Pre-zero data dreams: Are AI smartphones leading the way?

It will read our minds. It will be intuitive. It will help us look for the exact song, pizza, car, shoe, airport, date, picture angle and what not, that too without any precious minute spent spelling anything out. It is like our personal Genie, which is now sitting right where it is handy, inside the bottle we carry all the time: our phones.

When cookies and apps came into advertising, marketers were joyous. That was a paradigm shift. So, what will happen now when AI is not just an extra garment users may or may not drape over their phone, but when AI becomes the very guts of that phone? Better sales conversion, high level of content optimisation, hyper-personalised ads, laser-sharp targeting and segmentation, or stricter privacy walls? New laws or consumer hypnotism?

The questions could not be more well-timed for marketers—in a year when third-party cookies dot the headlines and AI has been tucked deep inside the smartphone, is the data economy going to change in a big way?

AI smartphones are poised to reshape first-party data ecosystems, significantly enhancing data accuracy, customer profiling, and understanding of user preferences.

“As we advance into an era of data-driven commerce, a fully developed zero-party marketplace ecosystem influenced by AI-driven decision-making will emerge.”- SHARADAVANI P, Director – Telecom Services, Dell Technologies

THE FIRST-PARTY HOME TOUR

The size of AI in marketing is pegged at USD 12.64 billion in 2022, and it is expected to grow at a compound annual growth rate or CAGR of 26.6% during 2023–30, as estimated by Grand View Research. Zion Market Research echoes this sentiment, putting this figure at USD 12.5 billion in 2022 and expecting it to touch USD 72.1 by 2030.

According to Salesforce’s State of Marketing Report 2024, marketers increasingly aim for more customised experiences based on detailed data like individual behaviours, preferences, interactions, or other specific indicators. They also look at AI to deliver more insights, predictions, automated workflows, and content. Note that high-performing marketing teams are 2.5x more likely than underperformers to have fully integrated AI into their operations.

Similarly, MMA’s (a marketing trade association) November 2023 State of AI in Marketing survey highlights that 73% of industry people feel AI will significantly enhance marketing capabilities.

That should mean that AI becoming more viscerally embedded in our smartphones could make marketers strike a new goldmine of data—after all, we are talking about a new avatar of first-party data here.

But first, what is an AI-strapped phone? “What I understand of an AI phone is that it will be able to do facial recognition, image recognition, predictive text input, have smart cameras, and the ability to adapt to user behaviour over time,” points out Ashish Karnad, Executive VP of Media and Digital at Hansa Research, adding that the accuracy of what AI learns depends upon how much each user allows it to access the information.

“Soon, the person advertisers speak to will change; it will no longer be us but our machines like the refrigerator placing orders for egg and vegetable stocks.”- ASHISH KARNAD, Executive VP – Media & Digital, Hansa Research

“As far as first-party data is concerned, yes, AI can be of good use to predict behaviours of your consumers based on past data, and hence one could use it for super-personalisation. For example, today, if you search for a product, see a certain type of content, click on a particular ad, or buy specific products, you will suddenly start getting ads of that product targeted at you. This is the first level AI based on user behaviour,” Karnad spells out.

However, suppose someone can look at a person’s unified data (of course, in a secure environment without PII) and add layers of information over and above the behaviour. In that case, one can send out real personalised stuff and ensure a better conversion rate regarding sales, Karnad opines. “The advent of AI phones will simplify this as the phone will have access to a lot of data.”

AI smartphones are poised to reshape first-party data ecosystems significantly, concurs Sharadavani P, Director, Telecom Services, Dell Technologies. “They would also enhance data accuracy, customer profiling, and understanding of user preferences. For example, consider how a smartphone could autonomously control a smart home. AI might adjust lighting based on room conditions, regulate temperature in line with user preferences, and tailor refrigerator settings to both contents and external factors.”

“Smartphones with advanced AI enable data collection that can be categorised as first-party and zero-party, allowing targeted advertisements across segments.”- ANKUSH SABHARWAL, CEO, CoRover

India is taking the lead in seeking global norms for AI ethics and first-party data use, aiming to set norms before widespread AI implementation.

Soon, the person advertisers speak to will also change. It will no longer be us but our machines. Karnad also nudges us to imagine a scenario where your refrigerator automatically checks if your stocks of eggs or veggies are depleting, knows what your family consumes and how much, and also knows that you are expecting guests (based on your conversations) this week. “You might then see ads being directed at your devices and not you as it is your device (your refrigerator in this case) placing the order.”

Ankush Sabharwal, CEO of CoRover, reminds us that we already use AI embedded in smartphones; apps like maps, video sharing, and social media use AI for recommendations.

AI in smartphones will, of course, enhance user experiences. But the impact will also cascade into the land of feature phones. Sabharwal tells how. “For example, using DigiSaathi, a multilingual VoiceBot for digital payments, users can call from any feature phone, ask questions, and receive information or instructions in their preferred language. Smartphones with advanced and deeper AI enable data collection that can be categorised as first-party and zero-party. Such developments allow the targeting of advertisements across different audience segments, given an increase in the data owners’ overall customer satisfaction and revenue circles.”

Great, so a new land of possibilities is unboxed with first-party data and AI. But what if this could go further upstream? Yes, we mean precisely that—data before zero-party data!

ZERO-PARTY DATA AND BEYOND

One big possible strength of AI that is equally feared and anticipated is how it can be intelligent enough to read our minds and steer them. We may still be just cracking the surface of zero-party data. Still, AI may also open up something truly alien, powerful, and dangerous—the secret garden of pre-zero-party data, where users think what AI wants them to think.

Are we about to enter a pre-zero-party marketplace in full blossom with AI deep inside these devices?

As defined by Forrester, zero-party data refers to information that customers willingly share with brands, establishing a foundation for customer engagement. Sharadavani predicts that as the world advances into a new era of data-driven commerce, a fully developed zero-party marketplace ecosystem influenced by AI and its data-driven decision-making will emerge. She points out that a good example is smart home devices that utilise zero-party data to optimise settings, such as temperature and lighting, according to individual preferences. Additionally, AI-powered chatbots could proactively address customer inquiries, leveraging zero-party data to provide tailored responses.

NEW CONSUMER AISLES, NEW FENCES

But a growing multi-screen universe raises privacy and control issues, warns Sabharwal. “People want to be informed, managed, and own their data. Thus, careful data usage by users should be the main focus. Upcoming platforms and techniques will be key to the data marketplace. New methods like cryptocurrency-enabled customer data vaults can facilitate greater privacy, trust, and decentralisation.” Sharadavani also cautions about critical data ownership, privacy, and control challenges, underscoring the need for balanced approaches as these technologies become embedded in daily life.

As the Salesforce report indicates, CMOs are most concerned with data leaks, with 41% feeling that data exposure is their top concern. The MMA survey also points out that 70% of respondents know the potential ethical implications of using AI in marketing, while 39% of organisations are developing strategies to address AI-related risks.

Sabharwal opines that by honouring consumers and treating them right in data collection, AI can be employed without harming any user. Karnad also applauds how India is taking the lead in asking for global norms on what should and should not be done using AI before the actual implementation of AI and the use of first-party data on a big scale.

“Technological advancements cannot be done at the cost of people’s security. But if used properly, AI can change how we lead our lives. The possibilities are immense.” Increasingly strict privacy laws demand explicit customer consent for data sharing, promoting a culture of transparency and trust, recommends Sharadavani.

The future still needs to be clarified. The dragon watching the castle can quickly turn against the princess anytime. Unless it turns out to be the beast, the beauty marries. We are entering a world where the dragon can read the princess’s mind and whisper things. If you are the prince and data is your princess, it is time to rethink those windows. Ditto for marketers. Suitors or Suits? Rethink it all.

By Pratima Harigunani

pratimah@cybermedia.co.in