Nikesh Arora (Google SVP) – Intl Advertising Association World Congress in Moscow (Aug 2010)

Chapters

Abstract

The Digital Age of Advertising: Real-time Feedback, Convergence, and Global Reach

Abstract:

This article explores the transformative effects of the digital revolution on advertising, highlighting the importance of real-time consumer feedback, the convergence of online and offline experiences, and the global reach of digital platforms. It draws insights from technology executive Nikesh Arora, focusing on the future of internet connectivity, the explosion of data, and the evolving landscape of internet advertising.

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1. Introduction: The Wireless Future and its Impact on Advertising

In 2009, Nikesh Arora’s presentation, drawing from Nikola Tesla’s earlier prediction of a wireless future, outlined the digital revolution’s rapid transformation of advertising. This era, characterized by significant internet penetration, mobile device proliferation, and an immense data surge, reshaped how brands connected with consumers.

Predictions for the Future of Technology:

Nikola Tesla had predicted the mobile internet as early as 1909, demonstrating the rapid pace of technological advancements. In 2010, 1.8 billion people had internet access, representing 26% of the world’s population and 90% of global GDP. Mobile phone subscriptions reached 4.6 billion, with two out of three individuals owning a mobile phone. The world possessed 800 exabytes of digital information, equivalent to 40,000 hours of television viewing, generated at a rate of 5 exabytes every two days.

2. The Internet’s Exponential Growth and Data Explosion

In 2010, 1.8 billion people were connected to the internet, accounting for 90% of the world’s GDP. This era witnessed a dramatic rise in digital information, with 800 exabytes of data globally, equivalent to 40,000 hours of TV viewing. Predictions for 2020 foresaw 5 billion people connected to the internet, with speeds 500 times faster than in 2010. The anticipated data volume was a staggering 53 zettabytes, highlighting the challenges in information management and relevance.

Internet Growth and Speed:

By 2020, 5 billion people (80% of the world’s population) will be connected to the internet with speeds reaching 1 gigabit per second. The internet speed is expected to increase 500 times faster in the next 10 years due to technological advancements.

3. The Evolution of Mobile Technology and its Impact

Mobile subscriptions were predicted to exceed the world’s population, reaching 10 billion. This surge was driven by devices like Kindles, iPads, and smart appliances, indicating a shift towards multiple mobile subscriptions per person.

Mobile Subscriptions and Data:

There will be 10 billion mobile subscriptions, including devices like the Kindle and iPad, leading to multiple devices per person. The world will generate approximately 53 zettabytes of data, highlighting the need for efficient information management and retrieval.

4. The Early Stages of the Internet and Interactive Advertising

Despite its vast reach, the internet was still in its nascent stage, akin to the early days of television advertising. This phase was characterized by the rise of interactive advertising, allowing direct user engagement with ads. The advertising industry’s challenge was to fully embrace this interactivity to enhance user experience.

The Internet Revolution’s Early Stage:

The internet and digital revolution are still in their early stages, with significant growth potential, particularly in advertising.

Television Advertising Evolution:

Television advertising began in 1959, 10 years after the introduction of television, with initial ads featuring products like the Barbie doll. The internet advertising industry is at a similar stage of development, with ample room for innovation and improvement.

5. Personalization and Predictions for the Future

The internet enabled mass personalization in advertising, offering targeted ads based on individual preferences. Arora’s team made five significant predictions for the future, emphasizing the internet’s infinite scale, the rise of global internet brands, and the platform’s ability to gather information, communicate, and distribute products globally.

Interactive Advertising Potential:

The internet allows for interactive advertising, enabling users to engage with ads through video, display, and search formats. The advertising industry needs to fully embrace this interactivity to connect with consumers effectively.

Mass Personalization:

The internet allows for mass personalization, showing different ads to different individuals. Tailoring ads based on factors like location, time of day, affluence, or gender can improve ad relevance. This level of personalization is still in its early stages, and the advertising industry needs to adapt.

Five Bets for the Future:

Infinite Scale: With billions of people connected to the internet and mobile devices, scale is significant.

Global Brands: Coca-Cola, Apple, Google, Nokia, Nike, Danone, Amazon, Facebook, and YouTube are examples of global brands.

Relevance and Choice:

The internet has revolutionized brand building, allowing businesses to reach a global audience of billions with ease. Traditional brands took decades to establish, while new internet brands can achieve similar recognition in just a few years. The internet’s infinite scale enables businesses to launch from anywhere and reach customers worldwide.

Early Examples of Internet Brand Building:

– Lucas Cruikshank, a 15-year-old from Nebraska, created a TV series with 54 three-minute episodes, gaining millions of views and subscribers.

– Two kids created the most-watched video of all time, with 186 million views, leading to a fan club and a growing college fund.

– An Israeli musician and DJ established a collaborative open source music platform with 21 artists.

The Internet as a Global Platform:

The internet serves as the world’s largest information, communication, and distribution platform. Businesses can use the internet to gather information, connect with customers, and distribute goods and services, both digital and physical.

Information Overload:

The world has moved from having 5 exabytes of information in 2003 to 53 zettabytes today. The challenge now is not about having too little information, but rather having too much information.

Relevance and Choice:

Advertisers and businesses need to find ways to create relevance and choice for consumers in the face of information overload. Consumers need to be able to find the right information and advertisers need to create relevance in their advertising to attract consumers.

Interactive Advertising:

An example is given of an Evian ad where 23 million people chose to watch the ad rather than having it thrust upon them. Interactive advertising allows users to choose to interact with advertising, making it more relevant and engaging.

Tracking Consumer Engagement:

Digital advertising allows advertisers to track how long people watch ads, where they go off, and how they engage with the brand. This data provides valuable insights into consumer behavior and preferences.

Evolution to a Market of One:

The internet and digital connectivity will eventually lead to a market of one, where brands can target and interact with individual consumers rather than large groups. This will require a shift in the way brands traditionally interact with consumers.

Instant Consumer Feedback:

In today’s digital landscape, consumer feedback is accessible in real-time. Marketers can gain immediate insights into whether their advertising resonates with consumers. Social media platforms such as Twitter reflect consumer sentiments towards brands.

Adaptive Web and the Convergence of Online and Offline Worlds:

The distinction between the online and offline worlds is gradually diminishing. Internet technologies are extending offline behaviors and interactions into the digital field. Social networking, communication, and e-commerce are examples of offline activities transitioning online.

Digital Shift of Content and Advertising:

Arora predicts that 40-50% of content and businesses will transition to digital mediums in the next 5-8 years. A significant portion of advertising will follow this shift, resulting in a combined online and offline advertising landscape. Consumers will engage with brands through multiple channels, including websites and television ads.

Science and Art in Advertising:

Arora emphasizes that advertising remains a combination of science and art. Science provides instant consumer feedback and insights through data analysis. Art involves interpreting and applying this data to create engaging and effective advertising campaigns.

Rapid Product Development and Testing at Google:

Google employs a strategy of continuous testing and iteration. The company runs numerous 1% experiments daily, allowing for rapid feedback and data-driven decision-making. This approach enables Google to refine and improve its products and services based on real-time consumer feedback.

Mobile Phone Company’s Experimentation with Search Ads:

A mobile phone company in Europe conducted an experiment with Google search ads. The company highlighted different features of its mobile package each day and collected data over 10 days. The analysis of consumer interactions with these ads informed the company’s television ad campaign.

Technological Disruption and the Borderless World:

Arora highlights the disruptive nature of technological advancements. Businesses and industries must adapt and reform to survive in this rapidly changing landscape. The internet has created a borderless world where businesses can reach a global audience. Arora encourages businesses to embrace innovation and not limit their imagination in the face of disruption.

Notes by: Hephaestus