The State of Digital

Current State

In the past year, Artificial Intelligence (AI) has had a profound impact, not just in digital marketing, but on everyday life. While iterations of AI have been around for some time, quietly powering numerous technologies, the game has changed. OpenAI has brazenly taken the lead with the introduction of ChatGPT, a language model seemingly able to answer any question and perform any requested task. Since the introduction of ChatGPT, AI platforms have quickly evolved to become indispensable tools for businesses and consumers. From revolutionizing healthcare with diagnostic breakthroughs to AI-assisted creativity from tools like Midjourney, DeepMind, and DALL-E, the use of AI has been propelled into uncharted territories. 

Businesses across the globe are quickly embracing AI, with 42% of organizations reporting some level of adoption with an additional 40% exploring the technology [1]. The landscape isn’t just defined by technological advancements, but also by strategic investments. Companies like Microsoft and Alphabet are heavily invested in AI, with Microsoft investing $13 billion in AI initiatives [2], and they are not the only ones. These days, it seems like every tech company has released its own custom AI tool and is building a road map for future advancements.

As AI adoption becomes more widespread, the need for effective regulation is becoming clear. Divergent approaches to AI oversight are surfacing, emphasizing the importance for companies to stay informed on global trends. As we continue to ride the AI wave, the past year has undeniably showcased the transformative potential of this technology. While the innovation of AI is proceeding at breakneck speeds, it remains to be seen if the power of this technology can be responsibly maintained. 

AI acts as a source of inspiration, facilitating ideation and sparking innovative solutions.

Recent Learnings

One of the most notable advancements in AI is the surge in Generative AI and Natural Language Processing (NLP), which enable machines to better understand and respond to human language. Leading AI companies like Open AI, DeepMind, and Microsoft Copilot have made significant breakthroughs, ranging from generating text, images, and code to revolutionizing how we discover information.

As AI continues to evolve, its integration into various facets of society is reshaping how we work, interact, and innovate. A notable trend is the integration of AI functionality into mainstream business software applications, which is transforming platforms like Adobe and Notion, and even social media tools like Snap. Search giants Google and Microsoft have invested heavily in transforming the web search experience through the integration of generative AI. The use of Google’s Search Generative Experience and Microsoft’s Deep Search is leading to a shift in how users interact with search results.

Cutting-edge AI applications have impacted industries globally, with advancements in customer service chatbots, autonomous vehicles, healthcare diagnostics, and virtual assistants. AI platforms are not only improving business processes, but also providing personalized consumer experiences and sophisticated fraud detection. The knowledge of these AI tools has literally been put to the test, scoring in the 90th percentile of the bar exam, and acing the SAT. In recent research studies, AI has also proven to be capable of providing ethical advice when pitted against top ethicists. AI’s ability to emulate human knowledge and behavior has been astounding, and it continues to be refined and improved.

Liabilities

AI introduces myriad ethical concerns and liabilities that span from potential inaccuracies and discriminatory outcomes to embedded biases. The ethical implications encompass issues such as transparency, plagiarism, job displacement, and the dispensing of false and misleading information. The rampant misuse and abuse of AI, as well as the loss of human control, emphasize the need for responsible AI development.

AI’s swift advancement raises concerns about the capacity to develop and update laws at a pace that matches these rapid changes.

Privacy is a significant point of concern in the use of AI, especially with technologies like Generative AI that have the capacity to process and be trained on personal data. The potential for data breaches, unauthorized access, and the generation of sensitive information raise alarms about privacy violations. The impact of AI on the workforce brings conflicting sentiments, with automation replacing jobs at an unprecedented rate while simultaneously enhancing productivity and creativity. The concern lies in potential job displacement, raising questions about the implications of widespread AI adoption in businesses. 

Algorithmic bias in AI applications is also a persistent challenge, leading to discriminatory outcomes and overall prejudice. This bias, a result of the skewed information AI models have been trained on, may impact marginalized groups disproportionately. Mitigating AI bias would require a comprehensive re-evaluation of current practices, and continuous assessment of bias in algorithms. 

In response to the evolving and sometimes dangerous challenges presented by AI, multiple states have enacted executive orders to establish guidelines governing its use. Although legislators recognize the critical need for AI regulation, the technology’s swift advancement raises concerns about their capacity to develop and update laws at a pace that matches these rapid changes.

Trends

The future of AI will bring transformative changes across almost every aspect of modern life. Natural language generation and understanding, speech recognition, and machine learning are at the forefront of AI advancements. 

These tools can enhance the capabilities of smart devices, amplify data, and optimize any number of tools for increased efficiency and personalization. Multimodal AI models, the democratization of AI, and increased utilization in workplaces are trends signaling the broader integration of AI across sectors. Innovations such as AI robots and the application of AI in healthcare for disease detection underscore the versatility and societal impact of AI technologies.

As with any powerful tool, AI is likely to be abused and misused. AI’s potential to spew misinformation and generate misleading imagery will become prominent, especially with the upcoming election. Hackers will tap into vulnerabilities in AI to access private information users have unwittingly provided to these platforms. This will result in a growing emphasis on ethics and regulation. The responsible use of AI will be a focal point, with technology leaders and legislatures searching for ways to keep this technology safe for society.

Current State

Social media platforms have evolved significantly since the days of MySpace, shaping global communication and cultural trends. More than half of the world uses some form of social media, with an estimated 4.89 billion total users [3]. At the forefront of the social media landscape are giants like Meta, YouTube, Instagram, and TikTok. The rise of short-form video content has been a defining trend, led by platforms like TikTok, Instagram Reels, and YouTube Shorts. TikTok, in particular, has captured the attention of younger audiences with its creative and engaging videos.

As of Sept 2023, source: Pew Research Center.

Social commerce has become increasingly prominent, blurring the lines between social media and e-commerce. Platforms like TikTok, Pinterest, and Facebook have integrated shopping features, allowing users to discover and purchase products directly through the apps. Influencer marketing has also become a significant aspect of the landscape, with creators on various platforms collaborating with brands to reach unique audiences.

However, social media is constantly plagued with challenges. Concerns about user privacy, misinformation, and the impact of social media on mental health have led to increased scrutiny and calls for regulation. Platforms are grappling with the responsibility of creating safe and inclusive spaces while balancing the need for freedom of expression.

Despite the challenges, social media will continue to play a big role in our everyday lives. Technologies such as augmented reality (AR) and artificial intelligence (AI) will drive the next evolution of these platforms. As users continue to seek connection, information, and entertainment online, social media platforms will continue to grow and adapt.

Recent Learnings

Social media platforms continue to evolve rapidly to maintain the loyalty of their users, and remain competitive in the space. User experience is at the forefront of these updates, including more features for creators, add-ons to enhance engagement with followers, and improved reporting. In addition, some platforms have hinted about the creation of paid, ad-free versions. Prioritizing safety, expression, and equity are key themes as well, reflecting a commitment to fostering inclusivity.

There has been an overall shift in user behavior on social media, and how users choose to engage with their content. The preference for video, short-lived trends, and the ability to quickly produce and share content have also influenced how these platforms are evolving. “Edutainment” has seen a strong rise in social media as users seek out educational videos that impart knowledge in an entertaining way. Social commerce has been expanding rapidly as consumers frequently turn to social media to discover new products, and simultaneously purchase them in the same environment.

Liabilities

Heavy use of social media has been strongly linked to an increased risk of mental health problems such as depression, anxiety, and feelings of loneliness [4][5]. It can also lead to disrupted sleep, which is associated with depression and memory loss. Idyllic and doctored images set unrealistic expectations, leading to things such as body dysmorphia and low self-esteem. The anonymity provided by social media has led to overwhelming numbers of incidents of cyberbullying and harassment, especially among children and teenagers. Social media platforms are designed to be addictive, with features like endless scrolling, and this type of addiction can lead users to become disengaged with the real world.

Social media platforms have experienced numerous data breaches worldwide. These threats include identity theft, fake giveaways, and “likejacking.” Malware is another significant threat, with social media being used as a platform for spreading harmful software. Phishing attacks, scams, imposter accounts, and vulnerable third-party apps are also common security risks associated with social media.

Social media platforms have been under fire from lawmakers due to content moderation, hate speech, and lack of compliance with local and international regulations. Platforms have struggled to find the balance between freedom of expression and preventing the spread of harmful content and misinformation.

Trends

Short-form video content continues to dominate social media platforms, with TikTok leading the way. The format’s popularity has spurred other platforms, including Instagram and YouTube, to introduce copycat features like Instagram Reels and YouTube Shorts. Likewise, the rise of social commerce has led to the integration of shopping features into social media platforms, allowing users to make purchases without leaving the app. More often than not, users are turning to social platforms to discover new products to purchase.

Social commerce has become increasingly prominent, blurring the lines between social media and e-commerce … More often than not, users are turning to social platforms to discover new products to purchase.

Authenticity is becoming a key trend, with users gravitating toward genuine, relatable content. The era of polished perfection is giving way to more authentic and raw expressions, challenging influencers and creators to connect with their audiences on a more personal level. Audio-driven content is also on the rise, driven largely by the music-forward content on TikTok. Real-time interactions have also been evolving, with features like Facebook Live allowing instant engagement opportunities with users and brands. 

Social media is witnessing a shift toward niche communities and micro-influencers. Users are seeking more specialized content tailored to their interests, leading to the rise of smaller, more engaged, communities. Brands are recognizing the effectiveness of micro-influencers in connecting with targeted audiences and building authentic relationships.

Current State

Primarily originating from privacy-related scandals surrounding the 2016 US Presidential Election and massive data breaches, user data and privacy have entered the spotlight. The Modern Consumer is much more aware of—and concerned by—the prevalence and usage of their personal data. Brands should take a value-exchange approach to data, where the customer gets something in return (grocery stores have been doing this successfully with loyalty programs for decades). A recent survey by Deloitte found a steep drop-off in consumer confidence in how platforms and brands collect, use, and manage their data. Only half of respondents feel that the benefits they get from online services outweigh the privacy risks, down from 59% in 2021.

Stemming from those same data-related scandals, legislation in the European Union (GDPR), and later, in some US States (CCPA, CPRA, etc.) has begun to frame the legal landscape around data protection and privacy. As with any legislation, the practical effects and rules will become clearer as cases get tested in court—leaving brands in a privacy gray area. More aggressive organizations will likely bear the burden and cost of testing the waters, while organizations that take a more conservative approach may be outpaced in the market.

Platforms have taken note. After a few false starts, Google has announced plans to completely phase out third-party cookies in Chrome by the second-half of 2024. Firefox also enabled stricter cookie protections by default, starting early in 2023. By and large, all browsers, operating systems, and social platforms have responded in some way by doing things like enabling privacy settings by default or providing more granular controls.

All that said, the Modern Consumer still has a penchant for personalization. According to a 2023 survey by omnichannel platform Twillio Segment, over half (56%) of consumers surveyed in 2023 said they would become repeat buyers after a personalized experience, up 7% year-over-year.

Recent Learnings

Two developments stand out that have the potential to disrupt consumer engagement, particularly for mid-market brands:

1) The death of the third-party cookie and easy access to targeting data for programmatic digital media. 

This will fundamentally change the way brands can use digital media platforms to reach their target audiences. It’s yet to be determined whether proposed alternatives, like Google’s interest-based Topics, will become effective replacements (and if they will bring their own privacy concerns). It will also require brands to either abandon personalization tactics or take ownership of their own first-party data.

2) The growth of patchwork privacy legislation at the state-level pending comprehensive federal privacy laws. 

Brands will need to spend more time understanding their legal obligations, which will depend on a complex set of parameters related to how much data they have, and where their customers are located.

Liabilities

Technology moves fast and carries risk. The law moves slowly and carries weight. Combined, brands—especially mid-market ones—are exposed.

Legality

Brands that collect and retain customer data have a new and complex legal burden to manage. Technology moves fast and carries risk. The law moves slowly and carries weight. Combined, brands—especially mid-market ones—are exposed.

Trust

The modern consumer’s heightened awareness of privacy issues opens brands up for criticism that they haven’t had to worry about in the past. Brands may even find themselves guilty by association, based on the partners and platforms they use.

Security

With the shift to first-party data, brands are now more responsible for storing and protecting their customers’ data. This makes them a bigger target for bad actors. Ironically, the platforms guilty of the misuse of data that led to this new landscape were also the ones that were best equipped to manage and secure it. Now, organizations with significantly fewer IT resources, likely not even in the technology business, will be on the hook, and exposed to potential data breaches.

Trends

The dichotomy between privacy and personalization leaves brands in murky waters. They must engage with consumers on an individual level without violating their trust. They must protect themselves from legal liability while staying ahead of their competitors. A mid-market brand, in particular, has the unique challenge of being too large to know their customers on an individual basis, but potentially too small to stand up an enterprise-scale data infrastructure.

Luckily, there’s a strong market right now for solutions to this problem. Existing CRM and ESP platforms like Mailchimp and Hubspot have put an emphasis on developing features that help mid-market brands organize and activate their first-party data.

Retailers have also seized the opportunity to leverage (and monetize) the first-party data they collect via loyalty programs. Many large retailers now offer “Retail Media Networks,” which, in essence, take the programmatic concepts previously enabled by the third-party cookie, and apply them to their own networks of digital ad space. These networks can be powerful tools, especially for consumer brands, but they also add a layer of complexity when it comes to planning a media buy, and may make it more difficult for a brand to maintain a consistent message across the customer journey.

All of this has led to a push for brands to take control of the data involved in their customers’ buying journeys, rather than relying on third parties. With retailers traditionally being the gatekeepers of shopping data, and disruptors like YETI and Allbirds taking greater market share, some brands, like KIND Snacks, are responding by launching their own direct-to-consumer offerings. Finding a niche is key, and brands should go in knowing that, in most cases, these D2C plays are for marketing data, not revenue.

Current State

In addition to AI, a few other emerging technologies have entered the daily lives of the modern consumer in recent years. For a mid-market brand, keeping up and knowing where the value is can be challenging. Is it worth it for brands to take the risk of jumping into these platforms early? Do they risk being left behind if they don’t?

Recent Learnings

Like any new technology, there are two key barriers to success—access and need. Access could be in the form of physical access to the devices and platforms, or comprehension of how to participate, and these things are relatively easy to solve through marketing. Need is tricky. Any formerly emerging technology (think television) was needed because it solved a problem (providing information and entertainment in the home). But the race to invent the “next big thing” leads to a lot of unneeded “innovations.” Whether an innovation is needed or not can be hard to see. What made cryptocurrency successful, while NFTs (ostensibly the same concept, only for assets instead of money) flopped?

For a brand with more limited resources and no room for waste, finding the correct innovation to hitch its wagon to can be hard, and the safe thing to do might be to stay the course with traditional channels. But brands that do that risk missing out or losing ground, especially to larger competitors. For example, the concept of customer service used to be owned by small- to mid-sized brands. They had the ability to connect with consumers in brick-and-mortar shopping environments with personalities that large brands couldn’t match. But, as the concept of “customer service” has broadened to “customer experience,” a large part of which involves speed and functionality delivered through technology, large brands have regained an edge with their ability to invest in these platforms.

To keep up, mid-market brands must get creative in the ways they leverage and architect third-party platforms to do business. While a large organization might be able to build a custom, enterprise solution tailored precisely to their needs and objectives, mid-market brands should consider ways to compose tools and platforms, and, in some cases, adjust their strategies to swim downstream and get the most out of those tools. 

Liabilities

Because mid-market brands might not have the resources to build their own solutions end-to-end, they have to rely on SaaS products. This exposes them to gaps in functionality, potential availability issues, and data security risks. Alongside the composition of tools and tech to fit your business needs, consider ways to back up data, or have contingency plans for disruption. Look not just at the functionality of a platform, but also at its reputation and ethos when it comes to security and stability.

Another liability might be implementing or adopting a technology that flops. Listen to your gut, and listen to your team. If another brand has implemented something successfully that you feel would be a good fit to spin off and make your own, great. But don’t make that your entire strategy, or you’ll always be second to the finish line. Look for opportunities to apply design thinking and Agile principles to vet ideas with minimal risk, and don’t be afraid to start small. An augmented reality experience can be spun up in a day or two using open-source tools, and you can quickly test out new CX concepts on a small scale.

Brands should also consider their values, and how they may or may not align with the social implications of emerging technology, and avoid getting caught up in potential pitfalls. For example, on the surface, NFTs and blockchain technology seem like the next evolution of digital products and marketing, but issues around the environmental impact have stirred debate.

Trends

Augmented, Virtual, and Mixed Reality

With investments from Meta (formerly Facebook) and now Apple’s Vision Pro, it’s hard to see a world where mixed reality doesn’t become the norm. That said, after years of false starts (ehem, Google Glass), what that will look like, and when it will happen, are still up in the air. There are also some pretty significant limitations, like having to account for vision correction in people who wear glasses or contact lenses, and issues with stability and motion sickness.

19 Crimes set the pace for AR-based packaging … it works because AR happens to be a perfect way to deliver the concept.

Mobile-based augmented reality has also become more and more prevalent in the way brands engage with consumers. The novelty is starting to wear off, though, and, like any other medium, an AR-based concept is most successful when there’s a compelling story or engaging idea to interact with. 19 Crimes set the pace for AR-based packaging with their Living Wine Labels concept, but, while AR is the core of the execution, it works because the AR happens to be a perfect way to deliver the concept of telling the stories of the characters associated with each product.

Here at Drake Cooper, we wanted to delve into the world of web-based AR to better understand what works. In the spirit of pairing the technology with a relevant concept, we leveraged Treefort Music Festival and Freak Alley—an open-air mural gallery located in downtown Boise—and built Freakfort, a web-based AR experience that lets people discover local bands through immersive animated murals. Read more about the project and process in our blog.

eCommerce & Direct-to-Consumer

The COVID-19 pandemic drove many consumers online, and, while brick-and-mortar retail has generally bounced back, many are still expecting a sustained long-term shift to online shopping. This might happen in a few ways. Brands are exploring direct-to-consumer offerings, and trying to figure out how they might tailor their products to work outside of a retail environment. A good example of this is KIND, which launched a D2C subscription product, realizing that people aren’t likely to change their grocery-shopping habits to buy individual products directly.

Digital platforms are also incorporating “shopability” more, creating opportunities for consumers to shop in their social networks. Brands can easily take advantage of these opportunities through paid media, and ensure that their owned eCommerce platforms are configured to connect to these third parties.

Artificial Intelligence

Since the launch of ChatGPT, and the resulting tidal wave of AI-related disruption, we’re starting to see a clearer short-term picture of how AI will enter our daily lives. In most cases, the presence of AI is indirect—another tool or platform that we were already using is now being augmented by AI. This is happening in work tools like Microsoft Word’s addition of Copilot, in the algorithms of social platforms and search engines, in our digital assistants like Siri, and even in our cars.

User Experience

As the internet transitions into a new era, called Web 3.0, the pathways people follow and the interactions they experience are changing. Just like how user interface trends like skeuomorphism “taught” us how to interact with touch-screen devices, the new spatially complex nature of mixed-reality experiences will require a new approach to UI.

The concept of a “website” as a brand’s presence online is also shifting. For years, Facebook and Google have tried to intercept web traffic to retain users in their own ecosystems through things like AMP Pages and Instant Articles. While those concepts have seen limited adoption, new approaches with a similar goal are popping up. The most relevant might be Google’s zero-click UX, essentially serving content from websites directly on the search engine results page. This approach opens SEO opportunities for brands, but also puts Google in place as a gatekeeper.

Authors

Elisia Schrauth
Senior Martech Manager

Steve Norell
Director of UX & Technology

About Drake Cooper

Drake Cooper is a 100% employee-owned, full-service marketing and advertising agency headquartered in Boise, Idaho. Our mission is to build brands for the ambitious. Founded in 1978, we’ve delivered award-winning strategies, campaigns, and digital platforms for clients in Travel & Tourism, Consumer Packaged Goods, Real Estate, and Non-profit sectors.

Photography by Solen Feyissa, Marcel Strauß, Pawel Czerwinski, Hao Wang, David Becker, Rene Böhmer, Karsten Winegeart, Jr Korpa on Unsplash.