When in the early 1830s, the US pioneers settled along the banks for the Colorado River in Texas founding the city of Austin, they would not have envisaged their city playing host to the creative and intellectual smorgasbord that is South by South West (SxSW). Indeed, few large-scale events attract delegates ranging from genetic scientists to country stars to NASA astronauts to philosophers to computer scientists to marketing professionals to a team from thenetworkone!
What did we learn this year?
The Internet; following the cable
We all use it on a daily basis – it’s an integral part of modern life but, few of us stop to think how the most complex machine created by man actually works.
Author and journalist Andrew Blum explained how he followed the cable that left his router to understand what makes up Internet. He discovered that the network is less fit for purpose than many tech companies and ISPs would like their customers to believe. Indeed, the vast majority of data transits through just 12 global hubs and, at peak times, 40% of all traffic in the US is on-demand video from steaming services like Netflix.
With the video traffic (from streaming services and social media / Facebook Live), only set to grow rapidly, Blum claims the existing network could come to a halt very soon.
In addition, the long-promised Internet of Things (IoT), could only make this worse as millions of connected devices from fridges to connected vehicles attempt to upload terabytes of (mostly unused) data to Cloud servers.
In an effort to bypass the network congestion, the likes of Facebook, Amazon and Google et al are investing heavily in building their own dedicated networks. On the face of it a good idea but, many commentators are raising concerns over net-neutrality. In the near future will we have to buy into either an Amazon or Google only ecosystem?
Sharif Fotouh, Founder and CEO of Compass EdgePoint believes that a potential solution lies in an old idea – storing IoT data locally thereby avoiding the need to transfer Terabytes long distances across the Internet. Fotouh claims, this would not only be faster and more efficient but, enable the safer development of smart cities and connected vehicles that need rapid access to up-to-date information hundreds of times a second.
“Good morning, Dave”
Again, this year SxSW was dominated by seminars, presentations and discussions about Artificial Intelligence (AI). Whilst the subject encourages views ranging from a Star Trek style utopian future to a Terminator dystopian disaster in equal measure, the majority of thinking is more considered and focuses on the practical application of this incredible technology.
Before progressing too much further, it is important to define what AI is and why it’s different to machine learning as the terms are often used interchangeably when, in fact, they are two very different things.
AI: the capability of a machine to imitate human behaviour.
Machine learning: the ability of a computer to automatically learn and improve from experience without being explicitly programmed.
It is the latter that has greater application in the marketing environment as it’s ideal for analysing vast amounts raw data to uncover hitherto unseen patterns that can be acted upon – for example, distinct customer types or, reactions to specific stimuli with in campaigns.
So why is AI now generating so much interest?
Simply put, we are drowning in data. According to Manoj Saxena, Executive Chairman, CognitiveScale (a US company that build augmented intelligence software applications), we have produced more data in the last 2 years than in the previous 5,000 years. In addition, from a technical perspective, we’ve reached an infection point.
Computers are becoming increasingly powerful to the point that within the next two years Saxena believes you’ll be able to buy a machine with cognitive power of a mouse brain and in 12 years, the cognitive power of a human brain!
Finally, anybody with a computer can now access massive processing and storage power affordably in the Cloud. Indeed, as Jerry Chow, Manager, Experimental Quantum Computing at IBM explained, anyone can now use and programme a Quantum computer though the online IBM QX programming portal www.qiskit.org
Is it all hype?
To some extent ‘yes’ but hang on… AI in the business environment is a ‘solution looking for a problem’. Steven Wolfe Pereira, Chief Marketing Communications Officer, Quantcast, believes that we are at the “top of the hype-cycle” and it is now time to question everything about AI – “AI is the new electricity but, we’ve got a long way to go”.
Pereira also believes that timing has had a huge influence on the rapid rise in the visibility and use of machine learning in marketing. He points to the increasing pressure being put on CMOs to create growth, when many Fortune 500 companies are facing slow or stalling market conditions with audiences that are increasingly divorced from media.
This said, those businesses that do find a use case for machine learning will certainly benefit. As Cameron David, SVP Data Science at NBC Universal, stated, NBC Universal are actively using machine learning to better target audiences on their network at any given time so media agencies can be more specific with placement and creative agencies can ‘fine tune’ the elements within an ad to better resonate with a given audience.
When it comes to finding the use case, Pereira believes brands need to go back to basics and consider how best to employ AI. For example…
- Go direct. Use machine learning to better understand the customer and then use the data to eliminate friction in the brand / customer relationship
- Design your AI mix. How much data can the brand owner process and where does machine learn best fit in the business? A good analogy is flight
- Own the ‘take-off’ – the strategy
- Let the plane (AI) do the flying – the data crunching
- Land the plane yourself – understand the outcomes, learn and set new goals
At the moment, machine learning is extremely useful for pattern recognition within large amounts of data, predictions based on that data, personalisation of materials to data sets and detecting abnormal data patterns such as fraudulent behaviour.
Will a computer take my job?
Almost certainly! But don’t pack away your sharpies just yet, we are a way off ‘HAL’ creating the next recipient of the Titanium Lion. As David, claimed, “There’s still no substitute for great creative” and whilst machine learning can define the specific elements that might resonate with a particular audience, overall the spark of originally behind the idea is still very much in the human domain.
As Pereira explained, “AI is like the internet was in 1998” and many of us remember how much fun getting online with dialup 56K modem was then!
The conscious machine
Perhaps one of the more fringe but none-the-less interesting seminars, focussed on what might happen in the near future (20 years hence), when a hyper intelligent AI could potentially become conscious.
To understand the issue, one must first define what it is to be conscious, and then, the impact that has on our decision-making processes.
David Chalmers, Co-Director, NYU Centre for Mind, Brain and Consciousness explained that consciousness is 100 billion neurons firing across our brains to create a chemical reaction that is the subjective summation of our sensory inputs.
Chalmers went on to explain that consciousness gives us purpose and moral sense and should not be confused with intelligence.
Therefore, a hyper intelligent AI would not necessarily be conscious.
Christof Koch, Chief Scientist and President of The Allen Institute argued that digital machine could only ever simulate consciousness and if we wanted create a conscious AI, we would need to create a neuromorphic machine who’s learning patterns were more akin to those of human brain.
The panel agreed that whilst a conscious machine, often the dream of science fiction fans, could potential exist in the future, any suitably intelligent AI would probably decide to forgo consciousness in favour of simply being more efficient. Why slow decision making down with tricky issues of morality?
“From chin down to face up”
Love them or loathe them, the digital voice activated assistant is here to stay. At the moment, Amazon’s Echo is leading the market with the Google Assistant close behind and Apple’s beautifully designed, more expensive offering, typically later to market and playing catch-up.
Chris Ferrel, Digital Strategy Director, The Richards Group explored the world without screens, explaining that, by 2020, approximately 30% of all web searches will not be made on a screen as we move from a “chin down to face up” interaction with our web enabled devices.
But, why now?
The dream of verbal interaction with a computer has been around since the early 1960s when IBM demonstrated Project Shoebox (https://en.wikipedia.org/wiki/IBM_Shoebox) a counting machine that recognised 16 words – if spoken slowly and clearly! But it wasn’t until 2012 that Microsoft demonstrated a machine learning technology with a 95% level of accuracy in human voice understanding.
Brad Abrams, Group Product Manager at Google Actions explained that since then, the development of AI technology and machine learning has enabled the rapid growth of voice activated devices and that we have move from the ‘age of click’ in 1984 with the development of the mouse, to the ‘age of touch’ in 2007 with the first iPhone, to the ‘age of saying’ in 2016 with Echo.
In following this progression, the user’s experience has changed dramatically and perhaps most significantly, people no longer need to learn how to interact with the machine. Voice control is a more natural interface and, therefore (assuming it’s suitably intelligent) easier to use – for most people.
Your brand on voice.
It is still relatively early days for this technology but, Abrams believes there are three distinct use cases for brands when it comes to voice – morning, commuting and relaxing in the evening. At these time of day, Google’s research suggests audience interaction levels with voice technology is at its highest and as such, brands should explore how they can best utilise this technology at these times of day.
Additionally, Ferrel believes that there several distinct groups of people driving the adoption, notably individuals with disabilities (who find using a screen difficult) children (often doing homework) and of course early tech adopters eager to build their connected home environments.
As adoption increases and the technology becomes mainstream, Ferrel believes that voice will be the ‘primary filter’ for many people before they potentially engage in deeper web search on devices with screens.
This is a potential huge behavioural shift with big implications that brands will have to carefully consider – specifically…
- Their voice and tone on these devices as users will not distinguish between the computer and brand
- Potentially using these devices to enrich their customer service offerings
- Re-design their SEO for voice which is often more long form than on screen
- How they monetise conversation
- Develop voice apps and integrate voice into their marketing strategies
So, with 30% of all internet searches soon to be conducted by voice, the obvious question here for agencies is “how prepared are you to offer voice campaigns to your client?” because if you’re not all over this, 30% of your digital output is going to be irrelevant!
The Retail Apocalypse
With 7,000 retail stores closing in the US in 2017 and, a similar picture repeated in countless other markets, many believe that the traditional retail business model is looking at a turbulent future in the face of online competition – specifically, the digitally native start-up offering a direct-to-consumer proposition and, in some cases, also moving into the bricks and mortar environment.
Michelle Bacharach, founder and CEO of FINDME, an AI platform that shows consumers how to use retailer’s products by mixing and matching them with others, believes that, the problems of the traditional retailer stem from a legacy attitude. They’re not “scrappy and lean and nimble and able to iterate quickly,” and often simply create ‘friction’ in the buying process, which today’s consumers don’t expect or want.
In addition, Bacharach claims that long property leases, higher overheads and legacy systems add to the problem.
Indeed, when looking at most traditional retailers, it’s hard to see how they could ever compete with the like of Amazon when it comes to scale and the personalised experience – it’s simply not how their businesses are set-up to work structurally or economically but, this doesn’t mean that they cannot compete on another front.
Matt Alexander, CEO of Neighbourhood Goods believes that for the most part, customers don’t really care about retail brands (on or offline) anymore but, they do buy people so, retailers need to consider the shopper experience in a more personal and human way.
Alexander feels that it’s okay for retail brands to be seen through their employees as it generates a ‘human vulnerability’ that consumer like.
What does this mean for agencies and their retail clients?
In short, think of the retail channel differently – it’s about ‘experience’ rather than income per square foot.
So perhaps, the future of traditional retail lies in a more experiential retail environment in which customers come to discover brands and experience them in a more surprising fashion that is more akin to a real-life Pinterest board? But to do this, retailers need to get to grips with a different value-exchange, a value exchange that offers a more frictionless ‘reason to visit’ be that a social experience, exploration and then, understand that it’s not just about extracting cash from consumers.
Under the influence
The retail landscape is changing, and with it, advertising is changing too. 70% of brands now dedicate a good part of their budget to influencer marketing, and this is higher for retail brands: 90% of luxury fashion brands and 80% of beauty brands work with influencers. Real audiences are invested in the opinions of their favourite influencers, in the same way you’d value to the opinion of a knowledgable friend.
However, insincerity is easy to spot, and this can seriously hurt a brand. Spencer McClung, EVP, Media and Partnerships at ipsy, recommends taking the time to find influencers that really resonate with the brand, rather than just choosing the one with the most followers. Additionally, brands and advertisers should be creating content with their chosen influencers, rather than creating work themselves and asking them to push it out on their social channels: they’re the ones that have a captive audience that’s been inspired by their content so far.
Additionally, brands themselves could consider using social platforms to advertise. Social media can be a great place to have a deep, two way conversation with your consumers, as handbag giant Kate Spade found. Kristen Naiman, SVP of Brand Creative, and Krista Neuhaus, Senior Director of Digital Brand Marketing, discussed their own storytelling, which they’ve had great success with on digital platforms. After meeting with YouTube, they decided to focus their efforts there as they were already creating video content. Kate Spade created both long and shortform content, from ‘how to’ videos with brand ambassadors to a mini-series starring celebrities.
So, it seems the key to performing well in the digital landscape is is knowing the brand’s personality and strengths and being open to new ideas and ways of marketing.
Beyond brand personality: what does a brand stand for?
With the world turning digital, it’s easy to forget that consumers still buy into a brand’s character. When 80% of millennials claim to be belief driven buyers, is it enough for brands to just put a friendly face in their advertising and leave it at that?
Purpose driven marketing is on the rise, but it’s not necessarily about cause marketing. Purpose driven brands live by their core beliefs and look to impact society and culture. They also become – and stay – relevant by creating meaningful connections with their audiences. Todd Kaplan, PepsiCo’s VP of Marketing, and AJ Hassan, Creative Director at R/GA, spoke about their new bottled water brand, LIFEWTR, and its purpose of supporting the arts. This is baked into everything, from their TVC’s and experiential events to their packaging.
Whilst this can reap great rewards (LIFEWTR made over $200 million USD in its first year) companies should tread carefully. As with digital marketing, if you’re not authentic, it’s bound to come back to bite you. Think the ‘Fearless Girl’ controversy: it was found that the company that commissioned the statue, State Street, underpaid about 300 female employees. Embarrassing, to say the least.
If you’re going to talk the talk, you must also walk the walk. If your company is already walking the walk, why not take some deserved credit? Consumers today are active ambassadors, and they want to buy into something they can feel good about.
The ‘Star Man’ cometh
Is there a brand right now with more purpose and personality than SpaceX? Unless you have been living on a remote island, cut off from all forms of communication for the last year, it would have been impossible not to notice Elon Musk blasting his Tesla convertible into space with the Star Man on board to a Bowie soundtrack…
(Watch Musk’s interview in full here: https://www.youtube.com/watch?v=kzlUyrccbos)
But, beyond the stunts, promises and hype, the “new space economy” is attracting serious funding.
Jason Dunn, Co-Founder of Made in Space Inc., explained that the sector is currently worth around $350bn and predicted to grow rapidly to over $1trillion in the next few years as the ‘cost to orbit’ falls significant thanks to the new and innovative commercial players like SpaceX, Blue Origin and Virgin who’ve developed reusable technology and commercial business models for space flight – although Musk was quoted at SxSW as saying: SpaceX is “alive by the skin of it’s teeth”.
However, Dunn believes that for the true value in the space sector lies in space made products such as phamaceuticals or ultra-high-grade fibre optic cable – products that can only be made in a zero-gravity environment and then sold back on Earth for a high margin. To prove the concept, Made in Space recently installed a 3D printer on the International Space Station for small-scale manufacturing.
Bronwyn Agrios, Head of Product at Astro Digital, a global imaging and analysis company, explained that the growth in increasingly complex navigation and mapping systems on Earth require increasingly high resolution pictures from space – BUT, the images are no longer taken for people to look at, they’re far too complex and, as such, are passed directly to dedicated AI’s monitoring everything from weather patterns to traffic congestion to pollution to man’s environmental impact on the planet. Indeed, as autonomous vehicles come online. Agrios claims evermore up-to-date and complex imagery will be required to ensure the vehicles end up at their intended destinations.
Despite all the optimism of the early space adopters, the real story is that space is not easy. It’s not easy if you’re a government agency like NASA or, if you’re a commercial company like SpaceX or Boeing. Space is risky, involves a lot of capital investment up front and everything takes longer than you think because nobody has done it before.
‘To boldly go… perhaps the true spirit of SxSW’