By Megan Graham
Yum Brands, the owner of fast-food giants Taco Bell, Pizza Hut and KFC, says new pilots of AI-driven marketing campaigns are increasing purchases and reducing customer churn.
The company last week said geopolitical turmoil and consumers' pessimism about the economy had hurt sales in the quarter ended Sept. 30, but added that it is optimistic about personalized marketing campaigns that use artificial intelligence.
The efforts have the potential to "greatly improve" the company's return on its investment in marketing, executives said.
The chief digital and technology officer at Yum, Joe Park, spoke with The Wall Street Journal about the AI marketing trials. The interview has been edited for length and clarity.
WSJ: Yum has been using AI across its business. When did AI start to come to play in its marketing specifically?
Joe Park: Our vision is really to make sure that our franchisees have the best technologies to run their restaurants. Marketing is certainly used to drive top-line growth, so it's always been something that we've planned for. The personalized AI-driven marketing is something that's more recent.
WSJ: What does that look like, exactly?
Park: In the pilot, we delivered emails that were customized at an individual level. When we look at factors like the time of day, the day of the week, the subject line in the email, the content, and more, you can optimize that for marketing use cases like upselling, retention, referrals and even win-back strategies .
For example, we know our Pizza Hut consumers have different frequency and timing of orders. Some consumers will order every few weeks and love exploring our menus, while others wait for special occasions like the Super Bowl and typically have large orders. With AI-driven marketing, instead of sending the same offer to everyone as a one-size-fits-all, we can engage each of them with the relevant offers at the right time. Our goal is to give our consumers better-timed offers, personalized content and tailored interactions so they feel understood and don't receive generic clutter.
WSJ: Is AI also being used to actually make these messages?
Park: It is. We have pre-written messages and we are using AI to select from them and decide when to deliver them and how.
We use a mix of both internally developed and third-party AI tools, and we're finding potential audiences and customizing their respective offers, and really using automation to do that.
If you're a marketeer, traditional AB testing methods are used -- the consumer wants something in red, or is it in blue, and which one wins? That can be slow and limited in how we test. What's different with this pilot is we can move to AI testing, called reinforcement learning. Instead of waiting weeks for test results, we're seeing real-time results that we're continuously fine-tuning.
WSJ: What kinds of results are you seeing so far?
Park: Compared to traditional digital marketing campaigns, they generate double-digit increases for us in consumer engagement, leading to more increased purchases. I think it's just the early start of what it could do.
And mind you, it was within a limited channel. We see so much opportunity as this could go into other areas for customers, whether the app or the drive-through kiosk, and so on.
WSJ: How will that work for customers at kiosks?
Park: We can personalize offers that can be unique to the location. Take into consideration things like the weather, the time of day, and with those use cases, you can kind of market to the individual or total area.
On your Taco Bell mobile app today, you can check into the drive-through with a unique four digit code, and that connects you to our systems to know who you are, to know your purchase history.
As we collect more data, we see AI playing a role in personalizing the menu board that you see or the kiosk that you're at, to know what you would more likely purchase at that moment, what kind of promos attract you.
WSJ: How do these AI efforts fit into the brand's larger marketing strategy?
Park: Traditional marketing methods are here to stay. I also do think that we're going to be testing and exploring what's possible -- like with gen AI, like looking at marketing assets and being able to give tools for our marketeers and our agencies to see what we can create from AI-generated creative assets that can supplement or help some of the traditional campaigns.
There's something we say internally, which is that AI won't replace jobs, but humans using AI will replace humans. The same applies to agencies. Marketing agencies won't be replaced by gen AI, but those that are using it are probably going to have an advantage over those that aren't.
Write to Megan Graham at megan.graham@wsj.com
(END) Dow Jones Newswires
November 15, 2024 06:00 ET (11:00 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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