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Chasing growth is a hell of a lot easier than transformation, and growth has decided to take a holiday

By Ashley Swartz, CEO

February 7, 2017 | 6 min read

Ashley Swartz, Furious Corp, chief executive officer and columnist for The Drum, reflects on the dynamics of the media industry observed at CES, particularly at a point in time where technology, and how human beings interact with it, will radically change advertising.


Amazon Alexa is leading the voice recognition race, with Google a distant second, according to Swartz

Since the first web banner ad was sold in 1993 by GNN (Global Network Navigator), advertising has been about net new growth. Media companies, technology companies, marketers, adtech companies and investors have all capitalized on this with new devices, applications and content to increase time spent by consumers interacting with devices.

These new experiences are often funded by advertising and what feels like a limitless number of opportunities to insert and interrupt with ads. But let’s call a spade a spade; chasing growth is a hell of a lot easier than transformation. Some folks may take offense to this, but as a business person I believe that media and advertising have yet not transformed to mitigate complexity. Thus far we have only added complexity to the mix.

The new technologies we see at CES, which include hardware and software, have enabled the shift of audiences to digital devices and increased time spent reading, watching, and sharing. This has fueled the emergence of data-driven advertising and the product-ization of the ‘digital footprint’. Many startups have leveraged meta data about individuals to predict consumer behavior and, in turn, sell this to marketers to increase the ROI of their ad spend and the likelihood of delivering the right ad at the right time.

Good, right? But what does this all mean if there are few ads with which to use data to target?

Less Does Not Mean More

My takeaway from CES is that we are in for a very rough ride. With new devices, Alexa crowned Queen, plus excitement over the possibilities posed by VR, CES was the calm before the storm.

This technology provides a blank canvas and opportunity for innovators, unfortunately during a time where the adpocalypse means there is no capital to be had for early stage adtech companies. Or for those that may prefer a more extreme, fatalistic metaphor, it's like the advertising industry waving from the deck of the Titanic before it left port.

Let’s look at the advertising and media market right now. Remember the net new growth I talked about earlier? Yeah, well that’s gone. In fact, the truth in numbers may confirm the market is actually shrinking.

Print and radio are declining, the TV increases are only in line with inflation, and the aggregate digital advertising spend estimates from 2016 tell us that after you remove Google and Facebook, digital ad spend for the rest of the industry is flat. The sprinkles on the cupcake are there are, more than ever, an increasing number of adtech ‘middle [wo]men’ siphoning money from the media value chain. This is what other industries call ‘shrinkage’, mainly attributable to fraud, viewability and other means of non-human traffic. So, if you step back to look at the big picture, advertising may be down, in every sector. * Insert screeching halt sound effect here *

The Magic CES 8-Ball

I observed many technological innovations that will impact advertising and media at CES, but one in particular will have what I believe to be a profound and disruptive impact on advertising and media.

Neural networks and AI have become so powerful that voice recognition has reached a mainstream tipping point. This means the era of ‘faceless computing’ or the elimination of the keyboard. We will now use our voices to interact with our devices.

The most apparent impact is for paid search, the tried and trusted advertising medium that seemed to be protected from disruption and a pure cash cow for Google and others.

So what will the search advertising market look like tomorrow? We can’t forget that there is a new sheriff in town. Amazon's Alexa is leading the voice recognition race, with Google a distant second, and Apple barely making to the starting line, despite training for the race the longest with Siri.

Let’s take this one step further. If we no longer rely on looking at our devices to search or interact with the internet, what is the impact on paid media? I can’t imagine a voice response to a search query providing me first with a paid audio ad. With the primary human-to-machine interface being voice, the opportunities to deliver ads to appear become less in both and frequency. At least until someone smarter than me re-imagines voice response-driven advertising.

Will I Retire Before I Need to Care?

Amazon said it sold nine-times the number of Echo (Alexa) devices over holiday 2016 versus last year, or ‘millions’. Although without specific numbers, Amazon Prime Video announced it has doubled TV viewers to an interface which will or is (if you have a Fire Stick or Fire) Alexa enabled.

This is all happening faster than we think, and our industry moves slower than we believe. So, hunker down and get ready. It is going to be a rough but very exciting ride over the next few years for advertising. If we were training for a race, I would suggest we prepare for a Spartan or Tough Mudder, because we are all going to have to get dirty and overcome obstacles we didn’t think would be in our path.

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