Klarna announced Tuesday that it expects to save $10 million annually by using generative AI for its marketing campaigns.
The buy now, pay later (BNPL) platform said it will reduce its marketing and sales spend by 11% in the first quarter of 2024, with 37% of that being due to AI. The company is using generative AI for copy and image generation, allowing it to run more content and more campaigns per year.
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What previously took six weeks to get campaign image assets now takes just a few days.
This will allow the company to create seasonal campaigns targeted at smaller retail events, rather than focusing solely on larger retail events, said David Sundstrom, Klarna's chief marketing officer.
“One of the biggest benefits is that we can do more than ever before. We can create new imagery in one week instead of six, at a much lower cost, and we can update our app and website weekly with imagery that reflects major retail events like Valentine's Day, Mother's Day, spring refresh, graduation, summer sales, etc.,” he told Sourcing Journal.
Companies using generative AI need to consider copyright and legal ramifications of what the technology produces. Sundstrom said Klarna's marketing employees have learned to check images for quality, legal standards, brand consistency, etc. So while it takes just a few seconds for generative AI to create an image, the process of a human reviewing its validity takes a bit longer.
The company said it uses a variety of tools to create its images, including OpenAI's image generation tool Dall-E, Midjourney, Adobe Firefly, Gigapixel, and Photoroom. Sandstrom said the company uses each for different purposes and declined to say which tools it relies on most.
Sandstrom said having a variety of tools at his disposal allows employees to work more creatively, especially since it speeds up the development of images.
“AI-generated imagery allows employees to conceptualize and visualize ideas without the limitations of traditional photography and design. They can experiment with different styles, elements and scenarios to create unique visuals that would be difficult or time-consuming to do manually,” he said.
Sandstrom added that generative AI allows employees to make adjustments specific to the campaign they're working on, without the need to take photos or videos in a specific location.
“AI can also generate imagery for different locations, weather conditions, and settings without being physically there. For example, employees can create visuals featuring snowy landscapes, specific cities, or exotic locations without being in their own workspace,” Sundstrom said. “This capability is especially useful for marketing campaigns, presentations, and other creative endeavors that require diverse, contextual imagery.”
By bringing more campaign creation in-house, Klarna has reduced its spend on outside agencies by 25%, or about $4 million per year. The company said in late February that its partnership with OpenAI had helped it create an agency that could do the work of 700 full-time agents. The company has cut ties with some third-party customer service agents, but said at the time that it wasn't cutting ties with its in-house employees.
Sandstrom said the company has less need for outside agencies, but that hasn't translated into a need to hire more in-house employees.
“Across our company, we're finding that tasks that previously took a long time for humans can now be done much faster and in much less time with the help of AI,” he said. “As a result, we have paused active hiring. The majority of our open roles are engineering roles, and other roles may be fill positions.”
The company announced earlier this month that 87% of its employees use AI systems on a daily basis.
Sundstrom declined to say whether Klarna is considering cutting jobs in the marketing department as it grows more convinced of AI, but did note that the company has plans to further explore AI and invest in the technology across various areas of the company.
“We are committed to leveraging AI to drive innovation and efficiency across our organization, and the positive impact on marketing is just one example of how AI is transforming traditional business processes to improve agility, creativity and customer-centric strategies,” said Sundstrom. “We will continue to explore and invest in AI technologies to further enhance our operations and deliver exceptional value to our customers and retail partners.”
