Yahoo & Mobile Ads
Yahoo now clearly up for sale but GAFA are not interested and the key bidders are private equity who see a tax advantage in getting rid of core business so they can profit from the Alibaba stake Yahoo owns. One Hedge Funder said he would be happy if the core business were sold for $1.
Some are disparaging about Yahoo but they have two big advantages – they are pretty big and they are not GAFA. Both highly appealing as the agency world generally wants to limit their exposure to Google and Facebook.
Yahoo have lots of eyeballs - and hence attention (the crucial - and increasingly rare - raw material for marketing) and are pretty good at monetising it – probably 3rd to Google and FB?
GAFA doesn’t really need more inventory – they are growing what they already have with new initiatives like AMP, Instant Articles and Live video, where they are well positioned to ‘help’ monetise third party content.
So key bidders are PE firms who want to break it up and two others;
Daily Mail – who are pretty good at monetizing content and are keen to grow their digital business, thus further reducing their exposure to print
Verizon – already spent big on AOL and Millennial Media – but still aren’t big enough. Adding Yahoo would make them big enough – Martin Sorrell said at MWC that a merger of Yahoo would make Verizon the third biggest media owner for WPP. Lots of people would try and help reduce that 85 cents
Verizon is still a largely US business so they may still sell off the non US business – though they seem to be supporting AOL outside the US.
The big advantage Verizon have is data. Yahoo should have good data but they squandered the advantage of constantly logged in users – and don’t play in social sign in space which is a huge source of data for FB Google Twitter LinkedIn etc. (A question we should know the answer to – can you target ads on FB based on the apps people sign in on with FB?)
A potential issue for anyone using data is consumer permission. In our research people don’t seem too concerned over GAFA and their privacy – many see it as a sort of value exchange, others think it’s just too late to worry about it. Following a big launch a few years ago Phorm were a key player in data and early ad tech. Yet once consumers learned that their online behavior was being monitored for ad targeting, they pressurized BT etc into dropping Phorm. After moving their focus to Asia they went into receivership this week having burned through $250m.
Data is only valuable as long as you have consumers tacit permission to use it. Given the usual reaction when retargeting is explained to civilians – you mean John Lewis is talking me around the web? – one wonders if that bubble may yet burst.
Ads – for poor people only?
Are we moving to a world where ads are being edged out of most content - will ads only be for poor people?
One of the leading TV online services told us that a couple of years ago they had lots of complaints – slow speed, clucky navigation etc - but now the service works incredibly well and they only get one sort of complaint – about the ads. What’s acceptable on the big screen, irritates many on the small screen.
Because much of the competition - BBC iPlayer Netflix, Amazon Prime, iTunes etc don’t have ads. Nor does Spotify – unless you are holding out for the free service and suffering the dullest ads they can find
Are we training people that ads are bad? That ads are for the people who can’t afford to subscribe to content? Does this legitimize ad blocking to some extent? A study from Accenture says a full 42 per cent of the 28,000 consumers surveyed in 28 countries, say that they would pay to eliminate advertising interruptions. But how much would they pay?
It is interesting that both Google and FB (and others) allow people to say what ads they don’t like - and they then see less of them. And True View is good learning for Google too. This is valuable data for the company and good customers service.
One consequence of the GAFA domination of ad revenue is that content providers gravitate to their platforms as the best way to monetise. Both AMPs and Instant Articles are getting good take up. But with AMPs it seems the ads cant keep up with the content
Generally content creators are struggling – with Buzzfeed the latest to miss forecast earnings. One news site that does well is subscription only The Information and they have a good - free – piece on how the race to the bottom may be slowing as publishers are realising that the quantity of audience delivered by clickbait is less valuable than the quality they miss out on. A refreshingly optimistic take on content creation and therefore worth a read.
At the excellent BSAC conference this week we heard some smart thinking on VR – both the forecasts and a creative explaining the opportunity. It’s obvious that what the medium needs is more content and consequently more creative talent.
I think anyone who reads the excellent Kevin Kelly piece in Wired on Magic Leap and the rest of the space will be inspired. And this storyteller guide is a good place to start too. Send them both to all your creative friends.
And in the arms race between Google and Facebook around video, YouTube launches 360 degree Live Video. Aptly described as the gateway drug for Virtual Reality, we think 360 video is going to be very important. And the fact that Neil Mohan – formerly the head of Google ad products - has moved to this area shows how seriously Google takes it.
The figures shared at the BSAC event showed that ‘real’ VR needs expensive gear and we see a parallel with the gaming world – hard core gamers invest in a console whilst more casual gamers use their phones. Both categories generate huge revenues and we think it will be the same with VR. How can you get involved in casual VR?
As GAFA take content more seriously the Hollywood agents will have a lot of influence. This longish read on the guys who run WME and now IMG – and the inspiration for Ari in Entourage – is worth reading.
Uber have dropped their New York instant food delivery business – after just 4 weeks. The economics of this business are hard – but people keep playing with different models. Unless you can make money from the product as well as the delivery we think people will continue to struggle
Finally an interesting new report from Ofcom has lots of great data but this is the killer chart. It shows that the proportion of people using a computer to access the internet dropped by 10 points in the last year. We now need to think about the balance between mobile natives and desktop migrants.
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