target specific audiences or individuals, enhancing relevance and engagement.

This personalisation extends beyond just content. Generative AI can help marketers create highly personalised customer experiences, tailoring every touchpoint to the individual customer’s preferences, behaviours, and needs. For example, AI can generate personalised product recommendations, offers, and messages that resonate with the customer on a deeper level.

Predictive modelling is another promising application of generative AI in marketing. AI can analyse historical and real-time data to predict future customer behaviour, market trends, and campaign performance. These insights empower marketers to make informed, proactive decisions and to adapt their strategies dynamically.

Moreover, generative AI can revolutionise the creative aspect of marketing. AI tools can generate design concepts, logos, and promotional graphics, providing marketers with a starting point for their creative processes or helping them create diverse content more efficiently.

AI can also optimise ad placements by predicting which channels and times would yield the most engagement, ensuring more effective use of advertising budgets. Furthermore, it can generate A/B testing scenarios, allowing marketers to identify the most effective approaches quickly.

However, the integration of generative AI in marketing is not without challenges. These include ethical considerations around data privacy, potential depersonalisation of customer interactions, and the risk of AI-generated content lacking the authentic human touch.

In conclusion, the potential of generative AI to transform the marketing industry is enormous. By harnessing this technology, marketers can create more engaging content, deliver personalised customer experiences, and make data-driven decisions more efficiently. The successful marketers of tomorrow will be those who embrace generative AI today, using it not as a replacement for human creativity and intuition, but as a powerful tool that enhances these qualities.

In the hands of innovative marketers, generative AI is not just a disruptor but a catalyst for a new era of creativity, personalisation, and strategic marketing.