Asia Insider Minute - Advertising on the Rails

It’s no easy feat to entirely unwind an industry eco-system, but that’s what scores of ad-tech entrepreneurs around the world are trying to do. In short, traditional advertising and the global agencies that support it are on the rails. Why? Once again, because technology fuelled by AI and big data are showing the way.

Advertising dollars flow where consumer eyeballs roam. And in this case, digital platforms are the place where consumer buying decisions are taking place. Partly because that’s where most of us absorb the lion’s share of news and entertainment. But also because the digital universe allows for a kind of precision marketing that’s only possible in a world packed with big data and consumer insights.

To help me grapple with the subject on this week’s episode of Inside Asia, I tracked down Ian Chapman-Banks, Co-Founder and CEO of Sqreem Technologies, a Singapore-based ad-tech start-up looking to take on the US$1 trillion advertising business. Ian is a physicist by training, but I’ve known him through the years as a bit of a maverick executive. It comes, therefore, as no surprise that Ian has set his sights on advertising - a segment slow to embrace technology and as a result, destine for consequences.

Progress comes with sacrifice. And in the case of AI-enabled advertising, there are two primary victims: First, the thousands of ad industry professionals who see their future in ruins. And second, the consumer, who knowingly or not, is walking through a marketplace labyrinth controlled by a Minotaur who goes by the name of Artificial Intelligence. 

First the industry. In 2017, digital ad spend surpassed TV ad spend globally for the first time, with Google and Facebook receiving the lion’s share of advertising dollars and Amazon coming in third. China’s Baidu, Sogou, and WeChat are on a tear as well, soaking up large shares of corporate ad spend in China and beyond. 

So why is this bad news for the advertising business? Because for decades the industry has placed a premium on serving corporate clients with idea generation, ad campaign coordination, ad rate management and public relations support. To deliver a well thought out and coordinated advertising effort on behalf of a multinational meant mobilizing hundreds if not thousands of ad industry specialists from Creative Directors to Copy Editors. Demand from corporates nurtured countless advertising careers.

Planning and delivering ads was – and still is – a complex and time-consuming endeavor. Measuring the results of these efforts was more a matter of art than science. More often than not, corporations trusted and relied on their advertising partners to show them the way – and fingers crossed – see the results in the form of increased sales or improved brand awareness.

If you’ve watched an episode or two of the popular TV series, Madmen, you know what I’m talking about. If you haven’t, then just imagine this: For decades, the ad agency was to the corporation what a court jester was to the sovereign of a feudal state. Advertisers held the unique position of trusted adviser and chief story-teller. Corporations – like kings – wanted to know that all was well in the kingdom; that successful sales campaigns and bigger profits were all possible if blessed by the magic of marketeers.

Today, ad agencies are increasingly at risk. Corporate ad spend increasingly bypasses the agency to flow directly to the coffers of digital warlords like Facebook and Google.

That was then. Today, ad agencies are increasingly at risk. Corporate ad spend increasingly bypasses the agency to flow directly to the coffers of digital warlords like Facebook and Google. It’s an empirical world, and that’s what digital platforms offer – data and measurable results.

Not surprisingly it’s left the ad industry in shambles. Margins have collapsed, agencies have down-sized, and the once vaunted gurus of Madison Avenue have fallen from grace, taken a knee, and now assume the title of “vendor” as opposed to “trusted advisor.”

Not to kick an industry when it’s down, but now comes the latest and potentially most devastating wave of disruption and it goes by the name of Artificial Intelligence. As my guest this episode explains: With the power of AI, all traditional methods of planning and delivering an ad campaign are out the door.

Indeed, Ian is bent on bringing the advertising industry to its knees. He and his 70 employees – so he claims – can do what tens of thousands of traditional advertisers can do in a fraction of the time and a sliver of the cost. Those are fighting words to the ad industry, and many will claim that without the creative and human touch, companies will fail to deliver thoughtful and cohesive messages to the marketplace over time. Others argue that real-time, data-driven insights are the kryptonite for a new era of identifying, targeting and appealing to buying behavior in surgical fashion.

Which brings me to the consumer – you and me, that is. When Ian talks about human psychology and predictive behavior – I don’t know about you – but I start to feel a little uncomfortable. AI as an advertising tool is like a blood-born Peeping Tom roving around our personal ecosystems, gathering data on the sly then placing markers in our brains – gently guiding us to buying decisions that we are wholly unaware of.

This would be disruption on a whole new level.

For the veteran and habitual consumer, maybe it’s no big deal. But for waves of next generation consumers who’ve cottoned on to the power of digital technology, it’s no surprise that minimalism, not consumerism, is suddenly in fashion. Like Nancy Reagan in her “Just Say No” to drugs campaign in the mid-1980s, millions of young would-be consumers are rejecting the idea of digital bots let loose on their digital lives. Instead, they’re starting to “Just Say No” to consumption. Then what my Capitalist friends? Should this trickle trend turn into a tsunami of mainstream behavior, not even the AI mavens of a new advertising model will be able to survive in a world where consumption declines and corporations falter. This would be disruption on a whole new level. So grab your boots – or your bots, as the case may be – and prepare for a Madman episode like nothing you’ve ever seen.

We at Inside Asia take a shine to disruptor stories. In months past we’ve explored how digital disruption is upending all kinds of industries, from healthcare to media. Check out my conversation with Rosaline Koo on the future of health insurance or my discussion with David Goldstein on media streaming and its impact on the pay-TV industry. Listen to advertising executive and behavioural psychologist, Chris Graves, as he unpacks the neuroscience of persuasion.

There’s so much more where this came from, so please do log on to www.insideasiapodcast.com, or subscribe by visiting iTunes or Stitcher. Search for “Inside Asia,” flick the subscribe button, and start listening. It’s completely free and we’d hate for you to miss out on our future episodes.