Programmatic Pants

Clay Schouest is the Chief Strategy Officer of Carat APAC.

3 million years’ worth of human development and the spirit of inquisitiveness had been reduced to which colour underpants Wayne would select that morning.

5 – 7 minute read


 

It’s 2050. Advertising as an industry has long been dead. That’s because choice, preference and conscious decision making is no longer a practiced human activity. It’s been replaced by the complete automation of our lives.

The last day of the last active choice was registered on the 10th December 2049 by Wayne Clayton in Singapore. The automation of decision making had reached the point where everything in life was managed through machine-based algorithms. By 2030 everyone on the planet, save for a few self-proclaimed luddites, had already fully embraced this automated life.

Wayne also practiced life automation apart from one single conscious decision – he reserved the right to choose his underpants every morning. This was his sole act of self-expression and his only remaining mechanism of protecting his individual identity.  His right to choose was not an act of political defiance, rather it was his way of reminding himself that he was still part human. He treasured his multi-coloured, multi-patterned pants collection in the same way an art collector treasures the uniqueness of craft in today’s context.

But on that 10th of December morning Wayne woke up feeling tired and slightly hungover from the previous night’s soma binge. He decided he didn’t have the energy nor the straight sight to choose his pants. Upon waking up and realising he would probably be late for work, he rolled over and capitulated the last act of human free will. “Alexa”, he croaked, “please select my pants”. And that was how the last active choice on earth was given up to an algorithm. That is how programmatic conquered pants and with it, the last choice in the world.

That is how programmatic conquered pants and with it, the last choice in the world.

The futurist Ray Kurtzweil’s dream had finally become reality.

So how did we get here? Most experts trace back the point of departure to the last ever Olympic games in Tokyo 2020 – this was the first occurrence of real time deterministic data combined with the known genetic code of each individual athlete to accurately predict the outcome of every sporting event. The IBM Watson’s algorithm was so accurate that it was not only 100% correct in predicting the Gold, Silver and Bronze medallists, but also the exact placement of the remaining athletes. The act was hailed as a breakthrough in predictive technology.

But in 2020 life automation was still in its infancy. Artificial intelligence and machine learning was still largely restricted to the automation of industries and large scale projects such as IBM Watson. Its exponential growth would soon gradually start prevailing in all aspects of life thereafter.

Initially the promise of machine-learning-based algorithms was celebrated as an ingenious way to improve life and a testament to the spirit of human progress.  In the beginning the algorithms offered limitless choice. In a world where everything was connected and predictive, the possibilities to enhance life seemed endless.

The use of algorithms in advertising provided the ability to customise exact offers and brand messages specified to meet the exact needs of the know individuals’ preferences, habits and predilections. It was a marvel of prediction. In fact, algorithmic advertising had become so accurate that it was able to predict and stimulate behavioural consumption demand before individuals actually knew themselves.

The use of algorithms in advertising provided the ability to customise exact offers and brand messages specified to meet the exact needs of the know individuals’ preferences, habits and predilections.

Gradually by 2030, machines had become so intelligent and predictive that choice had begun to reduce and narrow. The advertising industry was the first affected by this reduction of choice. The algorithms had become so smart at predicting and stimulating future demand that people started to become less inquisitiveness, less spontaneous and more passive. It was more convenient to let algorithms make choices for them. The result was a self-perpetuating bubble whereby the machines started narrowing down choices and reducing randomness based upon its excellent predictive optimisation techniques. Like abandoned gold mines of the old west, advertising and marketing as industries ceased to be productive and were shut down completely.

This narrowing down of choice was the beginning of Singularity.

At this stage not all were happy with the increasing automation of life– artists and religious leaders being particularly sensitive. By 2040 these two seemingly incongruous groups had formed a strange bedfellow’s alliance called the “Spirit of Randomness”.  They argued for spontaneity and inquisitiveness and practiced random acts of kindness as demonstrations of the human spirit.  But things turned dark and the alliance was eventual disbanded after the machine learning intelligence agency predicted and prevented random acts of terrorism that had been planned by the group to hack and sabotage the world’s central neural computing network system.

The automation of life had become so predictive and optimised that almost no choice remained. The sheer accuracy of predictive optimisation had reduced choice to a single point.

By 2045 the writing was on the wall. The automation of life had become so predictive and optimised that almost no choice remained. The sheer accuracy of predictive optimisation had reduced choice to a single point. The repercussions from this was a sea of sameness. Almost everyone wore exactly the same clothes, had exactly the same driverless car model, lived in exactly the same apartment layout, listened to exactly the same music and worked in exactly the same industry – mining solar energy to help fuel the ever-increasing power needs of the super computers.

And by 2049 it was only Wayne left with his single conscious choice of which pants to wear in the morning – 3 million years’ worth of human development and the spirit of inquisitiveness had been reduced to which colour briefs Wayne would select that morning… The end of self-conscious thought and choice happened not with a bang, but with a morning fart and a whimper.

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Retiring the Canary

Clay Schouest is the Chief Strategy Officer of Carat APAC.

Are we entering a ‘new norm’ for advertising where growth in ad spend and economic growth enter a new relationship? It seems we might be.

5 – 7 minute read


Global advertising spend has generally always acted as the canary in the coalmine for the general state of the global economy. When ad spend goes up so does economic growth, and when spend contracts so generally does the economy. This is the first year in many that global economic forecasts for growth are going up whilst the advertising growth rate is less than the previous year. To be exact, the overall economy is predicated to grow 3.6% in 2017 versus 3.1% actualised in 2016, whilst advertising growth rates are forecasted to be lower with a 3.5% increase in 2017 versus 4.1% actualised in 2016.

This scenario suggests a couple potential scenarios:

1.  That economic growth may be about to slow, or that advertising may actually exceed its initial forecast.

2.  That we are entering a ‘new norm’ for advertising where growth in ad spend and economic growth enter a new relationship.

Could it be that less advertising spend is required to achieve growth?

It’s the latter that I would like to explore. Perhaps we are starting to see a new norm for advertising. Could it be that less advertising spend is required to achieve growth? This would suggest advertising investment is becoming more effective at achieving like-to-like sales.

One could assume this may be down to the influence of the peer-to-peer economy. In other words, the power of fully-scaled social media whereby ‘earned’ media is becoming increasingly more influential on achieving sales.

It could also be attributed to the increasing shift toward addressable advertising—advertising that serve ads directly based on demographic, psychographic, or behavioral attributes associated with the consumer instead of projecting what content a particular audience will be consuming.

To use this Adweek example: Whether your target audience is watching TBS at 2 p.m. or ESPN at 10 p.m., they’ll be served your ad. And it is served to your target whether they’re a heavy or a light TV viewer because the ad finds the audience versus the old model of having the viewer come across the ad. And advertisers are only charged on impressions that are served to their target audience.

Over the past few years, the impact of new ad technology has increased the prevalence of addressable advertising with better, and more accurate targeting and optimisation that requires less advertising spend to achieve sales, and in turn reduces wastage.

The growth in advertising investment allocated to addressability has increased over 2,000%. Currently only 10% of all advertising is invested in this way – and analysts predict it will be exponential in the coming years (30% by 2018 and almost 50% in the US by 2020). The scalability of addressability is on our doorstep.

It could be attributed to the increasing shift toward addressable advertising with better, and more accurate targeting and optimisation that requires less advertising spend to achieve sales, and in turn reduces wastage.

Does addressability equate to better effectiveness? There is also evidence to suggest yes. In a recent study by the analytics group D2D the effectiveness of addressable advertising was measured versus a control group panel. Those plans that contained elements of addressability outperformed those that did not. The study concluded addressability done in the correct way can influence effectiveness by a factor of 10X. This will most likely increase as it becomes more scaled.

As more platforms and media goes addressable, traditional ‘fixed inventory’ advertising will become less and less. This coupled with the fact that people also consume less advertising and have more ad blocking technology installed might ultimately spell the death of advertising as we know it.

The creation and distribution of brand messages will be addressable and largely embedded in entertainment-based content or embedded in general utilitarian aspects of our daily lives. Reminders will pop up on our digital screens and household items – such as a message from our favourite yogurt brand on our digital fridge door, or a message about allergy relief medication relayed by Alexa in the morning when we ask for the day’s weather forecast.

It feels like the old adage of “half the money I spend on advertising is wasted; the trouble is I don’t know which half” may be coming to an end all together. Coming back full circle: are we entering a ‘new norm’ for advertising where growth in ad spend and economic growth enter a new relationship? It seems we might be.

 

Searching for Marketing’s El Dorado

Clay Schouest is the Chief Strategy Officer of Carat APAC.
This was originally
presented at the Advertiser International Association 2016 conference in Beijing on 25 June.

The marketing world is chasing the dream of data, but in our pursuit, are we losing something equally important? And how will this affect our hiring policy?

5 – 7 minute read


El Dorado is an allegory. For those of you who may be unfamiliar, El Dorado is a legendary lost city, one overflowing with gold and precious stones in fabulous abundance. Over time, and creative interpretations, El Dorado has been used as a metaphor to represent the ultimate prize that one might spend one’s life seeking [1]—wealth, success, happiness, etc.

In Voltaire’s Candide, El Dorado represents an ideal society where everything is perfect—Paradise, you might say. The main character of the book commits his entire life to obsessively searching for the lost city, searching for Paradise.

Sadly El Dorado turns out to be only in his imagination—a place that does not and never will exist.

I’d like to spend a few minutes pondering what I believe to be our industry’s search for El Dorado: data, specifically the idea of data as the answer to all our dreams. We currently seem to have a myopic obsession with all things related to data.

The Fourth Industrial Revolution: the Digital Economy

We are entering the Fourth Industrial Revolution: the First powered our trains and the transportation industry with steam; the Second increased productivity through electricity; the Third revolutionised our world through computing; and now the Fourth is about new technologies that are fusing the physical, digital and biological worlds [2].

Our industry has never been more exciting. The fourth industrial revolution provides new means for better outputs and is impacting all disciplines, economies and industries—even challenging ideas about what it means to be human.

In marketing we often refer to the Fourth Industrial Revolution as the Digital Economy. By 2020 we prophesize our industry will be 100% digital and organised around data. China is leading the charge and will most likely be the first market to get there.

The Fourth Industrial Revolution is about new technologies that are fusing the physical, digital and biological worlds.

There are now more bytes of data left behind by our behavioural digital footprints than there are stars in the universe. To be exact, there are over 40 trillion terabytes of data and that number is growing every day. All this data represents the opportunity to get closer to consumers like never before, even predicting what they want before they know they want it. For example, AI technologies are now commonplace within our industry. We are using them to communicate, get to know our consumers and provide products and services based upon their interests.

We are now closing the gap between interaction and transaction. By 2020, all the media we consume, whatever the format, will link content with brand commerce. That is a brilliant thing for both business and consumers. As an industry, the ability to maximise ROI at the moment of receptivity with message and media makes our work more accountable. We know from studies that ROI improves up to 55% when we develop connected experiences that link content and commerce.

The future is bright; there is no denying that. One might say El Dorado is now within reach—or is it?

How this affects hiring policy

I can’t help but feel uneasy about how our industry is preparing for our bright future, and more specifically, the type of talent and capabilities we are hiring to help get us there. We seem to have an unbalanced hiring policy towards the talent that we recruit to realise our future vision. Our cumulative marketing brain talent pool has become lopsided—seemingly favouring the left, more analytical side, over the right, based on creativity and lateral thinking.

Why? That’s partly because it’s new and partly because people are coming to grips with how to manage, organise and classify data. In a recent survey of what keeps CMOs up at night “data” was cited as the #1 driver of how companies and organisations are structuring themselves. So it’s no surprise that when we look at LinkedIn, up to 70% of the new job postings from within the past year have “analytics” in the title or job description.

Our cumulative marketing brain talent pool has become lopsided—seemingly favouring the left, more analytical side, over the right, based on creativity and lateral thinking.

Are we headed in the wrong direction?

So here’s my point of controversy:

Today when I look around the industry, I see a bunch of organisations, clients and agencies who are convinced that data is their El Dorado. I believe data is a means not the end. The end is fundamentally about touching the human spirit, creating an emotional connection—that is what will fuel growth.

In fact, when you look at the top driver of business value, it is creativity, by far. Creativity contributes to business value far more than any other factor. Additionally, if you look at the skillsets required to succeed in the Fourth Industrial Revolution, as outlined by the World Economic Forum, creativity also tops that list [2]. The power of an idea is just as important as ever; that hasn’t changed. What has changed is the ability to design and amplify ideas in the digital economy.

So let’s make sure we develop and stimulate the right brain again. Let’s hire more creative minds to help deliver great ideas that fuel those data-led approaches. And when I say creative minds, I don’t mean creative in the traditional sense. I don’t mean copy editors; I mean lateral thinkers.

Data is a means not the end. Creativity contributes to business value far more than any other factor.

Let’s remember data is not our El Dorado. It is not the end goal. To truly succeed in the digital economy, we need data solutions that inspire more creativity. In order to realise that ambition, we need to attract and retain more creative thinkers, not just data analysts. Let’s think and plan for our long term future.

  1. https://en.wikipedia.org/wiki/El_Dorado
  2. The Fourth Industrial Revolution by Klaus Schwab