Consumer Tech, Advertising + Commerce: State of the Union

As 2016 gets underway, for consumer tech, advertising and commerce — which, today, are joined at the hip — three things are clear:

1. It’s a Mobile-First World

Today, nearly half of the world’s adults have a smartphone. By 2020, that ratio will reach 80%. 

Mobile includes more than just smartphones. It covers tablets, watches, cars, desktops, laptops, and, with the introduction of Apple TV, televisions — any device that runs iOS or Android.

Going forward, products, brands, channels and publications looking to connect with consumers digitally must power their design and development strategies first and foremost with a mobile-mindset — a desktop-friendly website is just icing on the cake. 

This evolution presents opportunities and challenges across the spectrum — to cable operators and media companiesmulti-channel and online-only retailers alike.   

2. Advertising is Dead

For the last twenty years, advertising as we have known it — the 30 second spot, the glossy magazine spread, the newspaper classified — has been dying a slow death. 

In 2015, two things signaled its official demise: TV’s dwindling live audience and the launch of ad block-friendly iOS 9. With the introduction of Apple TV’s app-driven interface, the deal was sealed. 

While networks, publishers, advertisers and agencies continue their quest to find new ways to capture attention and dollars, Facebook and Google will win in the near- and mid-term.

Meantime, consumers are experiencing life free from unwanted interruptions and distractions. Enlightened, they will gravitate to those platforms, channels and content that connect them to advertisers' products and services in ways that are entertaining and trustworthy — and frictionless. Platforms, processes and services that make buying easy — anywhere — are especially likely to be winners. 

3. Messaging is the Next Thing

Messenger is Facebook's mobile messaging service. And Facebook’s plans for Messenger are ambitious — driven, in part, by China-based, Tencent-owned WeChat. WeChat already provides its 600 million users with many of the features that are in the Messenger development pipeline.

If Facebook and Tencent succeed in their ambitions, messaging will allow brands to establish and build long-term relationships with consumers in ways that existing apps can't.

They will streamline mobile shopping — which today requires consumers to keep separate accounts with each retail website or app that they use — facilitate customer service interactions, and make reserving and booking travel, taxis, movie tickets and appointments an easy, one-step process.  

In December, Facebook and Uber announced a partnership allowing users to hail cars from within Messenger. And Facebook revealed that Messenger has over 800 million monthly users. 

By year end 2016, expect many of those same brands that are navigating the changing advertising landscape to be road-testing messaging's possiblities — and expect to see more and more users doing the same. 

Looking at the year ahead, three things remain to be seen:

1. Messaging: Who else?

Two other sets of players will influence the course of messaging’s development:

Startups: Kik, Line, Viber and Facebook’s own WhatsApp are among a handful of well-funded messaging startups with significant user bases, north of 250 million each. One of Kik’s lead investors is Tencent. And Snapchat? Part startup, part 800 pound gorilla. 

All are global, targeting valuable, younger consumers and quickly developing portfolios of products, features and brand relationships that build community, keeping those users engaged and loyal.

Sleeping Giants: Google is reportedly developing a messaging service. Apple, Yahoo and Blackberry already have the basics in place. Amazon must be exploring building or acquiring one of its own. While it’s unclear today what role these five will play in the space, to expect all of them to remain low key about what promises to be a meaningful opportunity would be a mistake.

For users today, switching costs between messaging services is almost zero. This will change, as user bases grow, payment functionality and loyalty features are added, commercial partnerships are established and network effects kick in. Eventually, one or two services will dominate.

By year end, look for one or more of the startups to be acquired and at least two of the sleeping giants to be awake, in action.  

2. Live Video Commerce: Who Takes First Crack at It?

Shopping in messaging apps will undoubtedly be convenient. But no digital commerce platform has successfully created a social experience that can match in-store shopping. And messaging, too, seems unlikely to solve for that.

I’ve banged the drum for Periscope to enable buying functionality.

This is why: shopping through live video would be fun — and social — in ways that no digital experience is right now. It will happen, eventually, and it will be a substantial global shopping channel, when it does. 

The opportunity to lead in live video commerce is Periscope’s to lose. If Periscope doesn’t pick up the ball, someone else will. Top candidates: YouTube, Facebook, Alibaba or Meerkat — or eBay, QVC or HSN.

3. Advertising: Who Will Drop It?

In the next 12 months at least one major, global consumer brand or luxury product will do the math and determine that connecting with consumers through creative digital and social media campaigns, celebrity and event sponsorships yields greater, sustained returns than television advertising and media buys. They will make headlines by eliminating spending on traditional advertising. More will follow.

Update: Scott Galloway's 2016 DLD presentation provides great data behind the advertising trends discussed here. See minutes 3:30 to 6:30, in particular.

Valued Resources on These Topics:

On Twitter: 

Benedict Evans (@BenedictEvans), Partner, Andreessen Horowitz

Rich Greenfield (@RichBTIG), Media + Tech Analyst, BTIG Equity Research

Jason Kint (@jason_kint), CEO, Digital Content Next

Daily + Weekly Updates:

Digiday Daily

Media ReDef from ReDef Founder + CEO, Jason Hirschhorn

Winners + Losers from NYU Stern Prfessor of Marketing + L2 Founder, Scott Galloway

This article is also available on Medium.