Is Marketing Changing? It's Thanks to GenAI

Generative artificial intelligence (GenAI) is radically changing marketing and innovation, with significant impact on both consumers and businesses. The study conducted by Paola Cillo (Bocconi Department of Management and Technology) and Gaia Rubera (Bocconi Department of Marketing), published in the Journal of the Academy of Marketing Science, starts with some predictions that GenAI could increase marketing productivity by up to 15 percent, an impressive figure that highlights the enormous influence of this technology on the industry. However, Cillo and Rubera warn that despite the hype, the long-term implications of using GenAI, for both companies and consumers, are still unclear and raise crucial questions.

GenAI differs from previous forms of AI in its ability to create new content, ranging from text to images to video. This has already found practical applications in numerous companies: Coca Cola has developed new beverages such as Coca-Cola Sugar Y3000, while Unilever and Nestlé use GenAI to create innovative advertising campaigns. However, Cillo and Rubera warn that although GenAI is a tremendous resource for generating original and engaging content, in the long run it could lead to a reduction in human creative capabilities. Companies should therefore strive to balance the use of GenAI with the need to preserve the originality and uniqueness that come from humans.

One of the most interesting points covered in the study concerns how GenAI might influence corporate innovation processes. Cillo and Rubera divide innovation into four main phases: development, testing, communication and consumer engagement. In each stage, GenAI can play a crucial role. In the development phase, for example, consumers can be involved in co-creation activities, taking advantage of crowdsourcing and open innovation platforms. However, a risk related to “AI compliance” emerges: consumers may simply accept the solutions proposed by GenAI without making their own creative contributions. To mitigate this problem, the authors suggest designing platforms that encourage the diversification of ideas, reducing the AI-compliance effect.

Another aspect concerns the use of GenAI in the testing phase. Traditionally, companies have relied on market research conducted on samples of consumers to test the potential success of a product or advertising campaign. However, according to Cillo and Rubera, GenAI can make consumer involvement less necessary by generating results similar to surveys conducted on real people. In fact, recent studies show that GPT-4 and other AIs can fairly accurately replicate consumer preferences, representing a faster and cheaper alternative.

But not everything is plain sailing. The use of GenAI in the creation of new content is not entirely free from problems. The authors point out that this technology can sometimes generate “hallucinations”, that is, content that, while formally correct, turns out to be meaningless or factually wrong. A well-known example was the error by Bard, Google's chatbot, which provided incorrect information during one of its demonstrations, resulting in a loss of billions of dollars in Google’s market value. Thus, it seems that GenAI currently works better in contexts where there are no right or wrong answers, such as artistic creation, than when creating scientific or informational content from scratch.

The role of GenAI in communication is another topic of great relevance. Cillo and Rubera note that GenAI can help companies create more persuasive marketing messages by adjusting the parameters of the model based on the preferences of the target audience. However, it should be explored how consumers perceive such AI-generated messages compared to those created by humans. Some studies suggest that messages created by GenAI are perceived as more authentic and conversational, but the impact of technical parameters such as the “temperature” of the algorithm on the persuasiveness of messages deserves further research.

The study raises crucial questions about the ethical implications and transparency of GenAI use. The growing use of this technology has led several governments and social platforms to mandate transparency in content creation. However, as experienced by Levi's, which has faced criticism for using GenAI in the creation of models targeting specific skin tones and body types, transparency may not be enough to avoid negative consumer reactions.