GroupM, the leading digital media investment firm, has released the preview version of its annual report on the state of digital marketing and its impact on marketers and advertisers. The report, titled “Interaction: Preview Edition for Clients and Partners February 2017”, is published by GroupM’s Worldwide Media and Marketing Forecast, highlighting the challenges in digital marketing across channels. On a positive note, the report predicts the digital share of ad investment in 2017 will jump to around 33%.

Interaction 2017 takes a very cautious approach in defining the digital landscape, suggesting the new and old worlds are contributing equally to new marketing technologies in dollar investments since 2013. In 2016, CMOs spent 72 cents of every new dollar on digital advertising, and 21 cents on TV. In 2017, the balance will swing higher — 77:17, in favor of Digital ad. TV ad spends will remain consistent as per the report.

Top Focus-Areas in Digital Transformation 

2017 is slated to be the year of Big Bang in marketing and advertising technologies. Top 100 CMOs agree that big-brand advertising is definitely moving towards Intelligence Age from the existing Information Age.

Traditionally, marketers have always been building strategies to outperform competitors at every touchpoint along the customer journey. Marketing budgets in 2016 reveal how nothing has changed in marketing, except for the increased complexity in the marketing platforms and their functionalities. While most enterprises now rely on automation for marketing and sales for B2B commerce, a handful of them also prefer to deploy intelligent technologies for social media and mobile apps. Omnichannel customer experience is driving more audience engagement than ever before.

Interaction 2017 reports –

“On a single platform you can advertise, sell, fulfill the order, and deliver customer service. A single piece of content, or more accurately, intellectual property, can be watched in linear form or on demand, as a show, a still, a clip, a multi-hour binge and multiply reconfigured for multiple platforms.”

And what drives customer experience?

Of course, it’s the accuracy and quality of customer data that marketing automation tools mine from omnichannel platforms.

“High-quality data is data that helps you acquire the customer you don’t know and to better understand the customer you do know.”

Read Also: CMOs Own Initiatives in Customer Experience; Focus Sharply Moving Towards No-Screen Engagement

Interaction 2017 suggests CMOs should start owning in-house media groups rather than relying on advertising. The threshold of the usefulness of owned media in 2017 is raised by integrating marketing technologies and sales enablement platforms running on AI, machine learning, and NLP.

“As artificial intelligence becomes part of the taxonomy of everything the structured and unstructured story around the brand, its purpose, origin and the conversation it creates will become part of the consumer experience.”

AI manifesting itself in daily life

How can marketers stay away from AI? Machine learning, voice recognition, NLP and cognitive learning capabilities lies at the heart of every innovation made in marketing technology ecosystem. AI in marketing technology provides brute force to marketing efforts, mimicking human behavior for personalized customer experience.

2017 will throw up battles of the AI innovators – “narrow intelligence” (those who are good at only one thing) versus “general intelligence” (those who are flexible and adaptable). Sans doubt, CMOs are yet to assess the extent to which AI can substitute human customer service interactions.

“This is clearly true of Google, Facebook, Amazon, Microsoft, and Apple which by market capitalization are among the six most valuable companies in the world. It’s true also of Alibaba, Baidu, and Tencent. Eight businesses, with data at their core (that are) mapping human behavior, (and in doing so) are becoming the wireframe of human experience.”

AR and VR: From Small Screen to No Screen

According to EIU’s latest report on customer experience, CMOs are focusing on moving towards no-screen engagement by 2020. AR and VR technologies enable marketers to deliver entertainment, social relevancy, personalization, and speed. Advertising in 2016 moved from storytelling to story creation. VR accessories touched sales figure of five million units in 2016. Exquisite customer experience in 2017 will be about delivering a 360-degree and immersive experience, minus the screens.

“It’s likely that the biggest AR deals in the near term will be collaborations between brands and retailers and between sponsors and events. Further applications can be expected in travel, tourism, and real estate. In all cases, the momentum needs to exist for the necessary app installs and for sufficient value to be created for all stakeholders.”

Video is a hotbed of Opportunities

TV still rules; online video platforms fail in longer formats.

Marketers shifting focus towards video marketing over Facebook, Instagram, Snap, and YouTube are yet to achieve the golden “catch”. Despite programmatic featuring as the fastest growing advertising technology, advertisers are unable to accurately measure key engagement metrics: who watched what, where, for how long and on what device.

Interaction 2017 reports, “For every 20 video ads served in the news feed, three are watched for three seconds or more and just one is watched for ten seconds or more.”

To show how video paradigm is shifting away from TV-only platforms, GroupM published a “video taxonomy” card for advertisers.

“The advertisers that account for 90% of television advertising revenue account for between 30% and 40% of the revenue of the digital behemoths.”

OTT: The Confluence of TV, Programmatic and Internet

Over-the-Top (OTT), or Connected TV, is still in its infancy. However, there is no shortage of advertisers who are promoting their brands over OTT. Promising to be an enriching customer-centric platform, the new ad inventory stack allows advertisers to broadcast quality and brand-safe content in an on-demand environment.

“The monetization of OTT bundles is straightforward – subscription sales plus highly targeted advertising less the cost of re-transmission fees. From the advertiser’s point of view, few will be big enough to represent meaningful sources of advertising inventory and it will be up to the agencies to aggregate the pool and harmonize both delivery and measurement.”

GroupM report notes, “Failure to create something that people are prepared to pay for or perceive as an indispensable utility is itself a prescription for failure. And so, the prescription to make TV ubiquitous is simple even if complex to activate.”

Marketers can’t miss Audio in 2017

Audio is the least explored marketing territory in the digital ecosystem. The soundtrack for brand promotion remains an elusive concept despite the bludgeoning budget allocations across web, social, mobile, search, video and e-commerce. Radio and online audio stores continue to have massive customer retention, thanks to the smart media streaming technologies. On-demand audio content provides unmatched consumer interaction, providing a beyond-the-demography snapshot about customer’s listening behavior and emotional intimacy with brands. Players like Spotify, Pandora, and iHeartMedia offer impeccable audio content discovery. However, ROI attributed to audio channels is meager despite collective revenue of over $9 billion and subscribers over 1.5 billion.

“2017 will be a big year for both Pandora and Spotify. Rumors of Pandora’s sale began to swirl in late 2016 and Spotify is expected to go public, and along with Snapchat, create the next two major publicly traded native digital media companies. In the meantime, against a backdrop of rising interest rates iHeartMedia’s immense mortgage obligations may be a barrier to progress.”

The insights provided by Interaction 2017 on every aspect of digital identity for an enterprise proves to be a ground-breaking “handbook” for every CMO who intends to magnify business objectives using digital transformations. Be it AI, mobile-first or programmatic and OTT, Interaction 2017 will remain the epitome of “ethical” branding policies in 2017.