Why FMCG and CPG Brands Need an AI Strategy NOW | DMA

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Why FMCG and CPG Brands Need an AI Strategy NOW


Everybody's talking about artificial intelligence these days.

To hear the blogoshphere tell it, the entire population of the earth will soon find ourselves out of work and replaced by robots.

Which is a shame, because it'll mean we won't have any money to spend on the advanced Roombas which will soon be able to beat us at Monopoly and then soothe our wounded egos with a relaxing back massage.

Meanwhile, back here in reality, while the artificial intelligence field has indeed been making great strides, the situation looks much less grim.

Self-driving cars are a reality, machine learning algorithms track our every digital move, and voice-activated A.I. assistants like Alexa, Siri, and Cortana have found their way into millions of homes worldwide (with more joining their swollen ranks every day).

It may not look like the job-stealing, human-hating, armageddon-starting AI that Hollywood films have prepared us all to expect, but the fact is that artificial intelligence has become an integral part of daily life in the digital age.

And its role is only going to get bigger.

So, how will this impact the retail landscape, and FMCG and CPG brands which depend upon it? ​

Why FMCG and CPG Brands Need an AI Strategy NOW

The day artificial intelligence started talking to us, everything changed. Like the smartphone technology which preceded it, AI verbal assistants represent an entirely new interface between users and the internet.

These interfaces are hugely important. They can alter the way in which users interact with the internet in significant and permanent ways. To understand just how significant such interface shifts can be, one need look no further than the widespread global adoption of the smartphone.

While the smartphone hasn’t eliminated the home computer as a user/internet interface, it has unquestionably pushed the PC into the role of secondary interface, particularly with younger users. In the battle for the world’s browsing minutes, the home computer simply hasn’t kept pace with its smaller, handier mobile counterparts.

The reason? Convenience. With a handheld device which was more than capable of performing 95% of the tasks users required sitting right in their pockets, the effort of using the home computer interface became simply too much work. Why bother when you don’t have to?

In the modern digital culture where convenience is king, the public can be reliably expected to take the path of least resistance almost every time.

Knowing this, it isn’t unreasonable to anticipate that, given the choice between unlocking a mobile device and punching its keypad to access something online, (as opposed to simply calling out one’s request into the air to a digital assistant in one’s living room) that using the once magical smartphone might begin to feel like an unnecessary amount of work as well.

And this predictable pattern of human behaviour has not been lost on the internet’s biggest brands.

While Amazon has gained quite a healthy head start with its Alexa product (a head start gained with a well-timed jump into the gap left by Siri’s initially disappointing performance) Google, Microsoft and Apple all now have viable home voice activated AI assistant products on the market, and it appears that Facebook will not be far behind.

The significant investments made by the companies to develop their tech will certainly prove well worth it if such products do indeed begin to establish themselves as the interface of choice for a growing segment of the global population, as many experts believe they will. Research giant Gartner, for example, predicts that “by 2018, 30% of Our Interactions With Technology Will Be Through “Conversations” With Smart Machines”

What does this mean for FMCG and CPG brands?

The widespread adoption of AI voice-activated virtual assistant technology will have major implications for almost every B2C company, but for FMCG and CPG companies the implications could be absolutely massive.

Ordering more toilet paper or dish detergent when one is running low by speaking instructions to a voice activated AI tool has already become common practice in many households where AI assistants are present. Such households can be expected become increasingly comfortable ordering FMCG/CPG products in this way. In addition, as voice activated AI assistants find their way into more and more homes worldwide, it is reasonable to expect that this trend will reach significant new heights in the years to come.

As has been true at every stage of the digital transformation, FMCG and CPG brands which develop and implement a strategy for making the most of this exciting new channel will be in the privileged position to earn a foothold as the technology and its interface develops.

In their recent report “The end of advertising as we know it“, Forrester presented quite a strong case for why the marketing channels which offer the most interruption-free user experiences are already beginning to move to the forefront.

Stale and outmoded approaches for delivering marketing messages to consumers are offering diminishing returns in the digital sphere, and have been for some time.

The likelihood that voice activated AI marketing methods will bear any resemblance to such approaches is extremely slim. Such a significant shift in the human-internet interface demands a completely new strategy.

How can FMCG and CPG brands develop a strategy to make the most of this new interface?

For brands marketing bigger ticket items, for instance, a TV, a car, or a piece of jewellery, the process of developing and implementing a voice activated AI strategy will be a bit tricky. Choosing exactly what a consumer wants is a much more involved process.

But in the FMCG/CPG arena, things are much simpler.

Toilet paper, milk, shampoo, and dish soap, among other common household items, can be easily replaced or refilled with very little consumer input.

When a user says “Alexa, order toilet paper”, or “Siri, we’re out of peanut butter” the AI involved will, presumably, know what brands of those products an individual user prefers.

For brands, finding a way to get their brand to the top of that list will be key, and the “tell my AI to order <BRAND> spaghetti sauce” is a call to action every FMCG/CPG brand should be prepared to get behind.

While this may all seem very far away at the moment, history teaches us that those ahead of such interface curves will always reap rewards. While preparing a useable strategy may seem daunting at the moment, there is help available, and every FMCG/CPG brand hoping to keep its digital marketing channels at the forefront would be well served to make the most of this intriguing opportunity.

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