Introduction
This is the second episode of a three-part series exploring challenges and trends within the marketing and digital communications industry. The following episode will investigate the use of Artificial intelligence (AI) within SME marketing strategy.
While it’s become a cliche at this point, it would also be amiss to start a conversation about AI without first consulting the oracle that is open AI's flagship language model Chat GPT. After inserting the prompt’‘ Should SMEs utilise AI within their marketing strategy?” Chat GPT (2023) responded: “By leveraging AI technologies effectively, SMEs can improve customer experiences, boost efficiency, and drive business growth.” (ChatGPT 2023).
While this statement is broadly in keeping with many opportunities AI has to offer small businesses, it also epitomises often banal accuracy that has the potential to undermine the distinct authenticity SMEs have to offer.
In this episode, we explore the growing trend of AI within SME marketing, some of the many opportunities it offers small business owners and piece together best practices to avoid potential pitfalls.
Caveat
Jack Clark (2023), the founder of AI safety company Anthropic and former policy director at Open Ai, recently posited that AI progress followed a linear progression from 1960 - 2010, an exponential progression from 2010 - 2020 and will now start to display compounded exponential qualities that will ‘intuitively feel nuts’ over the next few years.
For this reason, researching a podcast about AI has been somewhat of a losing battle, with keeping up with the latest data and trends almost impossible. So I acknowledge that some themes explored in this episode may be out of date by the time you listen to them.
What is AI?
There are many definitions of AI, but one I found useful is “the science and engineering of making intelligent machines, especially intelligent computer programs. It is related to the similar task of using computers to understand human intelligence, but AI does not have to confine itself to methods that are biologically observable." (McCarthy 2007)
However it’s defined, AI has seen explosive uptake, with 94% of UK brand marketers already using artificial intelligence (AI) within their digital advertising (Talk CMO 2023). Given the global value of artificial intelligence is predicted to grow by 360% by 2030 (Statista 2023), AI is a future marketing trend.
AI adoption has not escaped the attention of SMEs. A recent survey of 1872 SMEs by IT research company Techaisle (2023) found 41% of surveyed participants were prioritising AI for improved marketing integration within a broader strategy.
When presenting these findings, market researcher Anurag Agrawal (2023) acknowledged that given the infancy of AI, the results are more likely signs of intrigue than a fundamental change due to AI’s lengthy time at the ‘peak of inflated expectations within the ‘hype cycle,’
An Opportunity For Innovation
Despite the introduction of GDPR in 2018 (GDPR.EU 2019) and the imminent end of Google’s 3rd party cookies in 2024 (Privacy Sandbox 2023), the rate of data collection continues to grow exponentially and is predicted to have expanded to 181 Zettabytes by 2025 (Statista 2021).
While big data offers many opportunities for SMEs, such as improved customer insight and more informed marketing tactics, these benefits are often constrained by the ability to extract and use findings (WEF 2023).
While many small businesses generate and manage large amounts of data, they frequently lack the proficiency to collect and analyse its results. This was evident in a recent World Economic Forum (2023) study. A survey of 111 SMEs found that 64% of respondents expressed difficulty using their data effectively, and 74% cited challenges extracting the full value of their data.
AI offers an opportunity for SMEs to fully utilise their data and make more informed marketing decisions, despite currently lacking this skill set. For example, research shows that using AI to automate and speed up extensive data analysis can empower SMEs to make more informed decisions and gain a competitive advantage (Gandomi, Chen & Abualigah 2023).
Risk Reduction
In episode one, we explored some of the findings of a recent research report conducted for this website into Micro-SME decision-making during COVID-19 (Rawling 2023). The report observed a reluctance from participants to take on risks when results not easily measured.
While only representing a small sample group, the finding is not uncommon. For example, research by the World Federation of Advertisers (2022) concluded that agency clients' primary concern was the absence of observable, objective KPIs. It is essential to acknowledge that while the sample group was more significant, comprising 90 participants, it was not limited to SMEs.
AI has the potential to present actionable data insight in an understandable format. This can give SMEs the confidence to seize riskier opportunities but also avoid potential dangers.
A 2022 research study exploring AI and risk mitigation during COVID-19 found a correlation between AI use and reduced business risk to SMEs. The findings reveal this correlation irrespective of turnover, business assets, age or innovation. The report highlights the impact of AI marketing applications to target customers better and forecast finances more effectively (Drydakis 2022)
While it merits attention that the study uses a novel method of measuring and forms hypothetical assumptions if proven valid, the finding poses a potentially momentous outcome for SMEs that could protect many businesses during the next recession.
The peril of mediocrity
Notable AI critic Sam Harris (2023) recently stated that “With GTP-4, it’s almost like we’ve done our first above-ground nuclear test, and we’ve seen the flash of very impressive AI, and now many of us are just waiting for the blast wave of hoaxes and lies to knock everything over.’ (Harris 2023) While Harris alludes to concern about fake news and trusted sources, his admonition merits concern for marketing too.
In a recent article for WARC (2023), Sam Peña-Taylor (2023) argues that the detail, utility and expert opinions many seek when searching online run the risk of being drowned in mediocre AI-generated content.
Research exploring the relationship between marketing and small businesses concluded that bespoke communication gave SMEs a competitive edge, increasing perceived customer trust, loyalty and likeness to share word of mouth (Gilboa. et al., 2019).
Generative AI can instantly produce large quantities of very well-written content. However, in a ‘tragedy of the commons’ type scenario where every business produces the same content, SMEs risk losing the distinct USP.
Conclusion
In their annual report, the international council for small businesses (2023)
posits that while AI offers SMEs an opportunity, due to its early stages, SMEs should reflect on the pros and cons before implementation.
As explored in this episode, AI offers many possibilities for SMEs. While there is a concern in the marketing industry about the likelihood of roles being replaced by AI, WEF (2023) and the OECD (2021) research shows that using AI can take on tasks many SMEs currently lack the skills set for.
Yet it’s use must not come at the cost of the unique expertise and value that SMEs bring or focus on good business practices.
Given Jack Clarks' (2023) prediction of ‘‘intuitively nuts’ progress, we are likely to see in coming years, SMEs take the advice of Jef Bezos (2007), who stated. :“It helps to base your strategy on (...) “What’s not going to change in the next five to ten years?”,(...) if you base your strategy first and foremost on more transitory things (..)—those things are going to change so rapidly that you’re going to have to change your strategy very rapidly, too.
Marketing professor Mark Ritson (2023) recently stated that “marketing has formed an unhealthy obsession with the pornography of change at the expense of doing a good, basic job in the present.” This is an important point that in accessing the benefits of AI, SMEs should not lose sight of their essential business function to serve the needs of customers.
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