Sales & Marketing

Why advertising will become a thing of the past

5 min read

05 June 2019

The rise of the Internet of Things driven consumer products are completely transforming branding and could erase advertising as we know it.

The chief brand officer for P&G, Marc Pritchard  claimed earlier this year that – ‘we need to start thinking about a world with no ads.’

– If true, Pritchard’s statement could mean that we are standing at the dawn of the era of ‘marketing to machines.’

Which brands will survive the advertising decline?

P&G realise that as technology platforms such as Amazon Alexa and Google Home move between our brands and the customer, they have only a small window of opportunity to capture the direct relationship with its customers.

In just a few years, brands will have made one of three triangular relationships with AI-platforms and customers:

1. DE-filtered – keeping direct contact with the customer

2. Filtered-IN – using marketing-to-machines to get past the gatekeeping AI platforms

3. Filtered-OUT – no more customer contact no way to get noticed by them.

The rise of automated buying means there’s no need for advertising

The rise of automated buying will make it harder for some brands to catch customers.

P&G are a huge ecosystem of brands, so they realise that each of their separate products will end up in one of those categories.

They will fight to stay in the first category as much as they can, knowing better than anyone how valuable the direct customer relationship is.

P&G have some really strong brands who should be able to do this. Consumers will probably explicitly keep asking for brands such as Pampers, Pantene or Swiffer. But there are also many other brands that are highly commoditized, like Ariel, Dreft or Bounty.

When automated buying makes an entrance, these brands will find it a lot more difficult to catch customers.

It wouldn’t be surprising if P&G became one of the pioneers of a subscription-based product model – where registered customers automatically receive toilet paper packages every two weeks.

Data gathering and personalisation is the new advertising

P&G have always been forerunners in direct customer contact, which is why it makes total sense that they would be one of the first to realise the dangers and potential of algorithm-based buying.

These investments will now pay off more than others. Data-gathering is the fundamental of every innovation, and those that do not invest in it will be so left behind, they will be unable to catch up.

P&G believes we have already arrived at this point – and those who haven’t invested in data-driven and personalised relationships with customised communication, pricing, and products, will become filtered-OUT.

Who is the middleman now?

‘The world without ads’ that Pritchard was addressing is also one of the many manifestations of the ‘cutting out the middle man’ tendency.

In the case of giants like P&G, the ‘middle man’ would be the media (where they display ads) and the retailers (where they display and sell their products) which will be increasingly cut out in times of AI platforms and automated buying.

The decline of smaller middlemen platforms

However, these middlemen will, in turn, be replaced by much more powerful ‘middle’ platforms like Google and Amazon, who will come in between the brands and the customers.

For retailers and the media, the relationship was one where both parties needed each other and had more or less equal negotiation power.

Who will win the new ‘non-ads’ game?

It’s not the same with these ‘new’ middlemen platforms – they need brands a lot less than brands need them.

This is why the DE-filtered customer relationship that P&G will strive for will be the most enviable. How are you preparing for the era of Marketing to Machines?