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Mobile Fix / February 7

Morning….I’m Simon Andrews, it’s first thing Friday and this my newsletter with news and my views on Mobile, Digital, Social and more. Lots of new subscribers this week so the sharing works - lets keep that up

And let’s continue the conversation on Twitter — I’m @SimonBigPicture

TLDR — If you read just one thing..this is a good piece on the origins of DTC - a scathing but well written review of a new book on that subject— The article is a must read and the book actually looks promising - despite the review ending;

It’s tempting to wonder what Marx would have thought of Ingrassia’s account, an impossibly dull, granular, play-by-play of how the bourgeoisie have continued to constantly revolutionize the instruments of production

Dollar Dollar

The Google figures for Q4 were a mixed bag, with revenue slightly down on expectations and EPS beating them. Search is a $27bn business and grew by 16%. The most attention was on them splitting out figures for YouTube for the first time. With a $15bn run rate it’s bigger than expected - emarketers estimated it at $11bn just a few months ago. In the investor call Sundar Pichai said YouTube has over 20 million music and premium paid subscribers and 2 million for YouTubeTV

This ‘coincided’ with an off the record revelation on Instagram revenues - at $20bn for 2019 it is about a quarter of all Facebook ad revenue.

Facebook / Instagram Ads

Theories that Facebook is maxing out of adspace have circulated for years - their CFO mentioned it in 2016 - and the ongoing increases in costs support this to some extent. As the Playbook we shared last week ( our most read piece) mentions, the best way to make the most of Facebook value is probably to let their Machine Learning work on your behalf.

And even in our brave new world of Privacy, Facebook has great data for advertisers so the thinking at the start of this week from Stratchery on how Facebook could revitalise their Facebook Advertising Network made a lot of sense.

I still think there is something here. Facebook has great data, huge demand from millions of advertisers - from Mom&Pops to P&G - and a constant need to grow their revenue. Could they guarantee their growth by solving the crisis facing content businesses, unable to monetise as their traffic is dark without 3rd party cookies? More to come on this.

#AdTechPerfectStorm

Some smart thinking on cookies from the head of the IAB in the US;

This isn’t the end. This is a new and better beginning

I listened to a good webinar from Beeswax where their CEO talked through the issues and answered a lot of questions - its an hour long but well worth the time - and two things are clear;

1/ It’s complicated

2/ No-one knows what comes next

One thing that came up is the opportunity for shared logins, whether that is across media businesses or the GAFA logins. In Germany this seems to work well but could UK publishers and TV stations cooperate like they do?

There is lots of smart thinking about - this thread goes deep on Google Turtledove (best 10 letter acronym for a while) and has some theories on what Google are up to. This piece builds on this and is worth reading too.

If you need further evidence just how complicated this space is read about the Chrome browser ‘identifier’ someone has discovered. I don’t think that there is a black hat team anywhere in GAFA seeking to thwart GDPR etc - i just think the tech is so complex that people could (and fraudsters do) exploit obscure parts of it for nefarious purposes.

The US Justice Department seems less understanding. In their anti trust investigation of Google they are asking lots of questions about Adtech - across the industry. As when Brussels looked at Google, the holding companies will be quick to volunteer their views, as long as it’s confidential.

Just to add more to the Storm, the UK may diverge from the EU on data, setting up the question of whether GDPR will remain. As this legislation has been adopted across the world, walking away from it seems pointless. But let’s see.

Now / Next

We spend a lot of time on what’s possible now, given mobile tech is mainstream and there is still huge potential. But what’s coming next remains really interesting.

We have talked about live captions on Android before - and use it all the time. Now we find you can use a similar tech in Google slides to transcribe and caption what you saw over the slides - in real time.

So if the tech listens and talks, and you have machine learning, you can create conversational robots that can talk about anything. Doc Searls sees this as a means towards Vendor Relationship Management - we all have a robot that uses our data to talk with companies and negotiate the right deals for us.

And someone used Machine Learning to turn a 100 year old film to 4k quality. The ability to take film and reimagine it is at the heart of contextual video - our friends at Spirable can take a 30 second TV ad and break it into 1800 frames and then optimise based on our bank of learnings - and keep optimising as it runs of Facebook or Google.

Merchant

We switched to the term Merchant as the balkanisation of retail into all these subsets makes little real sense. There are lots of business models in retailing and none are good or bad. Here a VC breaks DTC brands into subsets to talk differences in valuation. Especially relevant as Casper price their IPO at half a previous valuation - triggering a 30% jump

A key advantage of the DTC era is that the barriers to entry are so low; small brands can do instagram shopping just as easily as the big boys and girls. This is a look at how some smaller brands are using IG shoppable ads and we are very focused on how ads will impact this as they get rolled out.

Legacy brands are just as likely to learn from startups and the other way round. The fact Macys plan to grow 4 of their private label brands to a $billion is evidence, whilst they are to close 125 weaker stores. Sephora are to open 100 new stores - outside of their traditional malls.

It’s possible that the neighbours to these new stores are the new generation stores bringing DTC brands to the high street. The Economist looked at Re:Store nestled between Chanel and Hermes in San Francisco and Fitch have visited Neighbourhood Goods in New York's Chelsea Market - a little more street than Union Square. Monocle magazine really get retail; their stores and cafes tend to be small but perfectly positioned; but they are over some of the more experiential trends like drinks in fashion stores.

Some Grocery players realise the competitive advantage is speed and convenience so pick up is going really well - even copying Nordstrom who do curbside pick up through their app

One trend we are fascinated by is the rise of Text in the US - now Shopify allows a full text funnel. Is the late adoption of text making this a novelty or can we expect similar services in markets where SMS is mature?

And one reminder that this space is still subject to regulators - the acquisition of Harrys is being blocked on competition grounds. And the fight over theAmazon deal with Deliveroo is heating up - both firms are fighting back.

Amazon

Amazon are back with their big plans for retail stores. The 3000 projected to open by next year looks unlikely. Now they have opened 5 pop up stores. I think they have to make an acquisition at some point to be a real player in Groceries, which is so important to them.

With ads growing at over 40% there is a wider pallet of tools and formats and here some Amazon Agency customers talk about how they are using them. And some more detail here with some good slides

One of the emerging Amazon specialists has a good report on US trends in their Advertising Benchmark Report . A UK specialist (and Fix friend) has this good advice on How to Audit, Increase Sales and Reduce ACoS

Because, of course, every brand needs an Amazon strategy

newTV

The big news in newTV this week are the Disney results. They got the headline they wanted with a big number for Disney+ subscribers; 26 million. But the rest of the results showed the price they paid - revenue up by 36% but income dropped by 23%.The Fox acquisition is reflected in these numbers.

Disney are bringing their streaming services together with the Hulu CEO departing. But is anyone paying the sticker price of $7 a month or is the bundle doing better?

A new business focussed on subscriber numbers is being launched by an ex Nielsen CEO suggests over half are on the basic and their report on the Hulu integration is a good read.

Audio

The latest Spotify numbers are a hit - $2billion in revenue and podcast growing by 200%. They have 125 million paying subscribers - up by 29%. And that rumour we mentioned of them buying the Ringer? Confirmed - but no word on the price paid.

The push for podcasting - which they hope will grow to 20% of their listening - is designed both to differentiate from the competition and help them reduce - or at least contain -what they pay the music companies. The FT has a good look at those negotiations.

Competition is tough - in India a local firm Ganna is beating Spotify, Apple and Amazon. And it not just listening services that compete - apps like Dubsmash - second only to TikTok in the US - is very music focused

Social Apps

Google still have ambitions in social and their incubator Area120 has two projects on the go. Their Shoelace app has been beta testing in New York but now is opening up to people on the waitlist - not yet in the UK.

And a new one; Tangi is about how to videos. Also not in the UK but they are buying UK search and their ad describes the product;

News

One of the depressing things about digital advertising is how dumb thinking has destroyed so much value in the news business. Because Agencies choose to buy the same property differently across formats, mobile sites tend not to carry brands that invest heavily in the paper version of the same title. Those that do value the digital audience ignore context and stalk readers so they reach them on ebay or Yahoo mail. And some misunderstood brand safety so much they have blacklists that preclude ads on any news pages.

This is a tricky area and Axios go deep here - some good thinking. One new initiative that has real promise is the DeepNews project where they have a quality score for news stories. The first product is a series of newsletters but i think the tech could be used in buying in a similar way to how Moat or IAS is.

On a slight tangent this piece looking at an actual domain list - the 20k domains used by the anonymous brand -- is really interesting. It’s back to the point I made about voucher copies a few weeks ago - if you had to take your client through all these sites, and show them what the ads looked like on the page, this nonsense would soon stop.

Will that ever happen? Well smart clients need to ask more questions. The death of cookies will reduce some of this.

Etc

Dark Kitchens are getting a lot of attention and big funding. This video report is a good summary of the industry. One firm in the video talks of how UberEats advise them what the demand is and they can easily test an appropriate brand. A Dubai firm will even cook the food for brands and has raised $60m. Essentially dark kitchens and delivery have created a platform for anyone to create a restaurant brand - you just need good marketing.

DuckDuckGo is an option for default Search on Android. Google were forced into this by EU regulators. How long before Apple copy this idea for iOS?

How to Run a Business in 2020 - a collective of millenials that has raised $11m

The new IPA Making Sense study on UK commercial media - using their TouchPoints data - is quite interesting. The chart we opened with, shows how TV has slipped and Social grown. The impact of Netflix is missed as its deemed non commercial.

Finally - two areas of interest coincide. Trump marketing and Text. Their superbowl ad had a clear call to action - text Trump to 88022. And they use that a lot. So all activity is building their database - with first party data and consent.

That clear objective is a good reminder of a key quote from Stephen King and his seminal JWT Planning Guide

All ads are much improved if that question is asked - and answered.

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