Dentsu Aegis Tech Matrix 2017

DENTSU AEGIS TECH MATRIXH OW T ECH NOLOGY CAN M OVE YOU R B USI NESS I N T H E D I G I TAL ECONOM Y

Driven by the dual forces of globalization and convergence, the exponential explosion of technology in the last 10 years has created a pace of change we’ve never seen before. With many technologies’ “15 minutes” burning bright but fizzling quickly, it can be challenging for brands to determine where to place their bets to drive their businesses forward.

To help marketers make smarter, better bets, we’ve distilled the complexity and general chaos of the CES show floors into 11 key categories that have broken through this year. We’ve then plotted these on a matrix to lay out

each technology’s potential to move your business. Our proprietary methodology takes into account the tech’s inherent riskiness, readiness to go to market, potential business impact, and other considerations. The resulting Dentsu Aegis Tech Matrix is a helicopter view of where we advise marketers to make their technology and innovation investments over the next 12 months.

From VR, to AI, to Drones and more, we’re excited about the potential for brands to find meaningful transformation through the groundbreaking technology first seen each year at CES.

INTRODUCTION

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D E N T S U A E G I S T E C H M AT R I X

D E N T S U A E G I S T E C H M AT R I X S E C T I O N S

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3 6 0 V I D E O

A I

A U G M E N T E D R E A L I T Y

C O N N E C T E D H O M E S

D E S K T O P M A N U F A C T U R I N G

D R O N E S

F A C I A L R E C O G N I T I O N

S E L F D R I V I N G C A R S

V O I C E A I

V R

W E A R A B L E S

T E C H M AT R I X : M E A S U R I N G T E C H N O L O G I E S ’ P O T E N T I A L T O M O V E YO U R B U S I N E S S

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H I G H R I S K

A C T N O W( < 1 Y E A R )

L O W R I S K

F U T U R E B E T ( 1 - 5 Y E A R S )

LOW RISK• Minor investment

• Easy distribution• Built on existing platform

• Credible company

HIGH RISK• High investment

• Dependent on outside forces aligning

• In a highly regulated field

• Unknown company/leadership

FUTURE BET (1-5 years)• Little to no existing

infrastructure• Limited hardware

availability

• No established distribution channels

ACT NOW (<1 year)• Existing infrastructure to

tap into• Broad hardware

availability

• Established distribution channels

Thousands of technologies and innovations are featured across nearly 2.5 million net square feet of exhibition space at CES each year. To help marketers make these as actionable as possible, we created the Dentsu Aegis Tech Matrix to provide a snapshot of our view on the feasibility and potential ROI of the major categories seen on the CES show floor this year.

As marketers survey the innovation and technology landscape, we found that three factors are most critical for decision-making when making a significant innovation investment: the speed of results, the inherent risk factors of the technology, and the technology’s maturity.

With that in mind, we used timeliness and riskiness as our axes and consolidated the opinions of six agencies across our group steeped in innovation to evaluate which categories of innovation we think marketers should pay attention to now, and which categories have great potential but may take years of groundwork to come to fruition.

The left two quadrants in the matrix represent the areas we see having the most potential now: 360 Video,

Voice AI, Augmented Reality, VR, the Connected Home, Wearables and Desktop Manufacturing.

The quadrants on the right side are the technologies we see as future bets: Artificial Intelligence, Facial Recognition, Drones and Self-Driving Cars. While each of these areas of innovation show great promise in its own right, based on our criteria, we believe they are not quite ready for prime-time. These factors are explored in greater detail in each technology’s respective section.

Deeper in this report you will find perspectives from our leaders across Dentsu Aegis Network exploring in more detail what opportunities and roadblocks marketers may face while incorporating these technologies into their long- and short-term strategies. The final pages of this report include contact information for all of our contributors. They would be happy to speak with you if you have questions or would like to discuss any of the findings or technologies in more detail, and we encourage you to drop them a line.

EXECUTIVE SUMMARY

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You’ll see more mainstream uses of 360 video in 2017. As more headsets aimed at phones are released (Daydream, Gear) more content will be released for these platforms. Entertainment (gaming, movies) will be the primary content-driver here, as well as publishing.

Gabe Garner

Facebook continues to lead thenormalization of 360, democratizing it and enabling allusers who upload a panoramicimage to feel the lack of constraintsenabled with 360 imagery. Expectto see a swathe of consumer-friendly 360 video capture devicesat CES this year, which willdemocratize and normalize 360 video further across the social web. This will gradually open UGC opportunities for brands who wantto experiment with co-creation of 360 Video. 360 Facebook and YouTube desktop is still a sub-optimal experience, so advertisersdeploying 360 would do well to consider only targeting content to mobile, where the experience ismore intuitive.

Justine Bloome

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360 VIDEO


ACT NOW

After much talk over many years, Artificial Intelligence (AI) is now ready for prime time and is widely predicted to be the top technology disruptor of the next decade. Executives are scrambling to establish AI strategies.

Big Data and virtually unlimited computing power have converged and enabled sophisticated algorithms to achieve results never before possible. AI has applications in everything from digital assistants to autonomous vehicles and smart, voice-enabled devices and phones. Subsets of AI, Machine Learning (ML) and Deep Learning, are being used to translate languages better, identify objects in photographs,

predict customer behavior, analyze the genome, reveal insights buried in Big Data, and aid in legal discovery and other routine work.

Google, IBM, Microsoft, Amazon, and Apple are all heavily invested in AI and have been for years. Only recently have their investments become visible to the general public in the form of more intelligent devices and services. Many leading companies – Uber, Airbnb, Netflix, and Salesforce – are using AI as a competitive advantage. Fintech and Lawtechstartups are overturning traditional industry giants by being smarter, faster, and better through the use of ML.

(Continued)

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AI


FUTURE BET

A recent trend is the democratization of AI/ML technology, putting powerful algorithms into the hands of just about anyone through widely available software APIs, toolkits and services. This accelerates disruption, empowering companies small and large to add intelligence to their offerings and widen the gap with their competition.

The pattern matching and predictive power of AI/ML make it ideal for data-intensive industries such as Finance and Insurance, Retail, Professional Services, Media and Telecom, Government, Healthcare, Education and Manufacturing. AI/ML can be used to develop new products and services, to discover insights, to increase efficiency and automation, and to add intelligence to customer experiences.

It’s not hyperbole: AI will impact every industry much like the Internet has, but much more quickly and broadly since it is a general purpose force multiplier. When AI is combined with IoT, drones, AR/VR, bots, blockchain, robotics, 3D printing and cloud computing, we have the tools to achieve what was previously the domain of science fiction.

Colin Angel

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AI

FUTURE BET

There’s significant excitement around AR following a buzzy 2016 year, driven by the likes of Microsoft’s Hololens, Ninantic’s Pokémon Go, and Magic Leap. Despite all of that, we still feel it’s a bit early to encourage brands to make any major investments in the AR space. Limited adoption and predominantly shallow AR experiences lead us to believe the medium isn’t quite ready for the types of rich storytelling experiences that we expect from major brands.

Layne Harris and Fitz Maro

It's shocking how little augmented reality we see from brands today. Augmented reality has a bigger upside and more utility than virtual reality, but it's yet to mature into a go-to option for brands to connect with their customers. We believe this will change in 2017 and continue for years to come. Augmented reality is very implementable and easy to scale so the upside for brands is massive.

Philip Gaughran

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AUGMENTEDREALITY


ACT NOW

Microsoft has dominated the AR conversation with Hololens, but smaller and more industrial-use AR is coming up on their flank. Companies like Daqri are creating new opportunities with B2B utility that could mainstream AR faster than B2C. Expect to see more buzz around Magic Leap, although a product launch before CES 2018 is unlikely. In the meantime, look for more executions in retail locations where brands are using AR to bring their customers exciting in-store experiences.

Gabe Garner

Many seem to forget that AR isn’t reliant on a head mounted device (HMD) like Hololens or Magic Leap. It’s in the pockets of every person with a smartphone. With Blipparnow offering programmatic display AR advertising formats that do not require the Blippar app to be installed, leveraging AR to enhance every day brand experiences will become more ubiquitous. In 2017, apps like Traces.io will make Pokémon Go style experiences open-source to brands and people alike. We will see retailer apps leverage AR to add a digital layer to instore browsing experiences.

Justine Bloome

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AUGMENTEDREALITY


ACT NOW

Augment Reality or Mixed Reality superimposes objects, action, controls and sound into the real world you around you. When done well, the effect is a mixed reality composed of the physical world you are in and a virtual world that has awareness of your environment and objects in it such that it feels as if both are real at the same time.

The Microsoft Hololens is remarkably good at this right now. The Magic Leap promises to take things even further when it becomes available. Mixed Reality creates incredible opportunities for entertainment, education and gaming. But perhaps most powerfully, can augment work in fields such as manufacturing, maintenance, healthcare, architecture and construction.

Imagine if a doctor could overlay a patient’s MRI while observing the actual patient to better understand

an ailment – or leverage Mixed Reality to more clearly see a tumor during surgery and highlight the arteries and nerves they need to avoid. Imagine if a construction worker could look at a building or the ground and see the electrical and gas lines to easily avoid potential issues. Imagine if a teacher could float atoms and molecules in front of a classroom and demonstrate how they interact. And just for fun, imagine a zombie game with zombies hiding in your closet or chasing you down your hall.

The technologies required to create these experiences are very similar to those required for Virtual Reality. Mixed Reality will advance as Virtual Reality does. We will see it in a factory or a hospital before we can buy it as a holiday gift for the kids –but within a couple years, mind-bending zombie games will be here.

Geoff Cubitt

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AUGMENTEDREALITY


ACT NOW

The rush to consolidate content and home automation will continue into 2017 and beyond. OTT services will continue to battle with traditional cable and internet providers (though consolidation of these two businesses into one will continue) to own the home and as a result, own many of the rich data points that help brands understand preferences and behavior, allowing brands to sell to them accordingly.

The home will continue to undergo an explosion of entertainment and smart utility transformations which will be good for brands looking to connect in a deeper way with their customer. Assuming they have access to the data that is being generated by the homeowner.

Philip Gaughran

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CONNECTEDHOMES

ACT NOW

It seems that every day in 2016 there was a new type of desktop manufacturing innovation popping up in the tech community – from augmented-reality woodworking and laser sintering to precision hydro-cutting. Technology that was once reserved for large, high-output factories is increasingly available to the everyday DIY maker. These technologies will provide brands the opportunity to create unique, limited, low-run products and real-life experiences.


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DESKTOPMANUFACTURING


ACT NOW

DRONES

The prolific growth that drone technology has seen in past years –particularly in 2015/16 – has tapered off a bit. While incremental innovation in the space will continue to happen, some of which is being driven by brands like Amazon in their first drone-flight delivery or Disney’s drone light show, the majority of brands will have limited opportunity to find real value in the category. Additionally, significant financial investment is required to create truly unique and standout experiences.


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FUTURE BET

For several years now, the consumer market has been saturated with low-cost flying machines, targeted at both kids and adults that want to experience the thrill of remote controlled flight. Often hard to control with buggy software, many of these are (and should be) viewed as toys, so to speak. These low-end devices have caused a bit of confusion in the marketplace as higher-end devices do exist and are maturing at an incredible pace. The higher end devices (500.00 USD+) include longer range flights, sophisticated remote controls and cameras that are as good or better than the average consumer smartphone. At about the 1k price point, the market changes considerably. Truly marvelous, autonomous flying machines are available. With ranges up to several miles and cameras capable of cinema-quality resolution, leaders like DJI are offering drones that have caused considerable disruption in the content

creation hardware space, and have created significant enough competition to force competitors like GoPro to get into the drone game.

While there has been a lot of movement over the last several years, expect the trend to continue. As costs come down, low-end and poorly performing hobbyist devices will disappear, displaced as the technology in higher-end machines trickles down via commoditization. Commercial uses of drones continues to expand and eventually personal cameras/3D scanning devices become capable of flight, using computer vision to follow their owners – taking photos, video and capturing other data (like 3D spacial info) will be used for entertainment, productivity and other uses.

Dave Meeker

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DRONES


FUTURE BET

We’ll soon see an increased adoption rate of Facial Recognition by marketers. The technology has existed for years, but has been held back from the mainstream by public discomfort and lack of willingness by brands to take the leap. Facial recognition can help address the problem of declining retail store visits by offering personalized, targeted content to consumers as they shop.

Several brands have started trialing the technology including Mastercard with selfie payments, and General Motors who pioneered a responsive facial recognition campaign that tailored content based on passing shoppers’ age, gender, composition and facial expression. We predict that consumers will eventually be accustomed to the idea of personalized services based on facial recognition; Facebook’s widely accepted DeepFace facial-tagging algorithm already has a higher accuracy rate than the FBI’s facial recognition system.

Jeff Tan

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FACIALRECOGNITION


FUTURE BET

Self-driving cars present a unique opportunity to product designers and marketers as they will give drivers back time in their day. That time is likely to be occupied by digital devices and content either built into vehicles or designed to dock with vehicle services. The brands that make the most of this will understand that new, in-vehicle experiences have the power to transform behavior.

Chad Vavra


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FUTURE BET

SELF DRIVING CAR

It has been a groundbreaking past couple of years for voice interfaces. Siri, Google Now, Alexa, and Google Home are the clear leaders in this category but you don’t have to be one of the tech giants to add voice capabilities to your applications. Voice-to-machine processing algorithms are available for most platforms and can be implemented by experienced developers. But keep in mind that while the barrier to technical entry has lowered, adding voice to an application significantly changes the experience design.

Chad Vavra

Perhaps the biggest news in this category in 2016 went relatively under the radar: Samsung acquired Viv.ai. From the original developers of Siri, which promises to shepherd in the “Era of the Do Engine,” Viv is an intelligent digital assistant that is able to perform simple tasks within seconds, such as ordering flowers, booking hotel rooms, arranging an Uber or making a reservation at the best French restaurant nearby. This will inherently and dramatically disrupt consumer use of traditional search. With any luck, we will see the first Samsung devices with Viv as a voice-centric interface at this year’s CES. Between Samsung’s Viv and Amazon Echo’s continued dominance with Alexa, intelligent digital assistants will shape the future of how consumers make purchase decisions, select brands and form brand preferences.

Justine Bloome

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VOICE AI


ACT NOW

While 2016 saw significant investments from brands in the VR space, we expect those investments to only grow in 2017. Major advancements in distribution, peripherals, and features all point towards that continuing growth. As toolsets become more powerful and easier to use more brands will enter the game and branded VR content will become prolific across mediums. Now is a good time for brands to begin investigating what their VR strategy is and implementing them – even in smaller test-and-learn activations.


In 2017, expect hardware costs to come down as more devices hit the market like the Windows 10 VR headset. Content is also in short supply so expect more distribution platforms and creators to enter the landscape. This will be especially interesting with platforms like Playstation for which big successful titles are most likely to drive hardware purchases. VR is still working toward mass adoption and it’s not looking likely that it will get there in 2017. But it’s still an incredibly rich platform for experiential marketing. If a brand can use existing owned channels for distribution, they can then make the experience live beyond the goggles.

Gabe Garner

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VIRTUAL REALITY


ACT NOW

Virtual Reality (VR) has arrived. The technology is good enough right now for entirely immersive experiences that fool the senses and transport users to places they have never been or that don’t even exist.

Great VR requires storytelling, creative design, and the technical skills to enable high performance across platforms. Environments in VR experiences can be completely imagined, photo realistic 3D renderings of actual locations, augmented by 360 video, or some combination of all of these.

Thinking of jumping in? Here are the key considerations.

First, different platforms support different levels of experiences. There are passive experiences that

take a user on a ride with 360 degree views; moderate experiences with sleek mobile integration, and the consumer controls aspects of it; fully immersive experiences with live-rendered interactive environments, where the user is in full control and even able to walk around and grab virtual objects.

As you move up from passive to immersive VR, more effort, skill and sophistication is required to create the content. The range of possible experiences line up with a range of VR products such as passive: Google Cardboard, moderate: Samsung Gear/Google Daydream, fully immersive: Oculus Rift/Playstation VR/HTC Vive.

Geoff Cubitt

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VIRTUAL REALITY

ACT NOW

Though the wearables industry has gone through a massive explosion in brands, and now a consolidation to a few major players that are dominating the category, there is still some potential for the right brands to play here at the right time. Luxury wearables are still on the rise and more advanced design that has led to more smart devices in clothing and accessories which will continue to see strength in 2017 and beyond. The days of sporting a wearable to say "hey, look at me, I'm tracking my steps" are going by the way side, however. Discreet and premium are the name of the game.

Philip Gaughran

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WEARABLES


ACT NOW

D E N T S U A E G I S T E C H M AT R I X C O N TA C T S

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FITZ MAROSenior Innovation Strategist

[email protected]

LAYNE HARRISVP, Head of Innovation Technology

[email protected]


JUSTINE BLOOMEEVP, Head of Strategy and Innovation

Carat USA [email protected]

GABE GARNERSVP, Business Planning

Firstborn [email protected]

COLIN ANGELTechnical Director

Isobar [email protected]

GEOFF CUBITTco-CEO


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CHAD VAVRADirector, Experience Strategy & Design

Isobar US [email protected]

DAVE MEEKERVP of Innovation


JEFF TANVP Strategy

[email protected]


PHIL GAUGHRANUS Chief Integration Officer

[email protected]