Is AI Marketing Real or Just a Buzzword?

When it comes to AI, based on what you’ve seen in movies or read about in books there are a lot of assumptions and confusion about what it can do when it comes to the practicality of its application in the business marketplace.

Because of this, AI is perceived throughout the hospitality industry as a vaporware buzzword of companies that want to seem innovative and cutting edge. In the simplest terms, AI which stands for artificial intelligence refers to systems or machines that mimic human intelligence to perform tasks and can iteratively improve themselves based on the information they collect. AI works by combining large amounts of data with fast, iterative processing and intelligent algorithms, allowing the software to learn automatically from patterns or features in the data. There are four types of AI—reactive, limited memory, theory of mind, and self-aware artificial intelligence.

• Reactive AI functions the way it was programmed with a predictable output based on the input it receives. (Example: Email Spam Filters and Netflix recommendations.)
• Limited memory AI can complete complex classification tasks and uses historical data to make predictions. (Example: Predictive Personalization and Self Driving Cars)
• Theory of mind AI exists when machines acquire decision-making capabilities equal to humans. (Not fully achieved yet.)
• Self-aware AI exists when machines are not only aware of the emotions and mental states of others, but also their own. (Dependent on expanding robust Theory of Mind AI)

When it comes to digital marketing and hospitality, the Limited Memory AI is best applied through advanced algorithms to analyze historical data faster and at multiple levels. This intelligent processing is key to identifying and predicting rare events, understanding complex systems, and optimizing unique scenarios. This autonomous algorithmic driver comprises the basis of predictive personalization.?

Before we investigate the details of predictive personalization, it is important to understand basic personalization. It allows businesses to target users based on timing (date range, days of week, time of day, time zone), demand (stay dates, length of stay, booking value, and availability), travel party (number of adults, children, rooms), visitor profile (location [country, state, or city], source [Google, Instagram, etc]), visitor behavior (members versus non-members, previous interactions), and custom targeting (device, URL variables, data layer variables). This type of personalization helps to increase conversion by delivering the right message to the right person. But what it doesn't understand is the purchase intent of the user.

Therefore, predictive personalization is a two-step process whereby you apply machine learning techniques to understand user behavior, and then personalize his or her experience by automatically presenting the best content and offers for that individual.

Predictive personalization constructs a predictive score of the user based on their past behavior (before coming to the website), current behavior on the website, any interaction it has with on-site personalization messaging, and external market data. For example, there is one AI built for hotel companies that anonymously captures every event of the online user journey across numerous hotel websites across 100 countries, processing tens to hundreds of millions of data points every single day. By tracking over 150 variables about each user, the algorithm leverages machine learning to find patterns by comparing against previous users. The algorithm then makes a prediction on user behavior to identify how likely a user is to book or not. AI helps marketers determine not only the right time but also the right booking intent.

A majority of hotel bookings come from a very small percentage of visits (roughly 3%) while the rest of the 97% of users that visit the website leave without completing a reservation.? Furthermore, of the typical booking engine visitors, the lowest intent visitors (the bottom 30%), generate only 4% of the hotel's total bookings. Inversely, the 10% highest intent users generate 49% of the hotel's total bookings. Predictive personalization solves the marketing problem to differentiate website visitor intent and truly optimize marketing campaigns.?

Once implemented, predictive personalization can address two issues hotel marketing faces. Either they are not running value-targeted campaigns or they are running promotional campaigns that target everyone. A hotel can run value-targeted campaigns and drive more bookings and revenue. The solution will split promotions and uses targeted offers for low-intent users (and drive 20-30% more bookings) and targeted upsells to high-intent users (up to 30% more revenue). For hotels that are running promotions that don't differentiate based on intent, AI can optimize these campaigns and save the hotel money by splitting the campaigns and reducing incentives for high-intent users. By suppressing promotions to those with high intent, it will save the hotel up to 80% on unnecessary discounts to these specific bookers.? When properly implemented, conversion rates for low-intent users increase between 50-60 percent against a control group and high intent user conversions increase over 150% over the control group.

So when it comes to the perception of AI, it probably will remain a buzzword when people see it as synonymous with Self-aware AI. However, if the conversation were shifted to focus on a single type of implementation as it relates to predictive personalization, AI is not only real, it is currently being successfully deployed in the marketplace revealing and driving hidden opportunities to maximize conversion, bookings, and revenue.

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Michael J. Goldrich, THN's Chief Experience Officer.? After spending nearly two decades in digital marketing and project leadership for multimillion-dollar brands and startups, Michael knows what truly drives website engagement and conversions – and it’s not by leveraging the marketing trend of the month. It’s how well you connect with the potential guests you’re trying to help and communicate your understanding back to them.

Learn more about The Hotels Network Here:?https://www.thehotelsnetwork.com/en/

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This article originally appeared in the spring edition of Hospitality Upgrade.