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Mobile Fix / January 31

TLDR - If you read just one thing..this is a masterclass in Facebook Ads written by a former Facebook exec (and Fix friend). It is thorough and covers all the angles - a must read.

Merchants

The shine is coming off the DTC space as it fills with me too brands and too many slavishly follow a dog eared play book. This article calls 6 issues - but majors on the funding model that demands aggressive growth which may not be feasible. Another indicator of a change is the NYT looking back at the golden days of Dollar Shave Club and others at the birth of this category. Some good insight from the pioneers - like this quote from one of the Warby Parker founders

“It’s never been cheaper to start a business, although I think it’s never been harder to scale a business,”

The me too brands keep coming. Mattress brands are everywhere, and as the Casper S1 shows, the competition eats away at margins as it drives up the need for marketing. Cookware is going the same way - this piece looks at how new entrants are trying to carve a niche. Along with the clothing space, one factor behind this flow is the ease of sourcing product. Tweak the design of the market leaders and find a low cost manufacturer and you are off. But the path is too easy to follow.

The need to differentiate is driving new business models. Swedish Bank Klarna were probably the first to get wide distribution for their buy now pay later model but as the appeal has grown ( it tends to be quite successful in driving sales) there have been new entrants. And now the press are taking an interest in view of possible problems with encouraging debt.

The ecology of the space keeps evolving too - Shopify are beta testing improvements to the new store design process and the No Code movement is growing - this long video has the leading players demoing their platforms

Removing friction from sales is the holy grail online and offline. We mentioned Amazon testing a wave of the hand as a payment technique a few months ago - no need for a card. Now they plan to install these terminals in a range of other retailers.

#AdtechPerfectStorm

As the implications of our Perfect Storm sink in, there is a lot of poorly informed thinking around. But there is some smart POVs; this from Mighty Hive (the media arm of Sorrels S4 firm) makes good sense and a webinar next week from the Beeswax CEO (who is ex DoubleClick) sounds promising.

The media appetite for stories about tech data and privacy continues, as this Vice piece shows and the BBC on Ring.

But there are ways of getting the right ads to the right people without invading their privacy and the £17m raise for our friends at SuperAwesome shows the way forward.

newTV

Many big brands have invested in programming, with different strategies; P&G wanted to build housewife audiences so developed soap operas their ads could run in. They then moved to funding programming like Northern Exposure, to be bartered for airtime and Unilever owned Wheel Of Fortune for the same reason. In my Mindshare days we helped Unilever with a range of shows, one of which was commissioned by ABC. And the best example was BMW and The Hire. There has never been more TV content being made and it is inevitable that new financing models - which involve brands - will emerge. Having a strategy for product placement is good preparation.

But to sustain all this new content we need good measurement. The Netflix move to count a view as 2 minutes has rightly caused comment - that’s not quite 1% of the Irishman. Of course there is a wealth of data on how long a Netflix programme was watched for - when paused etc but does that get shared with the Creators? The need for an industry wide agreement on data is well argued here, but I think the people involved will get what they need, whilst public access will be limited.

The Monday Note deep dive into Quibi makes an interesting point; they have raised a lot of money largely because Katzenberg is so well connected and well respected. So the story is he should have been able to raise even more - but Hollywood sees the project as a huge gamble. I am told that Quibi is getting good support from brands even though the ads have to be shot using the Quibi tech that gives both a vertical and horizontal version.

Apple keep hiring great TV talent and their latest move is for ex HBO guru Carmi Zlotnik.

Variety look at the Peacock advertising offering and how they look to better manage the viewer experience with just 5 minutes of ads per hour and better frequency capping. Which is good as new Comscore research supports common sense - ads perform better when there are less of them

The WARC editor has a good look at the UK addressableTV opportunity here and it’s worth reading. One issue is that when you run an ad for a specific region or profile, the rest of the audience still needs to see an ad and the tools for measuring who gets what apparently need some attention. The term is Overwriting but it would be a shame if this admin issue clouds the huge opportunity

The tension between Streaming and Cinema is not confined to Netflix - or the US. With the Coronavirus affecting much of China the team behind one of the big Lunar New Year films decided to cancel the Cinema release and instead put it online for free.

News that Sky and Disney have done a deal shouldn’t be too much of a surprise. They work very closely now and the risk for both of a different deal was high. Sky keep their dominant position on content and Disney+ gets the benefit of the best distribution. And the deal leaves less room for the other US players - unless they use Amazon as a distribution partner?

Is there more M&A to be done around streaming? MGM leads 2020 media acquisition targets as the entertainment world splits into haves and have-nots. With IP like Bond and Handmaids Tale it will be profitable for its Hedge Fund owners to sell to one of the really big players.

GAFA love affair with sport continues - Facebook have signed a global deal with the PGA. But rumours are that this may be the last Facebook sports deal for a while as they rethink their Watch Strategy. A very smart friend last week suggested that Facebook should buy CBS/Viacom or Roku (or both) if they want to play in newTV. They need more ‘surface’ as their ad demand keeps growing and it catapults them to compete with Google Chromecast, Amazon Fire and Apple TV. More thinking on this in the next few weeks

Personalisation

An odd Gartner report from just before Christmas predicted that most marketers would drop personalisation by 2025. It got quite a bit of press from the Flat Earth marketers who worship broad reach, even though the reasoning was really weak. And their other prediction that most online ads will be targeted using artificial intelligence identification of emotions was ignored. To be fair, Gartner recommended that marketers test and learn around personalisation, which I would wholeheartedly agree with. Especially as we see this stuff working really well, when done well.

If you didn’t read the Jeff Jarvis Defence of Targeting we shared the other week you really should. Then read the Guardian investigation into the Trump ad campaign - loads of insight into 2016 and what they are already doing for 2020. It ends with the Boz quote we have shared before;

That is the opportunity for everyone now. Get good at this stuff. The Playbook we opened with is a good place to start.

Regulation

The new presentation from Benedict Evans is a must read as he conjured new insights from largely familiar data. One theme he focuses on is regulation, which is a good link to the thinking the US will try and protect GAFA from new regulations and taxes, post Brexit.

China

Just as GAFA dominate digital advertising in the west BBAT dominate in China. This Chinese report goes into some detail and only a little is lost in translation.

The competition is intense - especially as ByteDance is a relatively recent threat. Tencent plan to allow WeChat users to upload photos and short videos to a twitter like feed, so they can be followed.

Techcrunch have more on the plans to better monitise WeChat. How they encourage the use of their Mini Apps will be watched carefully by the West. For example the new ability for creators to paywall some or all of their content is a model many in the West would like to see take off.

3Cs (Commerce Content Community)

HBR on When Community Becomes Your Competitive Advantage. Building on our thinking from the last few weeks about Customer Lifetime Value, Loyalty and Dialogue. John Hagel tweeted that he wrote about this in Net Gain 20 years ago - a great book that still influences our thinking.

A Fix friend from iProspect builds on this, referencing the new Benedict Evans talk and the Owned Commerce piece we shared last week.

The #AdtechPerfectStorm is the ideal climate for new thinking about how to be more valuable to your customers, whilst making them more valuable to you.

Social apps

Lots of coverage that the creator of Vine is back with Byte. It’s a good video app and is doing well with downloads but the market has moved on - and the audience he needs to stay on that chart is obsessed by TikTok right now.

And new apps are using Snap as a platform for growth. A VC has a good twitter thread on how Hoop leverages SnapKit and Snap itself. But he notes that Hoop is getting talked about on TikTok. The brands focused on this young audience are active with AR lens but here the organic sharing of Lens and Filters is explained

So it’s going to be tough for Byte but Instagram is also struggling to match TikTok and YouTube despite their huge reach. They are supporting their creators and are being more open on how the Algorithm works and how pods affect that.

It’s a dynamic space and it’s quite different in different markets - as the new Digital 2020 report from WeAreSocial reminds us; 3.8 billion people worldwide using social media.

Dollar Dollar

Remember Peak Apple? Well, the Apple share price has doubled in the last 12 months and it’s over 10 times what it was when they announced the iPad 10 years ago.

And the Q4 figures blew through expectations although the Services revenue was slightly below forecasts. And they now have over $200bn in cash.

Facebook beat expectations but still got beat up. Sales growth of 25% was castigated as their lowest growth ever. Margins are down as they are hiring more and more people. The slides are worth a look. And the news they’re helping people opt out of Off Facebook activity tracking is a sign they get the Privacy issue.

And Amazon bounced back. Revenue beat expectations. They announced they have 150m Prime customers world wide and more joined in the last quarter than ever before. Other revenues - which includes ads- grew by 41%

Etc

Google listened to the furore over the new look for search ads and are reconsidering the design

A Fix friend pointed me to Scroll - a politer version of ad blocking?

Huge fan of how L’Oreal are using digital to reinvent their business. Would love to get closer to them - are there any of their people reading FIx?

Good insight into one of the key issues holding digital back; the primitive way agencies are organised to deal with digital. 15 years ago we managed digital at DLKW (a top10 agency) alongside traditional and it was 20% of the agency revenue, in a market where digital was a fraction of what it is now. The balkanisation of Agency skillsets is a huge problem.

Google Assistant can now buy you a cinema ticket - by adding its own UX to the transaction

Finally… I have long argued that QR codes are really useful - we just taught people they were a waste of time. Now people get the benefits and as the Facebook exec says here - they will finally become a thing. How could you use them?

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