The Evolution of Advertisement

In 1704 the first published newspaper advertisement appeared in the Boston News-Letter seeking a buyer for a property in Long Island. Over 300 years have gone by and surprisingly the methods of advertising have not evolved much.

Recently I’ve ran into a lot of resistance from people saying that companies like Facebook and Google are going to have to change their business model to survive and that advertisements as they stand today are a dying trend. Let’s take a look at that a little more closely and see how the advertisement process is already evolving into more than we are used to.

First I want to quell the thought that the current advertising model used by tech companies isn’t working. Let us look at the social media giant, Facebook. I’m going to target the US & Canada first since that is probably where most of you reside. As you can see, in Q4 of 2016, Facebook was pulling in $19.28 per user between the two countries with a user base of 232 million. That totals to a staggering $4.473~ billion dollars in just 2 countries per year. As depicted in the chart below, this ad revenue has only been growing for Facebook and continues to grow to this day. Similar charts can be found for most other tech companies with a large user base.

So how do these ads work?

Currently as a business you can go to Facebook, Google, Twitter, or any of the giants and pay them to advertise your business. Let’s continue using Facebook as an example here.

Facebook gives a business the opportunity to select a target demographic, in a target area, and set a budget for a specific advertisement or a full ad campaign. The target area can be drilled down from an entire country to within a 1 mile radius of a specific address. You also have the ability to select which kind of demographic you want to reach and narrow it down by gender, age, industry, interests, and most importantly Behaviors. In the basic ad below, we have the potential to reach up to 7,000,000 users with our advertisement.

As you can imagine, this is a pretty powerful tool. A business is able to put their ad in front of exactly the type of people they want. For example, a video game store can put an advertisement for a new game on Facebook, then ask Facebook to display the ad to 18–20 year olds that are into gaming AND have played a game in the last 48 hours. Talk about targeted advertising!!!

Almost everything in the Facebook ad above is pretty common among different advertising channels, but I want to focus on is the behavioral targeting. Targeting behaviors and peoples actions is what is going to eventually make simple forms of advertising obsolete. As large companies are able to amass more and more data, they will be able to use these behavioral analytics to target their users with more relevant ads more efficiently. But that is only the beginning…

The next example I’m going to use is my favorite and is what I believe the perfect example of what the future of advertising is going to be: integrated and seamless. The screenshot below is of the Google messaging application called “Allo”

Here, you can see that we are chatting with our friend Emily and it looks like Italian is on the slate for tonight. Allo immediately recognizes what is going on and goes on to display some nearby Italian restaurants that might be of interest to us. Allo can also do get movie times, check a flight status, show the weather, and a few other helpful things. Pretty cool huh?

Let’s take a step and look at this from the advertisers point of view. Google now has the capability of letting you advertise your service to someone who is searching for exactly what you have to offer. Not only that, this isn’t some annoying ad that’s just blocking a part of your webpage or delaying you from watching the YouTube video you actually want to watch, it’s a seamless and helpful feature that allows you to save time and money.

Looking at the examples above and then looking at trends in the current market with Amazons range of Echo products, Google Home, and the rise of machine learning, it’s easy to see how advertising is going to shape itself in the future. Advertising is going to continue becoming more targeted, more seamless, and much less intrusive. The tables are already starting to turn and the power is moving from the advertisers to the consumers. No longer will advertisers be shoving their commercials, ads, or popups down our throat, but users will “request” advertisements based on what they are doing or what they are looking for.

So when will this new form of advertising become prominent? It’s hard to say, but companies like Amazon and Google are making enormous strides towards this type of model. I believe sooner rather than later, we will be making most of our purchases and decisions using models similar to what we see in “Allo”, and at the end of the day, we won’t even notice the magic that is happening behind the scenes, we’ll only enjoy our Fettucine Alfredo at the end of the evening.