Gareth Davies, co-founder & CEO, Adbrain (pictured) speaks exclusively to ExchangeWire about how the technical revolution which is reinventing the way people behave, companies innovate, economies operate, and governments regulate, faster than many of us can comprehend.

The exponential growth of technology, loosely defined by the repeated doubling of computer power every 18-24 months, coupled with rapidly maturing technologies: the cloud (infinitely scalable computing power), artificial intelligence, and connected, sensory-aware devices, is behind the changing behaviour of consumers worldwide.

As a result of these three technological changes, today’s largest and fastest growing companies’ principal assets are no longer physical (or, dare I say, even human), but instead digital: software, algorithms, and vast quantities of user-generated data mined to offer ever-improving products and services .

Uber is now more valuable than Hertz, and owns no cars. Amazon is more valuable than Walmart, and owns no stock. Airbnb is more valuable than Hilton, and owns no property. Much the same could be said for Google and Facebook, whose principal assets are software, algorithms and rich user data, tied to cookies and device IDs. The message for marketers and publishers alike is that content has officially been dethroned. Data is King. Long live the King!

The implications of these trends on the advertising industry are significant, offering great promise along with very real threats, and raising pertinent questions around how we adapt to device fragmentation, manage and protect exponentially growing user-generated data, the role of human creativity versus algorithms, and the agency/marketer relationship, to name a few.

The power of exponential growth

To understand the power of exponential growth, take today’s smartphone. Not long ago we used mobile phones for calls, SMS, and basic games (Nokia’s snake anyone?). Today, thanks to the exponential growth of computing power, your average smartphone is one thousand times more powerful, and one million times cheaper, than the government supercomputers of the 1970s. What’s more, with smartphone penetration pushing close to two billion people (43% of global population) we have reached a phase of technology mass adoption which has led to radical changes in consumer behaviour.

It won’t stop there. The ability to cram evermore transistors on a piece of silicon will continue to grow exponentially, until wearable devices soon become embeddable devices, injected into the human body to augment our biological makeup. Think digital tattoos, downloaded from iTunes, or Google Play, at the retina level.

It may sound futuristic, but so too did self-driving cars and 3D printing of human body parts, now rapidly becoming widespread. Situate this within the rise of cloud computing, the 'Internet of Things', and machine learning (a much loved branch of Artificial Intelligence in the programmatic ad space), and we have a trio of technologies that are poised to change not just the way ads are bought and sold, but the logic and decisioning behind every message.

Marketing lessons to be learnt

Lesson one: own and manage your data.

Data can have immense value, providing of course you know what to do with it. What is clear from the likes of Uber, Waze, Amazon, Google, FB, and many more, is that gathering vast quantities of user-specific data, including geolocation, behavioural (including purchase intent), and deterministic (CRM, transaction etc) data and applying machine learning algorithms to derive insight is where ultimate value can be created. No number of agency planners or marketers alone can derive the type of insight derived from leveraging the cloud to analyse petabytes of relevant unstructured user data.

Technologies such as Hadoop, MapReduce, and Spark make it easy to rapidly prototype new algorithms, and apply them to massive data sets to not only categorise and understand a user, but to predict future behaviour. It is this predictive power that is rapidly changing not just the way ads are not just bought and sold, but how marketers understand, engage with, and ultimately sell to their customers. Sadly, not all of us have in-house data scientists, which is where technology partners come in handy.

Lesson two: add intelligence.

Whilst machine learning has been around for a number of years in programmatic advertising (defined by automation and data), we’re only at the very beginning; and what’s to come will make today’s programmatic decision engines seem as dumb as the Nokia 6210. It is no coincidence that Larry Page recently made Ray Kurzweil, a leading global authority on artificial intelligence, Google’s Director of Engineering. His mission – to develop AI with natural language understanding, and push computers from logic to emotion. Soon, Kurzweil says, AI computers will, "be funny, get your jokes, be sexy, be loving, and even be creative".

We are moving towards a world where data intelligence software will be able to predict our own future behaviour and deepest desires, even before our conscious minds are aware. Now, with great power comes great responsibility, which is where user privacy and data security are paramount. The litmus test for agencies and marketers in the artificial intelligence age is to simply ask your tech partners how they collect data and what they do with it. Remember ExchangeWire’s Ciaran O’Kane’s 5-second rule: "If you can’t understand what your tech vendor is saying in the first five seconds, they’re an ad network!" Finally, ensure your data remains yours, is portable, not tied to a media impression, or hidden behind a black box.

Lesson three: test, learn, and be open-minded.

Think beyond the media channel and CTR metric and delve deeper into user behaviour, engagement and lifetime value metrics. In a world of fragmented devices, understanding the single journey of a user across multiple digital devices is critical, and much innovation is happening in the data intelligence space to help marketers build a single view of their cross-device customer. What’s more, rapid adoption of data-management technology – whilst still relatively early – helps marketers layer insight and data on top of various customer and device IDs to build holistic views of user behaviour and inform decisioning, prior to the point of programmatic activation.

Riding the exponential wave

The larger impact of these three exponential forces – the cloud, artificial intelligence, and connected devices – on our society, economy, and digital marketing industry is far from clear. When it comes to user privacy, data ownership, the impact of automation, and the role of the marketer/agency, there is little to be gained from denying the wave of change to come.

In 2015, 55% of US digital ad spend will be traded programmatically (eMarketer), and, looking forward, AI will fundamentally alter the way we think about automation, decisioning, insight, and intelligence. The leading marketers and agencies of tomorrow will have learnt and embraced the lessons of exponential growth, building rich first-party data assets and layering intelligent technology to drive insight to answer fundamental intelligence questions such as, "How does my single customer engage across all their digital devices?", and, "How should I adjust my strategy based on what I predict my customer will do next?". These industry leaders will protect their data – and critically respect user privacy – whilst openly partnering with best-in-breed technologists to learn in real-time, and ride the exponential wave at scale.