Shoppable advertising is part of the wider social commerce trend which, according to McKinsey, will have a global market value in excess of $2 trillion by 2025. That’s trillion. What’s more, shoppable ads are set to undergo significant enhancements thanks to the evolution of generative artificial intelligence (AI).
In fact, the potentially transformative impact of AI on shoppable ads is one of the five key trends identified in our new report: ‘Where AI and Marketing Collide: 2024 CX Predictions’. The capacity of AI to process and analyze vast swathes of customer data from multiple sources to produce individualized customer experiences at scale is a competitive advantage many brands will be looking to grab.
What is shoppable advertising?
Shoppable ads turn every piece of content, whatever the media, into a digital storefront. Rather than redirecting consumers elsewhere, shoppable ads enable them to complete a purchase directly, then and there, at the point of engagement.
This type of advertising has blossomed across social, search, influencer live streams, CTV, video, addressable, and even augmented and virtual reality – wherever people might draw inspiration for future purchases. In September this year, for example, social streaming giant TikTok announced the full launch of TikTok Shop in the US, promising to create a “new shopping culture” by bringing “shoppable videos and LIVE streams directly to For You feeds across the country.”
For brands, shoppable ads have a lot of benefits:
- Shorter, more fluid purchase journeys with fewer steps and less friction between consideration and acquisition.
- Unambiguous attribution data, closing the loop between impressions and conversions.
- Product preference data (e.g. size, color, style, or make), allowing for greater personalization.
- More accurate ROAS data from which to shape ongoing campaigns, thus lowering CPA over time.
- 66% of consumers* who have used shoppable ads think they make interesting products easier to find.
- 58% of 16–34-year-olds* like companies to recommend products or services that are tailored to their personal preferences.
*According to our new CX trends report.
AI’s impact on shoppable advertising
Generative AI is great at processing, analyzing, learning from, and acting upon huge amounts of data in real-time. This makes it the perfect vehicle to take shoppable advertising to the next level – to individualized, one-to-one shopping experiences delivered at scale.
Brands can leverage generative AI to unify purchase data, on-site analytics, behavioral data, biographical data, and inventory data to serve up hyper-personalized shoppable advertising content tailored to individuals’ preferences. And because AI platforms ‘learn’ from any shifts in these data sets, the shoppable ads remain relevant and attuned to the individual, even if tastes, fashions, budgets, and thus buyer behaviors, change.
In the not-too-distant future, we’re also likely to see AI making social commerce more, well… social – through the introduction of conversational shoppable adverts and interfaces. Conversational AI uses ML to learn from customer responses to shape and contextualize future interactions – just like a human does when having a conversation.
For shoppable ads, this will mean customers being able to ask questions about products or services, interact with the AI to explore different options, and ultimately complete the purchase directly from the advertising content.
Sounds like science fiction? Not so much. Since April, for example, travel group Expedia has offered an in-app travel planning experience powered by ChatGPT that enables customers to ‘chat’ with an interactive AI assistant to create their ideal vacation.
Overcoming the AI understanding gap
The excitement surrounding AI and its potential to transform business operations like shoppable advertising is justified. However, this excitement – along with a generous dash of commercial FOMO – means brands risk rushing into AI activation before they’re ready. Conversely, it can leave them unsure about how to hop on board the AI train before it leaves the station.
Either way, there’s a gap in understanding the fundamental basis for successful AI implementation – data. Data preparedness and data health.
As Simon Chung, Acxiom’s Director of Strategy, Consulting & Analytics (EMEA) summarizes: “You’ve got to put the right foundations in place to enable AI, because it can be only as good as the data you put in.”
AI solutions and AI platforms need to be fed a diet of high-quality information and be trained on the taxonomy, interactions, dependencies, safeguards, and decision logic between data sets. In short, for AI to automate decisions accurately and serve personalized experiences properly it needs the right data and clear instructions on how to use it. Otherwise, the experiences created will be unfamiliar and potentially unwelcome.
So step one on the road to AI activation is getting your data in shape. Brands need to consider the quality in range and depth of data they hold, how it is collected, connected, stored, and how regularly it is updated. Could an AI platform draw upon an accurate single version of the truth for each customer from across the entire tech stack? If the answer to this is anything but a resounding ‘yes’ then there’s work to be done before introducing AI to the mix.
Beyond this data alignment and hygiene, there’s also an opportunity for augmentation. Bringing together first, second, and third-party data to enrich the customer view enables shoppable advertising experiences to match individuals’ preferences more closely.
This level of data management is itself a significant undertaking. Our other recent report ‘Customer Intelligence – How well do you understand your customers?’ has a useful section on data health that could help frame the process. Unsurprisingly, of course, some brands opt to call in expert help to get their data in shape. This can be a sensible step in getting full value from your AI implementation.
A firm footing for the future
For many brands, the opportunity to combine shorter purchase journeys with hyper-personalized customer engagements will make AI-supercharged shoppable advertising irresistible. In the years to come it may well become standard practice. For now, there’s a lot of real estate between AI ‘as is’ and tomorrow’s would be / could be AI concierge or personal shopper. A clear data and intelligence strategy is key to closing this gap.
To explore the exciting potential of shoppable advertising and AI further, make sure you download Acxiom’s new report: ‘Where AI and Marketing Collide: 2024 CX Predictions’. It provides access to real-world case studies and insights from 200 brands and 2,000 consumers, as well as tangible steps you can take to turn AI’s potential into your business reality.
What’s more, shoppable advertising is just one of the five key AI-powered trends transforming the CX landscape covered in the report. It’s also recommended reading for anyone interested in proactive customer service, healthy acquisition and retention, sustainable CX, and predictive personalization.
