Artificial intelligence (AI) is an exciting technology that has transformed the marketing industry — enabling businesses to automate processes, optimize campaigns, and improve customer experience.
However, while AI can be a powerful tool in direct marketing, it also poses significant risks to marketers and brands.
Here are 5 reasons why using AI in direct marketing could be dangerous:
- Lack of transparency: One of the significant concerns with AI in marketing is the lack of transparency in how it makes decisions. Many AI algorithms are black boxes, meaning that marketers cannot see how the algorithm arrived at a particular decision.
This lack of transparency can be dangerous, especially if the AI makes a wrong decision that could damage the brand's reputation.
According to a recent survey by the Capgemini Research Institute, only 35% of businesses say they understand how AI makes decisions.
- Privacy concerns: Another risk associated with using AI in direct marketing is the potential for privacy violations. AI algorithms rely on data to make decisions, and if that data is collected without the consumer's knowledge or consent, it could be a violation of privacy laws.
According to a survey by the Pew Research Center, 81% of Americans say
that the potential risks of data collection by companies outweigh the benefits.
- Lack of human oversight: While AI can automate many marketing tasks, it still requires human oversight to ensure that it's making ethical and responsible decisions. Without proper oversight, AI algorithms could make decisions that are not in line with a brand's values or that could harm its reputation.
A recent study by PwC found that 52% of businesses do not have a process for ethical AI decision-making.
- Biased algorithms: AI algorithms are only as good as the data they are trained on. If the data is biased, the algorithm will be biased as well. This bias could lead to discrimination against certain groups of people, which could damage a brand's reputation and lead to legal trouble.
According to a recent study by the Harvard Business Review, AI algorithms used in hiring and promotion decisions can perpetuate gender and racial bias.
- Over-personalization: While AI can help marketers personalize their messages to individual consumers, it can also lead to over-personalization.
When consumers feel that their personal data is being used in a creepy or intrusive way, it can damage their trust in the brand. According to a survey by Accenture, 41% of consumers said they would be willing to switch to a different brand if they felt that their data was being used inappropriately.
"AI algorithms could make decisions that are not in line with a brand's values or that could harm its reputation."
There are many ways AI can be a useful tool in direct marketing, we've already seen many of those in action. But it also poses significant risks to marketers and brands.
To avoid these risks, marketers should be sure that they have a clear understanding of how their AI algorithms make decisions, ensure that they are collecting data ethically and with consumer consent, and implement processes for ethical AI decision-making.
By doing so, marketers can harness the power of AI to improve customer experience while protecting their brand reputation.
At J&C, our expertise lies in our mastery of the art and science of customer engagement — including the judicious use of AI. Helping clients improve their response rates and marketing ROI using all tools at our disposal is our specialty. Contact J&C today if you need help getting your message to the right audience.
► NOTE: This entire blog was written by AI.
Sources:
- Capgemini Research Institute. (2020). The ethical AI imperative: Five core principles for enterprises. https://www.capgemini.com/wp-content/uploads/2020/01/ethical-ai-imperative.pdf
- Pew Research Center. (2019). Americans and Privacy: Concerned, Confused, and Feeling Lack of Control Over Their Personal Information. https://www.pewresearch.org/internet/2019/11/15/americans-and-privacy-concerned-confused-and-feeling-lack-of-control-over-their-personal-information/
- PwC. (2020). Responsible AI in business: How to maximize the AI opportunity and minimize risk. https://www.pwc.com/gx/en/issues/data-and-analytics/responsible-ai-in-business.html
- Harvard Business Review. (2019). Why Companies Should Be Transparent About Their Algorithms. https://hbr.org/2019/01/why-companies-should-be-transparent-about-their-algorithms
- Accenture. (2019). Global Financial Services Consumer Study: Discovering Growth. https://www.accenture.com/_acnmedia/PDF-96/Accenture-2019-Financial-Services-Consumer-Study.pdf#zoom=50
