The Rise of (Humanized) AI Avatars And Their Practical Use Cases

Today’s newsletter is co-authored by Michael Streit, former Head of Data Strategy & Analytics at Novartis Germany and a Leadership & AI enthusiast.

Many of you have probably seen them already. You come across these incredibly lifelike digital versions of people from your network on LinkedIn. They might say a few sentences like “Hello, I’m the virtual avatar of…” or speak in another language using the same voice. We see them, marvel at their human-likeness, and yet, we find a bit of joy in the small imperfections that reveal them as virtual avatars.

Most of the time, these are just playful experiments that seem more like a gimmick. But what lies behind this technology and what is it good for? 

Let's dive into the topic of AI avatars, explore some promising use cases, and draft a methodology on how to implement your own company or personal avatar with a practical business value. 

What Are AI Avatars and Why They Matter (For Business)

AI avatars are virtual representations of (real or artificial) people powered by AI. They are designed to look, sound, and behave like real humans.

Here's an impressive recent example by Reid Hoffman:

Avatars can be based on real human beings or completely artificial characters without a real-world counterpart.

We differentiate between two major categories:

Video Avatars: 
These are non-interactive digital personas in the form of videos that simulate human behavior based on pre-recorded or scripted content. They are often used for simple, repetitive communication tasks.

Live Avatars: 
… aka interactive Avatars or conversational Avatars . These avatars are dynamic and can respond to user interactions in real-time, just like the one in the video above. They engage in conversations, understand user inputs, and provide personalized responses. Soon, they will not only understand voice or written commands but also facial expressions, emotions, and gestures (multimodal interactions) and will develop a contextual understanding.

AI avatars are becoming increasingly important in business because of their ability to combine efficiency with a personal touch. They help companies scale communications, from customer support to marketing, while keeping interactions tailored and consistent.

How are AI Avatars even possible?

AI avatars are powered by a mix of technologies:

Video avatars primarily rely on Natural Language Processing in combination with Generative AI and Text-To-Speech to provide a realistic simulation of a "talking head".

On top of that, Interactive Avatars use Speech-to-text and Computer Vision to process both audio and video inputs, and generate responses in real time.

With the recent advances in multimodal Generative AI, speech inputs can be processed natively by them, making the conversations even more responsive and realistic.

All of this comes together to create digital avatars that feel pretty lifelike and can engage with us in a really natural way.

Companies Specializing in AI Avatars

Building AI avatars is no longer a complex topic reserved for big software companies in Silicon Valley. In fact, the technology is becoming increasingly commoditized, with many software-as-a-service providers popping up.

Literally ANYONE can create at least a Video Avatar in under one hour.

Here's a short list of tools and vendors:

• Synthesia.io

• HeyGen.com

• HourOne.ai

• Veed.io

• Hippovideo.io

• Beyond Presence (German newcomer)

Beyond the basic appearance, you can also build your avatar on top of an RAG infrastructure that allows it - similar to an LLM chatbot - to ground its answers and responses in any knowledge base you give it.

The Problem with Creating the "Perfect" Avatar

If you've been following this newsletter, you're likely familiar with the 80% Fallacy in AI (if not, catch up on it here).

Creating a quick, solid version of your "digital clone" or AI avatar can be surprisingly fast. In just 1-2 days, you might produce an avatar that's nearly indistinguishable from reality—at least at first glance.

But that final stretch, where your avatar becomes truly flawless and capable of handling any situation, is still a distant goal. This gap is what trips up many business use cases.

In the end, choosing the right use cases remains as crucial as ever.

How to Implement an AI Avatar in Your Business

Successfully integrating AI avatars into your business starts with identifying the right use cases. Begin by analyzing internal processes and customer interactions to solve pain points or bottlenecks. Involve your team in crowdsourcing ideas to ensure the use cases align with real needs.

Next, evaluate these use cases using an impact-feasibility ranking. Consider factors like technical and organizational readiness. Even the best AI avatar is useless if employees are reluctant to engage with it. Address ethical concerns to ensure both internal and external compliance while fostering user adoption.

For implementation, follow the 20-20 rule of building Atomic AI use cases. Deliver enough value to validate the concept and keep momentum for the overall roadmap. Manage expectations closely—developing a perfect AI avatar is far from trivial. As you build more integrated and automated solutions, encourage full participation from all necessary team members, emphasizing that iteration is key to refining the avatar's performance.

Quality training data is crucial, especially when integrating custom knowledge sources.

Lastly, distinguish between avatars based on real people and fully AI-generated ones, and provide user training to seamlessly integrate these avatars into daily workflows.

While the field is still maturing and taking shape, here's a look at some real-world use cases.

Use Case Examples for Video Avatars

Even though this tech is quite new, we nevertheless could already see some interesting use cases around communication, customer service and education that could help companies to reduce video production costs, publish fast at scale and increase customer & employee engagement. 

Here’s a high-level mind map to illustrate some key areas:

1. Corporate Communication & Internal Support: 
   Use video avatars for (multilingual) internal & external (spokespersons) announcements, training videos, and employee support. Overall to standardize and streamline communication.
   

2. Online Courses & Educational Content: 
   Widely used in e-learning platforms to deliver consistent and engaging educational content (multilingual), making learning more accessible, personalized and interactive.
   

3. Marketing & Sales: 
   Employed in marketing campaigns, by using customer data, to deliver tailored video content to potential customers, improving engagement and conversion rates. Sales reps can also use AI avatars to augment their in-person interactions. Think about personalized video messages (efficient & fast) via email, for example, to scale outreach & follow-up without losing the personal touch. And last but not least, the emerging trend of using AI avatars as digital influencers or models that can promote products and engage with audiences on social media platforms. For example, AI influencers like Miquela (3M+ Instagram followers) are already being used by brands like Prada and Calvin Klein. Other big names such as Versace or Red Bull are undertaking similar initiatives.

Use Cases for Live Avatars

1. 1st Level Customer Support: 
   Virtual assistants in terms of live avatars provide immediate support for customer inquiries 24/7 (multilingual). They could manage complex queries, guide customers through troubleshooting or purchase processes, and even handle transactions. Thus resolving problems, reducing waiting time and enhancing customer experience and satisfaction.
   

2. Virtual Mentor: 
   Interactive avatars can conduct not only training sessions (e.g. Sales & rhetoric training), but create entire personalized educational programs along. Employees receive instant feedback and can ask questions in real time according to their individual progress. Think about employee onboarding, too. Walk new hires through their first few weeks and help them get answers they might otherwise be afraid to ask (or simply don't know who to ask). This gets them up to speed faster, reduces costs, and doesn't impact the bottom line of other team members.
   

3. Meeting Avatars:
   Now that's an interesting topic with a 50/50 chance to fail completely. Avatars could attend meetings, take notes, moderate discussions, and facilitate creative processes like brainstorming. Their presence might encourage more active participation.

Conclusions

While AI avatars often start out as "toys", their potential impact on business is huge. But don't get carried away with the technology itself - focus on how these avatars can complement your business strategy and unlock new opportunities for improved efficiency and growth (we're confident there are plenty!).

As always, start small, test ideas, and be open to iterating along the way. Maybe a simple text chatbot is the perfect first step to dip your toe into this new world.

Don't just think about what AI avatars can do for your business, think about how they can improve the human experience-both for your customers and your team.

Good luck!

Michael & Tobias