MBR – Research Paper

Sara Haque
MBA – 2W
01-322222-029
Integrating AI in Digital Marketing: An investigation of
effectiveness in customer engagement and retention through
AI-Based marketing strategies.

Introduction:
In the digital era, Companies constantly endeavor to attract customers and increase the

retention rate through various digital marketing strategies. With the emergence of AI in the

digital marketing industry, Artificial intelligence has the potential to notably adapt the practices

in which customer engagement and conversions are conducted (Ransbotham, 2017) . Artificial

Intelligence (AI) has the competency to systematically process a large amount of data and can

efficiently achieve goals through learning (Kaplan & Haenlein, 2019) . AI has become a

fundamental component of business growth, and its use in marketing offers strategic potential.

(Martínez-López & Casillas, 2013) suggested several research areas from the perspective of

business marketing, which are essential to advancing the overall agenda. These areas include

customer relationship management, communication strategies, pricing tactics, product

development, innovation, and fostering creativity. On the other hand, Customer engagement

encompasses the various methods, techniques, and tools utilized to establish and uphold

continuous communication with customers across all possible interaction channels.

The current business environment has become increasingly competitive, with large amounts

of data and scarce resources, leading companies to seek ways to make faster decisions. Artificial

intelligence (AI) has become a popular solution, as it promises to improve business intelligence

and performance (Selen et al., 2014). AI is transforming the way companies approach
marketing, as it offers a range of powerful tools and techniques for analyzing customer data and

delivering personalized experiences. In particular, AI is being used to optimize advertising

campaigns, create more engaging content, and improve customer engagement and retention

(Zheng et al., 2021) One area where AI has demonstrated its effectiveness is in marketing,

particularly in social media marketing, which can help to increase revenues and reduce operating

costs. AI-based digital marketing allows businesses to target the right customers at the right time

(Ransbotham, 2017) Existing research has focused on how AI supports marketing execution,

including the automation of data collection, analysis, and the use of tools such as business

intelligence, chatbots, and sentiment analysis (Pitt et al., 2018). In terms of strategy, AI can assist

in making rational decisions and executing the best possible actions in a given situation (Russell

et al., 2016). Marketers aim to keep their products and services at the center of the consumer's

mind throughout the customer experience, with social media being a powerful platform for

customer engagement (Hollebeek et al., 2014). Social media can also be used to monitor

consumer reviews and behavior, which can help to create customized promotional campaigns

and increase conversion rates (Al-Natour et al., 2020). Understanding consumer behavior is

crucial for businesses to satisfy the needs and requirements of their customers. One of the key

benefits of using AI in digital marketing is its ability to automate repetitive tasks and processes,

freeing up marketers to focus on more strategic initiatives. For example, AI can help to identify

patterns and trends in customer behavior, enabling marketers to deliver more relevant and

personalized content (Sethi et al., 2019).There is a lack of comprehensive studies that have

investigated the benefits and challenges of AI in the context of organizational strategy for digital

marketing. While existing research has provided insights into the use of AI in marketing

execution, including data collection, analysis, and the use of tools such as chatbots and sentiment
analysis, there is a paucity of research on how AI can be used strategically to achieve business

objectives. Specifically, there is a need to explore the motivations for adopting AI, the

implications and advantages of AI in digital marketing, and the practical recommendations for

organizations seeking to implement AI-based marketing strategies. The use of AI-based

technologies has the potential to transform the customer engagement and marketing strategies of

businesses. However, it is still uncertain whether businesses should rely solely on AI to make

decisions or rather use AI as a tool to support their decision-making processes. Therefore, here

are some research questions:

RQ.1 What are the potential benefits and challenges of using AI in digital marketing, and how

can it contribute to achieving overall business objectives?

The potential benefits of using AI in digital marketing include increased efficiency and

accuracy, enhanced customer targeting and personalization, improved customer engagement and

retention, and greater insights into consumer behavior (Kaplan & Haenlein, 2019)(Ransbotham,

2017). Moreover, there are also several challenges, such as, potential ethical concerns related to

privacy and bias, and the difficulty in balancing the use of AI with human expertise (Sethi et al.,

2019). Further more, by addressing these challenges and leveraging the benefits of AI,

businesses can achieve overall objectives such as increased revenues, improved customer

satisfaction, and reduced costs (Zheng et al., 2021)

 RQ.2 What practical insights and recommendations can be provided for organizations seeking

to implement AI-based marketing strategies

To successfully implement AI-based marketing strategies, organizations should prioritize the

collection and management of high-quality data, ensure transparency and accountability in the

use of AI, and continually monitor and adapt their strategies based on performance metrics(Pitt

et al., 2018). Additionally, organizations should consider the potential impact on employees and

customers and invest in training and education to ensure that stakeholders understand and

support the use of AI (Russell et al., 2016). Ultimately, the success of AI-based marketing

strategies will depend on the organization's ability to balance the use of AI with human expertise

and intuition (Sethi et al., 2019)

RQ.3 What is the role of AI in making rational decisions and executing the best possible

actions in a given situation, and how can it contribute to organizational strategy?

AI can assist in making rational decisions and executing the best possible actions in a given

situation by analyzing large amounts of data and identifying patterns and trends that may be

difficult or impossible for humans to detect (Russell et al., 2016). By automating repetitive tasks

and providing insights into customer behavior, AI can also free up human resources to focus on

more strategic initiatives(Sethi et al., 2019). By leveraging the power of AI, organizations can

develop more effective marketing strategies that are aligned with overall organizational goals

and objectives (Selen et al., 2014)

 RQ.4 What are the motivations and drivers for businesses to adopt AI-based marketing

strategies, and how do they align with business objectives?

The motivations for businesses to adopt AI-based marketing strategies include the potential

for increased efficiency, improved customer engagement and retention, and greater insights into

consumer behavior (Martínez-López & Casillas, 2013; Ransbotham, 2017). These motivations

align with business objectives such as increased revenues, reduced costs, and improved customer

satisfaction (Zheng et al., 2021) . Additionally, businesses may be motivated to adopt AI-based

marketing strategies in response to competitive pressures or industry trends (Al-Natour et al.,

2020)

RQ.5 To what extent should businesses rely on AI to make marketing decisions, and how can

they balance the use of AI with human expertise and intuition?

Businesses should not rely solely on AI to make marketing decisions and should balance the

use of AI with human expertise and intuition (Ransbotham et al., 2017). While AI can assist in

data analysis and decision-making processes, human intuition and creativity are still necessary

for developing and executing successful marketing strategies (Zheng et al., 2021). Businesses

should also ensure that the use of AI aligns with ethical principles and transparent decision-

making processes (Sethi and King, 2019).

Based on the above, the research paper aims to identify the potential benefits and challenges

of using AI in digital marketing and explore how it can contribute to achieving overall business
objectives. Additionally, the research intends to provide practical insights and recommendations

for organizations seeking to implement AI-based marketing strategies and to contribute to the

existing literature. furthermore, this research aims to investigate the motivations for adopting AI

strategically and the implications and advantages of using AI in the marketing strategy to

improve customer engagement and retention rate.