In this posting, Peter talks about the level of disruption that is occurring in the world of print as well as how augmented reality is altering how we receive and digest advertising. I have edited some of the original content but the substance is very much kept intact. Enjoy the read.
Today, less than two decades after the arrival of the Internet, Google and Facebook together command more advertising dollars than all print media on the planet.
In 2017, Google’s advertising revenue totaled over $95 billion, while Facebook reached more than $39 billion. Taken together, this number represents roughly 25% of all global advertising expenditure.
Fueled by open source e-commerce platforms, mobile devices, and advances in online payment infrastructure, social media marketing has replaced virtually the entire traditional advertising industry in fewer than 15 years. And the numbers are huge. In 2018, global advertising surpassed $550 billion, driving Google’s valuation above $700 billion and Facebook above $500 billion, all fueled by our searches, likes, dislikes, what we desire, who our friends are, and what we (and they) are clicking on these days.
But with a blitzkrieg of technologies converging on the industry, advertising will continue to change, first, by getting more invasive and a lot more personal, and then by vanishing entirely. How long will it be before the latter? Give it 10 to 12 years at the most.
Because of the convergence of high-bandwidth 5G connectivity, augmented reality eyewear, our emerging trillion-sensor economy, and powerful AI, we have gained the ability to superimpose digital information atop physical environments, freeing advertising from the tyranny of the screen.
Imagine stepping into a future Apple Store. When you approach the iPhone display, a full-sized AR avatar of Steve Jobs materializes to give you a tour of the product’s latest features. Avatar Jobs is a little too much, so with nothing more than a voice command, he’s replaced with floating text and a list of phone features hovers in the air in front of you. After you’ve made your selection, eschewing the iPhone for a new pair of AR iGlasses, another voice command is all it takes to execute a smart contract.
Next, glasses on, you head over to a friend’s house. While chatting in her kitchen, you gaze at her new cabinets. Sensors in the glasses track eye motion, so your AI knows your focus has been lingering. Via your search history, your iPhone knows you’ve been considering remodeling your kitchen. Because your smart recommendation preferences are turned on, cabinet prices, design, and color choices fill your field of vision. It’s a new form of advertising: either an extension of frictionless shopping or a novel type of spam.
The early version of this reality is already here. Known as visual search, the feature is currently available from a number of companies. Here are some examples.
All this visual search competition has kicked development into overdrive, spiking consumer adoption rates. And as more people use these systems, more data gets fed back to the AI running them. By the fall of 2018, this feedback loop pushed visual searches above a billion queries a month for the first time.
Pretty much every global brand is preparing for a world of point, shoot, and shop.
But it could get even creepier.
You’ve been spotted. You’re just out for a casual stroll through a department store, and their facial recognition system has you in its sights. Your AR glasses light up: “Hi Sarah, great to see you. . . . That’s because you forgot to change your preferences to Do Not Disturb. A microsecond later, the store’s TV monitors have got you. Maybe it’s a hologram or the President of the United States calling out your name, “Sarah, just one second. Your pores are a matter of national security. I want to tell you that your genome sequence matches a new line of L’Oréal skincare products.” If you don’t respond to POTUS, the AI switches tactics. Now it’s Mom. You flinch, involuntarily. Her voice is deeply imprinted on your brain. But you know better, and just keep walking. Sometimes it could be your favorite movie stars (based on data from your Netflix account), or your favorite sports star (based on Internet searches).
Does this sound like a far-off fantasy? Guess again.
From the Mad Men of old to the Madder Men of today, the purpose of advertising hasn’t changed: to sell you stuff. So ads extol benefits: Buy X because it’ll make you Y—sexy, successful, shiny, whatever. But what happens when you are no longer the one making the buying decisions? That’s when Shopping JARVIS comes to the rescue.
Imagine a future when you simply say: “Hey JARVIS, buy me some toothpaste.” Does JARVIS watch TV? Did he happen to catch those late-night ads filled with bright-white smiles? Of course not. In a nanosecond, JARVIS considers the molecular formulations of all available options, their cost, the research that supports their teeth-whitening claims, published client-satisfaction reports, and evaluates your genome to determine the flavor formulation most likely to tingle your taste buds. Then it makes a purchase.
Taking it a step further, in the future, you’ll never actually have to order toothpaste. JARVIS will be monitoring your supply of regularly consumed items, from coffee, tea, and almond milk to toothpaste, deodorant, and all the rest, and will order supplies before you realize what needs restocking.
How about purchasing something new? That drone your son wants for his birthday? Just specify functionality. “Hey JARVIS, could you buy me a drone for under $100 that is easy to fly and takes great photos?”
What about fashion decisions? Will we trust our AIs to choose our clothes? It seems unlikely until you consider that AIs can track eye movement as we window-shop, listen to our daily conversations to understand likes and dislikes and scan our social feeds to understand our fashion preferences as well as those of our friends. With that level of detail, Fashion JARVIS will do a pretty accurate job of selecting our clothing, no advertising required.
In the next decade, expect advertising to get far more personalized learning from an explosion of layered data and expanding into new surfaces of our digitally superimposed world.
Next, we’ll head towards a future in which AI will take over the majority of our buying decisions, continually surprising us with products and services we didn’t even know we wanted.
Or, if surprises aren’t your thing, you’ll just turn off that feature and opt for the boring and staid. Either way, it’s a shift that threatens traditional advertisers, while offering consumers a very different view of the material world around them.
In 2018 the global advertising industry is projected to surpass $550 billion with revenue from advertising driving Google’s valuation to in excess of $700 billion, and Facebook to over $500 billion. But all of that is about to change.
What if I were to tell you that the advertising business as we know it today is about to disappear… Collapse… Dematerialize?
Let’s dive in.
The TV show Mad Men fictionalized the classic 1960’s Madison Avenue advertising agency, where print, TV, and radio ruled the roost and defined how companies pushed their products to the consuming public. There’s no question that when the dot-com revolution came along, few understood the disruptive impact of the technology. Now, less than two decades after the dot-com bust, Google, and Facebook combined, command more of the advertising market than all print media on the planet.
To provide perspective:
Both Google and Facebook, companies that are roughly a decade old, together make up roughly 25% of all global advertising expenditures. In these ten years, virtually the entire advertising industry has transformed itself into a digitized social media marketing business, fueled by open-source e-commerce platforms, mobile devices, and breakthroughs in digital payment infrastructure.
The purpose of today’s advertising whether print or digital is to convince you to buy something. Advertisers extol the benefits. Buy this product because… it will make you more popular, more sexy, more successful, and so on. But what happens in the future when it’s not you making the purchasing decisions, but instead, your AI? Imagine a future when you simply say to JARVIS, your personal AI butler (named after the AI in Ironman) “Hey, I’m low on toothpaste, buy me some.” Does JARVIS watch the TV advertising campaign filled with bright-white smiles? No, of course not. In a nanosecond, the AI considers the molecular formulation of all the options, the pricing, the published client-satisfaction reports and finally, perhaps, evaluates your genome to understand exactly which flavour formulation is likely to excite your taste buds. And then it purchases.
Frankly, in the future, you’ll never have to actually ask your AI. JARVIS will be monitoring your supply of regularly consumed items, from toothpaste to butter, and will be able to order them “auto-magically” before you even know you need them.
How about the purchase of something new? Say, for example, a drone your son wants for his birthday. In this case, you’d likely just specify the functionality desired and ask “Hey JARVIS, could you buy me a drone for under $100 that is easy to fly, and that takes great photos?”
Even today, there are very few things that I want to go and buy myself, to look at advertising, do comparison shopping, and so forth. But what about fashion decisions? Are you going to trust your AI to choose your clothing? Probably not, but I do imagine an AI that listens to my daily conversations, tracking my eye movements as I window shop, and actively pattern matching me across my social circles. That AI will know what I like, which of my friends I tend to dress like, and it will do a pretty good job of selecting clothing choices for me.
We’re heading towards a future where, regardless of the product or service category, your AI will make the majority of your buying decisions. This is the paradigm shift that poses a tremendous threat to traditional advertisers and a revenue disrupter to the current online models subscribed to by Google and Facebook.
I often speak of the six D’s of exponentials: Digitized, Deceptive, Disruptive, Dematerialized, Demonetized and Democratized. Right now, we are experiencing the dematerialization and demonetization of advertising thanks to the power of artificial intelligence and the prominence of social networks. But perhaps there is a seventh D… Dismissed. Meaning that companies are going to be dismissed by the consumer, who will delegate their AI to make all purchase decisions. At the end of the day, my AI will make purchases for me based upon fundamental metrics: which product choice is the healthiest, the lowest cost, the safest, and best aligned with my social graph. I will not care about any advertisement, and when I have my AI make optimized decisions for me, I will no longer trust traditional advertising. For the consumer, and for those of you in the advertising business, the change is about to occur at an unprecedented rate.
