Personalization as a Service: new revenue stream for IBM Watson?

IBM Watson has come a long way since Jeopardy. After finding applications in health care and finance, IBM continues to explore new revenue streams for its artificial intelligence service.

Today, IBM is tapping Watson to help deliver highly personalized travel and retail shopping experiences.

Personalization is a massive opportunity for marketers. It has been found to increase ad click-throughs, email open-rates, conversions, and ultimately revenue. Customers have also come to expect it.

In fact, marketers say personalization is the single most important capability for their company’s future marketing efforts, according to an Adobe study of over 1,000 marketers.

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But personalization is also complicated. It depends on collecting and finding the most relevant data about customers. And the delivery of personalized messages or experiences varies throughout the customer journey. That’s part of the reason why, as we found in our recent marketing clouds report, only six percent of marketers target and personalize their messaging down to the individual level.

Enter Watson.

Watson has been best used to parse massive datasets and provide insight, which could be a very good way to address the challenges of personalization — regardless of industry. For example, a previous investment in Pathway Genomics aims to use Watson to help personalize consumer health.

Today’s first investment is in WayBlazer, a travel discovery company led by a founder of Travelocity and Kayak. The company is using Watson to redefine how consumers plan, personalize, and purchase travel.

WayBlazer uses Watson to analyze massive amounts of data, linking places, offers, and preferences with social, cultural, and economic data to generate recommendations tailored to each consumer.

IBM’s second investment is in Sellpoints, a provider of e-commerce and customer engagement solutions. IBM Watson helps Sellpoints customers better understand individual shopper preferences and intent. Instead of requiring surveys or complex questions, the company’s new app allows consumers to ask questions in natural language, returning a set of relevant and personalized offers in just two taps or clicks.

By simplifying and personalizing the customer experience, IBM says they can eliminate nearly 60 percent of the clicks in the traditional product selection process.

One question will be whether IBM makes more investments or partnerships regarding personalization capabilities for marketing and commerce, or whether it will use them for its own marketing cloud offering. A large ecosystem of marketing technology vendors might be interested in similar capabilities.