They rightly argue that it’s got too hard to spend on digital and they want to change things. They are not pulling back from digital, but insisting they will now only invest where the right measurements are in place.
It’s worth watching the full video – or at least read the transcript – from which this stands out;
We don't want to waste time and money on a crappy media supply chain.
Instead we want to invest in raising the bar on the creative crafts to drive growth on our brands, better advertising that drives growth enabled by media transparency that drives a clean and productive media supply chain
P&G is taking action because it's good for consumers, it's good for our business and is responsible for the industry
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In the current climate we are convinced this will drive real change – no-one wants to miss out on P&G spend so we will see a rush to adopt these new standards.
Digging into the deck from the Investor call we see that Mobile DAU (Daily Active Users) is now almost the same as the DAU at 94% of the total. - Mobile only MAU are 62% of the total MAUs. ARPU is up in both the US and Europe (by 26%) - but Europe is still a fraction of the US ARPU so lots of potential for more growth over here.
Their product innovation across all their platforms is paying off – 400m people are making video calls – making it harder for start us like HouseParty to get real traction. And anticipating the P&G move Facebook are expanding their partnerships to provide better measurement – the great thing about Digital is that it works and it’s in everyone interest to prove this.
Apple performance picked up after 3 quarters of decline, as the iPhone 7 sold well. Services – Music, the App store and Pay were up 18% with $7billion revenue – a huge business for anyone other than Apple.
The most interesting aspects of these quarterly earnings is often what gets shared on the calls with investors. Tim Cook talks of Apple doubling their annual Services revenue to $50bn;
Having considered a bid for TIme Warner its likely Apple will use some of their huge cash pile to buy a big player in content and media before too long. Netflix must be high on the list
Facebook were also asked lots of questions about their Video ambitions and Mark Zuckeberg said;
As we’ve pointed out before that a disadvantage for Facebook is that they have no way to connect to the big screen TV. Google have secured wide distribution and support for their Chromecast and Amazon Fire Stick is doing pretty well too. Facebook have recently made it possible to share Facebook content through some of these devices and now have an App for Apple TV and Roku etc. Their challenge will be whether the app is pre loaded or does the user need to download and install it.
Symptomatic of the P&G news 90% of brands want to reset how they do programmatic. It’s not a huge surprise as Programmatic is still so young and the shape of the business is evolving. Some of the best work comes from the more experienced players and our friends at Infectious have been at this longer than most.
As with all things digital, it’s time to experiment; Brands need to get involved - with the right advisors - and learn. eBay are running another of their Programmatic weeks as encouragement – only running ads bought programmatically.
It is undoubtedly the future but we see it as a platform for better effectiveness and currently too many people use it instead as a tool for efficiency.
In our digital transformation workshops we always feature Starbucks. A global company with a commodity product and stores run by minimum wage staff has used tech to transform its business model. A quarter of all coffee they sell in the US is ordered through their app and their new virtual assistant looks a smart move letting you order your Vente dry Vanilla Latte with voice. Although hopefully it is better at understanding than some of their baristas who often struggle with Simon given what gets written on the cups.
Creative & Agencies
One key benefit of the P&G reset is the simplification of the plumbing frees more time to focus on the missing element in digital – creative thinking. One of the pioneers of digital advertising Ian Schafer makes the good point that the future is about fewer, better ads. Our take is that bespoke ads are necessary – ones that fit perfectly the context and that also means more focus and doing fewer.
A good FT piece looks at how the holding companies are dealing with digital as part of their consideration on succession as the old guard retire. The challenge is how they reset their business to navigate a world where just two companies account for the majority of spend whilst dealing with the P&G issues around contracts and transparency.
One of the challenges is that much of their creative talent is not able to deliver digital ads – so brands are using a plethora of people to produce mobile and social ads. Getting Snap to do your Snapchat ads helps with the bespoke aspect but it’s hard to get brand consistency and ideas that change behavior. Schafer questions whether the current trend for publishers to do ads for their advertisers is sustainable.
Over Chinese New Year 14 billion red envelopes were shared by alibaba, now with Pokemon Go like elements to get people to use them in different locations, as well as just online. The logic of these vast giveaways is to recruit people onto their platforms – particularly the payments. BAT are pushing hard into Money each opening new online Banks.
A good look at how Amazon is embracing the ad business – though hard to see what Sorrell means when he says clients should worry about them. It’s more likely agencies worry if they don’t take them seriously and they go direct to clients.
This is an interesting look at the Amazon Grocery business in the UK. We have have used it and its pretty good – but it doesn’t feel like they have fully committed to it yet. With a market cap of around $1.5bn ( around 1.5 x revenue) buying Ocado would be a smart move to accelerate the business.
Everyone seems to be building Bots. A key Facebook exec - and Fix friend - built one of our favourites. PodBot tells you about good podcasts - try it here.
It makes two important points really well. First it’s not that hard to make one – James is a really smart guy but not an engineer. Second Bots need to have a purpose and solve a real problem. Chances are, most brands would benefit more from an improved mobile web experience than from a Bot.
Finally…. Benedict Evans nails the new opportunity with Mobile 2.0 1billion people with high end smartphones. In the UK 42 million people with smartphone, using them for 3 hours everyday. What could you do for them?
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