Predicts 2017: Marketers, Expect the Unexpected - Gartner
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Gartner for Marketers
Predicts 2017:
Marketers, Expect
the Unexpected
Charles Golvin Lizzy Foo Kune Noah Elkin
Research Director Principal Research Research Director
Analyst
Andrew Frank Jake Sorofman
Research Vice President Research Vice President
and Distinguished Analyst
What technologies will marketing leaders see
accelerate change? Find out inside!
Gartner research excerpt from full document G00316321
2017: Predicts
Marketers,
2017:
Expect
Marketers,
the Expect the
ed Unexpected
mber 2016 Published:
ID: G00316321
3 November 2016 ID: G00316321
Analyst(s):
S. Golvin, Lizzy Foo Kune, NoahS.
Charles Elkin, Andrew
Golvin, LizzyFrank, Jake Noah
Foo Kune, Sorofman
Elkin, Andrew Frank, Jake Sorofman
aders are now
Marketing
accustomed
leaders to
arechanges
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to changes
brands involving how brands
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However,
with by
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2020, fiveHowever,
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sitions in both
catalyze
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marketing
organizations.
strategies and organizations.
gs Key Findings
■
s are finding that Many
their mobile
brandsapplications
are finding that
are not
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not delivering the level of adoption
er engagement that andunderpinned
customer engagement
these companies'
that underpinned
decision tothese
investcompanies'
in an app. decision to invest in an app.
■
ows that increasing
Research
customers'
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that increasing
of their data
customers'
reduces privacy
control concerns.
of their data reduces privacy concerns.
days of serving Gone
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as they to
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ontent. Instead, companies
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companies
as aare
differentiator.
using privacy settings as a differentiator.
■
d brand marketers Retailers
are deploying
and brand
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reality
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(AR) applications to enhance the
perience. These include
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a customer
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try a product
a customer
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to virtually try a product or employing
ed intelligence tolocation-based
bring items of interest
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bring itemsattention
of interestatto
the
the
right
customer's
time attention at the right time
and place.
■
nal artificial intelligence
Conversational
(AI) platforms
artificial
targeting
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(AI) platforms
and marketers
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setconsumers
up and marketers set up
r conversational conditions
agents to interact
for conversational
with each otheragents
as to
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interact
forwith
theireach
end other
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■
marketing organizations
Gartner finds
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dations Recommendations
■
erging solutions, Evaluate
such as mobile
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ermine if they offer
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to determine
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a level
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■
ur audience according
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■
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information
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es overcome hurdles
and employees
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decisions at moments of truth.
Page 1 of 14 Gartner, Inc. | G00316321
Gartner research excerpt from full document G00316321
■ Direct your digital marketing center of excellence or other innovation group to focus on AI agent
and proxy web scenarios.
■ Direct your
■ Review the digital marketing
marketing center
technology of excellence
stack, governanceor other innovation relative
and operations group totofocus on AI agent
the corporate IT
and proxy web scenarios.
stack, governance and operations. Determine the degree of overlap and difference between
■ these
Reviewtwo
thespheres as atechnology
marketing measure ofstack,
compatibility.
governance and operations relative to the corporate IT
stack, governance and operations. Determine the degree of overlap and difference between
these two spheres as a measure of compatibility.
Table of Contents
Strategic
Table of Planning
ContentsAssumptions............................................................................................................. 2
Analysis.................................................................................................................................................. 2
Strategic
What Planning
You NeedAssumptions.............................................................................................................
to Know.................................................................................................................. 2 2
Analysis..................................................................................................................................................
Strategic Planning Assumptions....................................................................................................... 2 3
What
A Look You Need to Know.................................................................................................................. 2
Back...................................................................................................................................14
Strategic
Gartner Planning Assumptions.......................................................................................................
Recommended Reading.......................................................................................................... 14 3
A Look Back...................................................................................................................................14
Gartner Recommended Reading.......................................................................................................... 14
Strategic Planning Assumptions
By 2019, 20% of brands will abandon their mobile apps.
Strategic Planning Assumptions
By 2019, ad blocking will increase advertising effectiveness by 50% as consumers use these tools
By 2019, 20% of brands will abandon their mobile apps.
to communicate preferences.
By 2019, ad blocking will increase advertising effectiveness by 50% as consumers use these tools
By 2020, 100 million consumers will shop in augmented reality.
to communicate preferences.
By 2020, virtual agents will participate in a majority of commercial interactions between people and
By 2020, 100 million consumers will shop in augmented reality.
businesses.
By 2020, virtual agents will participate in a majority of commercial interactions between people and
By 2020, 20% of Global 2000 CIOs will report into marketing.
businesses.
By 2020, 20% of Global 2000 CIOs will report into marketing.
Analysis
Analysis
What You Need to Know
The force of technology change has pushed marketers and their customers to adapt and evolve.
What
Yet, it isYou
not Need
uncommonto Know
for the path of these changes to diverge significantly from accepted
wisdom.
The forceFor example, TiVo's
of technology changeintroduction
has pushedof the DVR into
marketers andthe market
their wrought
customers to the obituary
adapt of TV
and evolve.
advertising; yet, the medium still commands a significant share of marketing budgets,
Yet, it is not uncommon for the path of these changes to diverge significantly from accepted and some
inventory,
wisdom. For such as Fox's
example, American
TiVo's Idol, emerged
introduction as must-have
of the DVR for brands
into the market seeking
wrought broad exposure.
the obituary of TV
advertising; yet, the medium still commands a significant share of marketing budgets, and some
Gartner has identified a number of technology-driven changes to the marketing environment that
inventory, such as Fox's American Idol, emerged as must-have for brands seeking broad exposure.
will lead to an outcome other than what many expect today. In some cases, such as AR, the change
will accelerate
Gartner quickly aand
has identified alter the
number retail industry. In others,
of technology-driven changessuch as consumers'
to the adoption of that
marketing environment ad-
blocking
will software,
lead to today's
an outcome caterpillar
other than what eating
many away at the
expect advertising
today. In someindustry will pupate
cases, such as AR,and
the change
Page 2increase
of 16 the value of advertising — but only for marketers who choose the correct path. Gartner, Inc. | G00316321
Organizations themselves will feel the strain of technology change as once-disparate disciplines
Page
Page 2coalesce.
2
ofof
1614 Marketing leaders must tune their antennas to the signals of change and resist accepted
Gartner, Inc.Inc.
Gartner, | G00316321
| G00316321
wisdom if they aim to benefit from what technology transformation has in store for them.
Gartner research excerpt from full document G00316321
will accelerate quickly and alter the retail industry. In others, such as consumers' adoption of ad-
blocking software, today's caterpillar eating away at the advertising industry will pupate and
increase the value of advertising — but only for marketers who choose the correct path.
Organizations themselves will feel the strain of technology change as once-disparate disciplines
coalesce. Marketing leaders must tune their antennas to the signals of change and resist accepted
wisdom if they aim to benefit from what technology transformation has in store for them.
Strategic Planning Assumptions
Strategic Planning Assumption: By 2019, 20% of brands will abandon their mobile apps.
Analysis by: Charles S. Golvin
Key Findings:
■ Many brands are finding that their mobile applications are not paying off. These apps are not
delivering the level of adoption and customer engagement companies expected.
■ The number of apps available in the Apple/Android app stores is so high — at least 2 million in
1
each store — that discovery is a huge impediment to adoption.
■ The cost of application support — not only in maintenance, upgrades and customer care, but
also in marketing to drive downloads — throws into disarray the original ROI calculations.
■ Alternative approaches lower the barriers to discovery and installation while offering application-
like levels of engagement at a fraction of the total cost. Examples include "live" mobile wallet
cards and, in particular, progressive web apps, which provide brands with greater leverage from
their existing investments in web presence.
■ Brands are investing to build presence in consumer messaging apps, such as Facebook
Messenger and WeChat, to reach customers in the apps where they spend a high percentage of
their time.
Near-Term Flags:
■ By year-end 2017, the number of branded applications realizing growth in average monthly
usage will decline from year-end 2016; this decline will continue in subsequent years.
■ By year-end 2018, the cost of marketing a nongame application as a function of the number of
downloads will at least double.
■ By year-end 2018, the average number of applications installed and used regularly by an adult
smartphone owner will cease to increase and, subsequently, remain flat.
Market Implications:
Since 2010, executives at Fortune 2000 companies, witnessing the unprecedented growth in
smartphone adoption and the subsequent explosion of the application market, have declaimed "we
need an app." Smartphone applications have birthed multibillion dollar companies, such as Uber,
but the application market has not been an unmitigated success. Some brands have invested
heavily to develop and market one or more applications only to discover that their anticipated level
Gartner, Inc. | G00316321 Page 3 of 16
of customer engagement failed to materialize. These companies then face the choice of abandoning
Pagetheir investment — as well as the likely wrath of customers who did download and use
3 of 14 theirInc.
Gartner, app —
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or doubling down on their investment in the hope of realizing their desired results.
Gartner research excerpt from full document G00316321
need an app." Smartphone applications have birthed multibillion dollar companies, such as Uber,
but the application market has not been an unmitigated success. Some brands have invested
heavily to develop and market one or more applications only to discover that their anticipated level
of customer engagement failed to materialize. These companies then face the choice of abandoning
their investment — as well as the likely wrath of customers who did download and use their app —
or doubling down on their investment in the hope of realizing their desired results.
From 2010 to mid-2016, Gartner received a significant number of inquiries along the lines of,
"Should we have an app?" and "What is the role of an app versus our mobile website?" New
smartphone features and attendant marketing techniques, such as Bluetooth beacons and mobile
wallets, prompt related requests as marketers seek to leverage these new techniques. We also
fielded numerous inquiries from companies that were disappointed with the results of their
application investment. They wanted to learn from the experience of companies that hit the app
jackpot. In many of these latter cases, it is clear that the company's expectations were overinflated
and their investment will never pay off.
As the number of applications available in Apple's App Store and the Google Play store continues to
rise, companies will face ever greater challenges — and costs — in realizing their desired foothold
on customers' devices. Google's efforts to make the mobile web more "applike," using techniques
such as instant web apps and progressive web apps, will gain traction with companies because the
mobile web is a requisite component of their digital presence — the mechanism with the widest
reach in today's ubiquitously connected environment. Many of these companies will evaluate these
experiences against their underperforming applications and opt to reduce their losses by allowing
their apps to expire.
One clear outcome from this transition will be Apple's reluctant embrace of the mobile web as a
vehicle for customer engagement. As brands invest in a more functional and responsive mobile web
presence, Apple will add support in Safari for many of Google's mobile web innovations.
Recommendations:
■ Assess your mobile marketing strategy against the "mobile-centric" and "mobile-extender"
types to evaluate whether your mobile marketing efforts are correctly prioritized (see "Two Types
of Mobile Marketers: Which One Are You?").
■ Evaluate emerging solutions, such as mobile wallet cards, progressive web apps and instant
apps, to determine if they offer a level of functionality that merits investment. Perform a gap
analysis between this level of functionality and that offered by your existing application(s).
■ Measure overall app performance against the foundational ROI calculations that you developed
to justify the launch of your application.
■ "Hype Cycle for Mobile Applications and Development, 2016"
Related Research:
Strategic Planning Assumption: By 2019, ad blocking will increase advertising effectiveness by
50%"Two
■ as consumers use these
Types of Mobile tools toWhich
Marketers: communicate
One Are preferences.
You?"
■
Analysis by: Lizzy
"The Mobile Foo
App Kune
Dilemma: One App Versus Many"
Key Findings:
Page 4■ of 16 Gartner, Inc. | G00316321
We are in the midst of an arms race between ad blockers, tools that automatically remove
2
Page 4 ofadvertising
14 content from web pages, and publishers, who sell advertising to marketers. An| G00316321
Gartner, Inc.
example of this race is the back and forth between Facebook and Adblock Plus, a tool that has
3
85% of the market share for blocking. Over a couple of weeks in August 2016, Adblock Plus■ "Hype Cycle for Mobile Applications and Development, 2016"
Gartner research excerpt from full document G00316321
Strategic Planning Assumption: By 2019, ad blocking will increase advertising effectiveness by
50% as consumers use these tools to communicate preferences.
Analysis by: Lizzy Foo Kune
Key Findings:
■ We are in the midst of an arms race between ad blockers, tools that automatically remove
2
advertising content from web pages, and publishers, who sell advertising to marketers. An
example of this race is the back and forth between Facebook and Adblock Plus, a tool that has
3
85% of the market share for blocking. Over a couple of weeks in August 2016, Adblock Plus
crowdsourced methods to block Facebook ads, prompting Facebook to quickly engineer a
4
work-around.
■ Today's ad blockers are not very selective about which ads they block; however, more
refinement based on customer preference is clearly possible. One option is to collect ad-
blocking data to inform segmentation efforts. Advertisers can assign users to groups according
to how privacy-conscious the users are. Privacy researchers hypothesize that audiences are
more likely to respond to ads and share their preferences when they can control what
5
information they give to advertisers. Currently, many ad blockers allow users to "whitelist" a
specific site to signal their willingness to accept that publisher's ads. Publishers may also pay
the ad blocker for inclusion in the ad blocker's whitelist as a provider of "acceptable ads."
■ Research shows that increasing customers' control of their data reduces their privacy concerns.
6
Waning are the days of serving advertising to passive audiences as they roam the internet and
consume content. Instead, some media platforms are using privacy settings as a differentiator.
Users who take advantage of these settings influence what data advertisers collect about them
and how they use that data. This forces tools that manage customer data to evolve. Facebook
exemplified this approach in a recent blog post in which it underscored how users can control
7
the data brands use to serve them advertising — even going as far as to provide advertisers an
audience consisting of ad-blocking users.
■ Ad blockers have realized that the audience they've cultivated is valuable to advertisers. Eyeo,
the company that makes Adblock Plus, offers a self-service platform that sells inventory to get
8
ads in front of consumers who block them.
Near-Term Flags:
By year-end 2017:
■ Publishers will increasingly block access to content when they detect site visitors using ad-
blocking software. As a result, 60% of current ad blocker users will forgo use of the software
because of its degradation of the quality of their experience and because of their ability to exert
control over how advertisers reflect their preferences.
■ Ad-block providers will experience a backlash from users and advertisers as a result of extorting
payments from publishers for whitelisting their sites.
Gartner, Inc. | G00316321 Page 5 of 16
■ Publishers will experiment with new formats and targeting methods to optimize the user
experience.
■ Instead of relying on users to manually adjust privacy settings, systems will emerge that learn
Page 5 ofuser
14 preferences over time. These tools will supersede ad blocking and its countermeasures.
Gartner, Inc. | G00316321
These may stand alone or be built into marketers' ad-serving platforms, data management
platforms or digital marketing hubs.Gartner research excerpt from full document G00316321
■ Ad-block providers will experience a backlash from users and advertisers as a result of extorting
payments from publishers for whitelisting their sites.
■ Publishers will experiment with new formats and targeting methods to optimize the user
experience.
■ Instead of relying on users to manually adjust privacy settings, systems will emerge that learn
user preferences over time. These tools will supersede ad blocking and its countermeasures.
These may stand alone or be built into marketers' ad-serving platforms, data management
platforms or digital marketing hubs.
Market Implications:
As a result of customers taking advantage of individual agency, major publishers will offer fewer
options for standard display formats while experimenting with new formats, including those related
to video advertising, native advertising and sponsored content. An early example of this is The New
9
York Times, which launched its new ad format, Flex Frame Everywhere, aiming to improve site
experience by providing ads more aligned with the Times' editorial style. The Interactive Advertising
10
Bureau (IAB) proposed significant changes to industry standard ad sizes, delisting rich media and
auto-expanding ads, and marking some veteran ad sizes for replacement by newer formats. The
cost of these formats will oscillate wildly as demand and available inventory struggle to find
equilibrium.
Faced with declining available inventory and increased costs, marketers will begin to evaluate more
transparent and effective targeting methods that account for customer choice. WhatsApp, the
messaging startup purchased by Facebook in 2014, now shares its data with its parent company
with the goal of allowing businesses to contact customers whose conversations are relevant to the
11
brand. For instance, a message exchange concerning an upcoming business trip could elicit an
advertisement from a hotel at the traveler's destination. However, for this system to succeed, it must
provide users with transparency around how this personalization works and their ability to control it.
Consequently, ad-blocking usage will decline due to customers taking control over the data
advertisers used to optimize users' digital experience and as industry countermeasures make it
more difficult for blockers to identify ads. The current cat-and-mouse game between ad-blocking
software and publishers is not sustainable because it serves both consumers and publishers poorly.
As users seize the opportunities to better express their preferences and advertisers increase their
ability to interpret those implicit statements, both parties will benefit and ad effectiveness will
increase.
Recommendations:
■ Marketers must elevate the importance of choice in consumer experience, and communicate
with users about the benefits of sharing data and what data is collected about them.
■ Publishers should engage users directly about how blocking is a detriment to their ability to
offer content to audiences. Consider the approach Ars Technica, a technology news site, took
to ad blocking. In 2010, it pioneered a method to block the ad blockers. A coder working on
behalf of the blocker developed a work-around to Ars within a day. As a result, the website
responded with a post about why ad blocking hurts content publishers. Within a day, it saw a
Page 6 of 16 12 Gartner, Inc. | G00316321
12% decline in the number of users blocking ads on its site.
■
Page 6 ofMarketers
14 should experiment with using advertising formats (e.g., native, video, sponsored
Gartner, Inc. | G00316321
content) to increase the quality of the customer experience. Ad effectiveness will increase as a
function of marketers becoming more selective about the ad formats they purchase.responded with a post about why ad blocking hurts content publishers. Within a day, it saw a
12
12% decline in the number of users blocking ads on its site.
Gartner
■ research excerpt
Marketers from full
should document G00316321
experiment with using advertising formats (e.g., native, video, sponsored
content) to increase the quality of the customer experience. Ad effectiveness will increase as a
function
behalf ofof marketers
the becoming amore
blocker developed selective to
work-around about
Ars the ad aformats
within day. Asthey purchase.
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■ responded with asegment
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14
known asto"anti-ad-blocking."
content) increase the quality Internet users —experience.
of the customer and their increasing ability towill
Ad effectiveness mediate what
increase as a
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function to share
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becoming caught between
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about the adByformats
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signaling what they want (and don't want) in online advertising, audiences will help marketers
■ Marketers must
increase their adsegment their audience
effectiveness accordingtheir
through managing to customers'
privacy. privacy preferences. Ad- 13
blocking tools are being used by 26% of internet users, according to one survey from the IAB.
In response,
Related Research: about 7% of sites in the Alexa top 5,000 are detecting and disabling the scripts,
14
known as "anti-ad-blocking." Internet users — and their increasing ability to mediate what
■ "Use Gartner's
data they chooseBuy/Own/Advocate Framework
to share — are caught betweento the
Maptwo.
Customer Journeysonand
By capitalizing thisDeliver
powerBetter
and
Customer Experiences"
signaling what they want (and don't want) in online advertising, audiences will help marketers
■
increase their ad effectiveness through managing their privacy.
"Use Personification to Balance Privacy and Relevance"
Strategic Planning Assumption: By 2020, 100 million consumers will shop in augmented reality.
Related Research:
■
Analysis
"Use by: Noah Elkin
Gartner's Buy/Own/Advocate Framework to Map Customer Journeys and Deliver Better
Customer Experiences"
Key Findings:
■ "Use Personification to Balance Privacy and Relevance"
■ Immersive technologies like AR
Strategic Planning Assumption: Byincrease user
2020, 100 engagement
million withwill
consumers a product
shop inor service byreality.
augmented enabling
a consumer to fully explore features and conveying additional information that can aid in a
buying
Analysis decision.
by: This will drive immersive interfaces, including both augmented and virtual
Noah Elkin
reality, to become the standard customer experience paradigm for scenarios requiring human-
Keyto-machine
Findings: interactions.
■ Retailers and brand marketers are deploying AR applications to enhance the shopping
■ Immersive technologies like AR increase user engagement with a product or service by enabling
experience. These include allowing a customer to virtually try a product or employing location-
a consumer to fully explore features and conveying additional information that can aid in a
based intelligence to bring items of interest to the customer's attention at the right time and
buying decision. This will drive immersive interfaces, including both augmented and virtual
place. Some brands will experiment with transactions in AR-based environments; however, for
reality, to become the standard customer experience paradigm for scenarios requiring human-
the most part, AR will serve to supplement rather than substitute existing physical and digital
to-machine interactions.
channels.
■ Retailers and brand marketers are deploying AR applications to enhance the shopping
■ The popularity of AR applications such as Pokémon Go will help propagate the technology,
experience. These include allowing a customer to virtually try a product or employing location-
bringing it into the mainstream and prompting more retailers to incorporate AR into the
based intelligence to bring items of interest to the customer's attention at the right time and
shopping experience.
place. Some brands will experiment with transactions in AR-based environments; however, for
■ the most part,
Marketers AR will serve
are developing ARtoexperiences
supplementprimarily
rather than
for substitute
smartphonesexisting physical andfordigital
and secondarily tablets,
channels.
which already have a sizable global installed base. Head-mounted displays (HMDs) will
■ gradually gain aoffoothold
The popularity but remain
AR applications a niche
such market for
as Pokémon GoAR.
will help propagate the technology,
■ bringing
Improvedit hardware
into the mainstream and prompting
features, software more
integration retailers
and businessto incorporate AR into AR
cases are inspiring the adoption
Gartner, Inc. | G00316321 Page 7 of 16
shopping experience.
among brands. These include ergonomic improvements to HMDs, better tracking and sensing
algorithms, and connections to consumer and enterprise software ecosystems.
Near-Term Flags:
■ By year-end 2016, more than 150 million people worldwide will download the Pokémon Go app,
Gartner, Inc. | G00316321 Page 7 of 16
Page 7 ofup
14 from an estimated 75 million today, fueling consumer appetite for AR experiences.
Gartner, Inc. | G00316321
■ By year-end 2017, one in five leading global retail brands will use AR to enhance the shopping
process, resulting in dramatically higher levels of customer engagement.which already have a sizable global installed base. Head-mounted displays (HMDs) will
gradually gain a foothold but remain a niche market for AR.
■ Improved hardware features, software integration and business cases are inspiring AR adoption
Gartner research excerpt from full document G00316321
among brands. These include ergonomic improvements to HMDs, better tracking and sensing
algorithms, and connections to consumer and enterprise software ecosystems.
Near-Term Flags:
■ By year-end 2016, more than 150 million people worldwide will download the Pokémon Go app,
up from an estimated 75 million today, fueling consumer appetite for AR experiences.
■ By year-end 2017, one in five leading global retail brands will use AR to enhance the shopping
process, resulting in dramatically higher levels of customer engagement.
■ By year-end 2018, smartphones will continue to drive more than 90% of AR-related
experiences; HMDs will remain a niche market limited to enterprise use cases and a segment of
the consumer population.
Market Implications:
As omnipresent mobile device usage becomes an ingrained behavior, further blurring the lines
between the physical and digital worlds, brands and their retail partners will need to develop
mechanisms to leverage this behavior to enhance the shopping experience. Using AR applications
to layer digital information — text, images, video and audio — on top of the physical world
represents one such route to deeper engagement, both in-store and in other locations. For example,
a consumer pointing the IKEA catalog app at a room in her home can "place" furniture where she'd
like it to go, helping to narrow her consideration set. This real-world element differentiates AR apps
from those offering virtual reality (VR).
The growing imperative to bridge physical and digital experiences and assets will place heightened
emphasis on customer experience. This means AR should engage your customers in a fashion that
is unique to the AR experience, not duplicate an experience that customers can get better, faster or
more conveniently via another medium. For example, the L'Oréal Paris MakeupGenius app allows
consumers to "try on" products, test looks curated from the brand's roster of expert makeup artists
and share them across their social graph, yielding a level of engagement that would be difficult to
reproduce using other traditional or digital channels. L'Oréal takes that engagement a step further
by enabling consumers to easily purchase the products they have tried on, bringing the opportunity
to transact closer to the moment of maximum emotional inspiration. Not all AR experiences need
also be commerce experiences, but you should evaluate whether incorporating AR has the potential
to shrink the distance between desire and action, and design the experience accordingly.
Although the bulk of AR applications will serve consumer markets, AR will see uptake in enterprises
that benefit from information overlaid onto business processes, such as field-service work. Other
vertical markets, including automotive, education, energy, engineering, healthcare and real estate,
where combining time-bound, context-specific information with real-world views improves safety
and productivity, also will see business impact from AR. For example, BMW's service engineers use
AR and HMDs to perform car maintenance. Many businesses will use AR to enhance customer
Page 8service
of 16 visits and sales calls, adding a new dimension to clienteling strategies. As use cases
Gartner, Inc. | G00316321
proliferate, marketers will benefit from positive impact on customer experience and access to a
broader market of experienced users.
Excitement around HMDs is high, but market penetration will trail that of smartphones and tablets
for some time. Gartner predicts sales of HMDs for both AR and VR applications will rise from 1.4
million units in 2016 to nearly 40 million by 2020. By comparison, global smartphone sales will
increase from 1.42 billion in 2016 to 1.6 billion in 2020. The installed base will reach more than 4.5
Pagebillion
8 of 14by 2020, putting smartphones in the hands of more than half the world's population.
Gartner, Inc. | G00316321
In 2018, over one-quarter of HMDs will be dedicated for business use, including for tasks such asAR and HMDs to perform car maintenance. Many businesses will use AR to enhance customer
billion by 2020, putting smartphones in the hands of more than half the world's population.
service visits and sales calls, adding a new dimension to clienteling strategies. As use cases
proliferate,
In 2018, over marketers
one-quarterwill benefit
of HMDs from
willpositive impactfor
be dedicated onbusiness
customeruse,
experience
includingand
for access to a as
tasks such
broader
Gartner market
research excerpt
equipment of experienced
repair,from full document
inspection users.
andG00316321
maintenance. HMD providers that can deliver products tightly
integrated with enterprise software solutions will position themselves for growth through 2020.
Excitement around HMDs is high, but market penetration will trail that of smartphones and tablets
for some time. Gartner predicts sales of HMDs for both AR and VR applications will rise from 1.4
Recommendations:
million units in 2016 to nearly 40 million by 2020. By comparison, global smartphone sales will
increase from 1.42 billion in 2016 to 1.6 billion in 2020. The installed base will reach more than 4.5
■ Understand how customers engage with your brand and your products to determine where
billion by 2020, putting smartphones in the hands of more than half the world's population.
digital overlays can enhance the physical shopping and customer service experience.
In
■ 2018, over AR
Evaluate one-quarter of HMDswith
implementations will an
beeye
dedicated for business
to scenarios use, including
where information willfor tasks
help such as
shoppers and
equipment repair, inspection and maintenance. HMD providers that can deliver products
employees overcome hurdles or make key decisions at moments of truth — for example, as tightly
integrated
part of with enterprise
clienteling software solutions will position themselves for growth through 2020.
programs.
■ Avoid using AR merely as a promotional ploy. AR experiences should provide functional benefits
Recommendations:
that fundamentally improve your brand's customer experience or the ability of your employees
■ to serve customers.
Understand how customers engage with your brand and your products to determine where
digital overlays can enhance the physical shopping and customer service experience.
■ Plan carefully for the current state of hardware, audience adoption and privacy preferences, as
■ well as the
Evaluate ARextensibility of AR content
implementations into to
with an eye other media.where information will help shoppers and
scenarios
employees overcome hurdles or make key decisions at moments of truth — for example, as
■ Incorporate measures of business value, usability testing and promotion into the development
part of clienteling programs.
process.
■ Avoid using AR merely as a promotional ploy. AR experiences should provide functional benefits
■ Seek opportunities to leverage industry-leading platforms or apps, such as gaming interfaces,
that fundamentally improve your brand's customer experience or the ability of your employees
for your own branded experiences.
to serve customers.
■ Plan Research:
Related carefully for the current state of hardware, audience adoption and privacy preferences, as
well as the extensibility of AR content into other media.
■ "Market Guide for Augmented Reality"
■ Incorporate measures of business value, usability testing and promotion into the development
■ "Hype Cycle for Wearable Devices, 2016"
process.
■ "Top 10
Seek Wearable Technologies
opportunities and Capabilitiesplatforms
to leverage industry-leading in 2017 and 2018"such as gaming interfaces,
or apps,
■
for your own branded experiences.
"Industry Vision: Commerce That Comes to You"
StrategicResearch:
Related Planning Assumption: By 2020, virtual agents will participate in a majority of commercial
interactions between people and businesses.
■ "Market Guide for Augmented Reality"
Analysis
"Hypeby:
■ Andrew Frank
Cycle for Wearable Devices, 2016"
Gartner,
■ Inc. | G00316321 Page 9 of 16
Key"Top 10 Wearable Technologies and Capabilities in 2017 and 2018"
Findings:
■ "Industry Vision:providers
Commerce
■ Digital platform areThat Comestheir
escalating to You"
efforts to deploy consumer-facing AI-based
systems
Strategic and interfaces.
Planning Google,
Assumption: ByApple, Facebook,
2020, virtual Amazon,
agents IBM andinMicrosoft
will participate are
a majority ofamong
commercial
competitors offering cutting-edge
interactions between people and businesses.conversational AI platforms aimed at attracting consumers
creating new business ecosystems.
■ Providers are also targeting marketers with conversational AI platforms, such as social chat
bots, although with less fanfare and greater market skepticism.
Gartner, Inc. | G00316321 Page 9 of 16
■ Conversational AI platforms targeting both consumers and marketers set up conditions for
conversational agents to interact with each other directly as proxies for their end users. Gartner
identifies this market as a "proxy web."
■ Smart contracts based on blockchain technology provide a secure way to decentralize and
commoditize complex transactions, paving the way for distributed, efficient machine-to-
Page 9 ofmachine
14 negotiations with minimal oversight. Gartner, Inc. | G00316321
■ Gartner forecasts that "the confluence of three trends — unprecedented volumes of data,■ Providers are also targeting marketers with conversational AI platforms, such as social chat
bots, although with less fanfare and greater market skepticism.
■ research
Gartner Conversational
excerpt fromAIfullplatforms targeting both consumers and marketers set up conditions for
document G00316321
conversational agents to interact with each other directly as proxies for their end users. Gartner
identifies this market as a "proxy web."
■ Smart contracts based on blockchain technology provide a secure way to decentralize and
commoditize complex transactions, paving the way for distributed, efficient machine-to-
machine negotiations with minimal oversight.
■ Gartner forecasts that "the confluence of three trends — unprecedented volumes of data,
massively increased processing power and new analytic tools — creates a 'tipping point'
15
beyond which differentiated algorithms become central to competition." Conversational
agents add a fourth trend — consumer conversational dynamics — to the formula, intensifying
its relevance to marketers who must now address the behavior and influence of agents on
buying journeys.
Near-Term Flags:
By year-end 2017:
■ The share of mobile search queries initiated through virtual personal assistants (VPAs), such as
16
Siri, Allo, Cortana and Alexa, will rise from 20% to over 50%.
■ Room-based screenless devices such as Amazon Echo and Google Home will be in over 10
17
million homes and will account for a growing share of commercial traffic.
■ Leading marketing hubs and automation platforms that seek to model and optimize customer
journeys will recognize agent-mediated interactions as critical components of journey analysis
and design.
■ Marketers will spend over 250 million dollars collectively on conversational technologies such
18
as virtual agents and chat bots deployed on websites and social networks. However, they'll
have difficulty justifying these marketing investments as consumer interactions with vendor
agents remain sparse and challenging to attribute to results (with the exception of service-
related queries).
Market Implications:
Economic efficiencies will drive adoption of AI-based agent technology in many large-scale
markets,
Page 10 of 16 leading to continued advancement in capabilities and creating new imperatives for Inc. | G00316321
Gartner,
marketers to understand the implications of agents on demand and discovery of products.
Digital platform giants such as Google, Apple, Facebook and Amazon collectively already control a
major portion of front-end consumer interactions through hardware and software dominance. They
stand to gain even more market power as consumers increase reliance on VPAs to interpret and
fulfill their requests. Although B2C marketers are likely to feel it first, B2B buyers will follow suit and
exploit the power of virtual agents to streamline procurement processes.
As marketers experience pressure to invest in virtual agents as part of the next wave of customer
experience design, they'll struggle with the complexity of how to train and deploy AI agents
effectively. This challenge will exacerbate as VPAs will increasingly mediate access to consumers,
who seek to resist ceding more control to large ecosystem platform providers that control many of
the requisite AI platforms and standards. Ultimately, marketers will need to consider proxy web
interactions between agents as crucial marketing conditions.
Page 10 of 14 Gartner, Inc. | G00316321
Growing restrictions on access to walled-garden personal data accumulated from VPAs and their
networks will drive tension among digital ecosystems and raise the cost of platform neutrality.fulfill their requests. Although B2C marketers are likely to feel it first, B2B buyers will follow suit and
exploit the power of virtual agents to streamline procurement processes.
As research
Gartner marketers experience
excerpt pressure
from full document to invest in virtual agents as part of the next wave of customer
G00316321
experience design, they'll struggle with the complexity of how to train and deploy AI agents
effectively. This challenge will exacerbate as VPAs will increasingly mediate access to consumers,
who seek to resist ceding more control to large ecosystem platform providers that control many of
the requisite AI platforms and standards. Ultimately, marketers will need to consider proxy web
interactions between agents as crucial marketing conditions.
Growing restrictions on access to walled-garden personal data accumulated from VPAs and their
networks will drive tension among digital ecosystems and raise the cost of platform neutrality.
Recommendations:
■ Make developing an overall understanding of the broad role of AI in marketing a top priority. Pay
particular attention to how interactions among AI systems — both within and outside your
organization — might disrupt marketing at many levels.
■ Direct your digital marketing center of excellence or other innovation group to focus on AI agent
and proxy web scenarios, and develop specific recommendations for how marketing can stay
ahead of the adoption curve.
■ Track and project the emergence and impact of VPA-based ecosystems in your industry.
Determine how digital giants are likely to mediate customer relationships and discovery
processes, and how this impacts marketing functions.
■ Gauge the impact of agent mediation on all of your SEO-related activities. Compose messages
that answer specific questions and can be rendered in a natural voice.
■ Work withaITDigital
and other appropriate operations groups to develop a digital commerce strategy
■ "Building Business Technology Platform"
that incorporates the capabilities of smart contracts and related blockchain technologies to
■ "Emerging
scale Technology
up emerging Analysis:
channels Natural-Language
for agent-based digitalQuestion Answering"
transactions. Focus on their impact on
■
buying journey and customer experience scenarios.
"Market Insight: Conversational Commerce — Hype or Reality?"
StrategicResearch:
Related Planning Assumption: By 2020, 20% of Global 2000 CIOs will report into marketing.
■
Analysis by: JakeMarketing
"Algorithmic SorofmanEssentials"
Key Findings:
■
Gartner, Inc. Gartner finds
| G00316321marketing organizations taking on primary or substantial responsibility for driving
Page 11 of 16
company growth, delivering on customer experience goals and leading innovation projects, all
of which increasingly depend extensively on technology.
■ CMO marketing technology budgets are nearing CIO's level of spending on enterprise IT.
■ Eighty-one percent of marketing organizations have appointed a chief marketing technologist
(CMT) in title or role equivalent; however, increasingly the lines between marketing-specific
technology and enterprise IT will blur as customer-facing and revenue-centered functions are
owned or driven by marketing. With this blurring, the CMT and CIO roles will begin to merge.
■ Marriott International and Delta Dental are examples of companies where the corporate IT
function now reports into the CMO. They see this strategy as a way to better align IT with both
the revenue engine and customer experience.
■ According to Gartner research, 31% of marketers say that IT reports into marketing. This finding
doesn't account for the fact that these may be indirect or shared reporting lines, but
nonetheless
Page 11 of 14 suggests substantial marketing authority over IT resources. Gartner, Inc. | G00316321
■ While there may be convincing customer and commercial rationale for the IT function to betechnology and enterprise IT will blur as customer-facing and revenue-centered functions are
owned or driven by marketing. With this blurring, the CMT and CIO roles will begin to merge.
■ research
Gartner Marriott International
excerpt and Delta
from full document Dental are examples of companies where the corporate IT
G00316321
function now reports into the CMO. They see this strategy as a way to better align IT with both
the revenue engine and customer experience.
■ According to Gartner research, 31% of marketers say that IT reports into marketing. This finding
doesn't account for the fact that these may be indirect or shared reporting lines, but
nonetheless suggests substantial marketing authority over IT resources.
■ While there may be convincing customer and commercial rationale for the IT function to be
assigned to the marketing organization, this reporting structure will not make sense for most
large enterprises. Enterprise IT is often focused on the architecture, procurement, delivery,
security and administration of infrastructure, which doesn't naturally fall into a CMO's purview.
Expect the likelihood of this reporting relationship to diminish with the scale and complexity of a
company's IT function.
Near-Term Flags:
■ By 2017, the percentage of the marketing expense budget allocated to technology will, on
average, exceed the overall corporate IT budget.
■ By 2018, 10% of Global 2000 companies will have CIOs reporting into CMOs.
■ By 2019, 15% of Global 2000 companies will have CIOs reporting into CMOs.
Market Implications:
Marketing's role has grown in scope and significance, from when marketing was often considered
to be little more than a promotional channel, the bullhorn for the brand. Today, the marketing
function is often the primary growth engine for the business and, more than any other function,
Page 12 of 16 Gartner, Inc. | G00316321
responsible for funding and setting the strategy for the cross-functional customer experience.
The marketing mandate is broad and, more than ever, highly dependent on technology. Eighty-one
percent of organizations now have a CMT in name or role equivalent. As the title suggests, this
leader is responsible for managing the capital and expense budget for marketing, which now
represents 27% of the overall marketing expense budget (or 3.24% of revenue), exceeding
investments in paid media and rivaling the overall corporate IT budget, which averages 3.4% of
revenue.
The marketing function is increasingly at the center of the company's revenue machine. As
marketing drives digital commerce initiatives and customer experience strategies, and invests in
more and more marketing-specific technology, the roles of the CMT and CIO will begin to blur. To
maximize alignment among IT and these business-critical functions under the CMO's purview, some
companies will consider reorganization to embed the corporate IT function within the marketing
organization.
This will not become a mainstream practice. Many large enterprises have highly complex
companywide IT challenges that could become a distraction to marketing leadership. For these
companies, reporting lines will likely remain separate and distinct. However, for companies with
below-average IT scale and complexity, where marketing owns and controls the majority of
revenue-generating and customer-facing touchpoints, these new reporting lines will likely make
sense.
Recommendations:
Page 12 of 14 Gartner, Inc. | G00316321
■ Assess the current alignment among IT, marketing and your overall business objectives.
Determine whether conflicting priorities across these organizations may slow decision making,companywide IT challenges that could become a distraction to marketing leadership. For these
companies, reporting lines will likely remain separate and distinct. However, for companies with
■ "Designing IT Your Marketing Team for where
the Next Decade"owns and controls the majority of
below-average scale and complexity, marketing
Gartner research excerpt from full document G00316321
revenue-generating and customer-facing touchpoints, these new reporting lines will likely make
A Look Back
sense.
This topic area is too new to have on-target or missed predictions.
Recommendations:
■ Assess the current alignment among IT, marketing and your overall business objectives.
Gartner
DetermineRecommended Reading
whether conflicting priorities across these organizations may slow decision making,
execution and responsiveness to market opportunities and change.
Some documents may not be available as part of your current Gartner subscription.
■ Review the marketing technology stack, governance and operations relative to the corporate IT
"Hype Cycle
stack andfor Digital Marketing
customer and Advertising,
data. Determine the degree2016"
of overlap and difference between these two
spheres as a measure of compatibility.
"Use Gartner's Marketing Maturity Model to Build Digital Marketing Muscle"
■ Review the priorities and plans of the CMT and CIO. Identify opportunities for collaboration and
"Marketing
work toOrganizational
ensure that eachDesign
has aand Strategy
distinct and Survey 2016:remit.
measurable Marketing Leaders' Ambitions Outstrip
Capabilities"
Related Research:
Evidence
Evidence
■ "CMO Spend Survey 2016-2017: Budgets Climb (Again!) to 12% of Revenue as Marketers
1 In June 2016, there were 2 million apps available for download in Apple's App Store and 2.2
Juggle More Demands"
million in Google Play (source: Statista).
■ "IT Key Metrics Data 2016: Executive Summary"
2 C. Farivar, "Frances' Second-Largest ISP Deploys Ad Blocking via Firmware Update," Ars
Technica, 3 January 2013. (Sometimes, the ISP also blocks advertisements.)
3 Inc.
Gartner, Uzunoglu, "What Ad Blockers Are (and Are Not) Doing," Computer Science Page 13 of 16
| G00316321
C. Wills and D.
Department, Worcester Polytechnic Institute, June 2016.
4J. Constine, "Facebook Rolls Out Code to Nullify Adblock Plus' Workaround Again," TechCrunch,
11 August 2016.
5A. Goldfarb and C. Tucker, "Why Managing Consumer Privacy Can Be an Opportunity," MIT Sloan
Management Review, 2013.
6 "TheRole of Push-Pull Technology in Privacy Calculus: The Case of Location-Based Services,"
Journal of Management Information Systems, 2009.
7A. Bosworth, "A New Way to Control the Ads You See on Facebook, and an Update on Ad
Blocking," Facebook, 9 August 2016.
8J. Mullin, "AdBlock Plus Finds the End-Game of Its Business Model: Selling Ads," Ars Technica, 13
September 2016.
9"The Times Works to Transform Digital Display Ad Business With Launch of Flex Frame
Everywhere," The New York Times, 5 October 2016.
10 "IAB Releases New Ad Unit Portfolio for Public Comment, Featuring Flexible Formats That Adapt
for Cross-Screen Marketing & Align With LEAN Principles," The Interactive Advertising Bureau, 26
September
Page 14 of 16 2016. Gartner, Inc. | G00316321
11 M.Isaac and M. Scott, "Relaxing Privacy Vow, WhatsApp Will Share Some Data With Facebook,"
The New York Times, 25 August 2016.
Page1213 of 14 Gartner, Inc. | G00316321
K. Murphy, "The Ad-Blocking Wars," The New York Times, 20 February 2016.
13 "Ad Blocking: Who Blocks Ads, Why and How to Win Them Back," The Interactive Advertising10
Gartner"IAB Releases
research NewfullAd
excerpt from Unit Portfolio
document for Public Comment, Featuring Flexible Formats That Adapt
G00316321
for Cross-Screen Marketing & Align With LEAN Principles," The Interactive Advertising Bureau, 26
September 2016.
11 M.Isaac and M. Scott, "Relaxing Privacy Vow, WhatsApp Will Share Some Data With Facebook,"
The New York Times, 25 August 2016.
12 K. Murphy, "The Ad-Blocking Wars," The New York Times, 20 February 2016.
13"Ad Blocking: Who Blocks Ads, Why and How to Win Them Back," The Interactive Advertising
Bureau.
14"Adblocking and Counter Blocking: A Slice of the Arms Race," Usenix, the Advanced Computing
Systems Association.
15 "Defining Algorithmic Business"
16G. Sterling, "Google Says 20 Percent of Mobile Queries Are Voice Searches," Search Engine
Land, 18 May 2016.
17J. Risley, "Amazon Echo Sales Reach 3M Units as Consumer Awareness Grows, Research Firm
Says," GeekWire, 6 April 2016.
18 J. Amaya, "Let's Talk Watson Conversation," IBM DeveloperWorks, 11 July 2016.
Gartner, Inc. | G00316321 Page 15 of 16
Page 14 of 14 Gartner, Inc. | G00316321Digital has redefined the role of marketing, adding new players and
creating bigger complexities.
Gartner for Marketers helps you get up to speed on and stay smarter in
the eight marketing areas that matter most: social, mobile, multichannel
and data-driven marketing, digital commerce, customer experience,
marketing management, and emerging marketing technology and trends.
Our clients say that they use our real-time, expert advice and objective
research, data and tools to:
• Target the right audiences
• Choose the right channels
• Quickly shortlist marketing and technology providers
• Stay informed on market and competitors
• Save time and avoid costly mistakes
Gartner helps companies improve their business results through the use
of technology. Our independent research and advice is trusted by business
and technology leaders in more than 10,000 distinct enterprises around
the world.
Visit www.gartner.com/digitalmarketing to learn more.
@GartnerDigital
© 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates.
For more information, email info@gartner.com or visit gartner.com.You can also read
