The digital advertising industry has always been associated with fast-paced change and a thirst for innovation. That’s understandable when you look at how digital transformed the traditional advertising world in the first decade of the century.
Yet, in recent years, there’s been growing concerns that something has gone wrong. There are worrying flaws in the foundation of the industry itself. But change is coming. The explosion of artificial intelligence (AI), the growing power of Gen Z, and the end of the cookie could bring transformational change.
Pinterest recently gathered 10 industry leaders in Toronto to discuss these issues. In a free-flowing hour-long conversation, they shared their experiences and observations, as well as their concerns and excitement about the future.
AI: Big changes today, bigger changes tomorrow
Kristie Painting, Pinterest Canada’s managing director, kicked off with how Pinterest has been using AI to deliver unique user experiences that meet the evolving needs and expectations of consumers.
“We try to do things a little bit differently, and that's very true of how we are leaning into AI,” she said. Painting pointed to the recent introduction of body type technology that allows users to see content that matches their own body type. “The best way to feel inspired is when you can see yourselves represented,” she said. The new body type technology follows the earlier introduction of skin tone technology and hair pattern search, other examples of the application of AI to produce a more inclusive experience for users.
“Our users love it,” said Painting. “We've had nothing but really warm and heartfelt responses from people saying for the first time ‘I really feel seen’ by the platforms.”
AI is starting to change consumer expectations for better and faster user experiences, said Erica Kokiw, executive vice-president for digital at UM Canada. ”Most consumers on Pinterest don't know [they’re using AI], but what it is doing is heightening their expectation for speed and frictionless experience. And we as marketers and our clients need to answer that.”
Adam Lang, managing director at Juniper Park\TBWA said his creative agency is already using AI to improve their work. “We're using it to look back at hundreds of historical ad units, and it provides analysis to say here’s how to make the most effective ads going forward,” he said.
Because of their work in digital media and using platforms, media agencies have been using AI for more than a decade, added Breanne Morrison, practice lead at Publicis Media. “But I think as the adoption grows—and it’s only been mainstream for the last year and a bit—it's only going to get better and stronger and give us so many more avenues of personalization and really diving deep into the people that we're trying to reach.“
But despite all the hype and attention in the last year, brand leaders are proceeding with caution, she said. “I think that there's still some trepidation about delivering that proper content, making sure that it's appropriate to the audience that you're trying to reach.”
Generation Z: Very different and very influential
While the youngest of Gen Zers may still be in grade school, others are working their way through high school, post-secondary and into the workforce. The panelists roundly agreed that while this group may still be young, they have already shown by the things they buy, the ways they work and the things they care about that they are, well… different.
The dairy industry has been uniquely challenged by Gen Z, said Rosa Checchia, chief marketing officer for Dairy Farmers of Ontario.
“We have leaned into in real-life moments, activating and content creation – putting ourselves in moments that matter to them,” she said. “So, we are constantly watching what they're doing, looking at trends to see what's next. We're not trying to get them to come to us, we are going to them.”
Coty has also had to revisit some of its tactics and strategies to connect with Gen Z, said director of digital marketing Patricia Chornenky. “We're really looking at the content that we're putting out there,” she said. “We want to ensure that consumers see themselves in the content. So we're leaning more into UGC video versus polished branded content.”
These younger consumers are also not searching in traditional ways, she said. They're on social media for everything and they're looking for inspiration. “It's no longer just ‘red lipstick.’ It's ‘wedding makeup with red lipstick,’ and they want to see that whole picture and that visual inspiration. So for us, we're really meeting them there and leaning into Pinterest search to really have that visualization for them.”
Gen Z are also much more interested in diversity, equality and inclusion, they are worried about the environment and are aware of mental health and wellness in ways no other generation has before them. The implications of that are already being felt across the consumer economy. “I love this generation,” said Painting. “They have an expectation of diversity and inclusion that no generation has had before and that’s part of the reason we are seeing such success with this demographic on Pinterest, because we are leaning into their demands. They are now our largest and most engaged user base.”
“I feel like Gen Z is one of the first generations where we're all like thank God for the youth,” added Alessia Grosso, SVP of communications strategy at Havas Media Group, “because they are going to come in and they're going to fix all of these problems that we've created.”
“They’re holding the previous generations more accountable than I think the millennials did, and they're highly influential in their homes,” said Kokiw. With issues like sustainability, they are demanding changes and so their parents are making changes. “They're very influential—more than any other generation—on actual purchasing changes.
But Kesi Olaf, Scotiabank’s vice-president marketing and digital sales, also cautioned against overgeneralizing about the cohort. “We make a mistake by treating them as a monolith, because they're not,” he said. However, older Gen Z banking customers do exhibit distinct differences from younger millennials, for example. “They actually prefer in-person advice conversations… they want to talk to somebody, which is a big shift from the millennial group—and again I use millennial as a broad term. But millennials are always leaning towards digital first even for things as complex as advice.”
Opportunity in a post-cookies world
“I actually think there is an opportunity with Cookie loss,” said Painting. Aside from being largely controlled by the biggest players in digital media, the reliance on cookies was flawed because it led to an over-reliance on last-touch attribution that misses some of the “nuance” of nonlinear consumer journeys to purchase.
“So, I'm interested in whether there's a silver lining to the short-term pain that cookie deprecation is causing,” she said.
“I agree, I think it is an opportunity,” said Kokiw. With its clients, UM always emphasizes the importance of diversification, and this change should mean more diversification in terms of where brands spend their money. “Now we’ll have an opportunity to not have 80% of our dollars going to two [players],” she said. “It is exciting to be able to try all these new avenues and see what the potential of the ecosystem is going to be in this new future.”
“When you look at the answer to cookies… you’re going to have this plethora of ID-based solutions in the market,” said Gautham Pingali, GroupM’s executive vice-president, performance and innovation. “And it's on us in the room to make sure that we're not swapping one identifier for another. How are we building ID-based marketing efforts that go back to ethical advertising? That's how we need to look at it.”
“Our industry eventually will have to find a replacement for the cookie with a piece of technology that's more modern and that is privacy-forward,” said Arthur Marcoviciu, digital marketing director for The Home Depot Canada. But whatever it is, it will need the support of all stakeholders, from marketers, agencies and publishers to consumers and governments.
“I think the personalization piece is really-important and I think the more signals that you're able to build the better,” said Painting. “We're building a whole suite of tools in order to connect with our clients in whatever way is appropriate, whether it's first-party through a cleanroom, whether it's segmentation, whether it's personalization, all of those I think are viable answers and they're all different and appropriate at different places for different clients and different objectives.”
Overall, the end of cookies should be viewed as a “huge opportunity” for the industry, added Pingali. It is a chance to prioritize consumers again and address important issues like the ethical use of advertising and the importance of privacy. “It gives us an opportunity to fix it all.”
