a woman thinking about the future

The Future of Advertising: The Next 10 Years

680 400 Michał Schindler

This article about the future of advertising has been written by a bot.

[Insert a quote from William Gibson about an unevenly distributed future]

[Complain that it is hard to be a prophet in your own land]

[Provide some stats that the growth of digital ad spend will continue]

[Bring up a scene from Minority Report, where Tom Cruise sees personalized ads after his eyes get scanned]

Okay, okay, it’s not a bot that wrote this article, but a thirty-something content manager from an ad-tech company. The content written by AI will be one of the trends of the coming years. Luckily for people like myself, we are not there yet.

We are at the beginning of a new decade. (Calm down, calendar nerds, I know that the new decade actually starts in 2021, but the change from 2019 to 2020 is very symbolic). This is a good moment to take a step back and think about how the whole ad industry may look in the next ten years.

The Future is Going To Be Like Present But More Futuristic

We at Codewise try to guess or predict what the future of advertising holds. We know that there are known unknowns and unknown unknowns. Yet, taking into account all the variables and changes, we are confident that it is possible to talk about the future. Mainly because…

…the future of advertising has already started some time ago.

Most of the trends that will dominate digital advertising in the next decade have already kicked off. The tough point is to predict, which of these trends will have the greatest impact on the industry.

a closeup of the eye looking into the future

Where are we now?

The state of the advertising industry circa 2020 is: blooming, under scrutiny, hungry for a change.

The state of the users is: blind to traditional ads.

From this, several patterns emerge and start to shape the future of advertising.

Shapes of tomorrow

The main buzzword of today is storitization. What this clunky word means is that every ad experience will have a narrative, with its own pace and plot points attached to it.

Advertisers no longer want you to remember technical specs of their products, they want you to feel specific emotions when you think or interact with their product. This brings you closer to the brand

And what better way to make you feel strong emotions than by engaging in various social issues. This makes what is often referred to as ‘woke’ marketing.

It’s not about products anymore.

Gillette did it.

Nike did it.

Watching these ads, you learn nothing about the products. You feel everything when you recall these brands.

Individual marketing campaigns

Different storytelling methods often come in hand with another trend that we can observe: personalization.

No more ‘one-size-fits-all’ ad campaigns with big budgets that try to talk to everybody in the same way.

A time of smaller, personalized ads in campaigns with even bigger budgets is coming.

Users respond better to content that seems to be tailored just for them.

Only recently, the best advertisers could do was to display a message “Hello [smartphone_brand] user, buy a new protective cover”.

Now, we are approaching the world where each user gets a unique message: “Hello John Doe, in the light of your recent breakup, would you consider buying a new smartphone that will make you look cool again?

This is something that will be possible by employing technology (AI to be more specific), not people.

Personalization won’t be achieved without measurability. This is an old problem in a new disguise.

[Insert a quote from Peter Drucker about measuring things and managing them]

It’s not about clicks and conversions anymore. How about measuring an emotional response? Eye focus? Heart rate? The tech of tomorrow will gather all sorts of data.

Dimensions of change

These trends will require or make use of changes in the legal framework, technological advancements and payment flow. Let’s go over each of these dimensions.

The First Dimension: The Legal Framework

When it comes to future-thinking, everyone likes to talk about new gadgets and gizmos, cyberspace, AI and space ads.

Let’s kick-off with something less spectacular, but probably more profound:

GDPR.

Its introduction has changed a lot for advertisers, not only European ones. The annoying cookie-consent popups user experience aside, it made advertisers rethink how they approach the collected user data.

Before GDPR, the idea was to feed marketing experts or AI with as much data as possible and wait for them to come up with the best strategy.

After GDPR, this brute-force mechanic has found its limits and marketers have to be smarter in the way they use tracked data. The GDPR framework did not only gave an option to opt-out from data-collecting processes, which caused the volumes of data to drop but at the same time raised the quality of data. AI’s or marketing experts don’t have to search for patterns amidst the white noise.

The impact of GDPR on the industry has crossed the EU boundaries. At this moment, many countries outside the EU are revising their privacy policies. In the US, companies themselves are asking for GDPR-like regulations.

The GDPR legislation, along with various privacy scandals or data leaks, has also changed a lot for users by putting the privacy issue on the lips of common people. Some are annoyed by yet another popup. Others are distressed because of discovering how much data has been gathered on them by companies.

The Future

The issues of privacy and data ownership have changed the industry forever and will keep having an increasingly bigger impact on it. Ten years ago, only geeks cared about where their data is stored and what this data is. Nowadays, a dating app becomes a matter of national security. There is no going back.

New sources of user data

With the new sources of user data, the only way is forward. These new sources include:

  • Biometric data, from advanced smartphones and security systems that use fingerprints, facial recognition or retinal scans.
  • Behavioral data, collected by wearables, eye-tracking cameras or similar devices.
  • Voice samples, recorded by smart speakers, smart displays and all other voice-controlled devices.

Both law and technology can provide users with tools to control their data better. And advertisers will have to be more open, honest, and selective when gathering data. Location of servers, and to be more specific, the jurisdiction which they fall under, will also influence the future of advertising.

The AI-produced information

The big and yet unaddressed unknown are the outcomes produced by automatic, AI-powered systems. By looking for patterns in scraps of user data, automatic systems will be able to predict user behavior to a bigger extent than a user may have consented to. Both users and advertisers don’t know the full scope of information that can be derived from seemingly-innocent user data.

The last point to make here is the opt-out option. It is still relatively easy to resign and withdraw one’s consent to the data storage. But if one’s data is used to train AI, the deletion of the source data may not be enough. The results such AI delivers will be somehow influenced by data that a company has no longer rights to.

Everything that was mentioned above gives merely a glimpse into the challenges that lawmakers and, consequently, users and advertisers will have to face in the coming years. New regulations are inevitable. 

The Second Dimension: The Technical Challenges And Opportunities

Now it’s time for the future to hit us with the coolest devices it has: VR/AR glasses, smart assistants, gadgets you previously didn’t know existed but now desperately crave for… wait, no? Won’t that be the biggest change happening in the next decade?

This new tech will obviously give advertisers new channels to reach their customers, but probably the most important tech innovations will be less spectacular.

Connecting the dots

Even now when we speak of marketing channels, we think of separate campaigns. We use similar creatives and content, but ‘email’ and ‘mobile’ channels aren’t directly connected. But it’s not how the real people use the Internet. 

They have various devices. They start reading a web page on a laptop and finish it on a mobile device. They cast media on their TVs and ask their smart displays questions. The shopping list is written on a smart fridge and brought up on a smartwatch when they enter a store.

images of various gadget and devices

There are many possible touchpoints, i.e. interactions with a product, in the modern world. To build a meaningful connection with a user, you have to be visible in many channels and, what is even more important, track users’ journeys across multiple platforms and devices.

The cost model of tomorrow is not click-centric, but user-centric. 

The future tracking platforms will allow you to map the entire history of users’ interactions, get data on all the touchpoints and adjust your messaging accordingly.

So the biggest technical advancement will allow to offer a consistent and unifying marketing experience to users.

New marketing channels and 5G

Joining various points becomes an even more pressing matter when you take into account all the new ways of how users will be able to interact with your brand.

  • Imagine presenting your product in a virtual or augmented reality.
  • Imagine smart assistants proactively promoting your offers.
  • Imagine your ads shown on TVs, fridges or microwave ovens’ displays.

In ten years, IoT or smart devices will simply become just devices. Their online capabilities will be so obvious that no one will even bother to mention them.

The adoption of the 5G technology will allow to present your ads in a much higher quality. Think 8K or 360 videos, 3D models, 100 MP images and so on.

Taking advantage of this will require new creative approaches and a complete rethink of how a typical marketing campaign is structured. Omnichannel marketing will take over traditional ‘email’ or ‘social’ marketing campaigns.

The oligopoly of big players

The future of advertising may have its price. We already see a couple of big players, namely Google and Facebook, dominating the ad industry. Let’s look into some other potential big players that may join the advertising game:

    • Supperapps developers. A superapp is a mobile application that is almost like a mini operating system and allows its users to perform most of the daily online tasks within one environment.

Invented in ‘mobile-first’ Asian countries, these apps may become ‘the Internet’ for many users. The most prominent example is WeChat.

Think of them as Uber, Amazon, and Airbnb combined. Having these kinds of services inside one app will make users spend most of their online time there. And whoever operates ads in these superapps, controls marketing in entire populations.

    • Smart TVs manufacturers. For now, TVs display ads mainly in the context of apps that are installed on them. But soon, TV manufacturers may decide to cut out the middlemen and display ads by themselves. 

The experience we know from ad-enabled Kindles is now coming to the millions of huge displays hanging in the prominent spots in living rooms all around the world.

The same reasoning may be adapted by smartphone manufacturers. Such a company, Samsung for example, would instantly become a heavyweight champion in the industry.

The removal of ad agencies from the marketing chain is already happening. For example, Instagram has released a feature that allows brands to connect with influencers directly.

Bots writing content

All these personalized messages, custom-tailored VR ads and so on cannot be created solely by people. The marketing departments would have to hire half of the world’s population to design ads for the other half.

A lot of tasks that are connected with launching a campaign will be automated. Writing a simple text ad will not require a content writer.

[Insert sad face emoji and play sad violin in the background]

However, more creativity will be required on a grander level, when designing a campaign that incorporates all the new tech and new trends.

an image of someone's hands typing on a laptop's keyboard

What remains of traditional marketing

The remaining changes that I can mention are the rise of voice searches and searches in natural language, digital out-of-home (DOOH) advertising, advertising in over-the-top media services, and blockchain.

The use of blockchain technology will probably have the greatest impact on the economic level that will be discussed in the next segment.

The Third Dimension: Money Talks

The average price of a click varies across verticals, but it is climbing up. Briefly speaking, the competition is bigger and the increase of an ad space does not cover the demand. On top of that, ad blocks usage is still going up and bot traffic, despite the small drop, still makes the huge chunk of traffic.

Advertisers have to reenvision their monetization strategies.

For starters, the lifetime value of a customer will be more important than the cost of a click.

With the holistic approach to a user’s history of touchpoints throughout various channels, focusing on the cost of a click will prove to be inefficient in the long run. What will count more and what advertisers will finally be able to track is the value generated by a user over time. 

Blockchain to the rescue

Blockchain technology can change a lot in the advertising industry:

  •  A universally trusted ledger of transactions can help fight ad fraud and eliminate the middlemen.
  • The ability to record each step of a transaction inside one incorruptible database will make the industry more transparent.
  • Easy identity verification can help track users across the web.
  • Different monetization methods for advertisers may come from rewarding users that engage with ads with microtransactions.

All of this may have a profound impact on how the industry operates. The blockchain technology can significantly reduce costs but it may speed up the division of the advertising market between big players even further by removing intermediary parties.

The spending paradox

Advertising agencies that will or will not adopt the blockchain technology may still be eliminated from the market by the known paradox:

The more successful they are, the more their customers spend on advertising. The more they spend, the bigger temptation they may feel to move all media buying operations in-house.

Truth be told, all these fancy AI-powered trackers and marketing platforms will require significant investments. The future of advertising most likely belongs to the biggest and/or the smartest, at least on more developed markets.

New markets and new prospects

With the hardened Internet users in more developed countries being more and more immune to advertising tricks, the focus of smaller players may shift towards new markets.

As of now, more than half of the world’s population is connected to the Internet. This means that there are 3 billion people that are yet to see the Internet for the first time. Various technological advancements and initiatives already try to make the Internet more accessible.

Imagine the change that 3 billion fresh customers entering the market will make.

It is hard to predict the future of advertising and even harder if you want to get it right

The following article is a shallow swim rather than a deep dive into everything the future of advertising may hold. Yet, I’ve tried to point out the trends that we can currently observe and that will most likely influence the future the most, as well as areas of change.

The beginning of a new year is always a good time to think about the future. I’ve provided you with material and you have to do the thinking.

[Insert a pun that ties a nice bow on the article]

Wherever you will be in the advertising industry in ten years, remember this article and tell me, how well it aged.