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Mobile Fix – December 9

Snap

As Snap moves towards their IPO there is inevitable interest in how they make money. Drawing parallels with Twitter this piece suggests their ad products are going to be difficult to sell and they will struggle to make money. Our take is different  - Snap are innovating with mobile native ad formats that seem to resonate with users and – increasingly – brands. At the start of any ad supported channel the key thing is brand count; how many brands are spending with you? Once they are on board you can try and build the spend up.

On that score Snapchat seems to be doing pretty well and as they build out their team the momentum will grow. And whilst persuading people to move money out of Facebook and Google will be hard, the reliance of those platforms on ad formats which are essentially desktop ones, could be a vulnerability.

WPP already spend $70m with Snapchat and the way Sorrell noted that Facebook has “been trying to undermine” them reminds us that ones (fr)enemies enemies are your friends. So that spend will rise.

A key issue is familiarity. Only a few years ago at a gathering of the UKs Media Great and Good, Facebook came in for a lot of comment with quite a long discussion on what their business model was. When it was pointed out they had $600m in US ad revenue the talk moved to how it was really for kids.

Now that everyone in Advertising has an iPhone, is on Facebook and, having done the coach tour of the Valley, is an expert on GAFA. The inscrutable user experience of Snap may slow down acceptance but more and more people are investing the time to understand how it works. And the Spectacles launch will help build salience and drive trial - even if we shouldn’t expect to see too many of the industry wearing them ‘seriously’ This is a good review of the Specs user experience – which does sound promising.

On that user interface; it is Shareable Design – in that the best way to learn how to use it is to watch a friend and copy them. Which clearly suits 13 years olds more that 35 year olds. Well worth reading this piece. Especially as it mentions Musical.ly – the biggest app you’ve never heard of unless you have a tween daughter. And Houseparty may well be the next teen app to break out.

Unit Economics

We were talking with a smart London VC about sectors we don’t really get and food delivery was one we both admitted to being sceptical about. There are clearly benefits to both the restaurants and the users but creating a defendable business seems very hard. There is only so much someone will pay for a delivery of a Patty & Bun Ari Gold. so Deliveroo etc are essentially all about optimising logistics with minimum wage staff.

So won’t these businesses inevitably end up as collateral damage, when businesses with additional revenue streams enter the market? Amazon play in this space in the US and have launched a limited London service. Uber Eats is already serving Victoria Park and they will deliver an Ari Gold for the same price as Deliveroo.

Will we soon see our Uber Pool take a detour to collect and deliver the Burger? As Amazon criss cross London doing their own deliveries, weaving a food pick up and drop off wont be hard. Many of these businesses seem to operate on the New York business model – I lose on each sale but hope to make it up on volume

But is Uber that different? This is a detailed look at their business and their Unit Economics – again any trip across London takes a certain amount of time and fuel. This post sees their future as bleak – and with the Auto industry investing in new models- GM with Lyft and BMW with Drive Now it’s going to remain a very competitive market. And our friends at EasyCarClub are still a key player with their AirBnB model for your car. To add to Uber difficulties a new start up in New York has a model designed around getting drivers to defect to them. Juno seeks to treat drives better and offers shares in the business

Amazon Go

The idea that Amazon will move onto the High Street has been around a while and anything that hints at it gets huge publicity. Their modest roll out of books shops is interpreted as a sign of bigger things. And so too is Amazon Go, their new Seattle store.

This new store has no check outs – you put stuff in your basket and just leave when you are finished – and your Amazon (Prime?) account is charged automatically

Not much detail on how it all works and only Amazon staff are allowed in at the moment – but this guy got quite close. Earlier in the year we did a lot of work on the future of retail for a luxury store opening in the Middle East next year and for all the Press Releases and Concept videos it’s all a bit disappointing.

But mobile is clearly a disruption and a huge opportunity – which is what our project focused on. Checking in with your Mobile tells Amazon who is in the store. With talk of Computer Vision, Deep Learning and Sensor Fusion a big part of this is them then knowing exactly where you are in the store, but how they know you have picked up a product is unclear. Unless it’s the many cameras they will have.

People have tried similar concepts before – Sainsbury ran one at our local branch so we got to try it out. But having to scan each product bar code while walking around the store is a bit of pain and you still had to find a self service till to weigh your basket before you could leave. The econsultancy guys covered this trial in some depth.

4 years on the tech is better and if anyone can make this work Amazon can. There will be lots of trips to Seattle in the New Year. (When HoF trialled a new store concept in Liverpool a few years ago M&S took a coach load of people up to check it out.

But Amazon have been quick to respond to rumours they plan to open 2000 stores – saying that isn’t the case.   Bezos said they will definitely open more stores  - but they don’t know how many yet.

This old IBM ad shows the concept has been around for a while

AR

Inevitably AR and VR will get even more headlines next year but we will only really understand if this is the next big thing, when products come to market.

Here is one glass half empty view on Magic Leap the secretive Florida company that has raised huge amounts of money and everyone who has seen the demo is convinced it will be amazing.

And Robert Scoble is glass half full on the idea that Apple will define the market with new product from them. I agree and am convinced that AR or VR will be a smartphone play rather than a console one (and already carry around a VR viewer just as we do earphones)

Location

The final Deep Dive of our Learning Programme took place this week and focused on the interplay between mobile and Out of Home. Huge potential but not much inspiring work – great ideas are needed to kickstart this space. This look at the opportunities in New York makes a similar point  - some brace brand will do really well by leading this charge.

The tech is being adopted and used in interesting ways. Beacons are now being used for attribution and as Store Visit Metrics become a measure of success for mobile ad campaigns the need for accurate data grows. Agreeing just what should be measured is an issue of some debate and the MMA have shared guidelines for industry comment

Programmatic

The problems of programmatic were summed up in the squabble between Breitbart and Kelloggs. In case you missed this news, the back story is Kelloggs learned they are running ads on alt right ‘news’ site as part of their programmatic buy and they decided to stop. The nutcases at Breitbart then declared war on Kelloggs and it is possible that rednecks across the US are now choosing a different breakfast.

Running ads for Kelloggs on any news site seems like a flaky decision. But the chances are no one made that decision – it’s just a function of buying audience without considering context.

All the fake news people were making money out of brands that weren’t in control of where their ads were appearing. Blacklisting, Whitelisting and Brand Safety get lots of press but do we need more/ better solutions? Or should brands just be paying more attention?

Quick Reads

With the introduction of the anti terrorist Snoopers Charter we think privacy is going to quickly move up the agenda – and that ad tech will inevitable get more attention. Liberty have a very good video campaign about this issue

And when people realize what data Facebook has they get quite concerned. We’d argue that if brands really knew what was possible with FB they’d get even more excited. Imagine blending this level of detail with dynamic personalized messages

Finally – this is the last proper Fix of 2016. We are off to Australia next week and so will share the new Christmas Playlist next Friday and unless anything really significant happens that’s it until the January.

Whilst in Oz we have been invited to speak at Google which should be fun – if there is anyone else we should meet, shout and we’ll try and make it happen

But to make sure you don’t run out of interesting stuff to read we have some good new decks for you;

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