The Impact of Artificial Intelligence on Digital Marketing: Leveraging Potential in a Competitive Business Landscape

Heny Hendrayati, Mochamad Achyarsyah, Frederic Marimon, Ulil Hartono, Lennora Putit

Abstract


This study aims to thoroughly investigate how Artificial Intelligence (AI) is strategically integrated into digital marketing practices and its consequential effects on Indonesia’s fiercely competitive business environment. Employing a quantitative research approach, this study meticulously examines Indonesian enterprises’ prevailing strategies for AI utilization. The research method employed in this study is quantitative, with the unit of analysis being Indonesian companies. The sample size comprises 100 companies selected through the stratified random sampling technique. Analysis of the data is conducted using the SPSS statistical package. Through detailed analysis of survey data and advanced statistical techniques, the research reveals a significant positive correlation between the integration of AI in digital marketing and improved marketing effectiveness. The study highlights a noticeable increase in customer engagement metrics and noteworthy enhancements in conversion rates among businesses proficient in leveraging AI technologies, further reinforcing this correlation. Additionally, the findings suggest that companies embracing AI demonstrate significantly heightened adaptability to the constantly evolving market dynamics, strengthening their competitive positioning. These insightful discoveries underscore the critical importance of harnessing AI’s transformative capabilities within digital marketing strategies to sustain and bolster a competitive edge in the marketplace. Furthermore, the study discusses its contributions to existing knowledge and provides practical implications for marketers and business policymakers in Indonesia.

 

Doi: 10.28991/ESJ-2024-08-06-012

Full Text: PDF


Keywords


Artificial Intelligence (AI); Digital Marketing; Business Competitiveness; Market Dynamics; Marketing Strategies.

References


Chaffey, D., Ellis-Chadwick, F., & Mayer, R. (2009). Internet marketing: strategy, implementation and practice. Pearson Education, London, United Kingdom.

Kartajaya, H., Kotler, P., & Hooi, D. H. (2019). Marketing 4.0: moving from traditional to digital. World Scientific Book Chapters, 99-123. doi:10.1142/9789813275478_0004.

Morris, N. (2009). Understanding Digital Marketing: Marketing Strategies for Engaging the Digital Generation. Journal of Direct, Data and Digital Marketing Practice, 10(4), 384–387. doi:10.1057/dddmp.2009.7.

Frost, R., & Strauss, J. (2016). E-marketing. Routledge, London, United Kingdom. doi:10.4324/9781315506531.

Evans, D. (2010). Social Media Marketing: The Next Generation of Business Engagement. John Wiley & Sons, New York, United States.

Savitri, C., Hurriyati, R., Wibowo, L. A., & Hendrayati, H. (2021). The role of social media marketing and brand image on smartphone purchase intention. International Journal of Data and Network Science, 6(1), 185–192. doi:10.5267/J.IJDNS.2021.9.009.

Susanto, E., Hendrayati, H., Rahtomo, W. R., & Prawira, M. F. A. (2022). Adoption of Digital Payments for Travelers at Tourism Destinations. African Journal of Hospitality, Tourism and Leisure, 11(2), 741–753. doi:10.46222/ajhtl.19770720.254.

Hoffman, D. L., & Novak, T. P. (2018). Consumer and object experience in the internet of things: An assemblage theory approach. Journal of Consumer Research, 44(6), 1178–1204. doi:10.1093/jcr/ucx105.

Caboni, F., & Hagberg, J. (2019). Augmented reality in retailing: a review of features, applications and value. International Journal of Retail and Distribution Management, 47(11), 1125–1140. doi:10.1108/IJRDM-12-2018-0263.

Kumar, H. (2022). Augmented reality in online retailing: a systematic review and research agenda. International Journal of Retail and Distribution Management, 50(4), 537–559. doi:10.1108/IJRDM-06-2021-0287.

Heinze, A., Fletcher, G., & Cruz, A. (2016). Digital and social media marketing: a results-driven approach. Routledge, London, United Kingdom. doi:10.4324/9781315688763.

Ryan, D. (2016). Understanding digital marketing: Marketing Strategies for Engaging the Digital Generation. Kogan Page Publishers, London, United Kingdom.

Hollensen, S. (2010). Marketing Management: A Relationship Approach. Pearson Education, London, United Kingdom.

Bezuidenhout, C., Heffernan, T., Abbas, R., & Mehmet, M. (2023). The impact of Artificial Intelligence on the marketing practices of Professional Services Firms. Journal of Marketing Theory and Practice, 31(4), 516–537. doi:10.1080/10696679.2022.2090005.

Stone, M., Aravopoulou, E., Ekinci, Y., Evans, G., Hobbs, M., Labib, A., Laughlin, P., Machtynger, J., & Machtynger, L. (2020). Artificial intelligence (AI) in strategic marketing decision-making: a research agenda. Bottom Line, 33(2), 183–200. doi:10.1108/BL-03-2020-0022.

Grewal, D., & Levy, M. (2022). Marketing. McGraw-Hill, New York, United States.

Thilagavathy, N., & Kumar, E. P. (2021). Artificial Intelligence on digital Marketing- An overview. Nveo-Natural Volatiles Essent. Oils Journal| NVEO, 8(5), 9895–9908.

Puntoni, S., Reczek, R. W., Giesler, M., & Botti, S. (2021). Consumers and Artificial Intelligence: An Experiential Perspective. Journal of Marketing, 85(1), 131–151. doi:10.1177/0022242920953847.

Kishen, R., Upadhyay, S., Jaimon, F., Suresh, S., Kozlova, N., Bozhuk, S., ... & Matchinov, V. A. (2021). Prospects for artificial intelligence implementation to design personalized customer engagement strategies. Journal of Legal, Ethical and Regulatory Issues, 24(6), 1–18.

Goodell, J. W., Kumar, S., Lim, W. M., & Pattnaik, D. (2021). Artificial intelligence and machine learning in finance: Identifying foundations, themes, and research clusters from bibliometric analysis. Journal of Behavioral and Experimental Finance, 32, 100577. doi:10.1016/j.jbef.2021.100577.

Ruiz-Real, J. L., Uribe-Toril, J., Torres, J. A., & Pablo, J. D. E. (2021). Artificial intelligence in business and economics research: Trends and future. Journal of Business Economics and Management, 22(1), 98–117. doi:10.3846/jbem.2020.13641.

Leeflang, P. S. H., Verhoef, P. C., Dahlström, P., & Freundt, T. (2014). Challenges and solutions for marketing in a digital era. European Management Journal, 32(1), 1–12. doi:10.1016/j.emj.2013.12.001.

Verhoef, P. C., Broekhuizen, T., Bart, Y., Bhattacharya, A., Qi Dong, J., Fabian, N., & Haenlein, M. (2021). Digital transformation: A multidisciplinary reflection and research agenda. Journal of Business Research, 122, 889–901. doi:10.1016/j.jbusres.2019.09.022.

Rakhmanita, A., Hurriyati, R., Disman, D., & Hendrayati, H. (2023). Future Research Direction on Branded Apps: a Bibliometric Analysis. Journal of Engineering Science and Technology, 18(3), 33–40.

Bughin, J., Seong, J., Manyika, J., Chui, M., & Joshi, R. (2018). Notes from the Ai Frontier: Modeling the Impact of Ai on the World Economy. Modeling the Global Economic Impact of AI | McKinsey, 4(September), 1–61.

Li, S. S., & Karahanna, E. (2015). Online recommendation systems in a B2C E-commerce context: A review and future directions. Journal of the Association for Information Systems, 16(2), 72–107. doi:10.17705/1jais.00389.

Gentsch, P. (2018). AI in Marketing, Sales and Service: How Marketers without a Data Science Degree can use AI, Big Data and Bots. AI in Marketing, Sales and Service: How Marketers without a Data Science Degree can use AI, Big Data and Bots. Springer International Publishing, Cham, Switzerland. doi:10.1007/978-3-319-89957-2.

Mariani, M. M., Perez-Vega, R., & Wirtz, J. (2022). AI in marketing, consumer research and psychology: A systematic literature review and research agenda. Psychology and Marketing, 39(4), 755–776. doi:10.1002/mar.21619.

Yusriadi, Y., Rusnaedi, Siregar, N. A., Megawati, S., & Sakkir, G. (2023). Implementation of artificial intelligence in Indonesia. International Journal of Data and Network Science, 7(1), 283–294. doi:10.5267/j.ijdns.2022.10.005.

Kurniasari, F., Lestari, E. D., & Tannady, H. (2023). Pursuing Long-Term Business Performance: Investigating the Effects of Financial and Technological Factors on Digital Adoption to Leverage SME Performance and Business Sustainability—Evidence from Indonesian SMEs in the Traditional Market. Sustainability (Switzerland), 15(16), 12668. doi:10.3390/su151612668.

Munir, A. R., Kadir, N., Umar, F., & Lyas, G. B. (2023). The impact of digital marketing and brand articulating capability for enhancing marketing capability. International Journal of Data and Network Science, 7(1), 65–72. doi:10.5267/j.ijdns.2022.12.005.

Trinugroho, I., Pamungkas, P., Wiwoho, J., Damayanti, S. M., & Pramono, T. (2022). Adoption of digital technologies for micro and small business in Indonesia. Finance Research Letters, 45, 102156. doi:10.1016/j.frl.2021.102156.

APJII (2023). APJII Survey: Internet Users in Indonesia Reach 215 Million People. Asosiasi Penyelenggara Jasa Internet Indonesia, Jakarta, Indonesia. Available online: https://teknologi.bisnis.com/read/20230308/101/1635219/survei-apjii-pengguna-internet-di-indonesia-tembus-215-juta-orang. (accessed on November 2024)

OOSGA. (2023). Social Media in Indonesia - 2023 Stats & Platform Trends. OOSGA, Singapore. Available online: https://oosga.com/social-media/idn/ . (accessed November May 2024)

Statista (2023). E-Commerce - Indonesia. Statista, Hamburg, Germany.

Kaplan, A. M., & Haenlein, M. (2010). Users of the world, unite! The challenges and opportunities of Social Media. Business Horizons, 53(1), 59–68. doi:10.1016/j.bushor.2009.09.003.

Chaffey, D., & Ellis-Chadwick, F. (2019). Digital Marketing. Pearson Education, London, United Kingdom.

Piñeiro-Otero, T., & Martínez-Rolán, X. (2016). Understanding Digital Marketing—Basics and Actions. MBA: Theory and Application of Business and Management Principles, 37–74. doi:10.1007/978-3-319-28281-7_2.

Adeola, O., Hinson, R. E., & Evans, O. (2019). Social media in marketing communications: A synthesis of successful strategies for the digital generation. Digital Transformation in Business and Society: Theory and Cases, 61–81. doi:10.1007/978-3-030-08277-2_4.

Sheth, J. N. (2018). How social media will impact marketing media. Social Media Marketing: Emerging Concepts and Applications, 3–18. doi:10.1007/978-981-10-5323-8_1.

Killian, G., & McManus, K. (2015). A marketing communications approach for the digital era: Managerial guidelines for social media integration. Business Horizons, 58(5), 539–549. doi:10.1016/j.bushor.2015.05.006.

De Vries, L., Gensler, S., & Leeflang, P. S. H. (2012). Popularity of Brand Posts on Brand Fan Pages: An Investigation of the Effects of Social Media Marketing. Journal of Interactive Marketing, 26(2), 83–91. doi:10.1016/j.intmar.2012.01.003.

Gandomi, A., & Haider, M. (2015). Beyond the hype: Big data concepts, methods, and analytics. International Journal of Information Management, 35(2), 137–144. doi:10.1016/j.ijinfomgt.2014.10.007.

Bresciani, S., Ferraris, A., Romano, M., & Santoro, G. (2021). Shifting Paradigms in Modern Marketing. Digital Transformation Management for Agile Organizations: A Compass to Sail the Digital World, 71–96. doi:10.1108/978-1-80043-171-320211005.

Rathore, B. (2020). Personalization and profits: the impact of AI on targeted digital marketing. International Journal of Transcontinental Discoveries, 7(1), 1–14.

Biswas, B., Sanyal, M. K., & Mukherjee, T. (2023). AI-Based Sales Forecasting Model for Digital Marketing. International Journal of E-Business Research, 19(1), 1–14. doi:10.4018/IJEBR.317888.

Ward, A. F., Marmol, M., Lopez-Lopez, D., Carracedo, P., & Juan, A. A. (2023). Data analytics and artificial intelligence in e-marketing: techniques, best practices and trends. International Journal of Data Analysis Techniques and Strategies, 15(3), 147–178. doi:10.1504/IJDATS.2023.133019.

Narayanan, A., & Shmatikov, V. (2008). Robust de-anonymization of large sparse datasets. Proceedings - IEEE Symposium on Security and Privacy, 111–125. doi:10.1109/SP.2008.33.

Han, S. (2011). Privacy in Context: Technology, Policy, and the Integrity of Social Life. Journal of Information Policy, 1(1), 149–151. doi:10.5325/jinfopoli.1.2011.149.

Davenport, T. H., & Ronanki, R. (2018). Artificial intelligence for the real world. Harvard Business Review, 96(1), 108-116.

Gupta, S., & Chhabria, S. G. (2023). The Use of Artificial Intelligence and Machine Learning in Digital Marketing in 2023: Trends and Insights. International Journal of Computer Applications, 184(51), 12–17. doi:10.5120/ijca2023922635.

Arun Kumar, B.R. (2021). AI-Based Digital Marketing Strategies—A Review. Inventive Computation and Information Technologies. Lecture Notes in Networks and Systems, Vol. 173. Springer, Singapore. doi:10.1007/978-981-33-4305-4_70.

Sharma, R., & Yetton, P. (2003). The contingent effects of management support and task interdependence on successful information systems implementation. MIS Quarterly: Management Information Systems, 27(4), 533–555. doi:10.2307/30036548.

Sarstedt, M., Ringle, C. M., & Hair, J. F. (2021). Partial Least Squares Structural Equation Modeling. Handbook of Market Research, 587–632. doi:10.1007/978-3-319-57413-4_15.

Gupta, S., Lehmann, D. R., & Stuart, J. A. (2004). Valuing Customers. Journal of Marketing Research, 41(1), 7–18. doi:10.1509/jmkr.41.1.7.25084.

Roetzer, P., & Kaput, M. (2022). Marketing Artificial Intelligence: AI, Marketing, and the Future of Business. BenBella Books, 256.

Pradeep, A. K., Appel, A., & Sthanunathan, S. (2018). AI for marketing and product innovation: Powerful new tools for predicting trends, connecting with customers, and closing sales. John Wiley & Sons, New York, United States.

Smith, A. N., Fischer, E., & Yongjian, C. (2012). How Does Brand-related User-generated Content Differ across YouTube, Facebook, and Twitter? Journal of Interactive Marketing, 26(2), 102–113. doi:10.1016/j.intmar.2012.01.002.

Culnan, M. J., & Williams, C. C. (2009). How ethics can enhance organizational privacy: Lessons from the ChoicePoint and TJX data breaches. MIS Quarterly: Management Information Systems, 33(4), 673–687. doi:10.2307/20650322.

Xu, H., Dinev, T., Smith, J., & Hart, P. (2011). Information privacy concerns: Linking individual perceptions with institutional privacy assurances. Journal of the Association for Information Systems, 12(12), 798–824. doi:10.17705/1jais.00281.

Frederiksen, A. (2009). Competing on analytics: The new science of winning. Total Quality Management & Business Excellence, 20(5), 583–583. doi:10.1080/14783360902925454.

Li, H., & Kannan, P. K. (2014). Attributing conversions in a multichannel online marketing environment: An empirical model and a field experiment. Journal of Marketing Research, 51(1), 40–56. doi:10.1509/jmr.13.0050.

Du, S., & Xie, C. (2021). Paradoxes of artificial intelligence in consumer markets: Ethical challenges and opportunities. Journal of Business Research, 129, 961–974. doi:10.1016/j.jbusres.2020.08.024.

Mata, F. J., & Quesada, A. (2014). Web 2.0, social networks and E-commerce as marketing tools. Journal of Theoretical and Applied Electronic Commerce Research, 9(1), 11–12. doi:10.4067/S0718-18762014000100006.

Constantinides, E. (2014). Foundations of Social Media Marketing. Procedia - Social and Behavioral Sciences, 148, 40–57. doi:10.1016/j.sbspro.2014.07.016.

Abidin, C. (2016). “Aren’t These Just Young, Rich Women Doing Vain Things Online?” Influencer Selfies as Subversive Frivolity. Social Media and Society, 2(2), 205630511664134. doi:10.1177/2056305116641342.

De Veirman, M., Cauberghe, V., & Hudders, L. (2017). Marketing through Instagram influencers: The impact of number of followers and product divergence on brand attitude. International Journal of Advertising, 36(5), 798–828. doi:10.1080/02650487.2017.1348035.

Khamis, S., Ang, L., & Welling, R. (2017). Self-branding, ‘micro-celebrity’ and the rise of Social Media Influencers. Celebrity Studies, 8(2), 191–208. doi:10.1080/19392397.2016.1218292.

Khoa, B. T., & Huynh, T. T. (2023). The influence of social media marketing activities on customer loyalty: A study of e-commerce industry. International Journal of Data and Network Science, 7(1), 175–184. doi:10.5267/j.ijdns.2022.11.005.

Abed, S. S., Dwivedi, Y. K., & Williams, M. D. (2015). Social media as a bridge to e-commerce adoption in SMEs: A systematic literature review. The Marketing Review, 15(1), 39–57. doi:10.1362/146934715x14267608178686.

Rauschnabel, P. A., Babin, B. J., tom Dieck, M. C., Krey, N., & Jung, T. (2022). What is augmented reality marketing? Its definition, complexity, and future. Journal of Business Research, 142, 1140–1150. doi:10.1016/j.jbusres.2021.12.084.

Szymczak, A. (2019). Will the use of Virtual Reality Lead to a Revolution in Marketing Communication? Marketing of Scientific and Research Organizations, 33(3), 53–69. doi:10.2478/minib-2019-0043.

Yeh, S. C., Li, Y. Y., Zhou, C., Chiu, P. H., & Chen, J. W. (2018). Effects of Virtual Reality and Augmented Reality on Induced Anxiety. IEEE Transactions on Neural Systems and Rehabilitation Engineering, 26(7), 1345–1352. doi:10.1109/TNSRE.2018.2844083.

Kim, J. H., Kim, M., Park, M., & Yoo, J. (2023). Immersive interactive technologies and virtual shopping experiences: Differences in consumer perceptions between augmented reality (AR) and virtual reality (VR). Telematics and Informatics, 77, 101936. doi:10.1016/j.tele.2022.101936.

Kim, D., & Ko, Y. J. (2019). The impact of virtual reality (VR) technology on sport spectators’ flow experience and satisfaction. Computers in Human Behavior, 93, 346–356. doi:10.1016/j.chb.2018.12.040.

Jain, J., Sinha, S., & Jain, S. (2021). Compendious Characterization of Chemically Treated Natural Fiber from Pineapple Leaves for Reinforcement in Polymer Composites. Journal of Natural Fibers, 18(6), 845–856. doi:10.1080/15440478.2019.1658256.

Binti, F. A., Roslan, M., & Ahmad, N. B. (2023). The Rise of AI-Powered Voice Assistants: Analyzing Their Transformative Impact on Modern Customer Service Paradigms and Consumer Expectations. Quarterly Journal of Emerging Technologies and Innovations, 8(3), 33–64.

Tuzovic, S., & Paluch, S. (2018). Conversational Commerce – A New Era for Service Business Development? Service Business Development, 81–100. doi:10.1007/978-3-658-22426-4_4.

Kendall, L., Chaudhuri, B., & Bhalla, A. (2020). Understanding Technology as Situated Practice: Everyday use of Voice User Interfaces Among Diverse Groups of Users in Urban India. Information Systems Frontiers, 22(3), 585–605. doi:10.1007/s10796-020-10015-6.

Dean, J. (2014). Big data, data mining, and machine learning: Value creation for business leaders and practitioners. Big Data, Data Mining, and Machine Learning: Value Creation for Business Leaders and Practitioners. John Wiley & Sons, New York, United States. doi:10.1002/9781118691786.

Rogers, E.M. (2003). Diffusion of Innovations. Free Press, New York, United States.

Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99-120. doi:10.1177/014920639101700108.

Dellaert, B. G. C., Shu, S. B., Arentze, T. A., Baker, T., Diehl, K., Donkers, B., Fast, N. J., Häubl, G., Johnson, H., Karmarkar, U. R., Oppewal, H., Schmitt, B. H., Schroeder, J., Spiller, S. A., & Steffel, M. (2020). Consumer decisions with artificially intelligent voice assistants. Marketing Letters, 31(4), 335–347. doi:10.1007/s11002-020-09537-5.

Hossain, M. A., Agnihotri, R., Rushan, M. R. I., Rahman, M. S., & Sumi, S. F. (2022). Marketing analytics capability, artificial intelligence adoption, and firms’ competitive advantage: Evidence from the manufacturing industry. Industrial Marketing Management, 106, 240–255. doi:10.1016/j.indmarman.2022.08.017.

Paschen, J., Kietzmann, J., & Kietzmann, T. C. (2019). Artificial intelligence (AI) and its implications for market knowledge in B2B marketing. Journal of Business and Industrial Marketing, 34(7), 1410–1419. doi:10.1108/JBIM-10-2018-0295.

Kopalle, P. K., Gangwar, M., Kaplan, A., Ramachandran, D., Reinartz, W., & Rindfleisch, A. (2022). Examining artificial intelligence (AI) technologies in marketing via a global lens: Current trends and future research opportunities. International Journal of Research in Marketing, 39(2), 522–540. doi:10.1016/j.ijresmar.2021.11.002.

Davenport, T., Guha, A., Grewal, D., & Bressgott, T. (2020). How artificial intelligence will change the future of marketing. Journal of the Academy of Marketing Science, 48(1), 24–42. doi:10.1007/s11747-019-00696-0.

Fosso Wamba, S. (2022). Impact of artificial intelligence assimilation on firm performance: The mediating effects of organizational agility and customer agility. International Journal of Information Management, 67, 102544. doi:10.1016/j.ijinfomgt.2022.102544.

Wamba-Taguimdje, S. L., Fosso Wamba, S., Kala Kamdjoug, J. R., & Tchatchouang Wanko, C. E. (2020). Influence of artificial intelligence (AI) on firm performance: the business value of AI-based transformation projects. Business Process Management Journal, 26(7), 1893–1924. doi:10.1108/BPMJ-10-2019-0411.

Hoyer, W. D., Kroschke, M., Schmitt, B., Kraume, K., & Shankar, V. (2020). Transforming the Customer Experience through New Technologies. Journal of Interactive Marketing, 51(1), 57–71. doi:10.1016/j.intmar.2020.04.001.

Maslowska, E., Malthouse, E. C., & Hollebeek, L. D. (2022). The role of recommender systems in fostering consumers’ long-term platform engagement. Journal of Service Management, 33(4–5), 721–732. doi:10.1108/JOSM-12-2021-0487.

Araujo, T., Copulsky, J. R., Hayes, J. L., Kim, S. J., & Srivastava, J. (2020). From Purchasing Exposure to Fostering Engagement: Brand–Consumer Experiences in the Emerging Computational Advertising Landscape. Journal of Advertising, 49(4), 428–445. doi:10.1080/00913367.2020.1795756.

Jiménez-Zarco, A. I., Rospigliosi, A., Martínez-Ruiz, M. P., & Izquierdo-Yusta, A. (2017). Marketing 4.0: Enhancing consumer-brand engagement through big data analysis. Socio-Economic Perspectives on Consumer Engagement and Buying Behavior, 94–117. doi:10.4018/978-1-5225-2139-6.ch005.

Di Vaio, A., Palladino, R., Hassan, R., & Escobar, O. (2020). Artificial intelligence and business models in the sustainable development goals perspective: A systematic literature review. Journal of Business Research, 121, 283–314. doi:10.1016/j.jbusres.2020.08.019.

Dwivedi, Y. K., Hughes, L., Ismagilova, E., Aarts, G., Coombs, C., Crick, T., Duan, Y., Dwivedi, R., Edwards, J., Eirug, A., Galanos, V., Ilavarasan, P. V., Janssen, M., Jones, P., Kar, A. K., Kizgin, H., Kronemann, B., Lal, B., Lucini, B., … Williams, M. D. (2021). Artificial Intelligence (AI): Multidisciplinary perspectives on emerging challenges, opportunities, and agenda for research, practice and policy. International Journal of Information Management, 57, 101994. doi:10.1016/j.ijinfomgt.2019.08.002.


Full Text: PDF

DOI: 10.28991/ESJ-2024-08-06-012

Refbacks

  • There are currently no refbacks.