How Klarna's AI Strategy Generates $10M in Marketing Savings Each Year

Klarna's Use of Artificial Intelligence Leads to 11% Reduction in Sales and Marketing Spend

Klarna was able to decrease its sales and marketing expenses by 11% in the first quarter of 2024, even though they launched more campaigns and produced additional marketing materials. This achievement was attributed to the company's implementation of artificial intelligence (AI), as stated in a press release.

The fintech company based in Stockholm has cut down its spending on marketing suppliers by 25%. By leveraging generative AI tools such as Midjourney, DALL-E, and Firefly, it saved $1.5 million in Q1 on image generation and editing. This move also helped reduce the image development cycle from 6 weeks to just 7 days.

Klarna's cost-saving measures and improved efficiency highlight the benefits that many marketers hope to achieve through the adoption of generative AI in their operations. The company has a strong partnership with the industry leader, OpenAI.

Klarna's Success with AI in Marketing

Klarna, known for its personalized shopping feed driven by artificial intelligence, has been reaping the benefits of using this technology in its marketing strategies. In the first quarter, AI accounted for more than a third (37%) of the company's marketing savings, which translates to approximately $10 million annually.

In a press release, CMO David Sandström mentioned how AI is transforming Klarna, making the company more efficient and customer-focused for a superior experience.

Klarna has managed to cut down on spending for external services like translation, production, CRM, and social agencies, resulting in savings of $4 million. Additionally, the company saved $6 million in image production costs while increasing the number of campaigns and images created. With the help of AI, Klarna produced over 1,000 images in the first quarter and streamlined updates to its app and website for retail events like Valentine's Day and Mother's Day. Sandström highlighted that AI has eliminated the need for stock imagery.

Klarna makes use of generative AI for 80% of their copywriting needs, utilizing an internal AI tool called Copy Assistant. In fact, there are over a dozen AI-driven projects in the company's marketing department and more than 100 throughout the organization. An impressive 87% of employees rely on generative AI for their daily tasks.

The company is part of a growing trend among marketers and advertising platforms that are embracing generative AI in their operations and products. Big names like Meta, Google, Coca-Cola, and Estée Lauder are also exploring the benefits of this technology. Ally Financial, for example, found success last year by using a proprietary large language model to enhance their marketing efforts.

Klarna has a strong partnership with OpenAI, according to Brad Lightcap, the COO of the tech company. He mentioned that Klarna is leading the way in practical AI adoption. Klarna, which has over 37 million users in the U.S., is said to be getting ready for an initial public offering.

Editor's P/S:

Klarna's success in leveraging AI for marketing optimization is a testament to the transformative potential of this technology. The company's ability to reduce expenses while simultaneously enhancing campaign effectiveness demonstrates the value of adopting AI in marketing operations. By harnessing the power of generative AI tools, Klarna has streamlined image development, reduced external service costs, and improved content creation efficiency.

Moreover, Klarna's partnership with OpenAI positions the company as a leader in practical AI adoption. The growing trend among major marketers and advertising platforms to embrace generative AI highlights the industry's recognition of its benefits. As AI continues to evolve, we can expect to see even more innovative and effective applications of this technology in marketing and beyond.