In recent years, artificial intelligence (AI) has emerged as one of the most talked-about innovations in marketing, promising to revolutionise the way businesses engage with their customers and optimise their strategies. From chatbots that provide instant customer service to algorithms that predict purchasing behaviour, AI is seen as the key to achieving unprecedented efficiency and personalisation. However, as AI continues to dominate conversations in boardrooms and marketing teams across India, it is worth asking whether we are truly harnessing its full potential or are we overestimating what AI can offer?
So, is the hype around AI in marketing justified? For that, let’s look at the global and Indian perspectives
AI marketing is a growing industry. CAGR of 29.8%reaching $48.8 billion by 2030. Now, with more than 700 million internet users and an explosion in e-commerce, digital payments and mobile consumption. India is a big market for AI. PwC India Report 2021 revealed that 70% of Indian companies already use AI in one form or another and Accenture’s 2023 report saysAI could add as much as $957 billion for Indian economy by 2035with marketing and sales being one of the main sectors benefiting from this growth.
AI is not just automating tasks; it is enabling marketers to gain deeper insights, deliver hyper-personalized experiences, and scale their campaigns with precision that is humanly impossible. Indian businesses are not only embracing AI, they are pioneering it to drive customer engagement, optimize ad spend, and strengthen customer loyalty. Leading Indian e-commerce companies like Flipkart, Swiggy, Myntra, Nykaa, Dream11 and BFSI companies like HDFC Bank, Tata Capital, Aditya Birla Capital have adopted AI to predict customer behavior, personalize offers, and improve customer service through chatbots, push notifications, emails, and in-app personalization.
However, while the enthusiasm is understandable, let us see what are the strengths and limitations of AI, especially in a diverse market like India.
The Power of AI in the Indian Marketing Landscape
- The power of data and predictive analytics: One of the key benefits of AI in marketing is its ability to leverage massive amounts of data to provide predictive insights that drive actionable results. AI tools can analyze user behavior, purchase history, and social interactions at a granular level, providing precise segments and a comprehensive view of customers. Best Banks like HDFCwho use AI-based customer segmentation models to predict specific products or services for specific customer groups. By analyzing data from multiple sources, including transaction history and social media behavior, they have increased customer engagement and cross-sell rates. At 01:01We have built algorithms and leverage AI behind our retention, CLV, growth and CRO performance frameworks to deliver results to our clients. We have also developed predictive remarketing frameworks that have enabled great cost efficiencies for D2C and e-commerce brands.
- Large-scale customization: The argument that AI offers only superficial personalization falls flat when looking at cases like Myntra, Zomato, Swiggy and other e-commerce brands. They all use AI to personalize recommendations based on each customer’s browsing history, shopping habits, and even body type preferences. With this, they tailor fashion choices to each customer, significantly improving their shopping experience and driving conversions.
- AI Creativity and Emotional Intelligence: Not as Limited as You Think: One of the most common criticisms of AI is its alleged lack of creativity and emotional intelligence, but this view overlooks recent advances in AI-driven content creation and emotional analysis. AI tools like IBM Watson and Adobe Sensei are increasingly used to generate marketing texts, video scripts and even social media posts, with remarkable accuracy and relevance.
Swiggy successfully used AI to optimize its creative strategy for its 2021 ‘What’s in a Name?’ campaign, which leveraged data-driven insights to create region-specific ad content that resonated with local audiences. Swiggy’s AI analyzed social media conversations across languages to understand regional food preferences and customer sentiment, helping the brand create relevant, hyperlocalized ad content. - The role of AI in optimizing ad spend: One of the greatest strengths of AI in marketing is its ability to optimize ad spend in real-time. Meta and Google have over 200 optimization combinations that are humanly impossible to observe in real-time. But AI and ML can do it and that’s what we did using 3rdi – Our internal recommendation engine which looks at these 200 optimization combinations to optimize your ads in real-time. We use it for several brands in BFSI, e-commerce and D2C sectors to optimize their ad spend.
- Indian SMEs and AI Adoption: The Future of Marketing: While some argue that AI is too expensive for small and medium-sized businesses (SMBs), the rise of affordable, cloud-based AI solutions is changing that. AI-powered marketing platforms such as Zoho CRM And Fresh work AI tools are now accessible to small businesses in India. Even expensive customer experience and customer lifetime management platforms like Adobe are being replaced by platforms like Clevertap and MoEngage. These platforms enable SMBs to automate customer interactions, predict sales trends, and deliver personalized marketing campaigns at a fraction of the cost traditionally associated with AI implementation.
Despite all these advantages, AI also has limitations that can hinder its effective use:
- Dependence on structured data: AI systems rely heavily on large volumes of clean, structured data to operate effectively. However, in India, data quality is often a major challenge. Dun & Bradstreet 2021 Survey, 40% of Indian companies Businesses are challenged by poor data quality, which hinders their AI efforts. For example, fragmented customer data, duplicate data, incomplete purchase histories, and inconsistent social media engagement data can mislead AI algorithms.
- Over-reliance on automation: Automation is one of AI’s main selling points, but over-reliance on it can lead to problems. SwiggySwiggy previously faced criticism when it used AI-based dynamic pricing during peak hours. The algorithm automatically increased delivery fees based on demand, leading to customer dissatisfaction. Swiggy had to drop the feature in several regions after users criticized the lack of transparency and fairness in pricing.
- The Challenges of Personalization in a Culturally Diverse Market India is a very diverse country, with vast differences in language, culture, and preferences. AI’s ability to deliver personalized content can often fall short in such a complex environment.
- Bias in algorithms: a challenge for inclusion AI algorithms are prone to bias, which is particularly problematic in India, where socioeconomic diversity is vast. AI models trained on limited or biased datasets can perpetuate inequalities and exclude certain groups. For example, AI-powered card, loan and insurance approval systems Credit practices used by some Indian banks have been found to be disadvantageous to certain demographic groups, leading to unfair credit practices. This problem arises because AI systems often reflect biases present in their training data, which may not be inclusive or representative of all groups in a market as diverse as India.
- High cost of implementation and maintenanceSmall and medium enterprises (SMEs), which constitute a significant portion of the Indian economy, often find it difficult to compare the cost-effectiveness of AI. NASSCOM ReportThe cost of AI adoption remains a barrier for 60% of Indian SMEs.
This is why these companies are looking for third-party solutions like ours to help them, as we have already trained our models for specific industries and proven their success rates.
So, are we overestimating the capabilities of AI in India?
NOT EXACTLY. We believe this is just the beginning. This is what many marketers often think, basing their judgment on short-term results when it is a constantly evolving technology. The Indian market poses unique challenges for AI-powered marketing. While AI can help businesses scale and automate many processes, its current capabilities are not advanced enough to address the full range of complexities in India. Marketers should be wary of relying too heavily on AI for tasks that require deep cultural understanding, creativity, and emotional intelligence.
I believe businesses should take a balanced approach by combining the analytical power of AI with human judgment. AI can be incredibly effective when used to enhance human decision-making, but it should not be seen as a substitute for creativity, strategic thinking, and cultural awareness.
