Unprecedented volumes of data and advances in AI are transforming the marketing services industry, according to a report released by leading technology advisory and investment firm GP Bullhound.

AI and the Services Revolution reveals that investments in marketing-related AI have grown steadily, with $2.5bn of investments in emerging companies in 2018 – and $1 billion invested in Q2 2019 alone. A total of $11bn has been invested in the sector since 2014.

While North America accounts for the majority of funding into AI marketing companies with a yearly volume of around $1.5bn in 2014-2018, Europe is showing the highest growth rate. The European market grew to represent 30% of all transactions in H1 2019, while Asian transactions have declined from 20% in 2018 to only 5% as of H1 2019.

The report highlights the application of AI in marketing as still early stage, but of increasing interest to marketers seeking to invest marketing budgets for greater returns.

Oliver Schweitzer, Executive Director at GP Bullhound comments:

“Artificial Intelligence heralds the beginning of a new marketing era, driven by the need to connect vast amounts of disparate data, uncover patterns and make predictions, which only AI can accomplish. AI will become increasingly integrated into digital services and marketing processes; however, human intelligence and intuition will remain critical to interpret its findings and implement strategic and creative plans accordingly.

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“While North American companies involved with marketing AI still dominate the sector, there has been strong recent growth in Europe.  But ultimately this is a global industry serving multinational clients who are seeking help and advice to process, interpret and act upon the massive volume of data being collected on customers.”

The report shows that the marketing AI space is still a nascent market, with the number of private placements (126 in 2018) outnumbering M&A transactions (83 in 2018).  However, M&A is clearly growing – in 2014 there were just 11 deals in the sector.

Likewise, there is a clear trajectory for significant growth of private placements over 2018 levels, with $1.5bn raised across 68 transactions so far this year.

The report reveals that data is the defining feature of the global digital economy and is reshaping the marketing sector. Advances in computing power mean that AI is evolving into a viable and affordable technology that enables marketers to collate, sort, and analyze vast quantities of data. AI also adds another layer of application, allowing the data to be employed in predicting and influencing future consumer actions.

Three major themes within marketing AI are considered within the report: Hyperpersonalisation, branding and B2B. Personalising customer journeys is the most common way for marketers to deploy AI, with a quarter (24%) already deploying AI to this effect, and almost two thirds (59%) planning to do so in the next two years.

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The report also highlights the critical role of digital marketing service providers, including agencies and consultancies, in advising marketers on the efficient use of AI.

Discussing the impact of AI on the role and work of creative agencies, Founder of S4 Capital Sir Martin Sorrell added:

“Having data first and foremost improves the output, but it doesn’treplace output. Access to vast amounts of data will therefore make our job more effective, not less effective. The traditional argument, that data destroys creativity, is nonsense – AI will aid creativity. Better input in the form of data leads to better output.”

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