The False Promise of AI in Marketing: Are We Overestimating Its Capabilities?

In recent years, artificial intelligence (AI) has become one of the most talked-about innovations in marketing, with promises of revolutionizing how businesses engage with customers and optimize their strategies. From chatbots that provide instant customer service to algorithms that predict buying behavior, AI is seen as the key to unlocking unprecedented efficiency and personalization. However, as AI continues to dominate conversations in boardrooms and marketing teams across India, it’s worth discussing—are we truly leveraging its full potential, or are we overestimating what AI can deliver?

So, Is the Hype Around AI in Marketing Justified? For that lets see the Global and Indian Perspective

AI marketing is a fast-paced growing industry. at a CAGR of 29.8%, reaching $48.8 billion by 2030. Now, with over 700 million internet users and an explosion in e-commerce, digital payments, and mobile consumption India is a big market for AI. A 2021 PwC India report revealed that 70% of Indian companies are already using AI in some form and a 2023 report by Accenture says, AI could add as much as $957 billion to the Indian economy by 2035, with marketing and sales being one of the primary sectors benefiting from this growth.

AI is doing more than just automating tasks—it is enabling marketers to gain deeper insights, offer hyper-personalized experiences, and scale their campaigns with precision that would be humanly impossible. Indian companies are not just adopting AI, they are pioneering it to drive customer engagement, optimize ad spends, and enhance customer loyalty. Top 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 enhance customer service through chatbots, push notifications, email and in-app personalization.

However, while the excitement is understandable, let’s see what are the strengths and limitations with AI, especially in a diverse market like India.

The Strengths of AI in the Indian Marketing Landscape

1. The Power of Data and Predictive Analytics: A key advantage of AI in marketing is its ability to leverage massive amounts of data to deliver predictive insights that drive real results. AI tools can analyze user behavior, purchase history, and social interactions at a granular level, offering sharp segments and complete view of the customers. Look at Top Banks like HDFC, which use AI-driven 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 0101, we have created algorithms and use AI at the back of our performance frameworks of Retention, CLV, Growth and CRO to deliver results for our clients. We have also developed Predictive Remarketing frameworks which has enabled a lot of cost efficiency for D2C and ecommerce brands.
   
2. Personalization at Scale: The argument that AI offers only superficial personalization falls flat when you see examine cases like Myntra, Zomato, Swiggy and other e-commerce brands. They all uses AI to personalize recommendations based on each customer’s browsing history, purchase patterns, and even body type preferences. Through this, they tailor fashion choices to individual customers, significantly improving their shopping experience and driving conversions.
3. AI’s Creativity and Emotional Intelligence: Not as Limited as We Think: One common criticism of AI is its supposed lack of creativity and emotional intelligence, but this view overlooks recent advancements in AI-driven content creation and emotional analysis. AI tools like IBM Watson and Adobe Sensei are increasingly being used to generate marketing copy, video scripts, and even social media posts, with remarkable accuracy and relevance.
   Swiggy successfully used AI to optimize its creative strategy during its 2021 “What’s in a Name?” campaign, which used data-driven insights to create region-specific ad content that resonated with local audiences. Swiggy’s AI analyzed social media conversations in various languages to understand regional food preferences and customer sentiment, helping the brand create relatable and hyper-localized ad content.
4. AI’s Role in Optimizing Ad Spend: One of the greatest strengths of AI in marketing is its ability to optimize ad spends in real time. Meta and Google have over 200 optimization combinations which is humanly impossible to observe in real time. But AI and ML can do it and this is what we have done using 3rdi – Our inhouse recommendation engine which looks at these 200 optimization combinations to optimize your ads real-time. We are using it for several brands across BFSI, E-commerce and D2C to optimize their ad spends.
5. Indian SMBs and AI Adoption: The Future of Marketing: While some argue that AI is too costly for small and medium-sized businesses (SMBs), the rise of affordable, cloud-based AI solutions is changing this narrative. AI-powered marketing platforms such as Zoho CRM and Freshworks have made AI tools accessible to even small businesses in India. Even expensive customer experience and life time management platforms like Adobe are being replaced by platforms like Clevertap and MoEngage. These platforms allow SMBs to automate customer interactions, predict sales trends, and deliver personalized marketing campaigns at a fraction of the cost traditionally associated with AI implementation.

With all these advantages, there are also limitations of AI which can hamper the effective usage:

1. Dependency on structured Data: AI systems rely heavily on large volumes of clean, structured data to function effectively. However, in India, data quality is often a significant challenge. According to a 2021 survey by Dun & Bradstreet, 40% of Indian companies struggle with poor data quality, which hampers their AI efforts. For instance, fragmented customer data, duplication of data, incomplete purchase histories, and inconsistent social media engagement data can mislead AI algorithms.
2. Over-Reliance on Automation: Automation is one of AI’s biggest selling points, but over-reliance can lead to problems. Swiggy, once faced backlash 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 roll back the feature in several regions after users criticized the lack of transparency and fairness in pricing.
3. Personalization Challenges in a Culturally Diverse Market India is a highly diverse country, with wide variations in language, culture, and preferences. AI’s ability to deliver personalized content can often fall short in such a complex environment. 
4. Bias in Algorithms: A Challenge for Inclusivity AI algorithms are prone to bias, and this is particularly problematic in India, where socio-economic diversity is vast. AI models trained on limited or biased datasets can perpetuate inequalities and exclude certain groups. For instance, AI-powered card, loan and insurance approval systems used by some Indian banks were found to disadvantage certain demographic groups, leading to unfair lending practices. This problem arises because AI systems often reflect the biases present in their training data, which may not be inclusive or representative of all groups in a market as varied as India.
5. High Cost of Implementation and Maintenance. Small and medium-sized businesses (SMBs), which make up a significant portion of India’s economy, often find it difficult to compare cost v/s efficiency of AI. According to a NASSCOM report, the cost of AI adoption remains a barrier for 60% of Indian SMBs. 

Hence these companies look out for third party solutions like us to help them since we have already trained our models to specific industries and have proven success rates. 

So Are We Overestimating AI’s Capabilities in India?

NOT EXACTLY. We believe it is just getting started. This is often believed as a lot of marketers base their judgement on short term results whereas this is an ever-evolving technology. The Indian market poses unique challenges for AI-driven marketing. While AI can help companies scale and automate many processes, its current capabilities are not advanced enough to address the full spectrum of India’s complexities. Marketers should be cautious about over-relying on AI for tasks that require deep cultural understanding, creativity, and emotional intelligence. 

I Think businesses should take a balanced approach by combining AI’s analytical power with human judgment. AI can be incredibly effective when used to augment human decision-making, but it should not be viewed as a replacement for creativity, strategic thinking, and cultural awareness.