CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Over the course of recent years, the field of marketing has experienced significant transformations due to advancements in technology. A notable breakthrough in technology that has had a profound impact on marketing is Artificial Intelligence (AI). AI encompasses various technologies and academic disciplines that have existed for a while, but have only recently become applicable in practical settings. Although still relatively new in the market, AI applications have already demonstrated impressive effectiveness in numerous industries, particularly in marketing (Cannella, 2018).
The recent advancements in AI technology, coupled with the growing number of successful applications, have generated excitement among marketers. However, this enthusiasm has not translated into a widespread comprehension of how the technology operates, how to practically implement it, and the long-term implications it carries. As AI continues to progress and gain broader acceptance in the marketing field, the ability of marketers to effectively integrate and manage AI will become an increasingly crucial skill (Cannella, 2018).
Having a clear understanding of one's role in generating and delivering value within an AI-driven work environment is crucial for individuals to thrive in their careers, contribute to the success of their companies, and effectively cater to consumers. As a result, it is highly likely that AI will bring about substantial transformations to the very core of marketing (Cannella, 2018).
According to Kaplan and Haenlein (2019), the concept of artificial intelligence (AI) revolves around machines, especially computer systems, imitating human intelligence processes. AI's defining characteristic lies in its capacity to effectively understand external information, learn from it, and employ the acquired knowledge to achieve specific performance goals by making adaptable modifications. AI encompasses various domains such as expert systems, natural language processing, speech recognition, and machine vision, among others.
On the other hand, marketing is widely acknowledged as a highly promising field for advancement, with the deployment of artificial intelligence (AI) demonstrating significant potential for revenue growth and achievement (Fagella, 2019). A report by PwC (2017) made a projection that investments in AI development would contribute to a 14% increase in the global GDP by 2030. Furthermore, it was estimated that AI would generate $13 trillion in output by 2030, leading to an annual global GDP growth of approximately 1.2% (Bughin et al., 2018).
Based on a survey conducted among marketers worldwide in late 2020, 41% of the participants reported experiencing improved revenue growth and enhanced performance as a direct outcome of implementing AI in their marketing endeavors. Another 38% attributed the creation of personalized consumer experiences to the utilization of AI in marketing (Gutman, 2020).
Artificial intelligence is positioned to make substantial contributions to tasks that were traditionally carried out by humans, such as effective communication, conversation, and displaying empathy. The rise of intelligent virtual assistants exemplifies this trend, and certain companies are already leveraging this technology in the realm of digital marketing to unlock new opportunities (Faruk et al., 2021). Over the past couple of decades, AI has instigated significant transformations not only in the field of marketing but also in domains like finance, healthcare, engineering, and education (Huang and Rust, 2018; Rust, 2020).
The increasing personalization of interactions between consumers and businesses, propelled by the abundance of data, has given rise to profound digital effects. Organizations are progressively investing in machine learning to augment their marketing capabilities. According to BCC Research, the market for machine learning solutions is projected to witness an impressive annual growth rate of 43.6%, reaching $8.8 billion by 2022 (Information Technology Industry Analysis and Market Research Report, 2022 as cited in Alkhayyat and Ahmed. 2022).
Marinchak et al. (2018) argue that AI is undergoing a fundamental transformation of marketing processes. The authors assert that AI is increasingly augmenting and automating marketing strategies and processes. However, there exists a scholarly debate concerning the future of AI in marketing. Some proponents argue that automation is the key, while others advocate for the utilization of AI in conjunction with human input (Jarrahi, 2018; Epstein, 2015).
Overall, AI has a significant impact on marketing and can enable the growth of business opportunities. It is evident that integrating AI into marketing strategies is crucial for businesses aiming to maintain competitiveness (Pradeep et al. 2018).
The digital revolution of the past decade has revolutionized social media, transforming it into a platform for business. Social media sites have experienced remarkable growth and continue to advance continuously. The way we engage with different social media platforms and communities has undergone significant changes, and this evolution is driven by artificial intelligence (AI). AI analyzes our past behavior, web searches, and more to provide tailored content on our timelines and send notifications accordingly.
For many of us, our first encounter with AI was through chatbots, which were developed to provide responses based on predetermined answers. Examples of AI in digital marketing include Indian Railways' chatbot Disha, algorithm-backed suggestions on Netflix, restaurant recommendations on platforms like Zomato and Swiggy, real-time traffic information on Google or Apple Maps, the use of AI in smart cars and drones, and dynamic pricing on ride-hailing services like Ola and Uber. These instances showcase the integration of AI in digital marketing.
Based on a report by Salesforce, it is revealed that 51% of marketing leaders worldwide are currently utilizing AI, and an additional quarter of them have plans to implement AI within the next two years (Salesforce Research, 2017). The AI for social media market is predicted to exceed $2.1 billion by 2023 (MarketsandMarkets, 2018). The integration of AI and social media marketing holds the potential to bring about significant transformations in how businesses establish connections with their customers. Therefore, the purpose of this research is to examine the role of Artificial Intelligence in social media marketing, focusing on a case study of OLX.
1.2 Statement of the Problem
Social media has become an integral part of daily life, with consumers constantly engaging on platforms like Facebook, Twitter, LinkedIn, Pinterest, and Instagram (Sadiku et al., 2018). AI presents a tremendous opportunity for marketers to elevate performance and efficiency in the social media sector. Companies are increasingly harnessing AI to enhance their utilization of social media.
One notable platform that has gained prominence in the realm of online classified advertisements is OLX. As one of the largest online classifieds marketplaces globally, OLX provides individuals and businesses with a convenient platform to buy and sell a wide array of products and services. It facilitates seamless connections between buyers and sellers, creating opportunities for various transactions. The advancement of AI opens up numerous possibilities for improving social media marketing strategies. However, there is a dearth of comprehensive research that delves into the practical implementation and outcomes of AI-infused strategies in this context. Many studies primarily focus on theoretical aspects or general trends, lacking practical insights from specific case studies.
This research aims to address this gap by conducting a comprehensive case study of OLX, a prominent online marketplace, to understand how AI is employed in their social media marketing efforts. By doing so, it will shed light on the practical implications of AI implementation, the challenges faced, and the benefits reaped.
1.3 Aim of the Study
The aim of this study is to investigate the role of Artificial Intelligence (AI) in social media marketing, specifically through a case study of OLX.
1.4 Objectives of the Study
The specific objectives of this study are as follows:
- To examine the integration of Artificial Intelligence in the social media marketing strategies of OLX.
- To identify and analyze the specific AI techniques used by OLX to enhance marketing effectiveness on social media.
- To explore the challenges and benefits associated with implementing AI in social media marketing campaigns.
- To assess the impacts of AI integration on user experiences and engagement on the OLX platform.
1.5 Research Questions
To guide the study, the following research questions will be addressed:
- How does OLX integrate Artificial Intelligence in their social media marketing strategies?
- What are the specific AI techniques used by OLX to enhance marketing effectiveness on social media?
- What are the challenges and benefits associated with implementing AI in social media marketing campaigns?
- What are the impacts of AI integration on user experiences and engagement on the OLX platform?
1.6 Research Hypothesis
The study will explore the following research hypothesis:
H0: The integration of Artificial Intelligence in social media marketing strategies does not significantly impacts social media marketing effectiveness on the OLX platform.
H1: The integration of Artificial Intelligence in social media marketing strategies significantly impacts social media marketing effectiveness on the OLX platform.
1.7 Justification of the Study
This study is significant for several reasons. Firstly, it contributes to the existing body of knowledge on the practical implementation and impact of AI in social media marketing. By conducting a detailed case study of OLX, it provides valuable insights into the specific AI techniques used by a prominent online marketplace and their implications for marketing effectiveness.
Secondly, the findings of this study can inform marketing practitioners and businesses about the potential benefits and challenges associated with AI integration in social media marketing campaigns. It can guide them in making informed decisions regarding the adoption and implementation of AI technologies in their marketing strategies.
Lastly, this research contributes to the broader understanding of the evolving relationship between technology and marketing. It explores the dynamic interplay between AI and social media marketing and the transformative effects it can have on customer engagement and user experiences.
1.8 Scope of the Study
This study focuses on the integration of Artificial Intelligence in social media marketing, specifically through a case study of OLX.
