New AI marketing service aims to help brands avoid stereotypes

When digital marketing veteran Larry Adams served as a senior advisor on billionaire and former mayor Michael Bloomberg’s 2020 presidential campaign, he had nearly unlimited funding at his disposal. But there was one thing money could not buy: the data needed to reach audiences of color with messages that would resonate. “When the stakes are this high, how could the information not be there?” he wondered. His New York-based startup, X_Stereotype, aims to fill that gap. The platform employs AI-powered software trained on more than 100,000 focus group interviews. It analyzes marketing content, including words and images, and predicts how it will be perceived by different audiences based on factors including race and gender. It can evaluate anything from a political speech to an Instagram post, email message, television commercial or movie poster, Adams said. Charging about $1,000 per campaign, X_Stereotype’s AI technology analyzes the client’s marketing content to produce a scorecard rating the performance on measures including perceived racial bias, inclusivity (does it appeal to a diverse audience?) and purchase intent. It also flags potential problems. “You’re not going to make everybody happy, but you certainly don't want to trigger people in a negative way,” Adams said. The company, which launched in February 2022, has 23 clients, most of them major brands such as SC Johnson, Procter & Gamble and American Express. Its very first customer, the Bob Evans brand, said working with X_Stereotype has sharply reduced the time it takes to vet new ideas and creative. It has also flagged potential issues, said Ciare James, Bob Evans's VP of brand marketing. The brand is currently using the service to help shape a new national marketing campaign for its full line of grocery products ranging from fresh sausage to heat-and-eat pasta dishes, for example. An analysis of a set of proposed television ads produced a poor score for perceived bias. “It was a hilarious spot, it showcased the food quite nicely,” said James. But the analysis revealed that some audiences felt it relied on cultural appropriation. “It was very eye-opening,” said James. “We know that we're well-intentioned … But in doing the research with X_Stereotype, it was helpful for us to get even sharper and understand where some watchouts might be that weren't immediately obvious to us.” Based on this feedback, the brand team discarded one of the ad ideas and is tweaking another for further feedback. X_Stereotype which has four employees, declined to provide revenue figures, but Adams said the company is operating at an 85% profit margin. Nielsen, the global leader in audience measurement, data and analysis, operates in 55 countries. Now privately held, it reported $3.5 billion in revenue in 2021. How to slay the giant The first challenge for Adams—who had a 35-year career leading digital strategy for companies including AT&T and WarnerMedia—was to develop the AI technology and consumer panel data to train it on. He tapped his retirement savings to do so, spending in the “mid six-figures” to hire neuroscientists and psychologists to write surveys, translate them into variables and create equations. He and co-founder Phil Alexander also paid developers and designers to create the software and platform interface. “I felt like, if I didn't do it, why would anyone else do it?” he said. “I put my chips on the table and put myself on the line.” He aimed high targeting his first clients. The biggest brands have the biggest budgets, he figured, and serve as leaders in the marketing world. If they adopted his technology, the rest would follow. Adams cold emailed chief brand officers at hundreds of companies to explain what his software could do. He priced the service on a per-campaign basis so clients wouldn't worry about committing to a novel technology. The company was soon profitable but ran into a cash flow problem because its large clients typically pay on 180-day cycles. Adams set out to raise VC funding to give his company a cushion, and expected an easy go of it: "We had AI, which everyone was talking about, and the company is Black-run, Black-owned—this should be a no-brainer, right?" He got a lot of meetings—and a lot of nos. The most common objection? “It’s really cool, but we don't understand it.” See our Year in Review stories here He turned to angel investors—marketing types who had experience with the same problems that spurred him to launch his company in the first place. He closed on a $2 million Seed round in June. Investor Brandon Davis, founder of political media strategy firm Technicolor Political, says his interest in X_Stereotype was spurred by his own frustration with the dearth of racially focused analysis tools on the market—he's also a customer. “We’ve integrated it into some of our standard campaign offerings," he said, "to make sure our content is not just relevant, but culturally intelligent.” “X_Stereotype’s work predates what I think has been a boom in conversation about how to reduce bias in AI,” Davis said. “When you have a business that is in a growing sector, in an important sector and ahead of the curve, that's a pretty good investment.” The next challenge At the end of January, X_Stereotype will launch a subscription service, starting at $1,500 a month, that will allow clients to host the platform on their desktops and run their own analyses. It's also planning to introduce the service in Spanish and Portuguese. But the most exciting challenge ahead, to Adams's mind, is to get the AI generating culturally inclusive ad copy, images and videos. “We have the data, we have the insights, we have the people's voices and how they speak,” he said. “That’s where the technology is headed.” Anne Kadet is the creator of Café Anne, a weekly newsletter with a New York City focus. Know a New York startup you would like to see featured in a future column? Write to anne.kadet@crainsnewyork.com. See our 2023 Marketers of the Year here

New AI marketing service aims to help brands avoid stereotypes

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