Once every few years I like to write an article predicting what will happen in the future. Over the years I’ve had a pretty good track record of getting things right. The world is shifting and moving a lot right now, but I believe that the future is bright. Here’s how I think about the next five years, and beyond, through the lens of Ad Tech, Consumer Technologies, Media and Advertising.
- 3rd Party Cookies won’t go away, but they will slowly be rendered non-usable as persistent IDs
3rd party cookies, which have been a commonly used tool in the ad tech industry, will not completely disappear but will instead become increasingly less useful as persistent IDs. Google, for example, will not shut off 3rd party cookies in Chrome, but will instead make them less usable for persistent IDs over time. This gradual decline in functionality is expected to take place over a period of five to ten years, and by the end of this time frame, we will likely see the value of 3rd party cookies in the ad tech space significantly decrease. In five years, we will already be on this trajectory towards the obsolescence of 3rd party cookies as persistent IDs.
- New approaches to targeting inventory that are privacy-centric will arrive at scale
As the ad tech industry shifts away from 3rd party cookies as persistent IDs, new approaches to targeting inventory that prioritize privacy will become increasingly prevalent. These new methods will be built on technologies such as cohorts and will make use of panels of users that are statistically relevant. This will allow advertisers to not only target the audiences they care about but also more effectively attribute their advertising spend to various outcomes.
The approaches currently being developed, including techniques such as embeddings and deep learning, will greatly surpass the current “brute force” methods used in ad tech and will lead to a move away from surveillance-based approaches towards those that prioritize privacy. Additionally, publisher and advertiser first-party data will be used to feed these privacy-centric models. The technology and techniques to match supply-side and demand-side data already exist, and this process will become increasingly easy, privacy-conscious, and available at scale.
This will lead to a more equitable understanding of customer behavior and reduce the information imbalance that has favored the buy side in recent years. The seed audiences that act as panels for ML models will lead to more equilibrium of understanding customer behavior and reduce the information imbalance that has grown over the last decade in favor of the buy side.
- The lines between Buy and Sell Side ad technologies will blur
The lines between buy-side and sell-side ad technologies are becoming increasingly blurred. Companies like The Trade Desk are beginning to integrate directly with publishers, bypassing the SSP and exchange infrastructure. In response, SSPs and exchanges are starting to offer buying platforms, allowing buyers to bypass DSPs. This trend will continue for a few years, reach a peak, and then ultimately collapse in on itself.
This is because DSPs are designed to lower competition over inventory and keep prices as low as possible, which is in line with their role as representatives of the buy-side. However, their algorithms are designed from a buyer’s perspective, and publishers will be wary of these direct paths, resulting in a decrease in yield.
Exchanges and SSPs have mostly focused on liquidity and passing inventory through to DSPs at the lowest cost possible, while publishers have continued to lose power in the struggle between the buy-side and sell-side of the market. However, the pendulum will ultimately swing back towards equilibrium, and publishers will regain more control over data and measurement. Companies will invest heavily in ways to increase publisher yield and the market will balance out again.
- Web 3 Technology will iterate beyond just Cryptocurrency
Web 3 technology is evolving and shifting beyond cryptocurrency, towards solutions that support distributed identity and group collaboration. This will have a significant impact on advertising in several ways. Imagine a world where users have full control over their identity and data, and only share relevant information with the companies they choose to interact with, through mechanisms that obscure unnecessary information. Healthcare and finance industries already use some techniques for doing this at scale, and combining these techniques with approaches used in the Web3/crypto space can open up new possibilities. For example, a digital wallet that contains all the important information about an individual’s life, such as healthcare, financial, education, employment, real estate, municipal and government information and automatically shares only relevant information with companies and organizations.
Users could easily opt-in to being part of a brand’s community, which would merge CRM, CDP, Ad Serving, and Social Media. This would mean that users get special perks from that brand, including the ability to get special offers, customized products, early access, etc. Brands could reach out to users and ask for their opinions on products and reward them for their participation. Users could “stake” their interest in a new product or feature and in return get early access, similar to an Indiegogo campaign, but for major brand interactions. Users could also vote on product changes or feature prioritization based on their staking, and the staking could be based on a points system based on their loyalty.
For example, if you have owned five BMWs over the last 20 years, and you are a known high-value customer, you could participate in a user group of other high-value customers and apply your influence to get special options for your next car, or maybe even for mainstream features in all models. Maybe BMW would offer a limited-edition model just for that group of customers, or a special badge. Or maybe you and others have strong opinions about the placement of cup holders, and could influence a change in future models. The “staking” in this case could be the fact that you have already bought several BMWs, and you currently own one or more.
These concepts like Staking are common in the Web3 and Crypto space but haven’t yet gone mainstream. But in the next five years, we are likely to see more and more of these concepts being integrated in the mainstream industry, even if the behind-the-scenes mechanism is obscured from the customers.
- Retail Media Marketplaces will grow and expand.
Retail media marketplaces are expected to grow and expand in the coming years. For big retailers like Amazon, Walmart, and Target, this represents an opportunity for additional revenue at higher margins. These networks have already expanded into grocery chains, and even to boutique e-commerce and retailers. They could expand even further beyond the virtual world and into the physical space between bricks-and-mortar stores.
The growth of these retail media marketplaces is due in part to the evolution of the old “coop-dollar” systems that have been in place for decades into something much more advanced. Brands can now pay for product placement in the search results for similar products. When combined with e-commerce experiences, this leads to better outcomes for all parties involved – brands, consumers, and e-commerce retailers. The margins on these media businesses are significantly higher compared to other parts of retailers’ businesses, which is why it is expected to proliferate.
Retailers have a direct consumer relationship, pure first-party data about the customer, and the positioning of these media units is almost perfectly located between the moment of purchase consideration and the purchase itself. This means brands will be willing to spend money on this “must-buy” piece of media. Additionally, bundling of virtual shelf placement with in-store environments will make this buy even stickier over time. If brands want to get good shelf positions, end-caps, and other in-store benefits for their products, they will need to also pay for placement in the virtual space. Ultimately, these will blur and blend and package together, but it is likely further out than five years.
- Social Networking will evolve to something else altogether.
Social networking is expected to evolve into something else altogether, with everything tied back through the social graph. This includes commerce, communications, education, search, and more. The social graph maps the connections between people and their interests, and platforms like Facebook understand who you know and the flow of information between you and your connections, as well as their interests and sentiments on various topics.
If the social graph were to become open, meaning it is no longer a walled garden, and your identity and the social graph extends beyond people to companies, products, brands, media, music, film, etc., and where you, the human, are in control, and it’s easy to manage, there would be significant opportunities for growth and change. Social graphs would connect everything, and the consumer would be in charge. Applications built on top of these open social graphs would be different from anything we have seen so far.
Facebook has already become Meta, and they’re trying to own the metaverse. But even without virtual reality, the social graph overlaid across everything would be transformative. It could lead to collaboration between ephemeral and permanent groups of people to do things together. For example, it would be easy to organize a friend group to buy out a restaurant for an evening party, find 800 people in the greater Boston area who also love the New England Patriots and want to have a meet and greet with the team, or have dinner at a local restaurant with a special menu with ten of your closest friends.
But this is just the tip of the iceberg. Connecting the social graph to everything else will change the world. And if identity is solved, so we know you’re not a Russian Bot, things will only get better.
- Artificial Intelligence will change everything.
Artificial Intelligence (AI) is expected to change everything in the coming years. We are already familiar with AI-powered solutions such as filters in Instagram or “lenses” in Snapchat, and predictive text to help with text messaging and correcting grammatical errors in documents. But these are just the beginning of a trend that is now starting to take off.
One example of this is ChatGPT, a new chatbot by OpenAI that complements their DallE offerings. ChatGPT enables the creation of very complex written content that can be indistinguishable from content created by humans. Some software developers are even using it to both bug-check and write code from scratch.
Similarly, AI image and video generators are on the cusp of making significant strides. MidJourney, Dall-E 2, and numerous other solutions can generate images in almost any style just by describing what one would like to see. The results are getting exponentially better on an ever-shortening curve.
While it’s important to note that this technology also brings ethical concerns such as copyright and originality, which need to be addressed, the gains will outweigh these concerns. Over the next few years, the art of combining human input with computer-generated output will be refined, and every single software tool used for writing, office work, finance, design, etc., will be transformed. Corporate users will have AIs trained just with their own datasets, such that trade secrets and non-public information can be incorporated into the AI engines. For creators, the initial concerns about artists having their work stolen by these AI engines will be replaced by new understandings of how artists can have their own AI, trained on their behalf, to supercharge and speed up the creation and generation of work.
For production artists and graphic designers, these AI tools will become a seamless and integral part of their workflow, allowing them to create and generate content faster and more efficiently. Musicians will also have access to similar tools that will allow them to compose, produce, and record music in new and innovative ways. The impact of AI in these fields will not only change the way we create and consume art, but it will also open up new possibilities for expression and creativity.
- The long game: What big technology will sneak up on us and change all aspects of society?
I’m going to say something that will sound boring: Electricity.
When I do these predictions, I like to pick one long term trend and extrapolate even further out than 5 years. The biggest trending technology I can think of is Electricity.
Solar technology will continue to improve on a scale increase similar to Moore’s Law, which it has been meeting or beating for more than twenty years. Today the cost of solar power is about $0.08 per Kilowatt. If the costs keep dropping and the output keeps increasing on the same scale it has, electricity will become extremely cheap.
You may recall how 20 years ago you paid a long distance fee for all phone calls except for local calls (just the town you lived in). Electricity will never be totally free, but similarly to how we now basically have free calling to anyone, anywhere, even video calling, we’re approaching a world where the cost of electricity is going to be so low, and the ability to create a distributed electrical grid and expand it everywhere will be so low, that the long term prediction should be for a very low cost and low or even zero emissions. Solar everywhere and incredibly cheap electricity will transform the way the world works eventually.
Over the next five years, you should expect to see a lot more solar power implemented, on houses, on buildings, and even the beginnings of solar panels placed under fixed infrastructure like streets and parking lots. https://solarroadways.com/
Once that transition happens at scale, with free electricity nearly everywhere, you’ll see big shifts. There will be a convergence with other lower cost technologies like LEDs (Light Emitting Diodes) hitting their next generation, where laser diodes will become cheap enough to replace LEDs. Lasers put out 1,000 times as much light as an LED, for only two-thirds as much energy. When the laser diodes become cheap enough, and the power is almost free, we’ll see a revolution in lighting and therefore in video. Effectively this means video everywhere, all the time. Streets made up of solar cells that have laser diodes mounted into the transparent high-strength glass surfaces so that the roads light up and animate. Buildings covered in solar cells with laser diodes embedded in them, instant christmas lights, video on the side of buildings everywhere, and the ability to put lighted animated signage anywhere for nearly no cost. Streetscapes and cities will radically transform when this happens.
And I’m bullish about carbon emissions because solar will be so cheap and the innovations on top of a newly formed, completely distributed solar grid are massive.
- And as always, my final prediction:
Sometime in the next five years, some new technology nobody has even thought about, or a simple reinvention of an existing widely used technology, will come into existence and totally scramble things. Just like the iPhone was unexpected, just like the success of Social Media was unexpected, something new will appear. And once again it will change everything.