How Brands Can Confront The AI Platform Challenge

Niraj DawarNovember 30, 20184584 min

How Brands Can Confront The AI Platform Challenge 

Pity the brand marketer. Over the past couple of decades she has had to contend with disintegrating mass media, concentrating retail distribution channels, the rise of advertising platforms such as Google and Facebook, and a tide of data and analytic tools. Far from the promise of disintermediation, what the internet has in fact delivered is the growing power of intermediaries: Amazon, App and Music Stores, Netflix. Brands that have survived these upheavals saw opportunities where others saw threats. But the most formidable challenge to brands, and the most formidable intermediaries, may be yet to come.

As I describe in my recent Harvard Business Review article, the rise of AI-powered voice bots such as Alexa, Google Assistant and others portends a future in which the customer interfaces with her world through a single channel. This channel will be the advertising medium, the sales interface, the channel of distribution, the point of purchase, the after sales point of contact, and even the private label competitor, all rolled into one. And there will be fewer than five such platforms worldwide, with most consumers choosing to use only one (because the platform learns and accumulates data that is unlikely to be portable across platforms). This kind of consolidation is unprecedented, and confronts the brand marketer with a wall, with the consumer on the other side and the platform owner as the gatekeeper.

An entirely new set of challenges…and opportunities will emerge from this new marketplace access barrier.

The challenges and some means of coping with them are described in the HBR piece. Here, I’d like to look at ways of circumventing (and pre-empting) the emerging voice-enabled platforms to form direct relationships with consumers.

The first priority is to establish sufficient value for end consumers to want to consider a direct purchasing relationship, side-stepping of the voice platforms. This is not easy, as CPG companies and many other brands (including financial products such as insurance and most consumer durables) have traditionally connected with the consumer mostly through one-way advertisements or through arms-length multi-layered distribution channels. The challenge now is to build one-to-one relationships that allow for two-way communication, and to extend trust in the brand. Unilever’s acquisition of the Dollar Shave Club, for example, was widely seen as an attempt to bring home the methodology by which the spunky start-up had built direct relationships with over 2 million members; a methodology that will prove invaluable to Unilever’s €21 billion business in personal care products as it faces the mounting power of AI-platforms.

A second method for side-stepping the AI platforms is to find ways to influence consumers’ real world behavior through direct communication, either at the point of decision-making or at the point of consumption, or both. Already, companies as diverse as Snapchat and PayPal are launching augmented reality glasses to enhance the consumers’ interaction with products both in store and at home. TUKU, a startup that I advise, is currently piloting a technology that allows the consumer to place their phone near a product package to obtain additional information, including video advertisements, individualized coupons, and bundled offers with other products. The information delivered differs depending on the consumers’ location (in-store versus at home), so the content can be highly targeted and even updated in real time from the brand managers’ computer terminal. Consumer packaged goods companies value the technology for allowing them to control customer interaction directly, and to circumvent the growing power of intermediaries, including retail stores, Google and Facebook, and soon, the AI bots.

Finally, consumer goods brands need to break out of their own bubble (data related only to consumer interactions with their own brands) and obtain a more complete picture of the consumer. How and when consumers buy other products or brands can provide invaluable competitive benchmarking: for example, a restaurant chain may be interested in knowing what percentage of its customers visit competitive chains, and how often. Foursquare offers analytics on consumers’ store visits that provide a much richer picture of the consumer through anonymous, aggregated location data.

The rising power of AI-enabled platforms will confront brands with the most formidable intermediary they have yet known. Brands will not be able to survive without cooperating with them, but consumer brand companies also need to avoid being at their mercy. They need to forge deep and direct relationships with end consumers. The time to do so is now, before the platforms become the consumers’ principal interface with their world.

Contributed to Branding Strategy Insider by: Niraj Dawar, Author of TILT: Shifting Your Strategy From Products To Customers

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