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Fix / Friday April 3

TLDR if you don't have time for everything else, flick through this AppAnnie report on how CoronaVirus is impacting the mobile economy. As well as general trends it looks at specific sectors too - a quick take on who is doing well and who isn’t.

Social

The time spent on social apps is (obviously) increased and TikTok seems to be a key beneficiary - and as an ad opportunity it’s developing fast. They now have (short term) deals with the major labels to legitimise the use of music by creators. But concern over Chinese influence remains - fuelled by their decision to ban Cantonese on ByteDance.

US investment firm Tiger Global is building a stake in TikTok owner Bytedance lured by the idea that ByteDance would command 19 per cent of China’s online advertising market this year - estimated to total over $80bn.

YouTube plan a new Shorts product designed to rival TikTok but it feels late - Instagram was able to benefit from copying Stories as it had a much larger used base than Snap. YouTube is clearly bigger than TikTok but not by that much.

Snap have learned that partnering can be a good strategy and plan to let users share their stories on other apps starting with Patreon and Triller. The thing to watch is whether TikTok gets added - there is already a developer relationship between the two apps - described as friends by Evan Spiegel - that uses SnapKit to allow Snap logins and more. Seems unlikely to me.

Perhaps the biggest opportunity for advertisers is Pinterest which is finally taking its commercial opportunity seriously. They hired top Facebook talent a couple of years ago but then they left. They now have a new team and their new commerce features are getting a good reaction from Merchants

As MSCHF nail it again with NBA.fm this Campaign profile of their founder is good background on this influential company.

AdtechPerfectStorm

The new Privacy focus gives us a chance to improve our business and we should seize it, rather than put it off. As Darren Hermann put it in his latest OP newsletter;

In a recent Coffee & Conversations, someone made the astute point about cookies were more "Internet 1.0" than the future. Meaning, the new media, and mediums like TikTok and CTV do not use cookies. Good point

I’m with Jeff Green of Trade Desk on this - it’s an archaic technology - his video on the topic is a great call to arms. (The interview with him we mention in the Fix/newTV is a good read too.)

Of course this change is a problem for many - especially publishers as the Safari changes have shown - what used to work doesn’t any longer. In a good Zoom chat last week we heard safari CPMs are heading south - as without 3rd party cookies they are largely untargeted. The answer is 1st party data and smart publishers have this - but it needs work to maximise its potential - taxonomy, standards and more

We are already seeing innovation - a study shows contextual targeting works - supporting what we have seen from Essence and others. And an interesting WSJ offer is to guarantee print advertisers a 70% ad recall - they should offer that for digital ads too.

The achilles heel of adtech - and especially the 20% of digital ad spend that doesn't go to GAFA - is how complicated it can seem. All the Three Letter Acronyms and a constantly changing jargon often give clients a headache - and support the cynical view that the complexity is designed to minimise scrutiny. As big Agencies formalise their links with SSPs they look to find ways to use their volume to gain advantage, as they have always done with traditional media. This issue is that sometimes the advantage accrues to the Agency rather than the clients who create the volume. There is little doubt that the Perfect Storm will benefit GAFA as their constantly logged in users means their tracking relies less on cookies. Mix in a lack of transparency and we think brands will move even more quickly to the big platforms.

Some of the practices in adtech also cause concern - whilst brand safety is important, the ease of building blocklists and whitelists means that consequences aren't always carefully considered. We need well resourced News sources but when Agencies decide not to buy ads next to Coronavirus stories these news providers suffer. UK trade body Newsworks have launched a BackDontBlock campaign to highlight this issue.

Merchants

The online grocery firms continue to have problems. The FT points out that Ocado has a brand new distribution facility opening this week - the only downside is that it's for Monoprox in France. Here they struggle, like their competitors, to offer slots. It's a good look at how Ocado is trying to deal with the situation. A US survey shows that people are moving to online - or at least trying - but are facing problems. It’s ironic that circumstances give online shopping this great opportunity for sampling, but in doing the right thing - prioritising the vulnerable - they miss the chance to reach the optimal affluent customers.

VC firm Loup are optimistic - they see ecommerce taking as much as a third of retail and - like us - believe these new habits will stick. At least, as Web Smith tweets amongst the affluent. And the need to allocate slots at physical stores may be an opportunity for Open Table to pivot, as their core business fades.

The food delivery businesses are having mixed fortunes. As key brands like McDonalds and Wagamama have closed they lose business and many customers are using their free time to rediscover cooking. Uber Eats have adapted by moving into grocery deliveries in many markets. Deliveroo are doing something similar with its Essentials range, picking up from M&S, some Co-oP stores and BP petrol stations. Of course Deliveroo had its share of problems before the Virus - that $500m cheque from Amazon remains uncashed as the CMA deliberate. Do they have enough cash to see them through the Lockdown?

For everyone else in any form of retail, uncertainty continues. Channel Advisor have interesting data showing how many categories are doing - Health & Beauty are doing well as is Computers. The Amazon data in this WSJ article shows similar trends but is more granular - and their web traffic is up 32% yoy and parcels handled by as much as 40%. The main thrust of the article is how Amazon is struggling to keep workers working.

And this volume has thrown 3rd party Amazon sellers of non essential goods into uncertainty - what worked before doesn't work now.

But great businesses are still being started and funded - checkout service Fast has raised $20m for their business that wants to be your profile for signing into services and buying goods online,. That is sort of what Amazon aspires to with Amazon Pay but being independent probably makes biz dev a little easier for Fast

newTV

This week I hope you enjoyed our first midweek Fix - a deep dive on newTV. We had a good reaction and plan to do this every other week. If you missed it you can read it here. Comments and thoughts very welcome. How could we improve it? And how might we collaborate?

An ongoing theme is how Lockdown audiences are spending their time. Nielsen data shows Streaming taking almost a quarter of all viewing in the US - up from 14% the same week last year. SuperAwesome has similar data for kids viewing - huge spikes but mobile and tablets win our over connected TV

The Barb data that the UK TV business relies on is running into problems Their approach requires engineers to visit the homes of their 5000 panel members to fix meters and install new ones. So the Virus means the integrity of the data will slowly decline. Businesses like Samba and Samsung know exactly what is being watched through Automatic Content Recognition

Adapting to changing times is a challenge for the whole industry but ITV seem to be doing well with production teams making ads for new advertisers. When we talk with DTC brands a barrier to traditional media is the arcane way in which it is sold. Used to self serve ads on Google and Facebook, new brands struggle with the concept of making contact and sorting insertion orders and invoicing etc. That’s the next barrier for TV to solve

China

This is a good report on Gen z in China that shows how Tech and Luxury are fused in this group - both hugely important. If the west is much different, it’s probably only a matter of time.

And as 97% say they prefer to use their digital wallet, mobile payments in China are expected to boom as offline stores reopen.

New behaviours

All these new habits like Zoom and Houseparty come with some baggage. First we found that Zoom was sharing data with Facebook - now stopped. Then it is said the service is not end to end encrypted, as claimed. And the 17 R&D centres in China ralse concern amongst security sources. None of that stopped the cabinet using Zoom, with our esteemed leader sharing a screenshot - including the meeting ID. Hopefully the Russians don't know his password. To be fair to Zoom they have gone from 10m users in December to 200m now - and are trying a code freeze to sort all their issues.

Houseparty also got lots of press as people claimed it was connected to hacks of Netflix Spotify and Paypal accounts. New owner Epic was quick to hit back, offering $1m to the first person that could prove Houseparty was at fault.

On the glass half full side here is more commentary on new behaviours; VC Jim Scheinman - and early Zoom investor - and London based VC Emilie Spire. Both worth a read.

Audio

I mentioned TikTok had agreed short term deals with some of the major labels - Spotify has finally sorted their deal with Warner. Just Vivendi to go.

In their push for Podcasts Spotify has a new API to enable developers to access podcasts just as they currently do for music.

The audience for Podcasts is growing fast but quite how the lockdown affects this is unclear. Acast data shows a positive growth and reported their biggest ever weekend for listening. Which makes sense as podcasts are now a habit for many. But then we saw another data source showing a small decline - maybe because of the fall in commuting or gym visits?

BTW if you have spare time, my conversations with Rory Sutherland and Tom Goodwin had great feedback - for their wisdom rather than mine. Invest your time wisely.

AR

Because people have time on their hands some wonder if AR and VR will grow over the coming months. I don’t think VR is ready for prime time but there are so many green shoots for AR

Facebook have done a deal with a UK firm for Smart Glasses microLED displays - the product video isn’t great but the products sound interesting.

Pokemon Go have seen that their user base is confined to home and are rethinking the game action to avoid the need to go outside. And parent company Niantic have bought 6d - a leading AR developer, who said of Niantic;

Some more examples of AR driven by Lidar and iPad - and remember Google 3D animals

Doom & Gloom

It’s inevitable that the Virus Crisis triggers speculation on what happens next. But the very nature of the crisis means no-one has much of a clue. Yes it’s going to be bad. For a while, But comparisons with 2008 and 2000 are not that helpful

I am being careful what I read but can recommend these pieces

Apple

When we started Fix - about 10 years ago - the focus was all about GAFA - in fact I suspect we were the first to use the term as I liked the Boss connotation of gaffer as these 4 companies bossed the Mobile world.

We don't mention Apple much any more as their focus on devices isn't that interesting.

But this week, two interesting stories.

First they bought the Dark Sky weather app - and closed down the Android version.

Then they broke their strictest rule - if you transact in an iOS app Apple take a 30% tax.

Lots of people have tried to break that rule - Spotify have complained to regulators, Netflix and Fortnite have tried various workarounds and Amazon switches you from their app to a website so as to avoid paying that tax.

But this week we saw Apple relax that rule for premium subscription video apps. So from Wednesday, Amazon started selling video on Prime through their iOS apps

Is this blink because Apple anticipate the end of charging that Tax? Or is there some other reason?

Apple and Amazon keep bickering and Prime Video competes with AppleTV. The last big hoohaa was apparently because Amazon were insisting on being able to sell ads on all the streaming platforms they were selling subscriptions for. Search on Prime for Channels and you see MGM Mubi BFI etc. Then Amazon wanted to sell ads on other streaming service devices - like xBox, Playstation and AppleTV.

Is there more to this than meets the eye?

Etc

One worry about the Virus is that everyone is using Tech without always thinking through the consequences. Boris is all over Zoom and the NHS have struck a deal with Palantir - the tech company ran by Peter Thiel - the first investor in Facebook. Palantir is equally famous for its first investor being the CIA. This NHS blog explains what Palantir and other tech firms are doing.

As people seek good quality news sources many complain about paywalls. Schibsted has seen a boom in new subscribers

TMobile and Sprint in the US have finally merged. The choice for MNOs is to become a fat pipe utility or to seize the opportunity that being peoples gateway to digital provides. Faced with unlimited choice, people need discovery and safety - a great way to build those higher-frequency, emotion-rich relationships that Forrester talks of with Disney in mind.

The FT talk of the coming video game renaissance and right on cue Amazon declare their intention to become a leading creator and distributor of video games

SaaS - loved by Merchant Bankers and tolerated by everyone else. Techcrunch considers how bad churn will get

Finally... as we are all now trapped at home, event producers are looking for virtual formats that capture the benefits of the best conferences. Digital Commerce For The New Decade from the Entropy team looks promising and has a great set of speakers. See you there.

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