May the Fourth Era of Advertising Be With You

A closer look at the progress made in online advertising from the AOL era to AI

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In a rapidly evolving landscape, accurately predicting the future of online advertising is no easy task.

Four years ago, I wrote an article for Adweek outlining the emergence of the fourth era of online advertising, characterized by media transactions on online platforms with a focus on data privacy. Looking back, some predictions were on point, while others require reassessment.

In this updated and improved article, we will examine the progress made in online advertising, the unexpected advancements in AI, the changing media consumption habits and the evolving landscape of privacy and identity.

From AOL to ad networks

The first era of advertising was the portal era. Yahoo and AOL dominated in an era of high CPMs. The second era started after the .com crash in 2001 where we then had the direct response era. Paid search generally and Google particularly became dominant players.

Affiliates thrived on new tracking technologies. In display, high CPMs for brand campaigns turned into performance ad networks.

The third era followed the 2009 financial crash: the platform era. This saw the rise of multiple ad platforms and walled gardens (led by Facebook Audience Network, programmatic display and video) and the mass use of data.

As you can see each era brought new dimensions and followed a period of disruption. As we head into the fourth era, that disruption has been constant for a few years from the pandemic, regulators’ changes and economic uncertainty.

The fourth era of online advertising

In the past four years, most media transactions have indeed shifted to online platforms. The rise of Connected TV (CTV) has significantly contributed to this transformation, especially with the acceleration of this shift due to the pandemic.

However, despite these changes, data privacy has not progressed as rapidly as expected. The delay in Google’s sunsetting of third-party cookies, for instance, has temporarily alleviated concerns in the advertising industry. Nevertheless, privacy remains an essential aspect of the future of advertising.

The rise of AI

AI has become the most significant story in the marketing industry. Chat GPT, in particular, has rapidly gained popularity as the fastest-growing software application in history.

Its impact on progressive marketers is already evident, with AI assisting in tasks such as creative development, content production and media bidding. Major tech players like Google, Facebook and Amazon have also rolled out AI marketing tools, increasing adoption rates. This surge in AI adoption has been driven not only by technological advancements, but also by a shortage of available talent and the need for improved productivity in the wake of the pandemic.

The democratization of AI techniques

While AI and machine learning techniques have been utilized in marketing for over a decade, the growth of content-generating AI and the democratization of AI techniques have revolutionized the field. Previously, leveraging these technologies required advanced computer engineering capabilities.

However, the availability of user-friendly, natural language query-based AI technologies has opened doors for anyone to utilize AI tools. Although computer engineering expertise remains advantageous, the accessibility of AI applications will accelerate adoption even further.

Disruption in media consumption

The integration of AI into search engines poses a potential disruption not only to the dominant media platform but also to the amount of time spent browsing websites. If consumers can obtain the content they need directly from AI-powered sources, the need for extensive web browsing may diminish.

Consequently, advertising strategies will need to adapt, with ads integrated into AI outputs and video feeds instead of search results or web banners. This shift will give rise to new advertising opportunities while potentially rendering some traditional avenues obsolete. Furthermore, legal battles over content ownership are likely to emerge as the industry adjusts to this evolving landscape.

Privacy and identity in an AI-driven world

The industry’s attention is focused on Google’s plans to sunset third-party cookies, following in the footsteps of Apple devices and browsers. However, broader disruptions may overshadow this transition, making the loss of cookies a mere sideshow.

Privacy will undoubtedly remain a critical concern for the future, but it is essential to consider limiting how sensitive data can be utilized by AI tools and technologies. Striking a balance between privacy and AI-driven innovation will be vital to ensure ethical and responsible practices.

Look back to progress forward

As the online advertising landscape continues to evolve, it is crucial to reflect on past predictions and adapt to emerging trends. The fourth era of online advertising has seen significant progress, with media transactions predominantly occurring through online platforms.

The rapid advancement of AI has revolutionized the marketing industry, democratizing access to powerful tools. Media consumption habits are shifting, necessitating the integration of advertising into AI outputs and video.