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Pepsi’s Hesitation in Embracing AI

AI Hesitance
AI Hesitance

Artificial intelligence (AI) is quickly becoming a game-changing tool in the advertising sector, with the potential to dramatically improve efficiency, effectiveness, and ROI. Despite all the buzz about artificial intelligence (AI), major companies like Pepsi and its subsidiary Frito-Lay have been slow to adopt it. In this article, we explore the factors that have led to their reluctance, including worries about their brands being harmed, copyright violations, and invasions of their privacy. We also discuss how AI might change the marketing landscape and how businesses could benefit from it.

Marketing’s Hopes for AI

Copywriting, video and audio production, and data analysis are just a few of the many marketing activities that have benefited from the rise in popularity of AI-powered tools in the advertising industry. Recent studies show that about 71% of advertising agencies have adopted generative AI. These resources have the potential to boost innovation, boost productivity, and provide customers with tailored service. There is a lot of buzz about artificial intelligence (AI), but marketers don’t agree on how to best put it to use. This disparity has caused some companies to approach AI-enabled technologies with caution, if not outright avoid them.

The Pepsi Way: Just the Right Amount of Nervousness

PepsiCo, Pepsi’s parent company, has shown a strong interest in artificial intelligence by spending “hundreds of millions” of dollars to use the technology to develop new product lines, examine sales data, and other tasks. PepsiCo, the parent company of the Pepsi beverage brand, has taken a cautious approach to implementing AI-driven tools, opting instead to observe the market first. Pepsi’s chief marketing officer, Todd Kaplan, is optimistic about AI’s future but thinks the technology is still in its infancy and needs more testing. There needs to be a better understanding of the capabilities of the technology, as Pepsi is wary of the scalability and impact of AI on its marketing strategies.

The Cautionary Steps Frito-Lay Is Taking

Frito-Lay North America, a PepsiCo subsidiary, recognizes the potential of artificial intelligence in advertising. However, the company is taking precautions when it comes to generative AI. The complexities of AI and the need for careful consideration of their nuances are highlighted by Chris Bellinger, vice president of creative and digital at Frito-Lay North America and Quaker. Frito-Lay is aware of the potential difficulties associated with implementing AI-powered tools, such as brand safety, copyright protection, and data privacy.

What Little AI Research La-Z-Boy Has Done

Despite the success of a recent ad campaign featuring an AI-powered recliner called The Decliner, furniture manufacturer La-Z-Boy has not yet invested heavily in artificial intelligence. This preliminary investigation shows that La-Z-Boy is still in the learning phase regarding AI and its marketing applications. The business has experimented with AI, but it hasn’t fully integrated AI into its advertising just yet.

Large Corporations’ Reluctance to Take Risks

Large corporations like Pepsi and Frito-Lay have trouble taking risks when it comes to adopting new technologies like 3D printing and artificial intelligence. Brand safety, data privacy, and copyright issues are just some of the unknowns and dangers that come with using AI. A wide variety of technologies and capabilities fall under the umbrella term “AI,” as pointed out by Ming Chan, founder and CEO of digital agency The1stMovement. Brands like Pepsi will be cautious and only use AI for limited experiments until it has been shown that it can improve connections with consumers and deliver scalable results.

The AI Black Box Conundrum

Lack of insight into how AI makes decisions is a major cause for concern. Because humans do not yet have a complete understanding of how AI-powered tools like ChatGPT, Llama 2, and xAI function and make decisions, these systems are often referred to as black boxes. Concerns about AI security and brand integrity have been raised as a result of this lack of disclosure. Marketers are becoming increasingly concerned with brand safety and developing solutions to mitigate potential risks as AI becomes increasingly popular.

The Importance of Reliable Case Studies

Despite all the talk about how great AI-powered tools are, there aren’t many studies to back up the claims that they’re worth the cost . Quiller’s creator and Authentic CEO Mike Nellis stresses the need to calculate return on investment before plowing resources into cutting-edge innovations. Nellis argues that cautious large companies like Pepsi risk falling behind more nimble startups that are more willing to take risks and adopt cutting-edge technologies like artificial intelligence.

Escape from the AI Holding Cell: The Trial and Error Stage

Despite major brands’ initial reluctance, some are moving into the try-it-out-and-see-what-happens phase of AI adoption. Before fully committing to AI-powered tools and strategies, tech company Lenovo is conducting stealth tests to ensure transparency and understanding. Like Southwest, JetBlue is using AI to expand its personalized marketing and better categorize its clientele. Both organizations are cautious about AI because of the unknowns surrounding the technology.

AI’s Potential as a Leveler

It’s possible that large corporations will fall behind more nimble rivals if they don’t start investing in cutting-edge technologies like artificial intelligence. Artificial intelligence (AI) has the potential to create a level playing field, making it easier for smaller brands to compete with larger ones. Brands that are open to AI have the potential to gain a competitive edge through increased innovation, efficiency, and personalization in their offerings.

See first source: Digiday


1. Why is artificial intelligence (AI) becoming increasingly important in the advertising sector?

AI has the potential to significantly improve efficiency, effectiveness, and return on investment (ROI) in advertising. It can enhance various marketing activities, including copywriting, video production, data analysis, and more, leading to more tailored services for customers.

2. What percentage of advertising agencies have adopted generative AI, and how can it benefit marketers?

Approximately 71% of advertising agencies have adopted generative AI. These AI-powered tools can boost innovation, productivity, and personalized services, offering marketers the potential to improve their strategies and deliver more valuable content to their audiences.

3. Why have some major companies like Pepsi and Frito-Lay been slow to adopt AI in their marketing strategies?

There are several reasons for their reluctance, including concerns about brand safety, copyright violations, data privacy, and the complexity of AI technologies. These large corporations are cautious and prefer to observe the market and experiment with limited AI applications before committing fully.

4. What is the approach of PepsiCo, Pepsi’s parent company, toward AI adoption?

PepsiCo has shown interest in AI and has invested “hundreds of millions” of dollars in using AI for tasks like product development and sales data analysis. However, the company is cautious, as it believes AI is still in its early stages and requires more testing before widespread implementation.

5. What precautions is Frito-Lay North America, a subsidiary of PepsiCo, taking with respect to AI, and why?

Frito-Lay recognizes the potential of AI but is cautious about generative AI due to complexities such as brand safety, copyright protection, and data privacy concerns. The company is carefully considering these nuances before fully integrating AI into its advertising strategies.

6. How is La-Z-Boy, a furniture manufacturer, approaching AI adoption in advertising?

La-Z-Boy has not heavily invested in AI advertising but has conducted preliminary experiments with AI. The company is in the learning phase and has not fully integrated AI into its advertising efforts.

7. What challenges do large corporations face in adopting new technologies like AI in marketing?

Large corporations are cautious about risks associated with AI adoption, including brand safety, data privacy, and copyright issues. The wide range of AI technologies and capabilities makes it essential for them to carefully evaluate and experiment with AI before scaling it.

8. What is the “AI black box conundrum,” and why is it a concern for marketers?

The “AI black box conundrum” refers to the lack of transparency in how AI-powered tools make decisions, often making them appear as black boxes to humans. This lack of insight raises concerns about AI security and brand integrity, as it’s challenging to understand and control AI’s decision-making processes.

9. Why is it important to have reliable case studies before fully adopting AI in marketing?

Reliable case studies help determine the return on investment (ROI) of AI-powered tools and strategies. It allows cautious companies to calculate the potential benefits and risks associated with AI adoption and make informed decisions.

10. How are some companies moving into the trial and error stage of AI adoption despite initial reluctance?

Some companies are conducting stealth tests and trials to better understand AI’s potential impact before fully committing. Tech company Lenovo and airlines like Southwest and JetBlue are cautiously exploring AI applications in marketing and personalization to address uncertainties surrounding the technology.

Featured Image Credit: NIKHIL; Unsplash – Thank you!

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