Many speak of Artificial Intelligence (AI) as being a force of the future – unaware that these intelligent beings are already manifesting themselves in their daily lives. These human-like machines are undoubtedly here to stay, and they will continue to grow, become more intelligent and have a greater influence in our day-to-day lives.
However, Artificial Intelligence is not the homicidal humanoid who seeks to conquer this planet, as depicted in films and series. It is far more understated than that. AI fear-mongering and scepticism is nothing more than mere speculation, which is only natural.
As Meenajshi Nadimpalli notes, the “tension resulting from accepting aspects of artificial intelligence relates to its confusing nature,” so it also our duty to demystify what we call AI. We cannot, however, stress it enough; artificial intelligence has already cemented its authority in the digital age. In fact, you probably interact with it daily, even if it’s in its most subtle and modest form. Isn’t it, therefore, time for consumers to know what exactly AI is, and how it will affect our lives?
Herein, we will stick to a basic definition: “Artificial Intelligence is the ability of a computer or computer-controlled robot to perform tasks commonly associated with intelligent beings.”. In other words, these supercomputers have an incredible ability to adapt to change. Despite the popularity of AI, there is a demonstrable ‘knowledge gap’ when it comes to this new technology. In a Pegasystems study ‘What Consumers Really Think About AI: A Global Study’, which surveyed 6,000 adults, participants were asked how much they really knew about artificial intelligence; more than 70 percent of all respondents confidently said that they understood AI, while also being unable to identify some of AI’s most basic tenets. Intelligent assistants, spam email filters, search engines, online shopping recommendations are all common examples. The probability that you have interacted with AI today is almost certain.
If you are a fellow computer enthusiast, you would’ve noticed by now that the advertisements which appear on your screen are often suited to your own preferences. This is the most fundamental skill artificial intelligence has developed to influence consumer choice and behaviour. In simpler terms, “AI plays a significant role in the background, monitoring consumer sentiments on the internet and social media, ” claims Nadimpalli.
Subsequently, many marketers are now turning to artificial intelligence to transform big data flow into valuable consumer insight. As always, there are risks involved, as witnessed with Cambridge Analytica’s use of personal Facebook data for political means and the continuous allegations made against the company and its CEO Mark Zuckerberg.
How does AI achieve this and does it breach my privacy?
As one would expect, the line between data analytics and data privacy is admittedly a blurry one. Artificial intelligence essentially uses a variety of statistical techniques from the branch known as ‘Predictive Analysis’. Originally, advertisers have relied on methods such as market research, web analytics, and data mining to build consumer profiles for understanding and influencing needs. With AI, it is now possible to understand emerging wants and needs in real time—as consumers express them online—and build richer profiles more quickly.
The digital age is embodied by the abundance of data and information collected, stored and sold with the use of our technological gadgets. Nowadays, ‘big data’ is a fashionable subject for the tech literate. In AI terms, big data is essentially a “large volume of transaction-level data that could identify individual consumers by itself or in combination with other datasets,” as mentioned by Jin. Since data is stored and collected, it could ultimately lead to a multitude of privacy concerns in the event that the technology is placed in the hands of the wrong people. Big data storehouses are a prime target for hackers and scammers; consequently, identity theft is where consumers are most at risk.
“According to the Bureau of Justice Statistics (BJS), identity theft affects 17.6 million (7 percent) of all U.S. residents age 16 and older (Harrell 2014). Consistently, identity theft is one of the biggest consumer-complaint categories – first in 2014, second in 2015 and third in 2016 (FTC 2014, 2015, 2016). In 2016, identity theft accounted for 13 percent of consumer complaints, trailing behind debt collection (28 percent) and imposter scam (13 percent), all of which could feed on lost personal data (FTC 2016).”
–Ginger Zhe Jin
We must, therefore, ask ourselves whether AI can save us from data misuse. We cannot afford to undermine the devastating consequences linked to the misuse of data. It is thus up to the rational consumer to deliberate whether he can trust AI to reap the benefits from future data use. And since firms across the world are now seeking to adopt AI algorithms for data purposes, a potential leading concern “is that firms are not fully accountable for the risk they bring to consumer privacy and data security” (Jin 2017).
According to Jin, full restoration of accountability can be achieved by overcoming three obstacles: the difficulty to observe firms’ actual action in data collection, data storage and data use; (2) the difficulty to quantify the consequence of data practice, especially before low-probability adverse events realize themselves; and (3) the difficulty to draw a causal link between a firm’s data practice and its consequence.
It’s important to note that AI deals with two different types of input data: Structured and unstructured. Structured data is more ‘traditional’ as it encompasses “standardized datasets, such as customer demographics or web-browsing history. AI, with its enormous computing power, runs complex computations on large volumes of such structured data and often produces results in real time” (Kietzmann 2018).
On the other hand, unstructured data accounts for “about 80 percent of the approximately 2.5 billion gigabytes of daily user-generated data are unstructured (Rizkallah, 2017) and provided as written texts, speech, and images. AI’s ability to process large volumes of this type of data—and to do so very quickly—is what distinguishes it from traditional computing systems” (Kietzmann 2018).
What these clever machines essentially do is ‘mine’ your data, meaning it picks supersets of information from various sources, and then clumps this information to alert you of patterns and correlations you hadn’t previously even thought of. With the help of machine learning, advertisers will be able to collect consumer data from many sources undetected, combine those data, and mine them to deliver on-the-spot consumer insights.
With all of this in mind, is there a need for advertising in a world where a machine knows exactly what you want? If you want to buy a car, you won’t have to look for one, as you can simply ask Google and it will find the perfect one for you. Consumers will ultimately be suggested superior recommendations for the things they want and have access to better products and services. This has the potential to make life healthier, more entertaining, more convenient and less stressful. In ‘What Consumers Really Think about AI: A Global Study’ (Pegasystems), the majority (38% of participants) agreed that AI can provide the same, if not better, levels of customer service than a human can.
As suggested earlier, artificial intelligence could potentially impact consumer privacy, fairness, bias, manipulation (better ads, false information). It is also stipulated that AI could, in theory, reduce the possibility of consumer purchase manipulation and vulnerability, by aiding customers on their buying experiences, ensuring that they make sensible buying choices because it allows marketing, gift selection, and virtual dressing (Nadimpalli 2017). Consumer data privacy is undoubtedly the biggest challenge AI will face in years to come. There are also many who believe that artificial intelligence can help bring sanity on matters of privacy, cybersecurity, fraud, individual financial security, etc.
Artificial Intelligence for retailers?
Customer service is an imperative part of any retailing business as it determines consumer brand loyalty. Algorithms escalate the capacity to see business suggestions and decipher results like higher sales and lower costs through customer service, item stock, and staffing. Platforms such as Facebook enable retailers to spare task costs connected to client benefit through incorporating chatbots by means of Facebook Messenger. As a result, “Artificial intelligence replaces the conventional customer service agent answering questions by sending links, images, and texts and only uses human respondents if the issue is more complicated” (Nampdilla 2017). Further, AI helps retailers in recruiting fitting contenders for contracts by evaluating their traits and execution history, which subsequently lowers hiring costs and attrition. They can likewise utilise the platform to connect more with candidates, offer customised criticism, updates, and approaching recommendation.
While AI has positively impacted online retail, traditional retail shops are in desperate need of a technological revamp. Our beloved high street retailers have seen a consistent decline in sales due to the accessibility, price, and service associated with online shopping. With the use of AI, outdated shops could restore faith in consumer attitudes towards traditional retail. For instance, shops could develop on-the-spot information via AI generated apps, which allow customers to compare and view adequately the items they wish to buy. Once a customer enters the store and opens the store app, the in-store sensors can identify and track the customer activities and behaviors.
In addition, artificial intelligence can now gain crucial customer insight. This is also known as ‘intelligent customer service’, where AI-powered automated assistants can study customer behavior and help build confidence in their purchase decision by recommending products based on the shoppers’ needs, preferences, and fit. If that isn’t enough, voice-enabled cameras can recognise and interpret facial, biometric and audible cues. Capturing shoppers’ in-the-moment emotions, reactions or interactions vis-a-vis the product can, as a result, help deliver appropriate products and recommendations. Again, this is perhaps another privacy issue which many may object to.
Despite the positive prospects associated with AI and customer service, public opinion on whether artiﬁcial intelligence devices can outperform traditional human services tend to be negative. In the Pegasystems study, only two percent more believed that AI has the potential to improve customer service. In another study, two economists from Bucharest Academy of Economic Studies concluded that consumers prefer the classical devices over the technologically advanced ones (Pelau, Ene 2018).
The greatest impact AI currently has – and will have – on consumer behaviour and choice will be its manipulation of advertisements and its presence in customer service. Artificial intelligence has revolutionised the way advertisers understand and guide consumers.
Despite public scepticism, we would argue that the ambivalence towards AI is simply a lack of education on the matter. Once we overcome this ‘knowledge gap’, we believe the choice to switch to AI will be a no-brainer.
It is undeniable that this fast-paced technology has the potential to make consumer lives far easier. Its journey, however, won’t be as plane sailing since it’s confronted with many challenges. New ways of consumer-generated data mining will drive consumer insight, and AI will become the ultimate test for privacy.
This article was first published by Max de Rosnay @ Consumer Choice Center
Max de Rosnay is originally from London, UK. He is currently completing a Bachelor of Arts and Science at the University of Sydney, where he’s majoring in philosophy and specialising in metaphysics and logic. Previously, Max worked as Research Analyst at Canaccord Genuity and as a journalist at the Daily Express. Max loves researching and writing and has always been politically inclined. Max is also fluent in French and speaks proficient Spanish.