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supermarkets who will find themselves hopelessly outpaced in this area.
Once those partnerships are established, a whole new challenge emerges for advertisers: more often than not, we won’t ask our VPA to get us Omo, but washing detergent. We won’t ask for Dove or Lux, but body wash. Similarly, we won’t ask for a VPA to keep us stocked up on Panadol, but paracetamol. In low- interest categories, category usage remains human- decided but brand choice becomes VPA-influenced. In low-interest categories, marketers will therefore soon be marketing to machines — rather than humans — to influence brand choice. Brands with large category shares will be in the fortunate position to drive and benefit from category growth — but the implications for how brands will increase market share from a low category base remains to be seen.
Don’t be too dismayed by this. Marketers have been marketing to machines for a long time — that’s what SEO and SEM is (and human agency has remained a key skill in making this happen). But there’s a difference. Whilst search marketing means influencing (including paying) an algorithm to ensure that your brand is seen by consumers, VPA- marketing means influencing (and presumably still paying) an algorithm to surface your brand not to a human, but to an algorithm.
It goes without saying that in some instances the algorithm surfacing a brand (for example Alexa)
will be owned by the same company fulfilling the distribution (in this case Amazon). Marketers won’t therefore necessarily be playing on a level playing field, and the rise in the west of GAFA (Google, Apple, Facebook and Amazon) and in the east of BAT (Baidu, Alibaba and Tencent) should give pause for thought. The very rise of most of these companies has been consumer driven, but advertiser funded. Those advertisers will now face tough negotiations with the companies their marketing investments built.
Artificial intelligence, mixed reality, voice and VPAs will therefore all profoundly influence consumer behaviour and decision making. But when we consider the future of PHD’s product, we must also consider the huge impact technology will have on our client’s categories.
Thoughtleader
PARTTWO:
TRANSFORMED CATEGORIES
Perhaps my favourite marketing anecdote comes from Theodore Levitt, who, in his 1960 HBR masterpiece Marketing Myopia, described how the American Railroads lost out on one of the biggest business opportunities of the nineteenth century. He observes that:
“The railroads serve as an example of an industry whose failure to grow is due to a limited market view. Those behind the railroads are in trouble not because the need for passenger transportation has declined or even because
that need has been lled by cars, airplanes, and other modes of transport. Rather, the industry is failing because those behind it assumed they were in the railroad business rather than the transportation business. They were railroad oriented instead of transportation oriented, product oriented instead of customer oriented.”
(Source: Levitt, HBR, first published 1960)
The bottom line — which is easy to see and say in retrospect — is that the great American railroads of over a century ago failed because they didn’t realise and best define what business they were in, and therefore didn’t capitalise on an opportunity created by technology when it landed on their doorstep. Sound relevant?
Several categories today are about to undergo huge transformation and change because of technology. Transportation and automobiles, finance and banking, professional services, retail and eCommerce are just some of the categories
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THE EDIT ISSUE 06 | Q2 2017