Future of Advertising: Media Digital Spaces, AI and VR
This is my final paper for the Advertising and Marketing Communication (JTC-555) course at Colorado State University on the future of advertising in terms of media that I wrote in August 2020:
Advertising is a fluid and adaptable industry especially in the area of integrated marketing communications where it takes various practices and then builds upon them to better craft, integrate and, thus, promote advertisements. One of the areas of advertising that is evolving includes the types of media that brands use to publish and promote their advertisements. These include traditional mediums (print, radio, broadcast) as well as new media (social media, internet). As newer technologies and digital spaces surface and become mainstream, consumer behavior and expectations change along with the practices used by advertisers. The future will look different for advertising in media when compared to a century or so ago; however, as advertising is fluid with the times, so are too the mediums in which they rely on to grow. Advertising will continue to increase its presence online and subsequently boost revenue by using social media channels, search engine results and other online areas. Media will also continue to develop newer technologies, such as artificial intelligence and virtual reality, to give consumers a new, more immersive experience.
History of Advertising in Media
In order to understand the future of advertising in the realm of media, it is important to observe the evolution of advertising practices and available media. Starting in the early 20th century, print reigned as the king medium for advertisers. In 1923 advertising expert Daniel Starch noted that “the simplest definition of advertising, and one that will probably meet the test of critical examination, is that advertising is selling in print” (Ahles). Advertisements in the early 1900s relied heavily on print including newspapers, magazines and direct mailing with “firms marketing directly to consumers by mail rather than using the channels of distribution common now” (Pollay).
Later, in the 1920s-30s radio became a common fixture in households across the U.S., and advertisers weren’t far behind in adapting to the new technology and consumer expectations. Being an audio-only medium, radio provided even further reach than print materials as “the first radio shows were produced by their sponsors’ ad agencies” (Arens and Weigold 46). Advertising expenditures for radio increased from $4.8 million in 1927 to a whopping $164.4 million merely 10 years later (Scott).
Media continued to evolve in the era of Post-World War II as television ownership exploded in households across the country. This new activity opened up completely new and creative ways advertisers could promote their products to consumers. “The postwar period from 1946 through the 1970s are sometimes referred to as advertising’s ‘Golden Age.’ This is because the introduction of television helped make the advertising industry a focus of great attention, which led to both acclaim and criticism” (Arens and Weigold 47).
Fast forward to the rise of the internet followed by social networking, where advertisers also joined the trend and started to specifically target who they wanted to reach as well as receive detailed data about online consumers. With the rise of the web came better ways to track consumers’ internet activities and expectations; thus, Google’s AdWords and other relevant tools became available. These allowed brands to purchase online ads that displayed at the top of search engine results and in Google display ads across websites and more. According to author Jeff Bernoff, “2009's consumers spend 34% of their media time online. As a result, digital marketing spending has gone from $6.2 billion in 1999 to $25.6 billion, or 12% of all marketing spending, in 2009.” Even so “marketers still spend most of their energy and dollars on TV, newspapers and radio” (Bernoff).
Now, advertising has evolved where companies realize that “their most important asset is not capital equipment, research capability, or their line of products. In the global marketplace, their most important asset is their customer and the relationship they have with that person or organization.” (Arens and Weigold 54). Social media and other two-way communication channels have upped the game in developing a better relationship with customers, especially with the heavy presence of easy-to-find online reviews of products now available.
As new channels and platforms emerge, advertisers are able to reach and engage with even more users; it’s not surprising that advertising revenue continues to increase into those channels. This has drastically impacted print media — newspapers especially — as well as created a more multi-channel approach to marketing toward consumers.
“Over the past decade, the Internet has become an increasingly important medium for advertising. The arrival of the Internet has had important consequences on the market position of many traditional media, namely offline media such as print, audio, namely, and television. For some of these media, most notably daily newspapers, the very business model is under the threat of extinction due to competition from the Internet for the placement of advertising” (Bergemann).
Traditional print mediums were hit financially with the rise of the digital landscape and the Great Recession. For example, “Advertising revenue fell from $37.8 billion in 2008 to $14.3 billion in 2018, a 62% decline” (Grieco). Despite this, print continues to keep its head above water by offering innovative ways that advertisers could reach consumers.
Ashley Randolph, the sales representative and marketing specialist at NOCO Style magazine in Loveland, Colorado, helps clients from local businesses sell and promote their advertisements in digital, print or a combination of both within the bi-monthly magazine. “Right now, there are so many different advertising avenues: Magazines, social media, billboards, direct mail, text messaging and more. I believe that the industry will have even more avenues in the future. Five to 10 years ago, there were not a lot of digital options. Now, with all the new technology, there are many, many options. I suggest businesses should do a little bit of everything: print, digital, etc.,” she said.
Randolph also discussed how the magazine had to adapt to new cliental demands in online spaces, specifically social media. “Advertising is getting so specific. Facebook knows if you are a male/female, how old you are, what you do for work, if you’re single, what your hobbies are, etc., and they can send you ads specifically for you. We offer programmatic marketing packages with geofencing, site retargeting, geotargeting and more, and it’s like digital stalking.”
Randolph’s observations align with how magazines have adapted to changing technologies and consumer expectations. “Magazines, on the other hand, have long been national, and some periodicals … publish editions in many countries. For over a decade, though, the trend has been toward localization and specialization” (Arens and Weigold 134).
The rise of social media allows advertisers to specifically target consumers for a variety of goals (clicks to website, page likes, purchase conversions, etc.) and provide detailed analytics. The following statistics from Sprout Social show how vital social-media advertising is:
- Marketers are spending more on social media advertising, totaling to more than $89 billion in 2019. According to projections, this ad spend will see an annual growth rate of 8.7% and likely reach $102 billion by 2020.
- Mobile users contribute to a majority of social advertising revenue; ninety-four percent of Facebook’s advertising revenue came from mobile for Q3 of 2019.
- The average ad spend per internet user also sees a gradual increase on mobile, jumping from $13.49 in 2018 to $15.40 in 2019. In 2020, advertisers will likely spend $16.85 per mobile internet user (Zote).
Social media and online advertisements will continue to increase in the future, but not without new practices to better connect with consumers.
Artificial intelligence (AI) is expected to play a bigger role in advertisements in the coming years. AI learns from a user’s behaviors online from visiting websites, interacting with specific content and liking content and pages on social media. Then, AI creates specifically targeted advertising experiences for online users based on their activity, which saves advertisers time and money.
“It’s predicted that more than 86% of US display ads will be ‘bought via automated channels,’ according to eMarketer. And eight in 10 mobile display ads are already bought programmatically. AI also powers the advertising products offered by Google and Facebook. Those firms captured a full 90% of new advertising business in 2017” (Kaput).
For example, TikTok, a popular social media app that focuses on video sharing, utilizes AI to better understand its user base and their preferences. “By using largescale machine learning and deep learning algorithms, its platforms learn about each user’s interests and preferences through interactions with the content, including taps, swipes, time spent on each article, time of day content is consumed, pauses, comments, dislikes, favorites, and so forth. This results in a personalized content feed customized specifically for each user” (Li).
Advertisers are utilizing virtual reality (VR) tools as well, which gives consumers new, creative ways to experience content through their smartphone or other devices. Because the VR experience is more personal and immersive, content is more memorable and emotional.
“According to Nielsen’s Superdata report, 61% of users share [augmented reality] ads which they see on the Internet. 35% of them do it to their social media followers and 26% - to close friends and family. This proves the emotional connection they develop towards a piece of advertising” (Kosińska).
For example, a travel company could offer you the ability to ‘visit’ different beaches around the country using VR in order to better show you vacation options. You can then look around at different angles of the area and even hear seagulls and crashing waves that virtually place you at specific oceanfront locations.
From print, radio and television mediums to where we are now and will continue to grow in digital spaces, the future of advertising is one that will continue to adapt these new, widely used technologies to reach consumers. AI and VR practices are predicated to increase in the coming years that will involve a new, immersive experience with an increase of consumer participation. No matter what the future looks like, the ultimate goal of advertising is to reach established and potential consumers that utilize the form of media offered, and that those new mediums and technologies will meet their expectations.
Doug Ryan, president of DigitasLBi, said it best regarding the continuous desire of advertising to enhance these positive human connections:
“As long as we’re connecting to other people, the human element will never go away. But the drive for more real-time individualization means that the human element will be exercised more and more on the strategic level than the executional level. Advertising will be less about crafting the individual words and images, and more about crafting the systems and algorithms that create the words and images” (Abramovich).
Abramovich, Giselle. “7 Predictions About The Future Of Advertising.” CMO Adobe, CMO Adobe, Sept. 2017, cmo.adobe.com/articles/2017/9/predictions-on-the-future-of-advertising-exb.html.
Ahles, Karina. Daniel Starch. 6 Mar. 2018, openworld-network.com/2018/03/daniel-starch/.
Arens, William F., and Michael F. Weigold. Contemporary Advertising and Integrated Marketing Communications. 15th ed., McGraw-Hill Education, 2017.
Bergemann, Dirk, and Alessandro Bonatti. “Targeting in Advertising Markets: Implications for Offline versus Online Media.” The RAND Journal of Economics, vol. 42, no. 3, 2011, pp. 417–443. JSTOR, www.jstor.org/stable/23046807. Accessed 1 Aug. 2020.
Bernoff, Josh, and Jbernoff@forrester.com. “The 2000s, by the Numbers.” Ad Age, Ad Age, 5 Jan. 2010, adage.com/article/digitalnext/digital-marketing-digital-decade-numbers/141305.
Grieco, Elizabeth. “Fast Facts about the Newspaper Industry's Financial Struggles as McClatchy Files for Bankruptcy.” Pew Research Center, Pew Research Center, 30 May 2020, www.pewresearch.org/fact-tank/2020/02/14/fast-facts-about-the-newspaper-industrys-financial-struggles/.
Kaput, Mike. “Why AI Is the Future of Advertising.” Marketing Artificial Intelligence Institute, Marketing Artificial Intelligence Institute, 6 Feb. 2020, www.marketingaiinstitute.com/blog/future-of-advertising.
Kosińska, Natalia. “AR & VR - the Future of Advertising or a Temporary Trend?” Blog With Dipp, Dipp, 19 Mar. 2020, blog.withdipp.com/en/ar-vr-the-future-of-advertising-or-a-temporary-trend.
Li, Hairong. “Special Section Introduction: Artificial Intelligence and Advertising.” Taylor & Francis, Journal of Advertising, 4 Sept. 2019, www.tandfonline.com/doi/full/10.1080/00913367.2019.1654947.
Pollay, Richard W. “The Subsiding Sizzle: A Descriptive History of Print Advertising, 1900-1980.” Journal of Marketing, vol. 49, no. 3, 1985, pp. 24–38., doi:10.2307/1251613.
Randolph, Ashely. Interview. By Katie-Leigh Corder. 28 July 2020. Email.
Scott, Carole E. “The History of the Radio Industry in the United States to 1940.” EHnet, Economic History Services, Mar. 2014, eh.net/encyclopedia/the-history-of-the-radio-industry-in-the-united-states-to-1940/.
Zote, Jacqueline. “55 Critical Social Media Statistics to Fuel Your 2020 Strategy.” Sprout Social, Sprout Social, 7 May 2020, sproutsocial.com/insights/social-media-statistics/.
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