Data and AI will drive a wave of personalization but what will be ‘the iPhone moment’?

Angel investor Eric Franchi was one of the co-founders of adtech outfit Undertone / Eric Franchi

Angel investor Eric Franchi recently helped fund some of what he sees as the most innovative early stage companies in digital. Here he shares his thoughts on how the challenges encountered by marketers when it comes to mobile are barely the tip of the iceberg, especially as consumers shift from screen-based interaction into a truly digital world.

Last month saw the tenth anniversary of the iPhone, and more broadly the real birth of mobile. It’s fairly amazing to note the change in the world since then, a look at the stats below remind us of that.

  • Nearly 3 billion people carry smartphones in their pockets.
  • There are over 5 million apps available for download in the two large app stores
  • Mobile ad spend crossed $80bn in 2016 and will grow by 30% this year
  • Facebook’s mobile ad business alone will be $30bn this year

Much of the thought pieces that were written celebrating the decade with the smartphone were very forward looking. Several predicted a world where we spend much less time in front of screens, as the physical world around us becomes more digital (think the home, automobile, television, etc.).

While predictions about the future are always fun, the reality is that the smartphone era created a world that the advertising industry is still managing to get to grips with.

It saw the transition of web to apps. From homepages to social platforms. The rise of messaging. The rise of images in all form – as content, in search, gifs, etc. The rise of video and the decline of the banner. The rise of identity and the erosion of the cookie.

On the last point, we only have to look at adblocking rates on mobile (380 million users according to PageFair) as evidence of the challenges the industry faces 10 years on from arguably the biggest breakthrough in mobile technology.

From an investment standpoint, we’re at an interesting stage because while there’s been so much change, there’s still much work to be done. This is why marketing and advertising technology remain very appealing as an investable category.

Perhaps we are the midpoint of the evolution of a world that is digital first. The things that we should see a lot more of as a marketing output are:

Personalization

This refers to the classic ideal of right person, right message, right time. But it’s about to become reality as mobile, data and artificial intelligence come together.

Right person

The foundation is data. Marketers have access to more and higher quality data than ever before. Marketers can easily access their own customer data and overlay that with other high quality data types and activate them across almost any digital channel thanks to customer data platforms. This is a category that has been around for a few years and is starting to come quickly – in fact the most recent Luma Partners study dubbed it as an “emerging category to watch”. The customer data platform will become the central hub for marketing activations, allowing brands to access any number of integrations for marketing purposes. A marketing process built around people and not broad audiences or cookie pools.

Right message

When we move from audiences to people, the message must change. As marketers get a more complete view of their customers across multiple channels they can be much more tailored. An obvious example of this is push-based messaging (in the case of a customer’s own app install base). However, more broadly, expect messaging to be revolutionized by Artificial Intelligence. More data, more audience segments, more opportunity for personalized messaging. There are already examples of this, such as Toyota using IBM’s Watson to create “cognitive ads" that consumers can interact with, or ad copy that was created entirely by AI.

Right Time (and also location)

Traditionally right time has been thought of as a moment in the purchase funnel. But mobile, data and AI will redefine this concept as well. Smartphones in our pockets give location an opportunity to create a personalized experience. Location, combined with other customer data signals provide an opportunity for “moment” messaging opportunities. Overlay data, AI-driven messaging and an ever-broadening device set (voice-based assistants in the home and the connected car) and right time is as exciting as how right person and message will be redefined.

Personalization is not just a marketing ideal. It’s going to be very good for business. According to Gartner, companies who rely on personalization will generate 20% more revenue (revenue!) than those who do not.

The bigger question from an investor’s standpoint is, what are the companies who will be building the technology to deliver it?

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