Twilio Segment’s 2023 Growth Report, a study of 2,450 business leaders, found that 88% of businesses are already using some form of AI in their marketing efforts this year, and more than half (54%) expect to spend even more on AI-powered campaigns in the coming year. The findings show that leaders expect their AI investments to pay off, with nine out of ten leaders (90%) reporting that AI will deliver either time or cost savings for their business.

The rise of generative AI chatbots appears to be having an impact on marketing leaders, as chatbots are the most common way businesses expect to use AI. Among the survey’s respondents, 38% of businesses say they will be using AI chatbots in their marketing efforts.

Additionally, businesses are tapping into AI models using customer data to tailor their marketing, with 34% of leaders integrating predictive AI. For example, Cisco uses Twilio Segment to collect product analytics data, and is currently building an AI model to predict user’s propensity and readiness to buy or upgrade to a new product. Training AI models on real-time data creates a flywheel – as the models analyse more data, it gets smarter to understand, perceive, and activate on valuable customer insights stored in the Customer Data Platform (CDP).

Data quality and CDPs are critical enablers

The report also shines a light on the essential role of data quality: 40% of businesses are struggling with technology infrastructure or low-quality data, highlighting the pivotal role of relevant, timely data in unleashing the full power of AI. 71% of respondents say AI could be more useful with access to higher-quality data.

CDPs are having a positive effect in ensuring data quality: Companies using a CDP experienced a 32% growth rate in the past year, compared to a 21% growth rate at companies not using a CDP. Because CDPs unify customer data that is collected across the organisation, it offers brands a single source of truth for their customers’ needs. These powerful tools are displacing the traditional customer relationship management (CRM) software — 24% of respondents say they plan to simplify, remove, or reduce their CRM spend in the coming 12 months. This shift points to the broader trend of businesses investing more in alternative technologies like data warehouses for customer data management that are powerfully interoperable with CDPs.

Consumer privacy concerns persist

On the topic of customer data, privacy remains paramount. While 66% of leaders feel that customers would appreciate AI-enhanced marketing if it leads to superior service, 28% express concerns about data privacy associated with AI adoption. Addressing these concerns, most businesses (85%) say it’s a priority to do a better job of capturing and leveraging first-party data in the coming year, marking a 14% increase from the 71% recorded in 2022.

“AI has taken the world by storm in 2023, and the data is clear that businesses have embraced the technology wholeheartedly as a means to attract, engage, and retain customers. The challenge now is ensuring that these AI efforts bear fruit,” said Katrina Wong, VP of Marketing at Twilio Segment. “Businesses have to prioritise data quality just as much, or even more, than they’re prioritising AI. Otherwise, they’re leaving money on the table.”