June 2017

The end of digital advertising?

According to research and advisory firm Forrester, $7.4 billion were wasted on digital and display ads in 2016 due to poor-quality ad placement.

Of this spending, only 40 percent was actually seen by a human. Meanwhile, a growing number of US online adults have installed ad blockers to avoid these types of interruptions.

In response to this trend, Forrester's James McQuivey examined the impending downfall of digital advertising and the rise of a new medium that will fill its place: intelligent agents.

The findings indicate:

  • A shift from ad spending toward branded relationships. Some 56 percent of consumers are now seeking deeper connections with brands through intelligent, conversational relationships.
  • The emergence of branded intelligent agents that offer a customized experience. The majority of advanced consumers are expected to adopt intelligent agents by 2025. To prepare, brands like Starbucks and Domino's are already joining early intelligent agent ecosystems like Amazon Alexa to begin collecting data on their loyal customers.
  • The impact this shift will have on the advertising industry. If the top 10 US advertisers shift just 10 percent of their ad budgets to branded relationships, it will cut $2.9 billion from the current ad business. Digital ad giants like Google and Facebook will lose the most, most quickly.