The Snap team continues to prepare for their IPO bringing Sony exec Michael Lynton on board as Chairman. Having a grown up on board has worked well for Facebook and this is being greeted as a good move.
WPPs Martin Sorrell has emphasized the rapid growth of their spend with Snap, up to $90m in 2016 – three times their original projections. He suggests that Snap could be the third force behind Google and Facebook.
That’s not really viable, given they spent $5billion with Google and $1.7bn with Facebook over the same period. But as we know, your (fr)enemies enemies are your friends and Sorrell likes – and needs - alternatives to GAFA and so will be encouraging Snap to take the fight to Facebook . This time last year he was suggesting that a Verizon Yahoo tie up would be the third force.
Snap is going to grow really fast – their investment in talent, the continued growth in audience and their rapid product development will ensure this. But we have seen rivals take inspiration from their new product features and it’s going to be hard for them to maintain differentiation. But they are not being precious about the user experience and the addition of search bar should make the service easier to use for their older demographic and perhaps increase time spent from their core users.
Ad Tech Winter
There is no end of doom and gloom around ad tech, with the new topic du jour how ad tech is over and it’s now all about martech. The key reason for this seems to be that martech firms tend to have a license model and theoretically more stable revenue streams, which in turn drives a higher multiple.
Given the other differences between adtech and martech tend to be quite subtle, lots of adtech firms are quietly reinventing themselves as martech.
In our opinion this is a poor use of time and effort – good valuations come from solid revenue streams. The issue for adtech is that the majority of their potential customers don’t understand the benefits of many of these firms and their technology .
Switching between adtech and martech badges doesn’t help. Demonstrating how the tech can drive better ROI for a brand is what’s needed and doing that in plain English - so a CMO or CEO can understand - has to be the priority. Obviously there is a (thin) layer of smart people in agencies who get the pros and cons of different ad tech firms but we need a Rosetta Stone so the rest of the business gets on board.
We are working on a talk for a few weeks hence and our premise is that Don Draper would relish working in todays marketing world, because the tool kit is so awesome. The irony is that (most of) the current Don Drapers are hermetically sealed off from this tool kit and the noise from Mark Ritson and the rest of the Traditional Media Taliban is drowning out the Adtech promise.
The just concern over ad fraud and issues of measurement obscures the legions of people benefiting from Google, Facebook and other digital activity. Take Criteo as an example; (many) Agencies have turned their back on them as they compete directly for brand budgets, but clients are investing more and more because they drive results. With over 13000 clients, revenue rose by 30% in their last quarter.
That’s an adtech business that is doing really well and the investment community gets that. Their business comes from brands seeing a real benefit from their investment.
The future is bright for technology and creative collaboration – you just need someone who can translate both adtech and marketing.
As we have talked about before, music is now ahead of most content categories in that it has been through the pain and is now coming out the other side, with new business models that promise more revenues than the old ones.
This long FT piece gets into the detailed story and this Goldman Sachs video is worth watching too. It’s not all sweet music though – Soundcloud is on the verge of running out of money and a sale seems likely – with Google rumoured as a potential buyer. And this is a look at how Apple believe they are reinventing their music service
Facebook are pulling back from paying publishers to create live video. Given this policy was never extended outside the US and given how much content people like Lads Bible etc made anyway, it doesn’t makes sense for them to commission content where ads are not easy to fit around. But there is speculation that they will move to encourage long form video that is a more natural fit for the mid roll ads we mentioned last week
The web is full of fraud. Whilst we hear lots about ad fraud – this new bearish report is quite depressing – there are lots of other scams. Looking for various hard to get trainers and clothes for birthday presents recently, we find a number of oddly named websites that have items that are sold out elsewhere. The content is good - clearly scraped from a legitimate site – and the check out is all quite straightforward. The only sign there may be something wrong is the shipping costs are high – despite purporting to be a UK site they appear to be a front for a Chinese retailer who apparently ships fake items that may or may not match the item bought. To have a chance of getting a credit card chargeback the punter has to return the items and try and get a refund.
The lesson has to be that if something looks too good to be true then it is probably a scam. And that lesson has to be applicable to ad fraud too.
If you are monitoring your spend and your activity you should be able to spot the fraud. It’s not always easy. We heard the City of London police talk about the problem and they pointed out that even sales can be fraud – scammers can fill in check out forms and they use stolen credit cards. By the time someone reports the card transaction and the site is charged back, the scammers have taken their ad commission and disappeared. But if you get really good at Google Analytics you are less likely to end up wasting money on fraudulent ads.
Getting stuff done
The 2017 forecasts are over and done. It’s now time to seize the opportunity. Lots of new new things to test and learn from.
The Google AMP initiative continues to evolve – there is now a lite version that enables content to be loaded when bandwidth is limited. There is quite a lot of antipathy to AMP and we wonder whether it’s not being adopted as widely as it could because it threatens the old business model of web design agencies? In our chat with Google in Australia we heard that a major inhibitor of their growth was that so few brands had really good mobile websites and we believe the same is true over here. Responsive sites may be the obvious choice, but they are often so slow on mobile.
So a question to our readers; Who is doing a good job of building AMP sites?
It’s getting easier to unlock the potential of hyper local sales with location driven ads. Our friends at Blis are getting good results from location based ads and Google have made it easy to have mobile search that drive store traffic. How could you make the most of location? Our friends at Tamoco can probably help too.
Twitter has sold their Fabric developer platform to Google. Google are still well placed to acquire Twitter but they seem to enjoy many of the advantages of ownership without having to pay. Or endure the regulatory scrutiny such a deal would inevitably attract.
Japans games arcades are becoming key for testing new VR games. Whilst many think VR is going to about home gaming, some think they will drive a renaissance in gaming arcades in the West. A new business opportunity for someone?
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