MarketLoop #1, August 1996

Intelligent Agents

This issue of MarketLoop covers the subject of intelligent agents or smart agents and what their marketing role may be in the future. Will we be able to forget about shopping in the future as intelligent agents will do it for us? Or should we worry about forgetting to program the video recorder, as our agent knows what we like and will do it? Fancy seeing a film tonight? Then your agent will find one that you will like and possibly book the restaurant and taxi too.

Agent technology refers to software programs that will make computers easier to use. In short, they will be "little helpers". One of the key features of intelligent agents is that they are able to learn and improve their performance, seemingly acting on their own initiative. For example, if you order books, CDs, film or theatre tickets on-line, then the agent will learn your tastes and may be able to suggest other ones of interest or even notify when a new film is released.

Agents can also act as filters. The rise of e-mail, both for work and home, could be followed potentially by a deluge of unwanted messages or you may want simply to prioritise them. Your agent will do this for you, blocking out unwanted messages but filtering through those messages you have said you want or that it knows you may want.

It is already possible to add software packages to your PC so that they restrict access to certain Web sites or other Internet resources, such as pornography. The latest "plug-in" for the Netscape web browser is able to block banner advertising on the Web. This could become popular as the download time for a Web page may be significantly reduced through the exclusion of the often graphics-hungry banner ads. The development of the Web may need this "advertising" to survive but this is another subject. It will not be covered here.

Linking shopping agents with the efficient communications offered by the Internet could change the way we shop. The Internet already allows consumers to access retailers all over the world whether they are large or small. If a retailer is able to ship products worldwide then the Internet is opening up a global market. From a consumer perspective, shopping on-line can have a number of advantages, some of which are now briefly described. Firstly, it may be more convenient to shop from home at any time of day or night especially when time is at a premium. Secondly, prices will vary from country to country and from retailer to retailer so on-line shopping will enable consumers to easily find the cheapest price. The third advantage of on-line shopping is that it may enable access to products not available in the consumer's country.

Intelligent agents can play a crucial role in the shopping trip, or lack of it, in the future. Armed with the necessary information, they will search out the product for which you are looking and find the cheapest price. What are the implications for the price wars of the future? Who will be prepared to pay a higher price when there is perfect knowledge of prices, worldwide? A number or on-line retailers are already blocking Arthur Andersen's Bargain Finder agent which seeks out the lowest CD prices across a number of stores.

These shopping agents have the ability to learn about a user's tastes and adapt over time because of this. Agents Inc. is demonstrating its Firefly system which provides users with details of artists, records or films they may like. This records ratings provided by thousands of users and stores them in a huge database. The agent is then able to compare one user's taste with another's and make suggestions on the basis of this. Furthermore, Firefly is able to undertake sophisticated advertisement targeting within its site as it learns about its users. For an advertiser, it allows an banner to be delivered to a specific audience and the targeting can be further refined by an individual user's reaction to that advertisement. A number of major advertisers have already bought space on the Firefly system.

Entertainment Connection started in April 1996 with a shopping service based on agent technology. While Firefly builds a virtual community where individual members can have their own homepages on the system, Entertainment Connection is more of a shopping experience. However, like Firefly, Entertainment Connection will allow banner ads to be accurately targeted to users.

Intelligent agents represent one of the key building blocks in the future of communications and commerce. Their ability to help the user will provide an automated customised service, delivering personalised information and seeking out information in which the user will be interested. They will be crucial for advertisers as, while some agents will block advertising, others will ensure that the right message is delivered to the right person at the right time thus eliminating wastage. A retailer's agent can measure the shopping habits of individual consumers, including their profitability, and target them with the most appropriate promotional offers. They will help to reward loyal consumers or encourage those who shop less.

Agents may be able to remember personal information such as loved ones' birthdays and anniversaries. The user then has the choice of being reminded of the date or the agent may be able to choose a gift and send it. However, the user will always be in control as the agent can be switched on or off. The retailer's agent will remember customers' birthdays and anniversaries.

The biggest barrier to the success of the agents is consumer acceptance. Do they represent Big Brother watching over you all the time? In addition, the electronic shopping industry is still in its infancy and consumers may be wary of providing too much personal data. However, the success of electronic banking and traditional mail order show that there is a precedent in this area.