‘AI elves’ dominating holiday shopping trends, marketing insiders say

Digital elves are fast replacing Santa’s helpers when people buy holiday gifts, according to marketing experts who say AI companions have become the preferred way to hunt for deals.

A Harris Poll survey published Tuesday found that 79% of marketers attending a recent Association of National Advertisers conference said conversational chatbots have supplanted web browsers as “the new search” for bargain hunters.

A report on the findings noted that algorithms steering online product recommendations are “rewriting the rules” of how consumers engage with products and services.

“People aren’t just using AI for search,” Erica Parker, the Harris Poll’s managing director of research products, said in an email. “They’re beginning to delegate decisions, from product recommendations to travel planning.”

The survey found that 71% of attendees at last month’s marketing industry conference in Orlando perceived a need for their employers to develop new artificial intelligence transparency and privacy standards.

This could include retraining marketers to interact directly with AI chatbots, ensuring that companies aren’t “filtered out” of what shoppers find and purchase through conversational prompts.

“It’s the preferred way to gather information that could then lead to a gift purchase,” said Bill Duggan, an Association of National Advertisers vice president who co-wrote the report. “It’s a new shortcut for consumers, as it’s fast and pretty thorough.”

The Harris Poll worked with the advertisers’ association to survey 577 out of roughly 3,000 participants.

Several marketing and finance experts not involved with the survey said its findings confirm a fundamental shift in online purchasing ahead of this year’s winter holidays.

“Brands are no longer competing for keywords,” said Angelica Gianchandani, a marketing instructor at New York University. “They are competing to be understood and recommended by AI agents that curate the entire shopping journey.”

Peter Earle, a senior economist at the free-market American Institute for Economic Research, said the shift to AI shopping arose “over the last two holiday cycles” as ecommerce platforms and mobile apps adopted conversational chatbots.

“That matters because it shifts market power away from search engines toward platforms that control AI interfaces, potentially reshaping retail competition, price discovery, and advertising strategies,” Mr. Earle said.

Robert Gmeiner, an economist teaching at the University of South Dakota, said the change in consumer behavior became irreversible after Google, the world’s largest web browser, added “AI summaries” to search results last year.

“If you are a marketing professional, instead of focusing on good product reviews, advertisements, and search engine optimization, you now have to focus on getting descriptions of your products into whatever is training AI chatbots,” Mr. Gmeiner said.

’AI elves’

While most chatbots function as automated customer service agents, industry insiders say it won’t be long before every shopper can program their own Buddy the Elf to find and order holiday gifts online.

Hundreds of retailers and other companies now provide AI agents who help customers answer questions such as, “Where can I find the best mid-range ski package for a family?”

“The agent acts as a personalized assistant, translating that nuanced human request into an autonomous buying strategy that executes across thousands of sources simultaneously,” said Paul Frampton-Calero, CEO of the Goodway Group, a New York marketing company.

That includes analyzing discounts, market data, and pricing histories in seconds, giving the shopper an advantage over others who may only compare ski prices at one or two suppliers.

Leading AI shopping companions include Amazon’s Rufus, Google Shopping’s AI-powered assistant, Microsoft Copilot-powered retailer customer service agents, Walmart’s GenAI Search and Shopify’s Sidekick. They also include standalone programs like Klarna’s AI buying assistant.

As of February 2024, Klarna reported that its AI agent had handled more than 2 million queries a day.

Amazon reported this month that more than 250 million customers have used Rufus so far this year, up 210% from 2024, and that users are 60% “more likely to convert” to it.

Mike Ford, founding CEO of Skydeo, which helps marketers build their social media audience, said the ability of AI companions to fulfill wishes in seconds goes well beyond “elf work.”

“Every shopper now gets their own personal Santa Claus as their commerce advisor,” Mr. Ford said. “Once people try conversational shopping, they keep using it because the experience is better than search and other methods.”

Other advantages of AI companions include their ability to avoid scams, sponsored advertisements, and generic recommendations that plague overwhelmed holiday shoppers on search engines.

“Instead of spending hours browsing multiple websites to find the right holiday gift at the right price, one can now do so in a few seconds with a simple prompt,” said Denish Shah, marketing department chair at Georgia State University’s Robinson College of Business. “This holiday season will mark the highest usage of AI-assisted search ever. We are at the inflection point of the adoption curve.”

AI guardrails

The yuletide surge in AI-powered shopping is not entirely without danger, as companies self-regulate the technology for the time being.

Analysts predict that new industry and government regulations will emerge to ensure that companies disclose their emerging use of AI companions and allow shoppers to delete personal data.

“The elf may and most likely is recording data as you shop,” said Tom Arnold, a finance professor at the University of Richmond. “What becomes of the data is not clear.”

The trend is also likely to favor large corporations, added Mandy Hoskinson, a Los Angeles-based digital marketer.

“Small businesses already struggle to break through the noise, and this new wave of purchasing behavior will crush them,” Ms. Hoskinson said.

The Harris Poll reported Tuesday that 44% of people born after 1980 use AI tools to learn about brands. By comparison, 47% said they turned to Instagram for the same thing, and 45% used TikTok.

But Ryan Young, a senior economist at the libertarian Competitive Enterprise Institute, said it remains to be seen whether AI companions outperform coupon browser extensions and websites for holiday deal hunters.

“Maybe the AI versions are better, and maybe they aren’t,” Mr. Young said. “The only difference seems to be the user interface, and that is where AI’s competitive advantage, if any, would be.”