Klarna, the AI-powered global payments network and shopping assistant, has embarked on a transformative journey, leveraging artificial intelligence to optimise its marketing operations. In the first quarter of 2024, Klarna cut its sales and marketing expenditure by 11%, while simultaneously increasing the number of campaigns and refreshing marketing collateral more frequently. This strategic move underscores the potential of AI to revolutionise marketing efficiency and creativity, leading to significant cost savings and enhanced customer engagement.
Cost Reduction through AI Integration
One of the most notable achievements in Klarna’s recent strategy is the substantial reduction in marketing costs attributed to AI. AI has been responsible for 37% of the total cost savings, translating to approximately $10 million on an annualised basis. The key drivers behind these savings include:
- Reduction in External Agency Expenses: Klarna has slashed its spending on external marketing suppliers by 25%, encompassing translation, production, CRM, and social agencies. This strategic cut has resulted in run rate savings of $4 million. By reducing reliance on external agencies, Klarna has streamlined its operations and fostered greater internal efficiency.
- Savings on Image Production: Despite increasing the number of campaigns and creating a significantly higher volume of images, Klarna has achieved a $6 million reduction in image production costs. This has been made possible through the utilisation of generative AI (genAI) tools such as Midjourney, DALL-E, and Firefly for image generation, and Topaz Gigapixel and Photoroom for final adjustments. In the first quarter of 2024 alone, these tools saved Klarna $1.5 million.
- Enhanced Efficiency and Creativity: The deployment of genAI has revolutionised Klarna’s image development process. Over 1,000 images were generated in the first three months of 2024, reducing the image development cycle from six weeks to just seven days. This accelerated pace includes rigorous checks for brand consistency, image quality, and legal compliance, ensuring that the final output aligns with Klarna’s high standards.
David Sandström, CMO at Klarna, emphasised the impact of AI on their marketing operations: “AI is helping us become leaner, faster, and more responsive to what our customers care about, leading to a much, much better experience. And we’re actually driving more marketing activity while saving tens of millions of dollars a year.”
Streamlined and Dynamic Marketing Content
The integration of AI has enabled Klarna to update its app and website images on a weekly basis, reflecting key retail events such as Valentine’s Day, Mother’s Day, Spring refreshes, Graduation, and Summer Sales. This dynamic approach allows Klarna to stay relevant and engaging, catering to seasonal trends and customer preferences with bespoke imagery.
David Sandström further elaborated on the advantages of AI-driven marketing: “Traditionally, it would have been very costly to cater to these occasions with bespoke imagery but with AI that is no longer an issue, and we can create relevant imagery to support practically any event. Essentially, we have removed the need for stock imagery.”
AI in Copywriting and Beyond
In addition to transforming image production, Klarna has also harnessed AI for copywriting. The company’s AI-powered tool, Copy Assistant, enables AI to handle 80% of all copywriting tasks. This innovation has not only reduced costs but also ensured that marketing messages are consistent, high-quality, and aligned with the brand’s voice.
Klarna’s partnership with OpenAI has been instrumental in this transformation. Employees across the company have developed over 300 GPTs (Generative Pre-trained Transformers) for internal use, with more than a dozen AI-driven projects within the marketing department alone and over 100 across the organisation.
Conclusion
Klarna’s strategic adoption of AI has set a new benchmark for cost-efficient and creative marketing. By significantly reducing expenditure on external agencies and image production, and enhancing the efficiency of their marketing processes, Klarna has demonstrated the transformative power of AI. This approach not only yields substantial financial savings but also ensures that Klarna remains agile, responsive, and customer-centric in an increasingly competitive market. As AI continues to evolve, Klarna’s innovative practices are likely to inspire other organisations to explore the potential of AI in revolutionising their marketing strategies.
