‘Data Is the New Oil’ and More from SXSW

AUSTIN, United States — The marketing and technology community's annual pilgrimage to Austin, Texas, for SXSW Interactive is a five-day jamboree dedicated to what's new and what's next. It's an opportunity to soak up the future through keynote talks, panel discussions, a trade show floor and networking meet-ups.

In 2015, wearable tech was on everyone's lips. This time around, virtual reality (VR) and the evolution of transportation, from autonomous cars to Elon Musk's Hyperloop system of ultra-high-speed trains, were key topics of conversation. McDonald's, Samsung and NASA all had VR experiences on show — as did IBM, which let visitors test out a VR cycling experience, taking the user through different landscapes and terrains. But what felt most fresh wasn't so much the rise of specific new technologies, but the emergence of new ways of working. There was no killer app and no single innovation dominated the conversation. Instead "collaboration" — something Net-a-Porter founder Natalie Massenet has written about in the context of online fashion retail — was the most important buzzword, replacing the likes of "disruption."

Nowhere was this focus felt more than in the keynote address delivered by US president Barack Obama, the first sitting president to speak during the festival. "If we use technology, data, social media in order to join forces around problems, then there's no problem that we face in this country that's not soluble,” he said in a call to arms.

But alongside the emphasis on collaboration, several other key vectors of change, from the rise of cognitive computing and artificial intelligence to conversational commerce and the ascendance of Generation Z, emerged as key themes with implications for the global fashion industry in the months and years to come.

Cognitive Computing

"Data is the new oil," said Kevin Plank, founder and chief executive officer of Under Armour, in a talk on brand building. "The companies that will win are using math," he added, explaining how Under Armour's connected fitness platform was a major opportunity for the company to capture big data and consumer insights.

His comments also suggested how businesses can drive success by feeding data to intelligent algorithms. Cognitive computing systems like IBM’s Watson were on hand at the event, doing things like mapping consumer sentiment and values by analysing 150-word Yelp reviews or Twitter posts, with the implication that true one-to-one marketing is around the corner. “At the moment [retailers] work on targeting based on assumed personalities. With Watson, they can directly match personalities. The results are 40 percent more accurate and can increase up-sell and cross-sell by up to 20 percent, making targeting much more efficient,” said Sandy Carter, general manager at IBM. (Watson first became famous for winning a game of Jeopardy! in 2011. Last week, it was Google DeepMind’s artificial intelligence AlphaGo that was in the headlines, after it defeated a human champion at the ancient board game of Go).

Michael Yamartino, head of commerce at Pinterest, said cognitive systems like these will fundamentally transform the shopping experience. But delivering truly personalised recommendations at scale isn’t easy. “The holy grail of AI? If recommendations feel like they are coming from your best friend,” said Yamartino. In another session, Laura Khoury, CEO and founder of Shoptelligence, a personalisation engine for retail, said: “The future of retail is all about the concept of me; aggregating goods and services that represent me as a person. It will be curated for me by really understanding what I'm looking for, what my values are and how I buy.”

Conversational Commerce

Of particular interest was the idea of leveraging cognitive computing to power customer service and the rise of intelligent virtual assistants. “There’s a whole new opportunity through AI to create better experiences for consumers with brands; experiences that evolve and become more interesting over time. Our current [customer service] interactions tend to be kind of boring. They don’t know me, even though I’ve maybe had a relationship with them for 10 years,” said Chris Messina, developer experience lead at Uber.

Messina is interested in the idea of "conversational user interfaces" like messaging apps, which can facilitate exchanges between brands and customers that feel more like the way people speak to their friends. In a blogpost that quickly went viral, he wrote: "2016 is going to be the year of conversational commerce." This signals towards messaging-based transactions and customer service interactions powered by intelligent bots that are so human-like that users won't be able to detect the difference.

Data is the new oil. The companies that will win are using math.

Already, Lark, a health app that uses AI, can have bot-powered conversations with users about topics like weight loss and nutrition. “What we really wanted to achieve was for users to feel as though there’s always someone there recognising their efforts and what they’re doing,” said Lark co-founder and CEO Julia Hu. “The power of AI is to bring some emotional connection to otherwise really cold interactions.” Lark’s software has learned from the conversational behaviour of doctors. But critically, the app functions at scale, powering over 350 million chats in the past few months, something which would otherwise require 21,000 full-time staff, she explained.

Bots are already integrated into chat services like Kik, a messaging app favoured by US teens, which hosts an intelligent assistant called Meya. The platform has 275 million users, who spend upwards of half an hour per session in the app, and a dedicated bot store. Whatsapp and Facebook Messenger are also tapping bots — and so is WeChat, alongside the additional services it currently offers its 1.1 billion registered users, from booking airline tickets to banking.

In fashion, Everlane has been experimenting with Facebook Messenger as a customer service channel, though, thus far, these interactions are a mix of automated messages — such as receipts and shipping updates — and messages powered by humans. “What’s transformational about it is the ability to create genuine personal and trackable relationships,” explained Messina.

Generation Z

Another big topic of conversation was how to best connect and communication with Generation Z , the generation born after the mid-nineties. Generation Z was born digital — but importantly, its members are mobile first. They are twice as likely to shop on mobile than millennials and they find email an out-dated mode of communication, according to Anna Fieler, executive vice president of marketing at PopSugar. Today's teenagers are three times more likely to open a chat message received through a push notification than an email, according to Jaclyn Ling, director of fashion and retail services at Kik.

What's more, they are much more interested in experiences they can share on social media, than stuff. "Generation Z are social authors, which really changes things for marketers. It's not about one-way conversations any more; you can't force them into engaging with the brand," said Shireen Jiwan, chief brand experience officer at Lucky Brand.

Importantly, members of Generation Z don’t define themselves by gender as much as older generations do. “For this generation there are less rigid expectations of what it means to be a boy or a girl,” said Fieler. Indeed, research released by JWT Intelligence during SXSW shows that Gen Z has a much less binary approach to gender than millennials. Only 48 percent of respondents identify as exclusively heterosexual, compared to 65 percent of millennials. Forty-four percent of Gen Z say they always buy clothes designed for their own gender, compared with 54 percent of millennials.

This has major implications for how retailers measure success. “The way we count our success is in weekly sales meetings with long Excel sheets that are very distinctly separated by gender,” said Jiwan. “We're pushing water uphill with a fork and changing that by casting campaigns that put menswear on women and vice versa. But we have to think about how we’re going to trace efficacy if we’re blurring genders. In effect, it’s about letting the back end of the business catch up with where culture and society are already moving today. It's a good thing for all of us.”