How ChatGPT will affect Retail Media?

The launch of ChatGPT by openai.com is seen by many experts as yet another major turning point in the technology and digital industry. Predictions indicate that this kind of artificial intelligence will significantly disrupt the job market and potentially make certain professions obsolete in 2023. Some even believe that Google is holding back the release of a similar AI because it would threaten the company's search business model. Maybe ChatGPT will do to Google what Google once did to Yahoo. Time will tell…?

AI has been used in text generation and chat conversations for years, but the major improvement steps that ChatGPT has brought up are twofold in my opinion.?

First, it has a deep understanding of the context and perspective of someone asking a question, even while following up like in a real conversation. Siri and Alexa look like from the 90s in comparison.

Second, it has the ability to merge different areas in a creative manner while producing decent quality output. In addition to some funny examples, ChatGPT has the potential to revolutionize more complex areas like software development by supporting tasks such as code transformation, debugging, and even complete software creation through simple command input. What used to take days of skilled work, can now be done within hours by simple descriptive text input.

So overall, ChatGPT is poised to have a significant impact on a variety of industries in the near future.?

How does ChatGPT fit into the Retail Media industry?

But how can a language model have an impact on the retail and media industry, specifically as ChatGPT is only trained on public data before 2021?

Well, let’s try it out:

Yes, this is a very simple example. The main point is, AI finally gets more “tangible”, I would say more human-like and hence more trustworthy (i know, also more scary).?

AI based results of offer recommenders have long been better than heuristics or manual defined rules, but only for specific defined goals. The retail world, however, is more complex. From my experience AI has always been seen as very skeptical in retail.

The challenges in retail are optimization problems with multiple contradicting goals and various side conditions: revenue, profit, customer loyalty, growing specific categories, drive-to-store vs. ecommerce, pushing private labels, business rules, stores and regions, etc..?

With retail media another complex goal must now be added to the equation. Many large retailers struggle with a constant tension between showing organic product listings with the goal to make sales revenue or showing advertising to generate (guaranteed) ad revenue. Too many ads might chase away shoppers, specifically when ads are not relevant. But ads are increasingly essential with its additional high margin revenue.

While ChatGPT is not specifically made for recommending offers or ads, I believe we are entering into a new era of AI technology. While this technology will become even better to optimize having multiple goals in mind, it will likely be also better in reasoning why it does so. Just like a very smart coworker. Thus acceptance will increase.

In my point of view this could become game changing in the retail and ad industry.?

What does it mean for Retail Media Networks??

The reason for the uprise of retail media in recent years is mainly the potential to utilize and monetize retailer’s data. Data that Google and Facebook don't have for their ad platforms. Retailers who are able to efficiently leverage and monetize their data will have a competitive advantage and will significantly benefit from Retail Media.?

Large retailers may have an easier time with this, as they have more data to work with. However, the arrival of new artificial intelligence technologies may shift the balance of power and will allow smaller retailers to also leverage their data just as well.?

As a retailer I would ask myself: Do we have the infrastructure to constantly replace components without hurting the whole system? Can we try new Ad Ranking algorithms without much effort? Can we use different AI models for different placements? Are we in control of how the ad ranking algorithm works?

While ChatGPT will likely not be used directly for Retail Media Ad ranking, we will certainly see a new wave of AI, better recommender systems… systems that will dramatically better optimize for retailers than humans, and with good reasoning why.?

Flexible and adaptable Retail Media technologies will win

At retailmediatools we have focused on modularity and flexibility from the very beginning. In our system most components can be used completely separated (due to microservice and API first infrastructure). While we built our own AI based ad ranking, we knew there will be retailers who trust their own ranking algorithm more or there might be specific retail industries that require some specialized external AI models. That's fine for us, we have built our platform open enough to allow such integrations.

In our system each ad placement can be individually configured to use a different ranking formula. A ranking formula can be fed from different AI models. A retailer could have an own AI model that works better for drive-to-store goals on an email ad placement, while our basic AI model can be used for the sponsored product listings.?

What is your opinion? Will ChatGPT also affect areas like Retail Media? If so, how will it affect it??