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Digital Advertising’s Next Wave Will Break at CES

Digital Advertising’s Next Wave Will Break at CES
Delivering value to brands and consumers
By Jay Richman

By all measures, 2017 was a transitional year for publishers and platforms. In the advertising world, that change meant the end of the first digital ad wave. Print media’s shift to digital is nearly complete, as Google and Facebook drive much of publishers’ traffic (and ad revenue). Television advertising has also accelerated its shift to digital, favoring premium video apps like Hulu and mass-reach platforms like Facebook, YouTube and Snapchat. Web publishers that don’t offer a differentiated experience are losing consumer attention — and associated advertisers — to scaled platforms.  Radio is still early in its shift and will ultimately transition to digital audio platforms over time.

Old models die hard due to entrenched interests, but the rise of scaled platforms is ushering in the next wave of digital advertising. Nowhere is that notion more prominent than at CES, which will not only shock you out of your post-holiday haze, but will also offer a look at what’s next in AdTech.

Supporting those shiny new objects on display at CES are five AdTech trends that will shape 2018 and beyond. Every marketer needs to keep these in mind as they walk the show floor: 

Ads start to go from creepy to valuable

Digital ads are still far from living up to their potential, often interrupting the consumer’s favorite content instead of adding value to the experience. For now, the winners in digital advertising are Facebook and Google, not only because their ads enhance the consumer experience, but also because that value leads to positive business outcomes for marketers. They do this by capturing and predicting intent better than even we can as consumers. Pixeling a shopper and retargeting them may be effective when compared to blind targeting. But, as data- rich platforms get better at interpreting context and interest signals, so too does their ability to drive true consumer value. This gives me hope that those shoes I just bought will stop haunting me everywhere I go online.

Incentives start to align

Quality advertising can only be achieved by aligning the interests of consumers and marketers, particularly in an age when consumers now have more control over the advertising they’re exposed to. One way to make the bargain more equitable is to offer a financial incentive to the marketer who creates great content and offers consumers control over their ad experience. This way, consumers can express their interests explicitly through clicks or implicitly through skips, and marketers only pay for consumers who engage with their content. This not-so-secret success formula allows platforms to thrive as they charge on a performance basis. For them, there is as much value in the data collected from ads scrolled past or videos skipped as there is with clicked or viewed messages. This approach allows them to get smarter at predicting intent, which is why they experience outsized returns.

Personalization must move beyond simply “targeting”

P&G’s Marc Pritchard has spoken at length about the problems that marketers have identified about programmatic ad placement. Knowing when and where to serve an ad is as important as who and what to serve. For example, don’t ask a user to click an ad if they are driving in a car, or target a “fitness enthusiast” in the middle of a wall sit. Understanding consumer context and mood are incredibly important and increasingly possible with everything becoming connected.

Digital audio consumption reaches its tipping point

If you’ve attended CES in the last several years, you know almost everything is getting smarter thanks to the rise of car, home and wearable connected technology. Many of these will be voice controlled, leading to an explosion of digital audio consumption. In fact, according to eMarketer, mobile audio is expected to reach about 1 hour a day in 2018, in the realm of social and video. Savvy marketers will quickly embrace the consumer shift and audio advertising will be reimagined through the lens of native experiences as opposed to terrestrial radio adaptations.

ROI will be more ubiquitous

In 2018, everything that can be measured will be measured. Marketers that have done their homework on available AdTech options have much higher expectations of platforms and media partners about the return on their investment. Once the province of the direct-response world, ROI is now every marketer’s concern. Ultimately, that means marketers will become wiser, choosing a more format-agnostic approach to their spending – as long as it’s ROI measurable. 

See you all out on the CES show floor!

Jay Richman is Spotify’s VP of Product, Revenue.

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