AI-Driven
Personalization
in Social-
Commerce
Dr Soummya Chowdhury
(Ph.D, [Link], PGDHRM, CA-IPCC, [Link])
Assistant Professor- Marketing
School of Business, GITAM deemed to be University, Hyderabad
Social-Commerce combines
social media with e-
commerce, enabling Social-commerce platforms
purchases directly through and brands using them have
social platforms (Instagram, revolutionized how consumers
TikTok, etc.) shop, integrating shopping
experiences directly within
Example: Instagram's social media platforms.
shoppable posts, TikTok’s
e-commerce integrations.
Instagram: Social-Commerce Features
Shoppable Posts: Instagram
allows brands to tag products
directly in their posts, stories, and
videos. Users can tap to view
product details and purchase
without leaving the app.
Instagram Checkout: Users can
purchase products directly on
Instagram, streamlining the
buying process within the app
itself.
Product Tags in Stories and
Reels: Users can tap on products
displayed in stories and reels,
redirecting them to product pages
Introduction to
AI and
Personalization
Why
“Personalization”
is important in Social-Commerce?
1. Demographic Information
Age, Gender, Location: Tailors recommendations based on life stage, gender preferences, and
location.
Occupation & Income: Influences purchasing power and professional-related needs.
Family & Marital Status: Impacts product choices for single, married, or family-oriented
users.
2. Psychographic Information
Interests & Hobbies: Sports, gaming, cooking, etc. for personalized recommendations.
Lifestyle & Values: E.g., eco-friendly, health-conscious, or adventurous choices.
Personality: Extroverted or introverted traits influencing product preferences.
3. Behavioural Data
Browsing & Purchase History: Tracks user interactions and purchases for pattern
recognition.
Engagement: Clicks, time spent, and content interactions to understand preferences.
Search Queries: Direct insights into what users are currently looking for.
4. Transactional Data
Spending Habits: Average spending and transaction frequency.
Brand Preferences: Frequent brands or products the user favours.
Reviews & Ratings: User feedback to fine-tune product recommendations.
5. Contextual Data
Device Used: Mobile vs. desktop, influencing content and product recommendations.
Time & Location: Helps suggest relevant content (e.g., local events, weather-based suggestions).
Social Media Activity: Likes, shares, and influencer follows that signal user interests.
6. Social Data
Social Interactions: Group preferences or shared content trends within the user’s network.
Friends & Network Behaviour: Recommendations based on what the user’s social circle engages with.
7. Temporal & Behavioural Changes
Seasonal/Contextual Changes: Preferences shift during holidays, life events, or changes in location.
Interest Shifts: Monitoring evolving tastes, such as moving from tech to home decor.
8. Feedback Mechanisms
Explicit Feedback: Ratings, reviews, or surveys directly reflecting user preferences.
Implicit Feedback: User behaviour (e.g., engagement duration, purchase actions) helps refine
recommendations.
1 2
WEBROOMING = SHOWROOMING =
ONLINE RESEARCH → IN- IN-STORE EXPLORATION
STORE PURCHASE → ONLINE PURCHASE
Micro- Moments
Using Google
Analytics for
Micro-Moments
Marketing
Track user behaviour: Google Analytics lets you track users' journey across your site. Understanding
how they navigate through your site (e.g., landing pages, product pages, or FAQ sections) allows you
to identify micro-moments.
Understand sources of traffic: Knowing where traffic comes from (organic search, paid ads, social
media, etc.) helps you know what drives users to your site in real time. For example, users who land
on your website after searching “best coffee near me” are likely in a “I want to go” micro-moment.
Create targeted content: With the insights from Google Analytics, you can tailor your content and
marketing efforts around common micro-moments. For example, if a lot of visitors to your site are
looking for product reviews, you can create content to answer these questions immediately.
Optimizing landing pages: Google Analytics allows you to see which pages get the most
engagement and conversions. This helps you refine your landing pages for specific micro-moments,
ensuring they address users' immediate needs.
Segment your audience: By segmenting your audience based on their behaviour (e.g., users who
are in the “I want to buy” phase), you can send personalized messaging through ads or email
campaigns.
Behaviour Flow Analysis: This is one of the best features for micro-moments. By seeing how users
flow from one page to another, you can understand their intent and be ready to provide relevant
content in real-time.
Omnichannel Marketing & AI
Integration
• Omnichannel Marketing Seamless, consistent customer experience
across all channels (online & offline).
• Integration of digital and physical touchpoints (website, mobile, email, in-
store, etc.).
• AI in Marketing Personalization: Leveraging AI to deliver tailored
content, offers, and recommendations.
• Predictive Analytics: Using AI to forecast customer behaviour and
trends, optimizing marketing efforts in real-time.
• Automation: Streamlining customer service (e.g., chatbots) and
marketing tasks (e.g., email campaigns) using AI.
AI-Driven Personalization:
Transforming Social-Commerce
AI-driven personalization tailors customer
experiences by predicting preferences, adjusting
pricing, and offering targeted content based on
user behaviour.
Key Areas of Focus:
• Recommender Systems
• Dynamic Pricing
• Targeted Content & Ads
Recommender Systems in Social-Commerce
AI predicts products or
content a user is likely to
engage with based on their
past interactions,
preferences, and the
Infographic showing the
behaviour of similar users.
Visuals intersection of social media
These systems aim to
and e-commerce.
improve the customer
experience by helping users
find what they’re looking for
faster, often without actively
searching.
Quick audience poll on which
social media platform they
Icons of social platforms most frequently shop on
(Instagram, TikTok, Pinterest, Interactive Element: (Instagram, Facebook, TikTok,
Facebook). etc.). Use tools like
Mentimeter or Slido for
instant feedback.
How AI-Powered
Recommender
Systems Shape
Shopping
Decisions
Types of Recommender Systems:
• Collaborative Filtering:
• Example: Amazon recommends products based on what similar users have
bought or rated.
• Uses data from many users’ behaviour to suggest products for a specific user.
• Content-Based Filtering:
• Example: Netflix recommends shows based on your watch history and
preferences.
• Focuses on the attributes of items you’ve engaged with to suggest similar items.
• Hybrid Recommender Systems:
• A combination of collaborative and content-based methods to improve accuracy.
• Example: YouTube combines both methods to suggest videos based on user
history and content similarity.
Key Benefits for Social-Commerce:
• Personalization at Scale: AI helps businesses tailor experiences for millions of
users without manual effort.
• Higher Conversion Rates: Personalized recommendations lead to higher
likelihood of purchases.
• Enhanced Customer Engagement: Recommender systems keep users engaged
by providing content/products they are more likely to enjoy or need.
Recommender
Systems Driving
Social-Commerce
Success: Real-
World Examples
Recommendation
Engine: Suggests Example: When buying
Impact: 35% of
related products a laptop, Amazon will
Amazon’s revenue is
Amazon: based on browsing and recommend accessories
driven by product
purchase history, like cases, keyboards,
recommendations.
increasing average and mice.
order value.
Example: You’re
Shoppable Posts: Impact: Instagram’s
scrolling through
Recommender systems shopping features are
Instagram, and you see
on Instagram show helping users transition
Instagram: an ad for shoes from a
personalized ads and from discovery to
brand you follow or that
products based on user purchase without
are like what you’ve
behaviour and interests. leaving the app.
liked.
Personalized
Playlists: Spotify uses
Example: Playlists like Impact: 70% of Spotify
recommender systems
"Discover Weekly" or users discover new
Spotify: to suggest playlists,
"Release Radar" are music via AI-driven
songs, and podcasts
tailor-made for users. recommendations.
based on listening
history.
Building Your
Brand’s AI-Driven
Recommender
System: Steps &
Best Practices
• Step 1: Gather Data
• Collect data on customer behaviour, purchases, browsing patterns, and social interactions.
• Ensure the data is clean, accurate, and properly segmented.
• Step 2: Choose the Right Recommender System Model
• Decide between collaborative filtering, content-based filtering, or a hybrid model based on your needs.
• Consider factors like user engagement and the complexity of your catalogue (e.g., Amazon’s hybrid model for a
vast product range).
• Step 3: Personalize User Experience
• Use data to suggest relevant products, offers, and even content (like videos or blog posts) that can lead to
conversions.
• Example: If a user frequently browses fitness products, recommend related items like yoga mats or
supplements.
• Step 4: Continuous Learning and Improvement
• Recommender systems must evolve with user behaviour. Continuously update algorithms based on new data
and trends.
• Best Practices:
• Test and Optimize: Use A/B testing to refine recommendation algorithms.
• Transparency: Inform users about how their data is used to improve their shopping experience.
• Performance Metrics: Track metrics like conversion rates, click-through rates, and revenue to measure
success.
The Future of AI-Driven
Personalization:
Recommender Systems in
Social-Commerce
Key Takeaways: Future Trends:
Recommender Systems are central to More Advanced Personalization: AI
creating personalized, engaging, and will use even more advanced data
seamless shopping experiences in social- signals like emotion recognition,
commerce. voice search, and visual search to
improve recommendations.
These systems drive higher engagement, Hyper-Personalization: As AI
conversion rates, and customer evolves, recommendations will
retention. become even more tailored to the
individual user’s mood, time of day,
and context.
Successful brands like Amazon, Instagram, Social Commerce Integration: AI-
and Spotify have shown how AI can powered recommendations will further
transform customer interactions into integrate with social media platforms
sales. to deliver seamless shopping
experiences.
Ensembled techniques of Algorithms
Bagging (Bootstrap Aggregating) involves training multiple models
independently on different subsets of the data (bootstrapped samples) and
then aggregating their predictions. It works well for reducing variance and
preventing overfitting.
Boosting is a sequential technique where each model is trained to correct the
errors of the previous model. It focuses more on difficult-to-predict data points
and is useful for reducing both bias and variance.
Stacking involves training multiple different models (base models) and then
training a meta-model on their predictions. The meta-model combines the base
models' outputs to make the final prediction. This can reduce bias and variance
by combining the strengths of multiple models.
AI-Driven
Dynamic Pricing
& Targeted
Content
AI's Role in Social-
Key Areas of Focus:
Commerce:
• Social-commerce blends • Dynamic Pricing: AI
social media and e- adjusts prices based on real-
commerce, making AI- time factors like demand,
driven strategies like competition, and user
dynamic pricing and behaviour.
targeted content crucial • Targeted Content & Ads:
in creating personalized, AI personalizes ads and
engaging shopping product suggestions based
experiences. on a user’s browsing
• The goal: Optimize history, interests, and
pricing, deliver relevant location.
content, and increase
conversions—all through
data-driven insights
powered by AI.
Dynamic Pricing:
Real-Time
Adjustments for
Optimized Shopping
Experiences
What is Dynamic Pricing? Dynamic pricing is a strategy
where AI algorithms adjust product prices in real time,
responding to factors like demand, competition, and user
behavior. The goal is to maximize revenue while providing the
best price for customers.
How Does AI Power Dynamic Pricing?AI continuously
analyzes market conditions, user behavior, and external
factors (e.g., seasonality, inventory levels) to predict the
optimal price at any given time.
Demand-Based Pricing: Prices rise when demand
is high (e.g., concerts, flights, hotel rooms).
Competition-Based Pricing: Prices adjust based
Techniques include: on competitors’ pricing.
Behavioural Pricing: Personalized pricing based
on the user’s browsing history, location, or past
purchase behaviour.
Example: Uber Surge Pricing: Uber uses AI to adjust fares based on demand. During
high demand times (e.g., rush hour), prices increase to encourage more drivers to
accept rides, while managing customer expectations.
Example: Airlines and Hotels Airlines and hotels use dynamic pricing to adjust fares
based on demand, time of day, or even how often a user searches for a particular trip.
Key Benefits of Dynamic Pricing: Increased Revenue: AI optimizes prices in real-
time, helping businesses maximize profits during high-demand periods.
Improved Customer Satisfaction: Personalized prices make the customer feel like
they’re getting a good deal.
Competitive Edge: AI allows businesses to stay competitive by adapting faster than
traditional pricing strategies.
Targeted
Content &
Ads
AI enables platforms to
deliver personalized ads,
This ensures that the content
product recommendations,
What is Targeted Content users see is relevant,
and content based on a
& Ads? leading to better engagement
user’s past behavior,
and higher conversion rates.
preferences, and
demographics.
Behavioural Targeting: Ads
are shown based on a user’s Contextual Targeting: AI
previous interactions, serves ads based on the
purchases, and browsing context of what the user is
How Does AI Personalize
history. For example, a user doing. If someone is browsing
Content & Ads?
who frequently looks at a product page, AI will
running shoes will see more recommend similar products
ads for fitness-related or discounts.
products.
Geolocation Targeting: AI Retargeting: AI follows up
personalizes ads based on with customers who have
the user’s location, shown interest but not
displaying offers or products completed a purchase. For
that are available locally or example, an item abandoned
regionally. in a cart might be retargeted
with a discount offer.
Example: Facebook & Instagram Ads
• These platforms use AI to serve personalized ads in users’ feeds based on their
engagement with brands, likes, comments, and even external websites
they’ve visited.
• Example: A user interested in fitness will see ads for gym equipment,
supplements, or activewear from brands they follow or similar brands.
Example: Amazon
• Product Recommendations: Amazon uses AI to suggest products based on a
user’s previous searches, purchases, and browsing history.
• Example: If a user buys a camera, they might see recommendations for camera
accessories, lenses, or memory cards.
Key Benefits of Targeted Content & Ads:
• Higher Conversion Rates: Personalized ads are more likely to lead to sales, as
they match the user’s interests.
• Better Customer Engagement: Tailored content resonates more with users,
leading to greater interaction and brand loyalty.
• Cost Efficiency: Businesses can optimize ad spending by targeting the most
relevant audience, ensuring a higher ROI on ad campaigns.
Synergizing
Dynamic Pricing &
Targeted Ads for a
Seamless Shopping
Experience
Key Takeaways & The Future of AI in Dynamic
Pricing & Targeted Content
Key Takeaways:
• AI-driven dynamic pricing and targeted content/ads are transforming how businesses
engage with consumers, creating more personalized, profitable, and efficient shopping
experiences.
• These AI tools provide businesses with real-time insights, enabling them to adjust pricing
and content strategies quickly in response to customer behavior.
• AI’s ability to scale personalization across millions of users ensures that businesses can
maintain a competitive edge in a crowded social-commerce marketplace.
Future Trends in AI for Social-Commerce:
• Hyper-Personalization: AI will go beyond demographics to understand deeper
preferences and even emotional triggers, creating more contextual and timely offers.
• Omnichannel Integration: AI will connect user experiences across multiple platforms,
delivering consistent pricing and personalized ads whether users are shopping on
social media, websites, or physical stores.
• Voice & Visual Search: As more people use voice assistants and AR for shopping, AI
will power dynamic pricing and recommendations based on voice commands and visual
cues.
Customer Segmentation:
Unlocking Personalized
Marketing in Social-Commerce
Customer segmentation Purpose: Helps businesses
involves dividing a broad tailor marketing efforts to
What is Customer customer base into smaller, each segment for more
Segmentation? more manageable groups effective targeting and
(segments) based on personalized customer
shared characteristics. experiences.
AI-powered
Traditional segmentation
segmentation allows
relied on manual
businesses to understand
grouping (demographics,
customer needs more
AI’s Role in Customer age, gender). AI takes this a
deeply, providing insights
Segmentation: step further by using data-
into factors like
driven insights to create
purchasing behaviour,
dynamic, behaviour-
brand loyalty, and online
based segments.
activity.
How AI Uses Data to
Create
Dynamic Customer
Segments
AI-Powered Data Analysis: AI algorithms
analyze large volumes of customer data from
multiple touchpoints like websites, social
media, mobile apps, and past purchases.
Key Data Points AI Analyzes:
Psychographic data:
Transactional data:
Behavioural data: Interests, values, lifestyle
Demographic data: Age, Purchase frequency,
Website visits, product choices inferred from social
gender, location. average order value,
views, interaction with ads. media behaviour or user-
product categories bought.
generated content.
Machine Learning & Clustering Techniques:Clustering Algorithms: AI uses
unsupervised learning techniques (like K-means clustering) to group customers based
on similar characteristics or behaviors without predefined categories.
Supervised Learning: AI can also be trained on labeled data to predict customer
behavior, such as the likelihood of making a repeat purchase.
Types of Segments AI Can Create:Demographic Segments: Based on age,
income, or location (e.g., “young professionals”).
Behavioral Segments: Based on purchase frequency, spending habits, and brand
loyalty (e.g., “frequent buyers” vs. “occasional window shoppers”).
Psychographic Segments: Based on customer interests, preferences, or lifestyle
(e.g., “health-conscious consumers” or “tech enthusiasts”).
E-Commerce Platforms:
• Amazon: Uses AI to segment customers based on their browsing and purchase history. Customers who
frequently buy tech gadgets are placed in a specific segment and shown targeted ads or product
recommendations tailored to their interests.
• Example: A user who buys fitness equipment might receive ads for supplements, workout clothes, or fitness-
related content on their homepage.
Fashion Retailers:
• Zara: Uses AI to analyze past purchases, store visits, and browsing behavior to recommend personalized
outfits or discounts.
• Example: Customers who frequently buy casual wear are grouped together and targeted with exclusive offers
on new arrivals in that category.
Beauty Brands:
• Sephora: AI segments customers based on skin tone, product preferences, and purchasing habits. This helps
Sephora provide personalized product recommendations, beauty tutorials, and offers.
• Example: Customers who prefer organic skincare products are placed in a segment and shown ads or
recommendations for new organic product lines.
Social Media Ads:
• Instagram & Facebook: Both platforms use AI to segment users based on interests, past interactions, and
purchase behaviour. The AI tailors ads to users who have shown interest in specific product categories (e.g.,
fitness, fashion, travel).
• Example: If a user has engaged with fitness-related posts or followed fitness influencers, they are likely to
see ads for gym memberships, equipment, or fitness supplements.
Step 1: Data Collection Step 2: Data Integration Step 3: Choose the Right AI
• Begin by collecting comprehensive • Use an AI-enabled CRM (Customer Tools
customer data across all touchpoints— Relationship Management system) or a • Implement AI tools or platforms (e.g.,
website interactions, social media Data Lake to centralize and integrate data Google Analytics AI, Salesforce
engagement, transaction history, and from various sources. This provides AI with Einstein, IBM Watson, Adobe Sensei)
customer service interactions. a holistic view of each customer. that specialize in customer segmentation.
• These tools will help you cluster
customers into meaningful groups, which
can then be targeted with personalized
offers, content, and recommendations.
Step 4: Build Targeted Step 5: Monitor and Refine
Campaigns Segments
• Once segments are created, use them to • Continuously track the performance of
design targeted marketing campaigns each segment and refine your AI models to
for each segment. ensure they stay relevant as customer Best Practices:
• For example, new customers might behaviors change over time.
receive a welcome discount, while loyal
customers might get exclusive early
access to sales.
Cross-Platform Integration:
Test and Optimize: Use A/B Ensure your AI segmentation
Start Small: Begin by
testing for campaigns to fine- integrates with all your
segmenting one or two customer
tune your messaging for each marketing channels, including
groups and gradually scale up.
segment. email, social media, and mobile
apps.
Personalized Product Recommendations
How AI Works: AI algorithms track user behaviour such as
browsing patterns, purchase history, and social media interactions
(likes, comments, shares).
Based on this data, recommendation systems predict which
products a customer is most likely to purchase.
Real-World Example:Instagram/Facebook Ads: Leveraging
Facebook’s AI algorithm, these platforms show users ads and
products aligned with their interests, significantly increasing the
likelihood of conversion.
Visual Search and Recognition
How It Works: Visual search allows users to upload images
to find similar products. AI algorithms analyze the image
and provide visually comparable items.
This improves user experience by enabling product
discovery without using keywords or text-based search.
Real-World Example: Pinterest Lens: Users can take
photos of items in the real world (e.g., clothing or furniture)
and Pinterest’s AI identifies visually similar products
available for purchase.
AI-Powered Chatbots
and Virtual
Assistants
How AI Enhances Customer Interaction: AI-powered
chatbots provide 24/7 support, answer customer inquiries,
suggest products, and guide users through the purchasing
process.
These chatbots can use natural language processing
(NLP) to understand customer queries and deliver relevant
responses.
Real-World Example:Facebook Messenger Bots: Many
brands now use Messenger bots to provide personalized
shopping experiences, from product discovery to checkout
support
Sentiment Analysis
How AI Works: AI algorithms scan customer reviews,
comments, and social media posts to analyze customer
sentiment toward products and brands. It uses NLP to detect
positive, negative, or neutral sentiments.
This information is valuable for brands to adjust marketing
messages, identify product issues, and manage brand reputation.
Real-World Example: Twitter and Brandwatch: Brands use
AI tools to monitor and analyze customer feedback on platforms
like Twitter. By analyzing sentiment, businesses can understand
consumer reactions to new product launches or marketing
campaigns.
Influencer Marketing Optimization
How AI Improves Influencer Selection: AI helps identify
the right influencers for a brand based on engagement
metrics, audience demographics, content relevance, and
social reach.
It helps brands optimize their campaigns by selecting
influencers who will generate the highest engagement and
ROI.
Real-World Example:TikTok: AI analyzes content and user
interactions to recommend influencers whose audience is
most likely to engage with the brand, ensuring efficient
campaign targeting.
Future Trends in AI
and Social Commerce
1. Augmented Reality (AR) & AI Integration
Combining AR with AI to create immersive shopping
experiences. For instance, users can virtually try on
clothes, makeup, or view furniture in their homes before
making a purchase decision.
2. Voice Search and Voice Commerce AI-powered
voice assistants (e.g., Alexa, Siri) allow users to make
purchases via voice commands, making shopping more
accessible, hands-free, and efficient.
3. Predictive Analytics for Inventory and Demand AI
will continue to improve forecasting and demand
prediction, ensuring that brands stock products according
to user preferences and seasonal demand patterns.
4. AI-Driven Content Creation AI will be able to
automate the creation of tailored content (images, videos,
ad copy), making the process more efficient and
personalized.
AI-based customer
segmentation allows The ability to target
businesses to create customers with
Key highly personalized
marketing
With AI, segmentation
is more dynamic and
relevant products,
offers, and content
Takeaway strategies by
grouping customers
can be adjusted in
real-time to adapt to
increases
engagement,
s: based on their
behaviour,
shifting customer
behaviours.
conversion rates,
and customer
preferences, and loyalty.
demographics.
Hyper-
Personalization: As Cross-Channel
AI becomes more Segmentation: AI will
Predictive
advanced, create unified
Segmentation: AI will
segmentation will segments across
Future become even more
predict which
customers are likely to
multiple platforms
Trends: granular, tailoring
offers not just by
churn, buy again, or
(website, social media,
email) to ensure
respond to certain
behaviour or consistency in
promotions.
demographics, but personalized
also by context, mood, marketing
and deeper insights.
AI doesn’t just understand customers; it predicts their
next move, tailoring experiences and segments before
they even know what they want.
