Amazon & Ads
It seems premature to upgrade the duopoly to a triopoly but some are already bundling Amazon with Google and Facebook
There is a little wishful thinking here - largely on the part of the big agencies that crave an alternative place to spend their big budgets as quickly and easily as possible. But Amazon is shaping up as a contender; their scale is increasingly matched by the variety of ad offerings as this summary shows
This will be worth watching as there are some clever ideas about how ads can thrive outside of the duopoly, but the sheer scale makes the gravitational pull for ad revenue too strong for most of these startups. Take Brave for example - a browser play is compelling and could be a viable alternative, but how to lure people away from Safari and Chrome? A helping hand from Amazon would be useful and when you have started your own search engine and launched your own phone, having your own browser isn’t too much of a leap.
GAFA & Content
As well as the GAFA focus on content the Next 11 are very interested too. In order to give Oath access to its NFL content, Verizon have traded their mobile exclusivity - and almost doubled the investment. When the Amazon deal to show a number of NFL games was announced the head of CBS - who hold the broadcast rights - said he doesn’t expect the retail giant to pry any ratings points away from his broadcast audience
Lots of people are watching that and with the Premier league planning a Saturday night game in their next package of rights it will be a UK deal that sets the next headlines. With language like Technology neutral basis the door is open for Amazon, Netflix, Facebook etc and we wonder whether BT won’t have to refocus on its core business with the Government pressing them and others for more investment in full fibre broadband.
Elsewhere content is high profile - YouTube have hired a former Disney exec to drive their push into original programming. And the Apple acquisition of our friends at Shazam is all about bolstering Apple Music - what better insight than data on all the songs people liked sufficiently to Shazam and learn what the track is.
The ad linking product Shazam have been having increased success with looks to have a more fragile future, but with Apple - finally - supporting QR codes the Shazam tech could help with their visual search efforts. Imagine if every Apple App Store logo on promotion for Apps could be read as a download link with a Shazam code? Apple do everything they can to help their app developer Disciples and this would be a real game changer for app store discovery.
We may be mixing in the wrong circles but the granularity of digital measurement is pretty widely accepted amongst the people we talk with. Yes there are issues, but knowing a 30 second video on Facebook is skipped after 3 seconds is useful - and that’s what you pay for.
Do we suppose that when the same ad is shown on broadcast tv it is watched religiously for the full 30 seconds. Because that’s what you pay for. Or is more likely that after 3 seconds the viewers turn their attention to the phone by their side
We need measurement that compares apples with apples and encourage all efforts towards that. But it’s hard to see that traditional media won’t be found wanting when we get that.
Watch everyone walking down the streets and see how many are engrossed in their phone. But we have yet to reprice outdoor ads. And talk to anyone and learn they have their phone with them whilst watching TV - but we have yet to reprice tv ads.
When someone next talks to you about how AI is transforming the Ad business, ask them their views on BTrees, Hash Indexes and Bloom Fitters. No, me neither. But these are core elements in AI and highlight that real expertise is needed - it’s not just the latest catch phrase. Google seem to be leading the pack and therefore their products and services will - eventually - redefine what we can do for clients.
The Economist have a good look at this and particularly Google. Their example of Gmail, where the content is scanned so they can suggest a selection of quick responses to each email, gives us an idea of where we are heading
Although the nightmare of auto correct on my Pixel suggests there is still a way to go.
These are some good examples of how AI can be used - analysing the cars on Google street view to determine voting patterns and how Uber developed a credit card just to get the data to feed their AI on who eats where helping their ambitions in food.
Our favourite VC Chamath Palihapitiya did a great interview recently and controversial as ever. Some disparaging comments on Facebook tearing apart society with its dopamine hits, have been widely reported.
Unusually Facebook have responded, pointing out quite a lot has changed since Chamath was there. Perhaps they are working on their public image - they are to start booking revenue in the country the buyer is rather than processing it in Dublin, which will negate criticism of the way they approach tax.
The debate over GDPR and what it will mean for the various players in the ad supply chain isn’t getting any clearer. A Ghostery study into who tracks what is illuminating as it demonstrates the immense scale of tracking and points up one key issue we feel will become more prominent - the detrimental effect on latency.
With the sale of Mashable at a knockdown price there is a lot of commentary about a media apocalypse. This piece rehearses the problems and suggest the winners will be those that pivot to readers; which fits with our view that content creators with a good idea of who their customers are - and the ability to strengthen that connection - will do well.
Of course when media business come up for sale there are always potential buyers. The $60bn Disney purchase of Fox is a good example - although the stories of Jame Murdoch running Disney seem now far off the mark.
End of days?
When the Sun runs a story of people buying Ethereum CryptoKitties for £10k and breeding them it seems like we might be in a bubble. But VC Chamath thinks Bitcoin could go to $1m in the next 20 years. And the Wall Street Journal looks at why bticoin has popped now
This stuff works
It feels right to end the year reminding ourselves that - despite the many issues - digital marketing does actually work.
“We need to go from treating it [media] as a commodity to be much more of a quality buy because agencies were just being incentivized to buy cheap media, whether that was on TV or online,”
That is a message that needs spreading.
BBH summarise some of the key marketing data points that advertisers should remember. It is interesting but some is debatable. The idea that most growth comes from acquiring new users is a little naive - i think Coke would find it easier to sell an extra can a week to a light user than persuading someone who doesn’t drink, to start.
A new exchange that lets publishers sell their inventory as futures, promises to be the future of advertising. It’s an interesting idea but is further separating ad inventory from the content that hosts it a good idea?
More O2O - Tencent to take stake in major Chinese store group. The collision of retail and digital is a big focus for us in 2018. Harvesting first party data - and consent - in high street stores is a fascinating way to drive digital activity.
One huge challenge facing digital is how to improve discovery. Nowhere is it more needed than in new TV. To paraphrase The Boss, a million channels and nothings on. This interview with the CEO of Tivo gets into how it may get solved.
Finally - Forwards / Backwards
Lots of reviews of the year and some of the better Trends deck
Right now we are focused on Christmas and gradually winding down so it’s a good time to share our soulful Christmas playlist Over 12 years in the making, this has evolved from CDs we burned for friends through a YouTube playlist to Spotify. The really good stuff is in the first 30 or 40 tracks or you can go shuffle for a mix of the classics and newer stuff we have found. Best enjoyed with a large glass of NZ Pinot Noir.
Have a good one and we will be back in full effect, in early January
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