CustomerZone360 NEWS

Free eNews Subscription

The Marketing Conundrum: Budget Constraints and the Rise of Generative AI

By Erik Linask May 22, 2023

The marketing landscape is evolving at an unprecedented pace, driven by innovative technologies that are disrupting traditional strategies and practices. Marketers are confronted with new challenges and opportunities, one of them being how to effectively engage customers and prospects using these tech advancements.

As this shift takes place, however, not all marketers feel equipped with the necessary resources to effectively execute their strategies. A recent Gartner survey revealed that a staggering 71% of CMOs believe they lack the sufficient budget to fully realize their marketing strategies for 2023.

In the rapidly changing digital marketplace, budget constraints can present a significant hurdle for marketers. This sentiment resonates with Gartner's findings, demonstrating a pervasive concern among CMOs, the majority of whom (75%) echo they feel pressured to reduce martech spending. 

Nevertheless, the rise of innovative marketing tools and technologies, particularly generative AI, might provide a cost-effective solution for marketers struggling to make the most out of their limited resources.

The challenge is that marketing budgets have remained largely flat as a percentage of overall corporate budgets, meaning a greater investment in technology means cutting costs elsewhere.  By and large, this seems to point to labor cuts, based on Gartner’s research, while technology is the single greatest area of spending increase.

“Like gamblers looking to write-off their losses with the next bet, CMOs are attracted to the allure of newer technologies, no doubt amplified by the chatter around generative AI,” said Ewan McIntyre, Chief of Research and VP Analyst in the Gartner Marketing practice.  “They are hungry to see its potential to transform marketing campaigns and content creation and, while this hunger is understandable, it illustrates the sunk-cost fallacy that more tech is always better.”

According to an analysis from IDC, a global market intelligence firm, spending on AI systems is projected to reach $154 billion next year.  Much of that growth is expected to come from marketing groups, which anticipate massive and immediate benefit from generative AI’s potential to transform customer engagement strategies.

Generative AI certainly has the potential to revolutionize marketing as we know it.  It can generate creative and unique content from images to text to music.  For marketers, this means the ability to create personalized content at scale, an aspect that could considerably alleviate budget constraints.

Indeed, many companies have begun to test the value of generative AI in marketing.  They are leveraging the latest buzzword in tech to produce personalized ad campaigns, tailor-made content, and predictive models of customer behavior.  Generative AI tools can not only optimize content creation, but also open up possibilities for much more robust data analysis and insights, improving decision-making and strategy execution to drive customer experiences.

With data seen as the new currency, companies that harness the power of generative AI to make the most of the volumes of data they collect seem to be creating a competitive edge for themselves.  They can interpret vast volumes of data to gain actionable insights about customer preferences, engagement, and behavior, and streamline operational efficiency by automating repetitive tasks, freeing up valuable time and resources for strategic planning and execution.

But, does it come at a cost, especially during a period of financial uncertainty?  McIntyre thinks so:  “The willingness to let the majority of their martech stack sit idle signifies a fundamental resource disconnect for CMOs,” he said.  “It’s difficult to imagine them leaving the same millions of dollars on the table for agencies or in-house resources.  This trade-off of technology over people will not help marketing leaders accelerate out of the challenges a recession will bring.”

That said, the conversation isn’t solely about Generative AI.  Other technologies have also been contributing to the marketing evolution, but some of them are likely to fall into the idle martech stack with GenAI taking the lead as the shiny new toy.

Artificial Intelligence (AI)

AI is being used to provide insights into consumer behavior and map the customer journey across all marketing mediums.  It's automating core marketing activities like lead generation, behavioral analysis, personalization, customer relationship management, and other repetitive tasks.  AI is also used in conversational marketing using live chats and chatbots for 24/7 customer interaction and data collection.  Moreover, AI aids in audience segmentation and manages targeted paid marketing, such as social media management (SMM) and pay-per-click (PPC) campaigns.  Certainly not least, natural language processing (NLP) enables real-time customer interactions and sentiment analysis, delivering relevant and compelling experiences at scale.

Extended Reality (XR)

XR, including augmented reality (AR) and virtual reality (VR), is delivering immersive CX and giving a boost to engagement.  Marketers are using XR for geo-fenced elements for location-specific targeting, virtual events, and storefronts.  XR technologies, in conjunction with technologies such as drones, interactive billboards, and holograms, are advancing experiential and guerilla marketing activities.  Businesses are also using hybrid events to reach their worldwide audience and measure marketing attribution.  Ad campaigns with 360-degree videos, holographic projections, and drone light shows are also being leveraged to create high-impact experiences.

Social Commerce

Social commerce has become an increasingly popular medium for marketing and advertising, leveraging the power of social media platforms to sell products directly.  This trend integrates online shopping and social media, providing a seamless experience for consumers who can purchase products without leaving their social media platforms.  It’s about meeting customers where they engage most.

Consumer Privacy

With increasing concerns about data privacy, marketers must be focused on transparent, intent-based marketing solutions.  Contextual targeting and more effective utilization of first-party data are key to navigating cookie-less marketing and privacy hurdles.

Web3 Marketing

Web3, or the decentralized internet, is also growing as the next iteration of the internet.  Blockchain, NFTs, and the metaverse are parts of the Web3 world and are being used to deliver engaging consumer experiences to global audiences with increased security.

Big Data & Analytics

Marketers are leveraging big data and analytics to gain insights into customer behavior, preferences, and trends, which can inform marketing strategies and campaigns.  These same tools also help assess the ROI of different marketing programs and strategies.

Low-Code/No-Code Platforms

Marketing teams aren’t programmers or developers, and new low- and no-code platforms make it easy for them to execute new strategies, including automating ad scheduling and performance analytics.  They enable non-technical marketers to create applications to support their marketing automation systems and campaigns.

Voice Marketing

Don’t forget voice.  Despite the prevalence of other engagement channels, voice-assisted selling is highly popular and can delivering targeted advertisements at scale.  This includes using popular voice assistants like Amazon Alexa, Google Assistant, and Apple Siri for marketing and commerce – again, allowing customers to use their preferred and familiar tools.

Omnichannel Marketing

With the multiple engagement channels available, it’s important to create consistent and seamless customer experiences across all platforms, interactions, and touchpoints.  From from brick-and-mortar stores to digital platforms, omnichannel marketing ensures drives enhancing customer engagement and a boost in sales.

For sure, these tools are neither mutually exclusive – including Generative AI – and a strategic combination can help marketers overcome budget constraints, while enhancing customer experience and engagement. By embracing generative AI and other digital tools, marketers can better align their strategies with customer needs and expectations, and ultimately drive business growth.

It’s a tricky landscape, at best, with budgets shrinking or staying flat and, as the dust settles, although marketers are faced with challenges, technology offers exciting opportunities.  Companies must be willing to invest in these emerging technologies and rethink traditional marketing strategies.  The integration of generative AI and other tech tools into the marketing mix can help CMOs navigate their budget constraints and ultimately execute more effective and efficient marketing strategies.  The question is, how can they do it without also sacrificing their human marketing teams? 

It’s not a simple one-for-one replacement.  If there’s one thing we’ve learned, it’s that AI can be a very useful tool, but it needs human interaction to realize its full potential.  CMOs and their teams will need to be agile, creative, and strategic in their approaches to innovative technologies like GenAI.  But, it also cannot be ignored.  The future of marketing lies not in the constraints of the present, but in the promise of technological innovations yet to be fully explored and the marketing teams that figure out how to best mix the human and machine elements will see the greatest successes.

Edited by Erik Linask
Get stories like this delivered straight to your inbox. [Free eNews Subscription]

Group Editorial Director

Related Articles

Study Finds Strong Correlation Between Hotel and Retail Personalization and Spending

By: Tracey E. Schelmetic    2/27/2024

Enterprise experience platform solutions provider Medallia, Inc. recently announced the findings of its new research report, "Understanding Personaliz…

Read More

Unmasking the Menace: How Deepfakes Pose Phishing Attacks on Customer Service

By: Special Guest    2/27/2024

Deepfake scammers are coming for your customers. As AI becomes increasingly sophisticated, cybercriminals are creating deepfake content that is increa…

Read More

CallRail Adds AI-Powered Analytics to Further Understand the Customer Journey

By: Tracey E. Schelmetic    2/27/2024

AI-powered lead intelligence solutions provider CallRail has announced AI-driven, self-reported attribution capabilities as a part of its innovation p…

Read More

Flirting with Chatbots? Americans are Increasingly Comfortable Interacting with AI

By: Tracey E. Schelmetic    2/26/2024

Infobip recently commissioned a survey that shed light on Americans' interactions with chatbots, uncovering some intriguing insights into the evolving…

Read More

Twilio Report Finds Increased Awareness on the Value of Prioritizing Data Quality

By: Tracey E. Schelmetic    2/26/2024

A new report from Twilio Segment, the company's fifth annual Customer Data Platform Report (which is based on the findings of anonymized usage data fr…

Read More