When Everyone is Using the Same Algorithm, What Happens to Competition?

In the future, the company with the best algorithm will win.

But in some cases, it seems likely that we will all be working with the same algorithm. When that happens, it is unclear who wins. Do we all win? Do we all lose? How can competition exist in an arena where every company is using the same algorithm?

This was a question of some debate at a recent meeting of marketing professionals in New York City. The discussion revolved around the growing role of AI and machine learning algorithms in advertising.

The truth is, a lot of advertising exists on one of only a few large platforms. Consider the fact that 2019 is the year where more than 50% of all ad spend will occur online vs offline. And consider that Google and Facebook control nearly all of the online advertising market.

Each of those companies, along with Amazon, Bing and a large number of smaller platforms, is working on algorithms that better serve the right ads to the right people at the right time. They are doing this because the future of their business relies on advertisers successfully reaching customers and driving sales. And a better algorithm, it’s thought, will be more adept at fulfilling that promise.

But at some point, we must consider that all of the advertisers on Google are running ads on the same platform, and that platform is running the same algorithm (or set of algorithms) to determine when and where to show different ads.

Here are four potential outcomes when this happens:

1) The companies with more/better data will win out over the companies with less/poorer data

When we are all using the same algorithm, the data that we are able to feed into it might determine who succeeds and who does not. Those companies who have the ability to store massive amounts of clean data, data that feeds back into the platform (whether it’s Google or anywhere else), will be better positioned to take advantage of the algorithms of the future. With more data, the algorithm will work more effectively for that company than it may for another.

In this scenario, the real level on which companies are competing is on data.

2) The marketplace will determine winners and losers

This is potentially a dangerous, anti-competitive scenario. But one we must consider. Google and Facebook already have incredible amounts of power. And if they can use their algorithms – intentionally or otherwise – to control what companies succeed in reaching new customers and what companies do not, be careful.

I don’t think any of us wants this kind of a future. Google and Facebook will tell us the same thing. But who is preventing it?

3) Branding will become more important than ever

When there is no real competitive advantage on targeted digital advertising, companies will need to rely on other areas to compete. Brands are one possible area of competition.

While brand loyalty has been trending downwards for some time, it may be that effective branding is going to see renewed importance over time. And that’s because consumers who seek out certain brands will bypass, in a sense, what the algorithms are doing.

4) Pricing will become more important than ever

This one requires very little explanation, because it is similar to #3. And while it might sound like good news for consumers (more companies competing on price and lower prices in the marketplace overall), it spells trouble in the long run.

A price war – with each company trying to lower prices to out-offer competitors – could precipitate a race to the bottom on quality and service. It could also mean that giant companies, like Amazon, undercut competitors to the point that they become near-monopolies.

This scenario is not great of competition either.

The Possibilities Are Endless

These are only four potential scenarios. They all might come true. Or none will come true. There are thousands of other ways this could work itself out.

But if you are responsible for advertising your business, or growing your business in any way, you have to start thinking about the future of competition. Because it may not look like competition today.

Best Algorithm Wins

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The age of AI is upon us. As marketers, we must embrace it. If we do, and if we can find the opportunities to use artificial intelligence to our company’s advantage, there will be nothing but success in our future.

Those who don’t, those who fight back against the changing tide, who insist on doing things the old way, are going to quickly find themselves out of a job. They will be passed over for promotions, will lose existing responsibilities to machines and those who realize their power, and will either go down with the sinking ship that is their company or will be shown the door as their company moves into the future without them.

It’s no longer a question of IF, it’s a question of WHEN. How soon will the algorithms come for your job? Or, put in a more optimistic way, how soon will the algorithms make you better at your job?

First Mover Advantage and AI

The algorithms that will help us become better marketers will help us in a number of ways – from targeting new users to optimizing our offers and pricing. But regardless of what they will do for us, there is one thing that bonds them all. They need data to function. They need data to learn, to grow, and to succeed. That is why there is such a large first-mover advantage in AI.

Those companies with the greatest capabilities at the end of the day will be the ones that are investing in those capabilities right now. If you come late to the party, you may be permanently at a disadvantage. That is because your competitors will have better algorithms than you do, trained on more data, over a longer period of time.

When We All Have AI

When all companies in a place are using artificial intelligence to their advantage, it becomes a question of whose algorithm is best. And there are a number of factors that will come into play:

  • Who has the larger data set?

  • Whose algorithm has been around longer?

  • Who has trained out the initial bugs best?

These are still early days of implementation of machine learning and other technologies in the marketing space. It’s not too late to claim that first-mover advantage.

But what should you do now to set your company up for success in the future?

How to Move Your Company Forward with AI

There are a number of things you can do today that will help your company succeed in an AI-driven future:

  1. Do your research. Find out what other companies are already doing. Talk to experts, attend conferences, and network. There is a lot to learn, and people will spend their whole lives learning the intricacies of this new science. So don’t expect to pick it all up or become an expert overnight. But you can become the go-to source for information and innovation in your organization.

  2. Make the case. Once you have a basic understanding of how companies are going to be using these new technologies to improve their marketing, it’s time to loop in the decision makers. To get them on board, give them real-life examples. How will your company save money? Grow revenue?

  3. Partner with early-adopters. There are a lot of big companies out there that are already making gains with these new technologies, and they are willing to collaborate if it makes good business sense. A great way to get started is to take advantage of the tools that these first-movers produce, and partner with them to expand your own capabilities.

Is AI Coming for Your Job?

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When you read anything about artificial intelligence or machine learning these days, you can sort it into one of two buckets: either it’s the greatest innovation ever and will make all of your dreams come true, or it’s the end of work as we know it.

The truth is, it’s probably a little bit of both, and a little bit of neither.

We already wrote a few months back about how machine learning will impact marketers from a process and performance standpoint. But what about jobs? Everyone wants to know – is AI going to make me obsolete?

Like so many other things, the answer is that it depends.

It depends on what role(s) you are playing in your company today. It depends what systems or processes you use. It depends how willing you are to learn and to grow your skillset. And it depends how willing your company will be to invest in both the technology and your career.

Let’s break those each down a bit further.

Your Role(s)

AI and machine learning have the potential to do many of the tasks that human beings do today. And depending on who you ask, that potential is either right around the corner or a decade or two away. Both scenarios are scary, because it means that the tasks we train for today might not exist in ten years’ time.

So the key to understanding how to proceed is to learn as much as you can about what role AI will play. We already know that computers can do simple tasks better than we can, whether it be straightforward data entry, normal mathematical calculations, etc. AI and machine learning will quickly become good at more complex processes, like statistical analysis and prediction.

In the marketing world, roles like media planning and buying, campaign management, pricing, promotions, content, and more will be threatened. If nothing else, the nature of those roles will change.

Human beings will still be necessary, at least in the near term, for strategic planning, as well as the development, installation, and maintenance of those systems that will be set up to improve marketing processes.

Systems and Processes

The roles that are most likely to be eliminated in your organization depend a lot on the types of systems that get developed. Until marketing programs are designed and trained on how to take over your role, your role is safe. And unless you work at a large organization with a huge R&D budget, odds are you are going to have to wait for another company to create the systems that your company will end up adopting.

So the reality is, the smaller your company, the less likely it is that AI is coming for your job anytime soon. Because the systems that get created in these early days of AI adoption are likely to be more expensive, and more complex than what will come later.

Learn and Grow

Either way, the time to adapt is now. Stop thinking about your job, and start thinking about your role. Each of our jobs is made up of a number of different tasks. AI will eliminate certain tasks, but it will also create new ones.

Start training now for the new tasks that your company is going to need you to work on. You can make yourself indispensable by learning the skills that no one else in your company is capable of.

Learn how to work with and manage data. Learn how to design the formulas and train the programs that are going to be used to implement these new technologies. And learn soft skills like people management, strategy, and communication that will always be in demand.

Your Company

Much of what comes next will rely as much on your company as it will on you. Some companies will invest in new technology early because they feel that it will give them a competitive advantage. Others will wait for the technology to prove its effects before they take the time to deploy it themselves.

Similarly, some companies will invest in retraining and preparing their workforce for the coming change. Others will be eager to downsize their teams and take advantage of the promised savings and efficiency that the next technology revolution will bring.

You can get a head start on that future reality by talking to your manager today about what it will mean for your organization. And the choice will be yours to either take the necessary steps to solidify your role in your current organization or prepare for a new role at the next organization.

Machine Learning: What Will it Mean for Marketers?

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The next wave of computer technology is upon us – and it’s Machine Learning. And if businesses want to succeed in the marketplace of tomorrow, they had better understand what machine learning is and how it can be applied to their business.

The danger of waiting is that your competitors, or some future company that does not even exist yet, will use machine learning to disrupt your industry and drive you out of business.

What is Machine Learning

Machine learning is a field of computer science that gives computer systems the ability to “learn” with data, without being explicitly programmed. It is an extension of artificial intelligence, which uses pattern recognition and computational learning to help solve problems better than humans ever could.

To most of us who are not actively studying or working in this field today, it might sound a little like science fiction. But computer technology is racing forward, with very real applications of machine learning already in place today.

Why Machine Learning

The reason that machine learning is so popular right now is a combination of the technological progress made in recent years and the potential it holds for a large swath of fields. For companies who are going to lead the way on innovation, the opportunities to deploy machine learning across their organizations is enough to excite everyone from board members, to executives, on down the line.

Machine learning will make decisions – both day to day and long-term strategic decisions – faster and better than humans. It does this by analyzing all of the data available to it using algorithms that get smarter over time.

What Does This Mean for Marketers

For marketers, machine learning will mean that some of the most complex parts of our job will get much easier. Machine learning might be used to:

  • Optimize who we target with our advertising, by analyzing who is most likely to become a paying customer on an individual basis
     
  • Write promotional copy that speaks directly to each person in our marketing funnel, by understanding the right combination of persuasion and emotion to use to convert new customers
     
  • Identify customers who are most likely to become repeat buyers and intervene with special offers at the right time to advance their loyalty
     
  • Intervene with users who we are at greatest risk of losing to competitors with a promotional offer that keeps them coming back
     
  • Recommend new products and services that our customers are most likely to purchase from us based on customer behavior and competitive offerings
     
  • Determine the appropriate price of everything we offer to maximize sales or profitability, including when and where to use promotions to spur greater levels of activity and address local or seasonality slowness

The above list just scrapes the surface of what might soon be possible with machine learning. To take full advantage, companies need to invest in research, data collection, training for current staff, and hiring experts. The time to start is now, because the sooner you can make strides in this field, the larger your advantage over the competition will be.

What Do You Know About Your Customers

Here is the simple truth – the more you know about your customers, the more successful you will be as a marketer or small business owner.

  • Knowing your existing customers will help you find more people like them
  • Knowing your existing customers will help you create products they want
  • Knowing your existing customers will help you provide better service

What should you know about your customers? In short, as much as you can.

You should know the things that relate to your business – how they found out about you, why they chose you over your competitors, how they use your product or service and whether it solves their problems, how they purchased, when and how much.

You should also know things that don’t relate directly to their interaction with your business. You should know things like where they live, how old are they, what do they do for a living, what are their hobbies and interests, where do they get their news, where do they shop, what else do they spend money on.

The world of big data, machine learning, and artificial intelligence will allow companies of all sizes to take advantage of information to improve their business. Marketers will have new ways of reaching out to potential customers with proven ROI. And with more data, those efforts will be more fruitful.

If you don’t know enough about your customers now, today is a great time to start learning. Collect data through user behavior tracking, focus groups and studies, surveys and questionnaires, interviews and direct customer outreach. Marketing departments should put someone in charge of customer knowledge and data analysis.

You may be surprised by how much information you already have on your customers. Start asking questions internally, streamline and protect that information for later use, find the holes and begin to fill them.