Facebook's (NASDAQ:FB) creation of "social networks" redefined online advertising. For the first time, a multi-billion user community could safely and voluntarily share information about their interests, and marketers could offer them products relevant to those interests.
Conversion rates shot through the roof. Facebook's targeted advertising gave businesses information about their users so they could know what they wanted to buy, and it worked incredibly well. The social network king's ad revenue nearly quadrupled in three years, from $7 billion in 2013 to $27 billion in 2016. The company continues to expand its dominant targeted advertising network, with membership surging on two of their other platforms: Messenger and WhatsApp.
Facebook's strategy was extremely effective, but there's something even bigger on the horizon. Rather than businesses marketing to us based on keywords we've provided about our interests, they'll soon begin marketing to us based on the information they know about us as individuals.
That individualized information is our very own DNA genetic code. In the coming years, our genomic sequence will serve as the foundation of a whole new era of personalized marketing.
Genomic sequencing 101
Let's take a step back and describe how we got to this point.
Largely thanks to automation, the costs related to reading and deciphering a human DNA code (a "genomic sequence") have fallen drastically. The first successful genomic sequence was accomplished by the Human Genome Project in 2003, which took 15 years and cost $3 billion. A new technique called Next Generation Sequencing ran the process in parallel, which advanced the technology during the next few years at a speed that outpaced Moore's Law. The costs of sequencing a genome fell dramatically: to $100 million in 2000, to $30,000 in 2010, and to less than $1,000 today. Illumina (NASDAQ:ILMN) emerged as the leader in the space. Earlier this year, the company unveiled its newest NovaSeq model, which it believes is capable of getting the costs down even lower, to $100 within a few years.
The now-affordable price point of reading our DNA code will unlock a boatload of new business opportunities. Especially in the consumer market.
Pharmacists want to use your genome to prescribe drugs that will work more effectively on you, Habit wants to provide you with personalized-to-your-genome meal plans, and DNA11 wants to use your DNA code to create personalized wall art (yes, seriously).
Capitalizing on the opportunity
Even though the tea leaves predict it, genomics hasn't gone mainstream just quite yet. For this consumer-marketing stage to actually work, lots of people first need to have their genomes sequenced, and businesses need access to those genomes.
23andme, ancestry.com, and Pathway Genomics are three examples of DNA data-collectors that have already set up shop. In exchange for access to your genome, they'll reveal your family's heritage or warn you about diseases you're susceptible to. But these companies also keep a copy of your genomic information on file for their records. For the time being, they aggregate and anonymize the information, and build reports about large populations so that nothing is personally identifiable.
With the information sitting in a digital database, the natural next step will be to aggregate it into larger platforms. Just like Facebook did with our hobbies, networks will emerge that provide our DNA code for the pharmacists, meal planners, and wall art decorators to market to us. Illumina's Helix already functions similar to Apple's "App Store," where you can unlock your DNA to build a personalized fitness plan or to purchase DNA-tailored wine recommendations. Invitae's Patient Insights Network is another platform building momentum, which asks patients to share data to help hospitals optimize treatment routines and pharmaceutical companies develop better drugs.
Networks like these will still only have access if you allow them to. Also similar to Facebook, the new platforms will have strict privacy controls -- so you'll know exactly how your information is being collected, used, and shared.
Due to the sensitive nature of the incredibly personal information (our own DNA!), privacy policies will become one of the hottest and most controversial topics of this new era. Expect to see a ton of emphasis on user privacy agreements, as well as consolidation of platforms to spread the fixed costs of cybersecurity and IT overhead more effectively across a larger user base.
Privacy concerns will be a hurdle, but they won't last forever. We saw similar concerns arise to then diminish during the early stages of e-commerce -- when everyone was terrified, then hesitant, and then comfortable with giving their credit card number to Amazon.com. Social media, too, went through growing pains before users eventually deemed Facebook as a safe way to share photos and personal information.
The next wave of personalization
More than 99% of our DNA is exactly the same as any other unrelated person. But more than 80 million variation sites within our genome allow us to have different eye colors, blood types, and experiences to everything we come in contact with in the world.
We're beginning to see a whole new wave of personalized products catching on to appeal to those variations, and larger-scale platforms will soon follow. Keep an eye out for a new "DNAbook" to emerge as the new online marketing goldmine.