Artificial intelligence can thank Hollywood for its bad rep. Movies like "Ex Machina" and the "Terminator" series conjure up futuristic doomsday scenarios where intelligent machines wreak havoc on humans.
However, in real life, humans are already surrounded by artificial intelligence. Amazon and Netflix recommendation engines suggest books or movies based on previous selections, Google Now reroutes drivers around traffic accidents on the commute home, and smartphone digital assistants like Apple's Siri and Microsoft's Cortana answer questions about the weather and sports scores.
Brands are using artificial intelligence to build better customer experiences and they're just getting started. IDC predicts that global spending on cognitive systems will reach $31.3 billion by 2019. Accenture found that AI could double economic growth rates by 2035 and boost labor productivity by 40%.
While there's an undeniable lure of AI delivering cost savings for businesss, the greater goal for marketers is using it to make the brand experience more personalized and predictive.
"It's one thing to redesign a digital experience, or make over a website or an app, but it's quite another to add the power of thinking and cognitive computing into embedded experiences," said Robert Schwartz, VP-global digital marketing at IBM.
Probably the most public face of AI today is IBM's Watson, the cloud-based cognitive engine "that can think like a human" that uses natural language processing and machine learning. Watson now works with dozens of brands in 45 industries across 20 countries.
Campbell Soup Co., Unilever, Toyota and GSK Consumer Healthcare are using Watson Ads, a cognitive system for advertising. Incorporating data from Weather Company, which IBM bought in 2015, Watson Ads helps brands offer relevant one-to-one brand experiences built on new consumer and product insights uncovered by Watson. Consumers can now ask Watson for Campbell Soup recipe ideas with answers built around weather, personal preference, past choices and even groceries on hand.
North Face is working on a prototype with Watson to match customers to the right gear. Sesame Street and Watson are teaming up to deliver personalized learning for children.
Not all brands using AI are Watson customers, of course. Insurance and financial services company USAA uses AI across its brand, with its largest effort around its digital enhanced virtual assistant named Eva, said Zack Gipson, USAA's chief innovation officer. Today USAA customers can ask Eva questions to help them search and navigate for information; however, the future opportunity is to deliver an even more proactive interaction, Mr. Gipson said. Eva could, for instance, continually evaluate and review a USAA customer's financial information and then reach out with personalized money management suggestions.
BMW is also using AI to improve its owners' experiences. BMW Connected is an opt-in system and personal mobility companion that gathers data around customers and their cars. It can do things like find and share destinations with the car, schedule trips, avoid traffic, find a parked car or nearby gas stations, lock or unlock the car from anywhere and give walking directions once parked. BMW Connected launched in March as a mobile app, but has since been integrated for Apple Watch and Amazon Alexa.
Customer feedback so far has been positive, with the most common request, in fact, asking for more features, said a BMW spokesperson.
Gartner Research Director Augie Ray pointed to KLM, the Netherlands-based air carrier, as another brand using AI in a quest to improve efficiency in social customer care. Its system can recommend answers for 60,000 customer questions and improves in accuracy as it collects more data and monitors customer interactions. He said currently about 10% of its answers are sent without any human editing, but that's expected to increase as the AI learning improves.
Josh Sutton, global head of data and artificial intelligence at Publicis.Sapient, has been leading the AI-specific practice established by the agency more than a year ago, although he's worked on advanced technologies for 20 years.
AI at its core is about helping humans work better, he said. While there are many current examples of brands using AI, looking forward, he pointed to several key emerging areas in customer experience: generating insights for optimal targeting, determining what customers want beyond simply sentiment analysis, and the ability to interact with customers in the same way a human salesperson would.
"Some of the most important things about leveraging AI revolve around the experiential design. Technology is evolving incredibly rapidly and data assets are growing exponentially, but it still comes down to building a great experience for the customers," Mr. Sutton said. "The internet gave us access to on-demand data whenever we wanted it and wherever we wanted it. What AI layers on top of that is on-demand access to insight and actual answers to questions whenever we want and wherever we want."
Of course, there's a danger in going overboard. The idea of too much automation—the creep factor—is referred to as the "uncanny valley" in the AI world. That's when brands push too far in trying to be human and instead turn people off.
Gartner's Mr. Ray said brands have to be careful to avoid the uncanny valley, but also said that consumer attitudes will change as AI advances.
"Today, people insist they'll never trust a self-driving car or speak with an AI customer service rep on the phone, but as the technology improves and people gain more experience, their expectations will adjust, and the risks to brands will diminish," said Mr. Ray.