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Mobile Fix  - June 10

Apple

With the Apple developer conference taking place next week there is – as usual - a huge amount of speculation on what ‘might’ be announced.  What is really interesting is that this week they made some pretty significant announcements on the apps store. This has caused yet more speculation – why not wait until next week? Is there so much next week that there was no room for this news?

The changes for the app store are all good things for developers – the constituency that GAFA need to keep happy. They will now get a better revenue share – after the first year of the app. Faster approval on apps and hence shorter lead times on new apps and on updates. And the subscription revenue model can now be used on any app, giving developers alternative options – especially as they can now chop and change pricing as they wish. This piece by Apple insider Daring Fireball gets into the details he was given in a call with Phil Schiller

The other change is that  - finally – the search within the App store will have ads. Whilst App Store optimization has grown rapidly over the last couple of years the ability to target ads within the store will be a huge opportunity for app developers and sees Apple poised to take a chunk of the burgeoning app install ads market – a huge proportion of which goes to Facebook currently. Google made a big play to take more of this spend the other week at I/O

This is a neat way for Apple to recover the money they give back to developers through the improved rev share. But it also supports our long held view that Apple will get back into advertising. They collect the data on their users that is needed to target ads and  - we believe  - they will see that the best way to support and nurture their developers is to enable a lucrative in-app ad marketplace. Right now others – like Flurry - do a pretty good job of this, but does Apple think they could do it better?

Apps

Whilst the market for ads driving downloads continues to grow, the users continue to – largely – ignore them. Overall downloads are down in the US and only Uber and Snapchat are seeing increased downloads. As we have reported before, the average user downloads zero ads each month. So that consumer focused app your ad agency suggested you build ? Forget it.

Deep linking and instant apps mean that – with smart integration – the functionality of the app can be accessed when needed and Google continue to push a mobile web focus. This has not settled down yet and brands need both a great mobile presence  - for customer acquisition – and maybe a really useful app for retention and customer service.

Amazon

The much anticipated Amazon Fresh  grocery business is finally here – at least in 69 London postcodes. You pay a £7 monthly fee on top of the Prime membership and the service looks good – we’ll report back next week.

With partnerships with local specialist stores it should challenge HubBub as well as Tesco and Ocado etc. But Hubbub has a fantastic list of partners and does really good business – our excellent local fishmonger does around a third of their business through Hubbub. But given one of their key people has sold a business (Love Film) to Amazon maybe we should watch this space.

The other competitors need to be worried – they make no money doing home delivery but can’t really deny the service to their customers. This Bloomberg article is a good look at the imminent battle.

At the recode conference last week Jeff Bezos did a fascinating (long) interview where he covered most of the things Amazon are doing. In it he mentions the insight that someone who subscribes to Prime to watch High Castle etc, will end up spending enough money on Amazon to justify the cost of their video business. Take that same logic to grocery and it’s a worrying move for Tesco etc – are they the next sector to become collateral damage? (Ocado are currently looking for a new Ad Agency – good luck to whoever ends up with that brief)

Bezos also talks about his investment in the Washington Post and makes the point that historically they made quite a lot of money from a small number of people. Now they are trying to make a small amount of money from a large number of people. This is a good in depth look at what is happening with The Washington Post – essential reading for anyone involved in publishing.

Facebook

Vanity Fair is our favourite bit of old media, along with Saturdays FT. Both are best enjoyed in good old fashioned print. This month VF has a great piece on how Facebook dealt with the threat of Google+. Good insight into how well they execute and how strong the culture is.

All of which makes their push to sell ads everywhere, frightening for everyone else in the ad business. As the WSJ reports, they are expanding their network play from Facebook users who happen to be on other sites to also cover non Facebook users too. Relying on cookies, they will be able to handle more of a brands budget and that essentially means taking revenue away from Googles’ Doubleclick, which is the other 800lb Gorilla in digital ads.

Factor in their Atlas initiative where they use FB data to replace cookies (with reportedly much improved performance) and they are making themselves a formidable opponent. And with the continuing issues with fraud across the open web, we believe brands will continue to invest in the relative safety of GAFA, at the expense of everyone else.

Making Mobile Ads Better

The World Federation of Advertisers has a new report out suggesting Ad Fraud could reach $50bn by 2025. Having spoken at their events - and those of the UK equivalent ISBA – we know brands are very concerned about fraud. A flight to quality - GAFA - is probably better than the alternative where brands cut back their investment in digital.

The new Mary Meeker report makes the obvious point that ads tend to be bad and this piece has the same solution we all have – we need to make the ads better. The head of research at TV network CBS makes the same point – and plan to launch some pre testing tools next week

This is possible in mobile now, but few people are using the tools. And measurement continues to be an issue – as Mark Ritson points out the myriad different ways of defining a view needs resolving. These issues will get resolved eventually and we firmly believe the solutions will encompass both digital and traditional media. As the CBS work shows reach and frequency are at the heart of planning – whichever media are being used - and different metrics are no longer acceptable.

Big clients are pushing their agencies to get their heads around the new opportunities; we hear one tells them No Mobile, No Meeting. So the change is happening – we just need to work out how to speed it up.

Quick Reads

Sky and Vodafone partner in New Zealand to offer QuadPlay We will see more partnerships as MNOs look to find ways to monetise the data they have. Next up is likely to be Verizon sealing the deal for Yahoo

We continue to be fascinated by the potential of Location and our involvement with our friends at Tamo.co is reinforcing this. The smart players are less focused on individual technologies  - like beacons – and are increasingly blending all the available tech and the data to solve the problems

Stattastic new decks from Mary Meeker and Ericsson. Both worth flicking through.

Finally we are out and about next week, with a keynote at an internal Google event focusing on Video. This new blog post from Ben Evans on video as the new HTML was timely. If you are at the Google event do come and say hello.

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