Can AI Beat Out Santa at Gift-Picking?
A new study projects a 130% jump in AI-led gift traffic this holiday. But is AI better at picking gifts than humans are?
This holiday season, will you rely on your own intuition to pick your spouse’s gift, or will you tap into what social media suggests?
You may end up doing neither. According to a new report, traffic to US retail sites from AI is expected to increase by an eye-popping 130% year-over-year. And even if AI is still a long way from being the most important driver of retail traffic, experts say the growth signals a significant shift in a whole new and super large area of decision-making.
“We are just in the first inning with regard to AI’s impact on revenue for retail,” says Matthew Siegel, a principal in Korn Ferry’s Global Technology and Marketing practices.
While AI platforms are often compared to search engines and e-commerce channels, they can act like social media influencers, showcasing a variety of products, giving recommendations on them, and telling people where to buy them. And with the holiday-shopping season unofficially kicking off next week, retailers will be watching for clues to see if their internal AI agents and external AI platforms can grow sales as much as influencers can.
Still, it’s an open question how well AI will discern what prized gifts people should get. Unlike search engines of the past, it can track and follow the kinds of gift the user likes. For his part, Dominic Cottone, a Korn Ferry senior client partner, says the risk in relying on AI too much is that you’re not using human relations. “Just go to your Mom and ask for her Christmas list,” he says. “She will appreciate that you asked.”
There are metrics showing that traffic from AI leads to greater sales conversions than traffic from other marketing channels. One survey from last year found that visitors from AI platforms purchased products at a 31% greater rate than those referred from elsewhere—and nine times greater than social-media referrals specifically—leading to a 254% revenue increase per visit. But the base of this revenue growth remains inconsequential—“negligible enough to not warrant dollar amounts,” says Craig Rowley, a senior client partner at Korn Ferry specializing in retail.
That’s where the parallel with influencers comes into play. Influencers first appeared on social media in the early aughts, and although marketers experimented with them right away, they needed nearly a decade to grow into a viable and reliable digital sales channel. Today, the affiliates/partner marketing category, which includes social influencers and social-media accounts, trails only paid search as the biggest digital-marketing revenue driver for firms, accounting for roughly $100 billion of the $241 billion in holiday sales last year.
Influencers took off in part because they tailored products to their audience and built trust with them over time with their recommendations. Since AI learns from past interactions, the more context for gifts people give agents and chatbots, the better the resulting recommendations will be and the more trust will be built, says Siegel. Korn Ferry senior client partner Jennifer Williams agrees, adding that AI platforms can draw for their recommendations on two years’ worth of data on users’ searches for holiday gifts.
From a brand perspective, the key is to model AI outputs to show up in user prompts without undermining trust or sacrificing authenticity, says Peri Hansen, sector leader of the Consumer Products practice and leader of the Marketing Officers practice at Korn Ferry. She says firms have invested heavily in expertise in generative-AI optimization in order to stay on top of the latest trends and algorithm changes and understand how consumers are prompting and using LLMs. “It’s another channel for CMOs to prove the value of AI outputs as revenue drivers,” says Hansen, “but they have to show up in a way that isn’t perceived as artificial or diluting the brand’s message.”
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