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AI Chatbots: An Evolving Trend in Brand Marketing

LONDON,UK — July 16, 2017.  Chatbots, software used to simulate text-based business-to-consumer conversations, have grown considerably smarter in recent years with the ongoing advances in artificial intelligence and are fast becoming an effective marketing tool for some of the world’s biggest brands.

Brands like Starbucks, Pizza Hut, and Bank of America are all making the most out of chatbots and their ability to market their brands, push products to their customers, and to perform menial, time-consuming customer service functions like scheduling an appointment or telling you when a delivery has arrived.

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Pizza Hut chatbot

The marketing potential afforded by virtual assistants is also being capitalized by smaller digital brands and e-commerce sites with the rise of chatbot builders for messaging apps. The popular freelance website, Fiverr, recently launched a chatbot marketplace where companies can hire developers to build chatbots for their sites – for as little as $5.

The Future of Chatbots for Brand Marketing is Bright

Early iterations of chat robots were mostly unsuccessful. Bugs and unnatural behavior commonly bogged down the bots. But with AI getting better and better, chatbots became smarter, and many companies are investing in their use and potential to successfully market their brands. According to a survey done by Oracle, 80 percent of businesses will implement chatbots by 2020. The Chatbot Market Research Report said that 67 percent of businesses believe that AI agents will outperform mobile apps in the next five years. The same study also found that the retention rate of users after one month of chatbot use was 40-60 percent compared to only a 20-40 percent retention rate for apps. And with giants like IBM, Facebook, Microsoft, and Amazon making long-term investments into chatbots, there must be huge gains to be made – if not now, then in the near future. The growth of chatbot investment also coincides with the customers’ want of easier, stress-free interaction with their favorite brands.

For example, over half of mobile users say they want to engage with businesses through SMS, but half are not receiving texts from their financial institutions, over 60 percent aren’t receiving texts from retailers, and 75 percent aren’t receiving texts from hotels or airlines – holes in the marketplace that chatbots will soon fill successfully. Most consumers are open to engaging with chatbots (60%), but only 22 percent have ever interacted with one, according to a 2017 Mobile Consumer Report from the marketing firm Vibes. Although there are many favourable signs pointing to the effectiveness of chatbots at marketing brands in the future, it’s harder to determine their success as of now due to low adoption among users.

Messaging Apps are Driving Chatbot Success and Growth

The biggest chatbot push is being made in messaging apps like WhatsApp, WeChat, and Facebook Messenger. Many brands see messaging apps as rapidly surpassing social media and email for user engagement – WhatsApp has over a billion monthly active users, Messenger has over 900 million, and WeChat has over 700 million. Messenger already has over 100,000 bots on the platform. The marketing potential for chatbots on these platforms is huge, most notably when compared to traditional brand marketing strategies such as using emails for customer engagement. Unlike email campaigns to market products and brands, artificial assistants in messaging apps are more likely to build a relationship, re-engage, and bring a customer back again. A chatbot survey campaign by CONVRG found that a user response was three times more likely than an email campaign.

“Businesses spent millions of dollars communicating with customers, yet those people are spending less and less time on email and social and more time on messaging,” said Ben Parr, a former writer at Mashable and the co-founder of chatbot developer Octane AI, in an interview to the Huffington Post. Unlike email marketing campaigns, in Parr’s opinion, chatbot campaigns wouldn’t be a one-way conversation – the brand and the consumer would be a relationship.

Retailers who use artificial assistants for digital commerce on messaging platforms are still hindered by the fact that customers can’t buy their products inside the messaging app. They still have to be redirected to another app or the retailer’s online store.The Conversational Commerce Report found that although customers are using chatbots in messaging apps to ask for support, to find deals, and to browse the stores, being sent to an external site or app lowers engagement and retention.

What a Successful Chatbot Marketing Strategy Looks Like

Brands succeed at chatbot marketing through three key strategies: personalization, engagement, and branding. The first one, personalization, is achieved when a brand lets users personalize their chatbot experience.

One example of this was American Eagle’s “This or That” chatbot campaign that let customers choose between two pieces of clothing in a simple quiz. If the customer selected one piece of clothing, the site would offer to let them buy it. If they didn’t want to purchase the clothing, they could just click through to another two items. Within weeks, American Eagle gained more than double the customers from their chatbot campaign than all their social media channels combined. Personalization also lets the user customize the experience to match their own personality. Some AI powered virtual assistants let users customize the bot so it speaks to you much more like a friend than a robot.

Engagement, measured by sustained interaction with the chatbot, is another way brands are attracting and retaining consumers. The popular HBO show Game of Thrones released “GotBot”, a Facebook chatbot meant to get fans up-to-date on all the events that led up to the much anticipated season 7 premiere as well as provide trivia, history, and any GoT related question fans might have.

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Image courtesy of The Verge

The final way that companies create successful chatbot marketing strategies is by personifying their brand. British Airways launched BOTler, their chatbot butler to provide travelers with flight deals and real-time tips about London’s best attractions. Personifying a brand can give a brand character and can also help them tell their brand’s story in a unique and entertaining way.

With massive investments from the biggest brands and the declining cost-of-entry for brand development, it looks like the trend of AI-driven virtual assistants is here to stay. Thanks to the continuing improvements in artificial intelligence and the huge shift to messaging apps from other social media, chatbots will continue to transform much of the way marketing is targeted at an audience. Marketing strategies won’t just push content in front of consumers’ eyes, but rather, they will continue to refocus on interacting with customers in more engaging and interesting ways.

Mantas Malukas

Founder at Niche Hunt
Mantas is entrepreneur, journalist & professional marketer. As an entrepreneur his main focus is in the development of high level concepts mainly in the editorial news projects, journalism and digital content marketing. For the several last years he was investing his passions into cryptocurrency, artificial intelligence (AI) and digital communication forms.  Twitter @mantasmalukas

Written by Mantas Malukas

Mantas is entrepreneur, journalist & professional marketer. As an entrepreneur his main focus is in the development of high level concepts mainly in the editorial news projects, journalism and digital content marketing. For the several last years he was investing his passions into cryptocurrency, artificial intelligence (AI) and digital communication forms.  Twitter @mantasmalukas

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