• by J. Walker Smith , Op-Ed Contributor, November 27, 2024

Answering this question in the affirmative puts you in fraught company. Many have proclaimed the end of marketing before.

In a book on the cusp of the new century, maverick Coke CMO Sergio Zyman announced the end of marketing as we know it. The primary focus on creativity would give way to a primary focus on sales, he said. But since then, we’ve rediscovered the primary place of creativity in driving sales.

Which is precisely why, in his pandemic-era book, social media maven Carlos Gil declared the end of sterile digital marketing based on clicks and views and the need for more human connections. Yet, digital marches on, and along the way, has invented ways of humanizing engagement.

Even more than the end of marketing, there have repeated declarations of a marketing revolution at hand. From Robert Keith, ex of Pillsbury. From Kevin Clancy, ex of Yankelovich and Copernicus. From Michael Ray, ex of Stanford. From the one-to-one gurus, Don Peppers and Martha Rogers. From the dot-com era Cluetrain Manifesto. From old media like Newsweek and from new media proselytizers like CES. Just to mention a few.

Despite all this sound and fury, the core ideas of marketing have endured unchanged. No end. No revolution. But maybe it’s different this time with AI. So, with a bit of trepidation and all the obligatory caveats, let me offer some thought-starters about AI as the end of marketing.

AI for Consumers

Some clarification first about what I have in mind when I’m talking about AI. Not what marketers are doing with AI, which is largely efficiency related. It is all about improving existing processes, channels and conversion.

AI for consumers will also be used for efficiency. But it will have the effect of removing people from marketing and shopping. Stripped down, the consumer journey moves from consideration to evaluation to purchasing to usage, and then back again. When AI mainstreams as a consumer tool to handle each of these steps (including things like biometric monitoring during usage), the consumer is inherently less involved.

AI will not be a complete substitute for consumers in every category or every decision, but AI will be used regularly as an assistive tool. As AI matures and improves, more and more people will use it to save time and reduce risks. That will make AI the consumer. As I have preached since 2013, marketing in a future of smart technologies is “advertising to algorithms.” Which means an end to marketing as we understand it.

AI means an end to consumer-centric marketing

This is a foundational concept in marketing. But it is derivative. Marketing is consumer-centric only by task, not by definition. That task is changing.

To paraphrase the late Harvard marketing guru Ted Levitt, consumers don’t buy products, they buy solutions. And thus, Levitt says, companies are in the problem-solving business. That’s the corporate purpose. The purpose of marketing derives from that.

Traditionally, marketing has put consumers at the center because, historically, consumers did everything—watched ads, visited stores, made decisions, assessed experiences, etc. But as consumers use AI for much or all of their shopping and usage, AI will be the driving force at every point of contact.

Marketing will have to target AI in order to support the broader business purpose of solving people’s problems. Meaning that marketing will have to shift from consumer-centricity to AI-centricity. A business must continue to be consumer-centric, but in support of that, marketing will have to put AI at the center.

Marketing will have to influence AI to influence consumers. Which means that marketing will have to figure out what persuades AI rather than what persuades consumers. Consumers will always be the end users, but to get solutions into the hands of consumers, marketing will have to be AI-centric.

AI means an end to segmentation

Part of AI’s promise is an enhanced ability to customize offerings and communications. This is an age-old marketing ambition, so we should take a show-me approach to this. But the ability of AI to process information is exponentially better than before, so the possibility of true, real-time personalization is finally on the table.

If AI can realize the promise of customization, then segmentation will be beside the point. We often forget that segmentation has always been understood as a stand-in for personalized products and advertising—the best we could do for now on the road to customization. Segments are a halfway step of customization. Not perfect, but at least a group of like-minded customers who share an affinity for a particular message or feature that is less well-liked by people who are not part of that segment.

The narrower and more focused the segment, the better. Although with greater specificity, cost considerations eventually come into play as a limiting factor. But if AI can facilitate affordable personalization at scale, then it means an end to segmentation.

AI will put loyalty back into the marketing vocabulary

The debate about loyalty versus penetration as the better way to grow has settled out on penetration as the thing to do.

Penetration is a leaky bucket idea. Customers come in but eventually leak out and thus must be won back again with penetration strategies. The bucket is best kept full with more water at the top, not with less water out the bottom.

Loyalty is an idea about plugging the holes in the leaky bucket. But well-researched experience has found that loyalty strategies can’t do this well enough to keep the bucket full. Only more water works, not plugging holes.

If AI succeeds at personalization, though, loyalty will need to be reconsidered. Even more than that, in many categories, AI will be used simply to reorder. Brand choices will be repeated by AI rather than randomly made or concurrently influenced at point-of-sale. Thus, AI will maintain brand consistency. Penetration theories presume that consumers are somewhat (if not largely) indifferent to brands, which means that AI-enforced consistency will be just as acceptable to consumers as today’s inconsistency.

In fact, some tech-driven applications rely on consumers prespecifying preferred brands in advance. Then the AI app keeps repeating those preferences over and over. This would completely bypass the kind of loyalty-eroding, point-of-sale randomness that makes penetration strategies better than loyalty strategies. AI will put loyalty back into the marketing conversation.

AI will make many service businesses scalable

The knock on service businesses is scalability. Because service growth entails hiring more people. A single person cannot be made infinitely productive, and thus a bigger service business always grows with roughly equivalent costs, not with shrinking costs.

AI changes this equation because many AI applications can mimic the things that people do. Chatbots are one example. Financial advice is another. Annual medical check-ups are another. Psychological counseling is yet another. Future homes built with sensors that feed data into AI systems may not require a service visit to check on the HVAC or figure out a flickering light. Same for cars.

While service businesses will never be scalable like a digital business, AI will change the economics, thereby opening  up service opportunities. Brands will be able to roll out services and experiences more affordably as a value-add. Follow-up care and consultation could be automated and made available.

Scalable services will enable more of the marketing for brands to be embedded in the experience of service and usage. This will be particularly important with AI in-between brands and consumers during the shopping experience.

AI will make mass media more important

My final thought is not so much the end of marketing as back to the future. It is to note that as consumers delegate more to AI, marketers will not only have to advertise to algorithms. They will have to figure out how to get around algorithms as well. 

AI will optimize the match of brands and preferences. Advertising to algorithms is about the match. Getting around algorithms is about preferences. If preferences remain unchanged, then marketers will be captive to AI. But if marketers can change preferences, AI will have to change the match it makes.

It is easy for consumers to delegate digital media to AI, but harder to do for mass media. That’s how marketers can tell stories to change minds. As marketers have always done.

Focusing solely on performance at every touchpoint will eventually hand marketing over entirely to AI. Which is not bad per se. But it locks in the status quo. It is stagnant and reductive, not transformative. It reduces everything to efficiency. Again, not bad in and of itself. Just not imaginative and thus an end to marketing rather than a new beginning.