The Digitisation of Everything – Advertising

Thursday 06 February 2020


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The proliferation of artificial intelligence, the rollout of 5G and the growth in connected devices will further entrench digital advertising as the leading medium to drive consumer behaviour in coming years.

Our technology accelerators are changing how we see and respond to advertising.

AI will drive the digitisation of advertising by helping advertisers target customers and by creating automatically generated, responsive content.

Advertisers collect consumer data through cookies and other sources to create user profiles which allows them to target each individual with relevant content. Although many people have a negative perception of targeted advertising, AI could enable advertisers to provide us with ads containing information that we actually want.

For example if an advertiser knows you regularly travel between Sydney and Melbourne they may advertise a discounted fare for the sector before you book your next trip. This more relevant advertising is a win-win and is the stated goal of Google’s advertising business.

“The goal of our advertising business is to deliver relevant ads at just the right time and to give people useful commercial information”

Aside from targeting, Google is using AI to dynamically create viewer-specific content. Last year the company released AI tools that enabled content to be mixed and matched to create responsive ads optimised to the individual viewer. In the future AI will be used not just to curate content but to generate it.

The video below is an AI generated ad for Nike. While it hasn’t quite hit the mark, it won’t be long before AI will be used to create entire advertising campaigns, saving advertisers time and money.

The launch of 5G will have a transformative effect on many physical industries including retail, transport, education and healthcare. However, its impact will also be felt in the advertising industry. The development of 5G will reduce bandwidth limitations allowing video advertising to flourish. With enhanced internet speeds, streaming video is set to become the preferred advertising medium. Faster speeds will also allow advertisers more opportunity for compelling, high resolution ads to engage consumers.

A recent study on in-app pricing and performance by mobile advertising platform Smaato found the average click through rate (CTR) of in-app video is 7.5 times higher than for display ads. The value to the app platform (eCPM) is also greater for video, at more than 8 times the revenue from a static add. Video ads can capture consumers attention in a way that static images cannot.

[eCPM is the effective cost per thousand impressions known as the effective cost per mille]
Social advertising is growing, and marketers are investing in videos through Instagram Stories. With Instagram Stories reaching an estimated 1 billion users, this new ad format looks set to grow rapidly allowing brands to engage deeply with their consumers. YouTube boasts nearly two billion monthly users and has the capacity to find customers with advanced targeting. YouTube is vital to a successful digital strategy and will benefit from the rise of 5G.

IoT is set to transform advertising as billions of connected devices from home appliances to wearables hit the market. Put simply IoT means more data; data which will help advertisers better understand customers’ needs in real time enabling contextual advertising.

The key is that advertisers don’t need personal information to glean valuable insights from you. For example, Nike doesn’t need to access your fitness tracker to know you are health conscious, the fact that you bought a fitness tracker tells them that.

Contextual data will allow advertisers to create more personal ads, build brand loyalty and bring the brand closer to the purchase decision. A great example of this is Starbucks. Instead of offering happy hour to “anyone and everyone” (as management describe it), Starbucks has started offering personalised promotions to individuals using data collected from the app. These promotions include birthday discounts and deals on what it knows are your favourite products based on your order history.

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About the Author
Swell Investment Team

Swell Investment Team

Members of the investment team contributed to this article.