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Guest Blog: 5G Will Change Ad Tech, But Not as Fast as You Think

Commercials promising blazing fast wireless internet are here. But while 5G is a game-changer, we should plan for a long, uncertain period of disruption. Here’s how advertisers can prepare.

Michael Zacharski, CEO of EMX

Guest blog author Michael Zacharski is CEO of EMX. (Image credit: EMX)

Why 5G won’t arrive everywhere overnight

Transformative technologies are a slow burn in terms of mass adoption. The telephone, for example, was invented in 1876, but it wasn’t until 1998 that the U.S. reached the milestone of one landline per person. Interestingly, while brands began using telephones as a sales tool in the early 1900s, it wasn’t until the late 1970s that call centers and telemarketing arrived. Smartphone adoption happened much faster, but it still took a decade to go from a handful of early adopters to the mobile-first experience brands and consumers expect today.

So, how long will 5G adoption take? Some optimistic news reports point to the possibility that increased demand for mobile broadband, due to the global health pandemic, may accelerate adoption. However, there are also reports that the challenge of building a new network while maintaining social distancing may actually delay 5G adoption.

Consider the build itself. The current 4G LTE service required the installation of 30,000 cell towers/antennas across the country. For 5G to achieve the same coverage, it will require the installation of 300,000 towers/antennas. That’s a tenfold increase! 5G also raises questions about aesthetics because local communities will have to weigh in on where the towers and antennas are located and what measures should be taken to conceal their appearance. 

One consequence of that process is that the earliest deployments of 5G will focus on areas with a minimal number of stakeholders. We’ll likely see the fastest adoption at indoor B2B environments such as factories, where a 5G network can leverage IoT for automation, preventative maintenance, robotics, etc. As for the consumer tipping point, we should probably think in terms of a 5-10 year timeline.

How should advertisers plan?

To begin, advertisers need to understand that while the 5G tipping point is years away, we currently face a blended environment where user connection speed varies dramatically. To the extent that advertisers encounter slower data transmission speeds, they benefit from added time for ad tech decisioning. As a 5G rollout speeds up data transmission, advertisers will see the amount of time allotted for ad tech decisioning shrink.

What happens in that window doesn’t take place in a vacuum. Due to privacy considerations, we’re already doing away with the cookie and rethinking the use of PII. In theory, that should mean that advertisers have to process fewer inputs within a shorter window. But in practice, consumer expectations, both for speed and overall experience, will force advertisers to deliver greater customization at faster speeds, albeit with fewer inputs. As we build new ad tech infrastructure, advertisers need to develop plans for managing that balancing act.

How 5G impacts ongoing disruptions in advertising?

The further we project into the future, the less siloed we can afford to be in our thinking. We should think about 5G as a complementary trend that will contribute to the disruption of established advertising channels, but not necessarily define the outcomes.

Take television. According to eMarketer data, we’re trending toward a point, probably in 2023, where the number of cord-cutting households will equal the number of households that subscribe to television (cable or satellite). In theory, high speed wireless internet should accelerate cord-cutting as consumers become less dependent on their ISPs. Cord-cutter households are typically serviced by the MVPD as a “utility” broadband provider. Those MVPDs will protect their ability to sell advertising. So while 5G is likely to accelerate cord-cutting, advertisers shouldn’t count on 5G to disrupt the TV advertising business model.

At the other end of the media planning budget, 5G may very well supercharge digital out of home (DOOH). After all, DOOH is a growing channel, but much of what needs to happen in terms of adoption depends on technological questions, rather than business models and evolutions in consumer behavior.

As advertisers think about today’s budgets and capabilities, they should remember that 5G won’t touch all channels equally, nor will its impact follow a straight line. Advertisers should ask themselves how 5G will accelerate current trends, but they should also consider the possibility that today’s dominant channels may see their relevance wane in the future, while nascent channels proliferate. In other words, advertisers should start preparing today for smaller decisioning windows and faster data speeds, even though the question of which channels that data ultimately flows through speaks to a broader planning issue that touches every aspect of an advertiser’s organization.

Guest blog author Michael Zacharski is CEO of EMX, where he leads the overall vision, strategy, culture and development of the company. Under his leadership, EMX solves complex challenges and drives measurable business results for agencies, advertisers and publishers by providing solutions across full-service and programmatic practice areas. EMX is the programmatic marketplace division of global marketing company, ENGINE.