What are the hottest content marketing trends in 2016?
With so many blogs and articles out there on the latest content marketing trends, technologies, channels and tools, how do you keep up and know which ones you should be paying attention to?
To help content marketers get up to speed and stay ahead of the curve, CJG Digital Marketing has picked out eight key content marketing trends and movers that will change the marketing space in 2016 and that you can’t ignore:
1. Content marketing is key to marketing success
The B2B and B2C markets may have different customer groups and strategies and tools to reach their audience, but one thing that remains the same is that content marketing has and will continue to drive both markets.
According to eMarketer, 76% of B2B marketers surveyed said they planned to increase their content marketing creation and use in 2016, with only 19% reporting the same amount for this year.
This is no surprise since CMI’s 2016 B2B Content Marketing report found that the most effective B2B marketers plan to increase their content marketing budget in the next 12 months. The most effective marketers allocate nearly twice as much of their total marketing budget on content marketing compared to their average peers.
The research also found that 61% of the most effective content marketers meet daily or weekly with their teams to discuss their content marketing programs. 60% of the most effective organizations have a documented content marketing strategy, with 62% reported that their strategy very closely guides their content marketing efforts.
CMI’s 2016 B2C Content Marketing report found similar trends for B2C markets. More effective B2C marketers have a documented marketing strategy, and up to 48% of the most successful marketers meet with their teams on a daily or weekly basis. Similarly, B2C marketers are investing more of their total marketing budget on content marketing.
2. Deeper focus on people, less on search engines
82% of marketers are spending more time to understand their target audience’s needs to develop content they actually want, rather than producing content only for search engines. Effective marketers are also focusing on using keywords, images and videos to provide better content and experiences and to attract people’s attention.
3. Rise of artificial intelligence in search
Search algorithm changes mean more importance is placed on long-form content and semantic search. Google’s Knowledge Graph, for example, is helping search users pull up better results for their long-term search queries.
This year, Google is taking this to the next level by using Artificial Intelligence (AI) to facilitate search queries. Last year alone, nearly 15% of unique searches are completed by Google’s RankBrain, and this number is expected to rise in 2016.
4. Automatic content creation from aggregated content
New software will soon be available to help marketers compile and create new content from all the information shared by social media users around the world. We’re starting to see this with Twitter’s Project Lightning, which creates new stories based on the images, posts, videos and other content people share in their tweets.
5. Content creation from automated algorithms
Many marketers are looking for new and more effective ways to create content beyond their freelancers. We may begin to see marketers producing content through robotic algorithms soon, as these technologies continue to improve and become more sophisticated. It has been predicted that this year we may start to see automated algorithms creating simple content for a wide range of industries, including journalism and finance.
6. New social media channels for publishing
Facebook’s Instant Articles feature provided marketers a new publishing option to get more visibility. Other social media platforms, such as Snapchat’s Discover, are also introducing their own publishing options to allow brands to more effectively share content and reach their target audiences.
7. Visual content is here to stay
Many brands have already started experimenting with visual content last year, and in 2016 we will see even more marketers using visuals for content marketing. Video and visual content will be key to successful content marketing, as more users are consuming content on the go using their mobile devices.
Jay Baer, President of Convince and Convert, has also predicted that 2016 will be the year of video, where video content will “take its right place as the petri dish of great content marketing.”
8. Interactive content gains momentum
New technologies like Oculus Rift will present marketers with new ways to create content and engage consumers through immersive marketing. Top brands will take advantage of these exciting opportunities to tell and share their brand stories, and create even more interactive, personalized experience for consumers, to help stay ahead of their competition in 2016 and beyond.
Check out the full infographic from CJG Digital Marketing below. Do you think CJG Digital Marketing missed any other top content marketing trends you should know? Please share your ideas!
The fast-paced world of digital marketing is changing too quickly for most companies to adapt. But staying up to date with the latest industry trends is imperative for anyone involved with expanding a business.
Here are five trends that have shaped the industry this year and that will become more important as we move forward:
Email marketing will need to become smarter
Whether you like it or not, email is the most ubiquitous tool online. Everyone has it, and utilizing it properly can push your marketing ahead of your rivals. Because business use of email is still very widespread, you need to get smarter about email marketing in order to fully realize your business’s marketing strategy. Luckily, there are a number of tools that can help you market more effectively, such as Mailchimp.
Content marketing will become integrated and more valuable
Content is king, and it seems to be getting more important every day. Google and other search engines are focusing more on the content you create as the potential of the online world as marketing tool becomes apparent. Now there seems to be a push for current, relevant content that you can use for your services and promote your business.
Staying fresh with the content you provide is almost as important as ensuring high-quality content. Customers will pay more attention if your content is relevant and timely.
Mobile assets and paid social media are more important than ever
It’s no secret that mobile is key to your marketing efforts. More mobile devices are sold and more people are reading content on mobile screens than ever before, so it is crucial to your overall strategy to have mobile marketing expertise on your team. London-based Abacus Marketing agrees that mobile marketing could overtake desktop website marketing in just a few years.
Big Data for personalization plays a key role
Marketers are increasingly using Big Data to get their brand message out to the public in a more personalized format. One obvious example is Google Trend analysis, a highly useful tool that marketing experts use to obtain the latest on what is trending around the world. You can — and should — use it in your business marketing efforts. Big Data will also let you offer specific content to buyers who are more likely to look for certain items, for example, and offer personalized deals to specific groups of within your customer base. Other tools, which until recently were the stuff of science fiction, are also available that let you do things like use predictive analysis to score leads.
Visual media matters
A picture really is worth a thousand words, as the saying goes, and nobody can deny the effectiveness of a well-designed infographic. In fact, some studies suggest that Millennials are particularly attracted to content with great visuals. Animated gifs and colorful bar graphs have even found their way into heavy-duty financial reports, so why not give them a try in your business marketing efforts?
A few more tips:
Always keep your content relevant and current to attract the attention of your target audience.
Always keep all your social media and public accounts fresh. Don’t use old content or outdated pictures in any public forum.
Your reviews are a proxy for your online reputation, so pay careful attention to them.
Much online content is being consumed on mobile now, so focus specifically on the design and usability of your mobile apps.
Online marketing is essentially geared towards getting more traffic onto your site. The more people visit, the better your chances of increasing sales.
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About Sunny Popali
Sunny Popali is SEO Director at www.tempocreative.com. Tempo Creative is a Phoenix inbound marketing company that has served over 700 clients since 2001. Tempos team specializes in digital and internet marketing services including web design, SEO, social media and strategy.
As 2015 winds down, it’s time to look forward to 2016 and explore the social media and content marketing trends that will impact marketing strategies over the next 15 months or so.
Some of the upcoming trends simply indicate an intensification of current trends, however others indicate that there are new things that will have a big impact in 2016.
Take a look at a few trends that should definitely factor in your planning for 2016.
1. SEO will focus more on social media platforms and less on search engines
Clearly Google is going nowhere. In fact, in 2016 Google’s word will still essentially be law when it comes to search engine optimization.
However, in 2016 there will be some changes in SEO. Many of these changes will be due to the fact that users are increasingly searching for products and services directly from websites such as Facebook, Pinterest, and YouTube.
There are two reasons for this shift in customer habits:
Customers are relying more and more on customer comments, feedback, and reviews before making purchasing decisions. This means that they are most likely to search directly on platforms where they can find that information.
Customers who are seeking information about products and services feel that video- and image-based content is more trustworthy.
2. The need to optimize for mobile and touchscreens will intensify
Consumers are using their mobile devices and tablets for the following tasks at a sharply increasing rate:
Sending and receiving emails and messages
Researching products and services
Reading or writing reviews and comments
Obtaining driving directions and using navigation apps
Visiting news and entertainment websites
Using social media
Most marketers would be hard-pressed to look at this list and see any case for continuing to avoid mobile and touchscreen optimization. Yet, for some reason many companies still see mobile optimization as something that is nice to do, but not urgent.
This lack of a sense of urgency seemingly ignores the fact that more than 80% of the highest growing group of consumers indicate that it is highly important that retailers provide mobile apps that work well. According to the same study, nearly 90% of Millennials believe that there are a large number of websites that have not done a very good job of optimizing for mobile.
3. Content marketing will move to edgier social media platforms
Platforms such as Instagram and Snapchat weren’t considered to be valid targets for mainstream content marketing efforts until now.
This is because they were considered to be too unproven and too “on the fringe” to warrant the time and marketing budget investments, when platforms such as Facebook and YouTube were so popular and had proven track records when it came to content marketing opportunity and success.
However, now that Instagram is enjoying such tremendous growth, and is opening up advertising opportunities to businesses beyond its brand partners, it (along with other platforms) will be seen as more and more viable in 2016.
4. Facebook will remain a strong player, but the demographic of the average user will age
In 2016, Facebook will likely remain the flagship social media website when it comes to sharing and promoting content, engaging with customers, and increasing Internet recognition.
However, it will become less and less possible to ignore the fact that younger consumers are moving away from the platform as their primary source of online social interaction and content consumption. Some companies may be able to maintain status quo for 2016 without feeling any negative impacts.
However, others may need to rethink their content marketing strategies for 2016 to take these shifts into account. Depending on their branding and the products or services that they offer, some companies may be able to profit from these changes by customizing the content that they promote on Facebook for an older demographic.
5. Content production must reflect quality and variety
More and more businesses are focusing marketing efforts on content. This means that, as customers have more content to choose from, competition is going to increase significantly.
In 2016, content will remain King, with an increasing focus on variety and and quality. When companies are creating their content marketing strategies for 2016, they may wish to consider the following when they make their final decisions:
Both B2B and B2C buyers value video based content over text based content.
While some curated content is a good thing, consumers believe that custom content is an indication that a company wishes to create a relationship with them.
The great majority of these same consumers report that customized content is useful for them.
B2B customers prefer learning about products and services through content as opposed to paid advertising.
Consumers believe that videos are more trustworthy forms of content than text.
Here is a great infographic depicting the importance of video in content marketing efforts:
A final, very important thing to note when considering content trends for 2016 is the decreasing value of the keyword as a way of optimizing content. In fact, in an effort to crack down on keyword stuffing, Google’s optimization rules have been updated to to kick offending sites out of prime SERP positions.
6. Oculus Rift will create significant changes in customer engagement
Oculus Rift is not likely to offer much to marketers in 2016. After all, it isn’t expected to ship to consumers until the first quarter. However, what Oculus Rift will do is influence the decisions that marketers make when it comes to creating customer interaction.
For example, companies that have not yet embraced storytelling may want to make 2016 the year that they do just that, because later in 2016 Oculus Rift may be the platform that their competitors will be using to tell stories while giving consumers a 360-degree vantage point.
When it comes to buying things—even big-ticket items—the way we make decisions makes no sense. One person makes an impulsive offer on a house because of the way the light comes in through the kitchen windows. Another gleefully drives a high-end sports car off the lot even though it will probably never approach the limits it was designed to push.
We can (and usually do) rationalize these decisions after the fact by talking about needing more closet space or wanting to out-accelerate an 18-wheeler as we merge onto the highway, but years of study have arrived at a clear conclusion:
When it comes to the customer experience, human beings are fundamentally irrational.
In the brick-and-mortar past, companies could leverage that irrationality in time-tested ways. They relied heavily on physical context, such as an inviting retail space, to make products and services as psychologically appealing as possible. They used well-trained salespeople and employees to maximize positive interactions and rescue negative ones. They carefully sequenced customer experiences, such as having a captain’s dinner on the final night of a cruise, to play on our hard-wired craving to end experiences on a high note.
Today, though, customer interactions are increasingly moving online. Fortune reports that on 2016’s Black Friday, the day after Thanksgiving that is so crucial to holiday retail results, 108.5 million Americans shopped online, while only 99.1 million visited brick-and-mortar stores. The 9.4% gap between the two was a dramatic change from just one year prior, when on- and offline Black Friday shopping were more or less equal.
When people browse in a store for a few minutes, an astute salesperson can read the telltale signs that they’re losing interest and heading for the exit. The salesperson can then intervene, answering questions and closing the sale.
Replicating that in a digital environment isn’t as easy, however. Despite all the investments companies have made to counteract e-shopping cart abandonment, they lack the data that would let them anticipate when a shopper is on the verge of opting out of a transaction, and the actions they take to lure someone back afterwards can easily come across as less helpful than intrusive.
In a digital environment, companies need to figure out how to use Big Data analysis and digital design to compensate for the absence of persuasive human communication and physical sights, sounds, and sensations. What’s more, a 2014 Gartner survey found that 89% of marketers expected customer experience to be their primary differentiator by 2016, and we’re already well into 2017.
As transactions continue to shift toward the digital and omnichannel, companies need to figure out new ways to gently push customers along the customer journey—and to do so without frustrating, offending, or otherwise alienating them.
The quest to understand online customers better in order to influence them more effectively is built on a decades-old foundation: behavioral psychology, the study of the connections between what people believe and what they actually do. All of marketing and advertising is based on changing people’s thoughts in order to influence their actions. However, it wasn’t until 2001 that a now-famous article in the Harvard Business Review formally introduced the idea of applying behavioral psychology to customer service in particular.
The article’s authors, Richard B. Chase and Sriram Dasu, respectively a professor and assistant professor at the University of Southern California’s Marshall School of Business, describe how companies could apply fundamental tenets of behavioral psychology research to “optimize those extraordinarily important moments when the company touches its customers—for better and for worse.” Their five main points were simple but have proven effective across multiple industries:
Finish strong. People evaluate experiences after the fact based on their high points and their endings, so the way a transaction ends is more important than how it begins.
Front-load the negatives. To ensure a strong positive finish, get bad experiences out of the way early.
Spread out the positives. Break up the pleasurable experiences into segments so they seem to last longer.
Provide choices. People don’t like to be shoved toward an outcome; they prefer to feel in control. Giving them options within the boundaries of your ability to deliver builds their commitment.
Be consistent. People like routine and predictability.
For example, McKinsey cites a major health insurance company that experimented with this framework in 2009 as part of its health management program. A test group of patients received regular coaching phone calls from nurses to help them meet health goals.
The front-loaded negative was inherent: the patients knew they had health problems that needed ongoing intervention, such as weight control or consistent use of medication. Nurses called each patient on a frequent, regular schedule to check their progress (consistency and spread-out positives), suggested next steps to keep them on track (choices), and cheered on their improvements (a strong finish).
McKinsey reports the patients in the test group were more satisfied with the health management program by seven percentage points, more satisfied with the insurance company by eight percentage points, and more likely to say the program motivated them to change their behavior by five percentage points.
The nurses who worked with the test group also reported increased job satisfaction. And these improvements all appeared in the first two weeks of the pilot program, without significantly affecting the company’s costs or tweaking key metrics, like the number and length of the calls.
Indeed, an ongoing body of research shows that positive reinforcements and indirect suggestions influence our decisions better and more subtly than blatant demands. This concept hit popular culture in 2008 with the bestselling book Nudge.
Written by University of Chicago economics professor Richard H. Thaler and Harvard Law School professor Cass R. Sunstein, Nudge first explains this principle, then explores it as a way to help people make decisions in their best interests, such as encouraging people to eat healthier by displaying fruits and vegetables at eye level or combatting credit card debt by placing a prominent notice on every credit card statement informing cardholders how much more they’ll spend over a year if they make only the minimum payment.
Whether they’re altruistic or commercial, nudges work because our decision-making is irrational in a predictable way. The question is how to apply that awareness to the digital economy.
In its early days, digital marketing assumed that online shopping would be purely rational, a tool that customers would use to help them zero in on the best product at the best price. The assumption was logical, but customer behavior remained irrational.
Our society is overloaded with information and short on time, says Brad Berens, Senior Fellow at the Center for the Digital Future at the University of Southern California, Annenberg, so it’s no surprise that the speed of the digital economy exacerbates our desire to make a fast decision rather than a perfect one, as well as increasing our tendency to make choices based on impulse rather than logic.
Buyers want what they want, but they don’t necessarily understand or care why they want it. They just want to get it and move on, with minimal friction, to the next thing. “Most of our decisions aren’t very important, and we only have so much time to interrogate and analyze them,” Berens points out.
But limited time and mental capacity for decision-making is only half the issue. The other half is that while our brains are both logical and emotional, the emotional side—also known as the limbic system or, more casually, the primitive lizard brain—is far older and more developed. It’s strong enough to override logic and drive our decisions, leaving rational thought to, well, rationalize our choices after the fact.
This is as true in the B2B realm as it is for consumers. The business purchasing process, governed as it is by requests for proposals, structured procurement processes, and permission gating, is designed to ensure that the people with spending authority make the most sensible deals possible. However, research shows that even in this supposedly rational process, the relationship with the seller is still more influential than product quality in driving customer commitment and loyalty.
Baba Shiv, a professor of marketing at Stanford University’s Graduate School of Business, studies how the emotional brain shapes decisions and experiences. In a popular TED Talk, he says that people in the process of making decisions fall into one of two mindsets: Type 1, which is stressed and wants to feel comforted and safe, and Type 2, which is bored or eager and wants to explore and take action.
People can move between these two mindsets, he says, but in both cases, the emotional brain is in control. Influencing it means first delivering a message that soothes or motivates, depending on the mindset the person happens to be in at the moment and only then presenting the logical argument to help rationalize the action.
In the digital economy, working with those tendencies means designing digital experiences with the full awareness that people will not evaluate them objectively, says Ravi Dhar, director of the Center for Customer Insights at the Yale School of Management. Since any experience’s greatest subjective impact in retrospect depends on what happens at the beginning, the end, and the peaks in between, companies need to design digital experiences to optimize those moments—to rationally design experiences for limited rationality.
This often involves making multiple small changes in the way options are presented well before the final nudge into making a purchase. A paper that Dhar co-authored for McKinsey offers the example of a media company that puts most of its content behind a paywall but offers free access to a limited number of articles a month as an incentive to drive subscriptions.
Many nonsubscribers reached their limit of free articles in the morning, but they were least likely to respond to a subscription offer generated by the paywall at that hour, because they were reading just before rushing out the door for the day. When the company delayed offers until later in the day, when readers were less distracted, successful subscription conversions increased.
Pre-selecting default options for necessary choices is another way companies can design digital experiences to follow customers’ preference for the path of least resistance. “We know from a decade of research that…defaults are a de facto nudge,” Dhar says.
For example, many online retailers set a default shipping option because customers have to choose a way to receive their packages and are more likely to passively allow the default option than actively choose another one. Similarly, he says, customers are more likely to enroll in a program when the default choice is set to accept it rather than to opt out.
Another intriguing possibility lies in the way customers react differently to on-screen information based on how that information is presented. Even minor tweaks can have a disproportionate impact on the choices people make, as explained in depth by University of California, Los Angeles, behavioral economist Shlomo Benartzi in his 2015 book, The Smarter Screen.
A few of the conclusions Benartzi reached: items at the center of a laptop screen draw more attention than those at the edges. Those on the upper left of a screen split into quadrants attract more attention than those on the lower left. And intriguingly, demographics are important variables.
Benartzi cites research showing that people over 40 prefer more visually complicated, text-heavy screens than younger people, who are drawn to saturated colors and large images. Women like screens that use a lot of different colors, including pastels, while men prefer primary colors on a grey or white background. People in Malaysia like lots of color; people in Germany don’t.
This suggests companies need to design their online experiences very differently for middle-aged women than they do for teenage boys. And, as Benartzi writes, “it’s easy to imagine a future in which each Internet user has his or her own ‘aesthetic algorithm,’ customizing the appearance of every site they see.”
Applying behavioral psychology to the digital experience in more sophisticated ways will require additional formal research into recommendation algorithms, predictions, and other applications of customer data science, says Jim Guszcza, PhD, chief U.S. data scientist for Deloitte Consulting.
In fact, given customers’ tendency to make the fastest decisions, Guszcza believes that in some cases, companies may want to consider making choice environments more difficult to navigate— a process he calls “disfluencing”—in high-stakes situations, like making an important medical decision or an irreversible big-ticket purchase. Choosing a harder-to-read font and a layout that requires more time to navigate forces customers to work harder to process the information, sending a subtle signal that it deserves their close attention.
That said, a company can’t apply behavioral psychology to deliver a digital experience if customers don’t engage with its site or mobile app in the first place. Addressing this often means making the process as convenient as possible, itself a behavioral nudge.
A digital solution that’s easy to use and search, offers a variety of choices pre-screened for relevance, and provides a friction-free transaction process is the equivalent of putting a product at eye level—and that applies far beyond retail. Consider the Global Entry program, which streamlines border crossings into the U.S. for pre-approved international travelers. Members can skip long passport control lines in favor of scanning their passports and answering a few questions at a touchscreen kiosk. To date, 1.8 million people have decided this convenience far outweighs the slow pace of approvals.
The basics of influencing irrational customers are essentially the same whether they’re taking place in a store or on a screen. A business still needs to know who its customers are, understand their needs and motivations, and give them a reason to buy.
And despite the accelerating shift to digital commerce, we still live in a physical world. “There’s no divide between old-style analog retail and new-style digital retail,” Berens says. “Increasingly, the two are overlapping. One of the things we’ve seen for years is that people go into a store with their phones, shop for a better price, and buy online. Or vice versa: they shop online and then go to a store to negotiate for a better deal.”
Still, digital increases the number of touchpoints from which the business can gather, cluster, and filter more types of data to make great suggestions that delight and surprise customers. That’s why the hottest word in marketing today is omnichannel. Bringing behavioral psychology to bear on the right person in the right place in the right way at the right time requires companies to design customer experiences that bridge multiple channels, on- and offline.
Amazon, for example, is known for its friction-free online purchasing. The company’s pilot store in Seattle has no lines or checkout counters, extending the brand experience into the physical world in a way that aligns with what customers already expect of it, Dhar says.
Omnichannel helps counter some people’s tendency to believe their purchasing decision isn’t truly well informed unless they can see, touch, hear, and in some cases taste and smell a product. Until we have ubiquitous access to virtual reality systems with full haptic feedback, the best way to address these concerns is by providing personalized, timely, relevant information and feedback in the moment through whatever channel is appropriate. That could be an automated call center that answers frequently asked questions, a video that shows a product from every angle, or a demonstration wizard built into the product. Any of these channels could also suggest the customer visit the nearest store to receive help from a human.
The omnichannel approach gives businesses plenty of opportunities to apply subtle nudges across physical and digital channels. For example, a supermarket chain could use store-club card data to push personalized offers to customers’ smartphones while they shop. “If the data tells them that your goal is to feed a family while balancing nutrition and cost, they could send you an e-coupon offering a discount on a brand of breakfast cereal that tastes like what you usually buy but contains half the sugar,” Guszcza says.
Similarly, a car insurance company could provide periodic feedback to policyholders through an app or even the digital screens in their cars, he suggests. “Getting a warning that you’re more aggressive than 90% of comparable drivers and three tips to avoid risk and lower your rates would not only incentivize the driver to be more careful for financial reasons but reduce claims and make the road safer for everyone.”
Digital channels can also show shoppers what similar people or organizations are buying, let them solicit feedback from colleagues or friends, and read reviews from other people who have made the same purchases. This leverages one of the most familiar forms of behavioral psychology—reinforcement from peers—and reassures buyers with Shiv’s Type 1 mindset that they’re making a choice that meets their needs or encourages those with the Type 2 mindset to move forward with the purchase. The rational mind only has to ask at the end of the process “Am I getting the best deal?” And as Guszcza points out, “If you can create solutions that use behavioral design and digital technology to turn my personal data into insight to reach my goals, you’ve increased the value of your engagement with me so much that I might even be willing to pay you more.”
Many transactions take place through corporate procurement systems that allow a company to leverage not just its own purchasing patterns but all the data in a marketplace specifically designed to facilitate enterprise purchasing. Machine learning can leverage this vast database of information to provide the necessary nudge to optimize purchasing patterns, when to buy, how best to negotiate, and more. To some extent, this is an attempt to eliminate psychology and make choices more rational.
B2B spending is tied into financial systems and processes, logistics systems, transportation systems, and other operational requirements in a way no consumer spending can be. A B2B decision is less about making a purchase that satisfies a desire than it is about making a purchase that keeps the company functioning.
That said, the decision still isn’t entirely rational, Berens says. When organizations have to choose among vendors offering relatively similar products and services, they generally opt for the vendor whose salespeople they like the best.
This means B2B companies have to make sure they meet or exceed parity with competitors on product quality, pricing, and time to delivery to satisfy all the rational requirements of the decision process. Only then can they bring behavioral psychology to bear by delivering consistently superior customer service, starting as soon as the customer hits their app or website and spreading out positive interactions all the way through post-purchase support. Finishing strong with a satisfied customer reinforces the relationship with a business customer just as much as it does with a consumer.
The best nudges make the customer relationship easy and enjoyable by providing experiences that are effortless and fun to choose, on- or offline, Dhar says. What sets the digital nudge apart in accommodating irrational customers is its ability to turn data about them and their journey into more effective, personalized persuasion even in the absence of the human touch.
Yet the subtle art of influencing customers isn’t just about making a sale, and it certainly shouldn’t be about persuading people to act against their own best interests, as Nudge co-author Thaler reminds audiences by exhorting them to “nudge for good.”
Guszcza, who talks about influencing people to make the choices they would make if only they had unlimited rationality, says companies that leverage behavioral psychology in their digital experiences should do so with an eye to creating positive impact for the customer, the company, and, where appropriate, the society.
In keeping with that ethos, any customer experience designed along behavioral lines has to include the option of letting the customer make a different choice, such as presenting a confirmation screen at the end of the purchase process with the cold, hard numbers and letting them opt out of the transaction altogether.
“A nudge is directing people in a certain direction,” Dhar says. “But for an ethical vendor, the only right direction to nudge is the right direction as judged by the customers themselves.” D!
Oil prices have fallen dramatically over last few years, forcing some major oil companies to take drastic actions such as layoffs, cutting investments and budgets, and more. Shell, for example, shelved its plan to invest in Qatar, Aramco put on hold its deep-water exploration in the Red Sea, Schlumberger fired a few thousand employees, and the list goes on…
In view of falling oil prices and the resulting squeeze on cash flows, the oil and gas industry has been challenged to adapt and optimize its performance to remain profitable while maintaining a long-term investment and operating outlook. Currently, oil and gas companies find it difficult to maintain the same level of investment in exploration and production as when crude prices were at their peak. Operations in the oil and gas industry today means balancing a dizzying array of trade-offs in the drive for competitive advantage while maximizing return on investment.
The result is a dire need to optimize performance and optimize the cost of production per barrel. Companies have many optimization opportunities once they start using the massive data being generated by oil fields. Oil and gas companies can turn this crisis into an opportunity by leveraging technological innovations like artificial intelligence to build a foundation for long-term success. If volatility in oil prices is the new norm, the push for “value over volume” is the key to success going forward.
Using AI tools, upstream oil and gas companies can shift their approach from production at all costs to producing in context. They will need to do profit and loss management at the well level to optimize the production cost per barrel. To do this, they must integrate all aspects of production management, collect the data for analysis and forecasting, and leverage artificial intelligence to optimize operations.
When remote sensors are connected to wireless networks, data can be collected and centrally analyzed from any location. According to the consulting firm McKinsey, the oil and gas supply chain stands to gain $50 billion in savings and increased profit by adopting AI. As an example, using AI algorithms to more accurately sift through signals and noise in seismic data can decrease dry wellhead development by 10 percent.
How oil and gas can leverage artificial intelligence
1. Planning and forecasting
On a macro scale, deep machine learning can help increase awareness of macroeconomic trends to drive investment decisions in exploration and production. Economic conditions and even weather patterns can be considered to determine where investments should take place as well as intensity of production.
2. Eliminate costly risks in drilling
Drilling is an expensive and risky investment, and applying AI in the operational planning and execution stages can significantly improve well planning, real-time drilling optimization, frictional drag estimation, and well cleaning predictions. Additionally, geoscientists can better assess variables such as the rate of penetration (ROP) improvement, well integrity, operational troubleshooting, drilling equipment condition recognition, real-time drilling risk recognition, and operational decision-making.
When drilling, machine-learning software takes into consideration a plethora of factors, such as seismic vibrations, thermal gradients, and strata permeability, along with more traditional data such as pressure differentials. AI can help optimize drilling operations by driving decisions such as direction and speed in real time, and it can predict failure of equipment such as semi-submersible pumps (ESPs) to reduce unplanned downtime and equipment costs.
3. Well reservoir facility management
Wells, reservoirs, and facility management includes integration of multiple disciplines: reservoir engineering, geology, production technology, petro physics, operations, and seismic interpretation. AI can help to create tools that allow asset teams to build professional understanding and identify opportunities to improve operational performance.
AI techniques can also be applied in other activities such as reservoir characterization, modeling and field surveillance. Fuzzy logic, artificial neural networks and expert systems are used extensively across the industry to accurately characterize reservoirs in order to attain optimum production level.
Today, AI systems form the backbone of digital oil field (DOF) concepts and implementations. However, there is still great potential for new ways to optimize field development and production costs, prolong field life, and increase the recovery factor.
4. Predictive maintenance
Today, artificial intelligence is taking the industry by storm. AI-powered software and sensor hardware enables us to use very large amounts of data to gain real-time responses on the best future course of action. With predictive analytics and cognitive security, for example, oil and gas companies can operate equipment safely and securely while receiving recommendations on how to avoid future equipment failure or mediate potential security breaches.
5. Oil and gas well surveying and inspections
Drones have been part of the oil and gas industry since 2013, when ConocoPhillips used the Boeing ScanEagle drone in trials in the Chukchi Sea. In June 2014, the Federal Aviation Administration (FAA) issued the first commercial permit for drone use over United States soil to BP, allowing the company to survey pipelines, roads, and equipment in Prudhoe Bay, Alaska. In January, Sky-Futures completed the first drone inspection in the Gulf of Mexico.
While drones are primarily used in the midstream sector, they can be applied to almost every aspect of the industry, including land surveying and mapping, well and pipeline inspections, and security. Technology is being developed to enable drones to detect early methane leaks. In addition, one day, drones could be used to find oil and gas reservoirs underlying remote uninhabited regions, from the comfort of a warm office.
6. Remote logistics
As logistics to offshore locations is always a challenge, AI-enhanced drones can be used to deliver materials to remote offshore locations.
Current adoption of AI
Chevron is currently using AI to identify new well locations and simulation candidates in California. By using AI software to analyze the company’s large collection of historical well performance data, the company is drilling in better locations and has seen production rise 30% over conventional methods. Chevron is also using predictive models to analyze the performance of thousands of pieces of rotating equipment to detect failures before they occur. By addressing problems before they become critical, Chevron has avoided unplanned shutdowns and lowered repair expenses. Increased production and lower costs have translated to more profit per well.
Today’s oil and gas industry has been transformed by two industry downturns in one decade. Although adoption of new hard technology such as directional drilling and hydraulic fracturing (fracking) has helped, the oil and gas industry needs to continue to innovate in today’s low-price market to survive. AI has the potential to differentiate companies that thrive and those that are left behind.
The promise of AI is already being realized in the oil and gas industry. Early adopters are taking advantage of their position to get a head start on the competition and protect their assets. The industry has always leveraged technology to adapt to change, and early adopters have always benefited the most. As competition in the oil and gas industry continues to heat up, companies cannot afford to be left behind. For those that understand and seize the opportunities inherent in adopting cognitive technologies, the future looks bright.
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About Anoop Srivastava
Anoop Srivastava is Senior Director of the Energy and Natural Resources Industries at SAP Value Engineering in Middle East and North Africa. He advises clients on their digital transformation strategies and helps them align their business strategy with IT strategy leveraging digital technology innovations such as the Internet of Things, Big Data, Advanced Analytics, Cloud etc. He has 21+ years of work experience spanning across Oil& Gas Industry, Business Consulting, Industry Value Advisory and Digital Transformation.