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Mobile Fix / December 20

It feels a little odd to be thinking about what is likely to happen in 2020 as one of my seminal projects was predicting 2010 - watch the video we made in 2001 here.

It’s a bit cheesy but we got quite a lot right on tech - although some of the timing was a little off.

And as a VC once told me that people who know what’s going to happen are called futurists. People who know when it’s going to happen, are called billionaires.

As William Gibson said; The future is already here—It's just not very evenly distributed. For 2020 this feels right.

All this Fix thinking is based on what’s happening right now and is very actionable. If we can help you think about how these issues impact your business and how to take advantage, I’d love to talk...

So, in 2020 I think….

Understanding DTC audiences will get more sophisticated

There is some smart thinking about the people who are most likely to buy DTC; the HENRY model has been around for a while - High Earners. Not Rich Yet. Now we have the CARLY - Can’t Afford Real Life Yet and this piece breaks out how this group can be influential.

A Fix reader shares a smart definition of a Modern Brand and this is a longish look at perfume brand LaLabo and how they qualify. Their stores are definitely Brand Cathedrals and always on just the right street. In our work of retail we keep coming back to how cool neighbourhoods can position a brand that opens a store there, so this article on DTC neighbourhoods makes good sense. As does this look at what makes a good Pop Up. You can go deeper with this piece on urban retail trends.

Many DTC brands don’t make it and - playing to my Bonsai Brand thinking - this BoF article on one highlights the challenge of taking funding for a niche business. As the owner laments;

..we probably could have built a profitable $20 to $50 million-a-year business.

Getting last mile delivery right will be even more of a priority

Free shipping is a key element of the Amazon flywheel and to make certain it works for them - in terms of both cost and reliability - they have inhoused more and more of the logistics.

The early priority of the guy who runs the Amazon delivery machine was to lurk in their warehouses to find slackers he could fire. This week he fired FedEX for similar reasons - by blocking sellers from using Fedex for Prime. Morgan Stanley think they already deliver half of their US packages themselves - around 2.5bn and that is forecast to grow to 6.5bn by 2022.

That is a lot of planes and big trucks, it is also an awful lot of vans traversing the streets of every town and city. Add into that all the bikes delivering food (and the Ubers on every corner) and that’s congestion. (And CO2 - when does that issue start to affect GAFA?)

The consolidation in Food delivery continues with Berlin based Delivery Hero buying Korea market leader Woowa for $4bn. Woowa cited increased competition from capital rich firms as a reason for them looking for a buyer. And Uber sold their India Eats business to Zomato.

Margins are relatively fixed and that the only real barrier to entry is capital, so the key factor is utilisation of the last mile drivers. Amazon and Uber both have business models that benefit from utilisation - and have the capital - so I think that they will become the dominant players in food too.

Influencers will see a renaissance as their true value is recognised

For all the fluff, Influencers fulfil a real need in this age of abundance - helping brands - and people - with discovery. 8 year Ryan Kaji made $26m with his toy unboxing videos and 15 year old Rowan Winch makes his money sharing memes on Instagram.

I think building on Influencer culture with live streaming will be huge in 2020. A Chinese bank estimates live commerce is already around 9% of the total Chinese ecommerce market at $63bn

A trusted host who gives shopping recommendations can help consumers to focus on one product and make purchasing decisions more easily.

Creativity gets recognised as the key to digital success

The switch from portrait to vertical still seems like a huge challenge to many, so these tips from WeAreSocial are helpful.

AR is getting traction with smarter brands though - Samsung phones have a neat Star Wars campaign and this interview with the head of creative strategy at Snapchat looks at their experience selling AR to brands

A less celebrated form of creativity is UI but getting this right can have really dramatic effects. Halving basket abandonment is often easier than doubling the response to an ad campaign. This work on menus shows how new thinking can be tested. But maybe the real innovation in User Interface is coming from Google - look at how their UI manages the experience of buying a movie ticket

Everyone acknowledges the impact of creative even if too few make it a priority. But when commerce is involved and you can show the impact of creativity - good and bad - in terms of $$$ - you do get focus.

We have developed a half day workshop on Unlocking the value of Mobile Creativity, with a number of platforms and pioneers sharing their best work. So far, good reaction from the Brands and Agencies we have discussed this with and we also plan a public event. If it sounds of interest for your team, let’s have a chat.

newTV evolves from subscription to a blended model - including Ads

The impact of Netflix on the creators is covered well in this piece celebrating the new Hollywood And they are being much more open about data on the business - last week they shared viewing figures for the Irishman and this week their SEC filing gave us insight into their international business. As one might expect their growth is coming from international;

U.S. and Canada: 67.1 million + 7%

Europe, Middle East, Africa: 47.4 million + 40%

Latin America: 29.4 million + 22%

Asia Pacific: 14.5 million + 53%

Monthly ARPU is slightly lower internationally versus $13.08 in the US.

I am still convinced they will use all that great content to build an ad funded service that acts as a gateway to subscription. That is what NBC are planning for their Peacock service

The old model is creaking. Magna data shows global TV Ad sales fell by 3.9% in 2019, the largest drop since the recession. Of course this points to a bigger issue - the increased spend of the Digital First brands on TV masks an even steeper decline from those traditional brands that have always spent on TV.

The peculiar way that Trad TV works means that the fall in audience has been accompanied by a rise in costs and as one exec from Starcom puts it;

The way the UK broadcasters plan to deal with this is to have even more ads. I think the only way this conundrum gets solved is through wider adoption of targeted ads - so brands buy the audiences that matter and people see ads that are relevant to them.

On our local Streaming service Britbox is getting the cold shoulder from Sky - which given their recent deal to put the BBC iPlayer on the Sky box suggests challenges ahead for ITV.

#AdtechPerfectStorm triggers a rethink on Digital Marketing

As we get confirmation that Chrome will follow Safari and Firefox in limiting cross site tracking with cookies the industry needs a PlanB. Or does everyone just move their money back to GAFA? The consolidation is accelerating - Rubicon and Telara are merging to create ‘The Trade Desk of the sell-side’ and Smart acquires LiquidM so they cover both demand and supply.

Publishers with strong audience have an advantage if they can unlock the potential of their 1st party data. TimeOut are doing a good job and this talk with a Permutive exec highlights their approach

Media Businesses are investable

Investing in Media brands hasn’t been that fashionable recently, but smart people get the opportunity and Axios have raised $20m. One of the most interesting new businesses in the US is Attention who are buying GirlBoss - the media business started by the founder of Nasty Girl. More on the acquisition and more on Attention here. The local version are our friends at Vida.

Strong media brands are attractive because one can narrow the gap between content and commerce. Monetising audiences is harder these days but if you can broker a sale, and take a commision, that can be much more lucrative. We see this with Google and Facebook. In travel Google are getting closer to the sale of a hotel room or flight and Facebook are learning from Instagram shoppable ads. And we see more publishers develop models where they use their strong Instagram followers for shopping.  

Audio goes mainstream

Some leaked data on Alexa suggests revenue is well below expectations. Of the $5.5m Amazon hoped to make from Skills they got just $1.4 - and as they make 30% on In Skill Purchases, the expectations were for an $18m market.

We have remarked before that there are no famous skills. And with such a big product footprint that feels like a big opportunity for Brands to get involved - audio Branded Utility. These are some of the most popular skills and this is the story of a first time Skill maker. Lots to think about here.

As the footprint of these devices grows the issue of incompatibility has been reduced with an agreement on a Smart Home standard

The very definition of specific types of voice are changing. Amazon have launched a short story app in India and the FT look at how Audio gives new voice to books in the digital age - but sort of miss the biggest innovation - text to speech. Everyone I have introduced to SpeakAI has been blown away and that has to affect the Audio books market before too long.

Quick Reads

The other week we looked at the Top10 apps - and a reader asked about the non GAFA apps that were doing well. The Business of Apps data has loads of good stuff.

Finally…. It is time to relax. Plenty to listen to here; long fascinating chats with Rory and Tom - lots of good stuff in these podcasts. And the Soulful Christmas Playlist is highly recommended - 14 hours of great Christmas music.

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