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Mobile Fix- June 16

Retail

A very quick trip to New York this week gave me the chance to see the Amazon book store in New York. It’s really nice, but it’s just a book shop and not as good as the three local to me. Worth watching to see how it evolves as there has to be more to it than I saw. Still need to find an excuse – or a sponsor – for a Seattle trip to see the real innovation.

And it’s interesting to see that Amazon now has 20 Private label brands – mainly in Fashion.

Others are doing interesting things in retail and commerce too – one of the US biggest drinks retailers is trying a members club to sell wine. Tasting Club learns what wine you like and then sends you a mixed case based on your preferences.

The poster child for this type of Commerce is Dollar Shave Club and this piece on them makes the obvious, but often overlooked point – success is all about retention. So many people obsess over acquisition costs but don’t get into the granularity of retention and real - long term - customer value.

Other models evolve when you have the data on what your customers really want. Deliveroo, who have been able to persuade restaurants to pay them a commission on the meals they sell, are playing with their supply chain and experimenting with Dark Kitchens, where the food for takeaway orders is cooked – separately from the restaurant.

Getting the granularity of data is key – and there are various companies who mine that data and share it. And those retailers who are following the Apple model of emailing receipts have the opportunity of connecting their physical sales with a digital identifier. If you are smart about this, there is lots of potential to reduce your reliance on the aggregators and retargeters .

So the two essential ingredients in retail are data and a compelling experience. Lots happening with data but fewer are delivering on Brand Cathedrals; stores where you go to worship the brand - even if you don’t plan to buy anything. Department stores used to win at this and some (Selfridges, BonMarche, Barneys etc) still do. But it’s not just for luxury retailers like Dover Street Market; Nike, Primark and WholeFoods make it work too. This is a good summary of how retail needs to reinvent itself and makes the point that Apple is great at both experience and selling lots of stuff. No-one gets close to their sales per square foot in Apple stores and they use their popularity to negotiate low rates for their retail stores as they will pull store traffic to the location.

A great example of blending experience and tech is the new hotel from the man who invented Boutique hotels. Ian Schrager. Public is at the lower end of the Hotel market but this is achieved by the smart use of Tech to save money that can be reinvested in the experience. He also plans a loyalty scheme to gather the data to drive retention and beat the aggregators. I plan to stay there on my next trip.

Money

Despite the wide availability of mobile payment apps we haven’t seen their usage really take off. Whilst we know from retail friends that adding Apple Pay will increase conversion and reduce basket abandonment, people still don’t use their device as a payments choice, given that a contactless card is so easy to use.

So the market is still open and in the US over 30 banks have teamed up to enable mobile peer to peer payments through Zelle. The main competition in this space is Venmo, now owned by PayPal.

In a project we have just completed on money and loyalty, we noted that one of the top people at a UK bank recently told us that ‘its not like we don’t see the opportunities (that the Fintech start ups are focused on) but we have other priorities getting in the way…when we do launch we have an installed base of millions of customers’

As with every sector now, it’s not about tech. It’s about solving problems, using tech as a tool.

So product innovation is where the winners will deliver – especially with PSD2 imminent. And focusing on niches and specific use cases enables real product innovation. One good example is Supercard from Travelex, a payments card that you link to whichever debit or credit card you like, then use when travelling. The benefit is that you avoid the usual mugging from the conversion rate. But the scheme is closing. Had they layered some more functionality around this and created a richer service, could it have done better?

Bad Ads

A new study shows us the most ad techniques hated by most people.. Not too many surprises; they don’t like much. Brands should ask themselves - or more likely – their agencies why they wastes money running them

The new browsers from Google and Apple (with around two thirds market share globally) will remove much of these formats and a good Monday Note piece gets into the details. We hadn’t seen the stat that 80% of the ad networks who apply to join Google DFP are rejected because of the risk of fraud. So GAFA already help stem lots of the annoying and worse ads – and these browsers are a natural next step. But some adtech companies are likely to stumble as their revenue dries up.

In our experience these brands running bad ads are seduced by poor metrics – the campaigns may look like good value but the wrong thing is being measured. Recently we saw that including bounce rates in an analysis completely changed the picture, as for some vendors bounce rate was hitting 80% against the 30% which is typical.

Tools to improve the efficiency of your activity keep coming. Facebook will now let you specify - or blacklist – publishers where you don’t want your ads to appear. Who’s on your blacklist? Ask your agency for their blacklist.

And the gap between CRM and advertising is finally starting to disappear as people have their CRM systems connected with their DMPs. Using custom Audiences tools to target your customers – and find lookalikes – can be incredibly effective. Now Amazon has a way of doing this and whilst some may worry about sharing precious data with such a voracious beast, the hashing they insist on is decent protection. Bing also have a new tool doing this and, as we keep stressing, Bing has some significant volume on mobile through Apple and Siri, so this is worth experimenting with too.

Of course if you are using data to drive precision, you needs creative work that reflects the data and doesn’t treat the customer like a stranger. Our friends at PhotoSpire and at Cablato can help.

GAFA & Content

Some publishers are moaning about how Facebook are approaching video content. It all seems a little premature to be complaining or questioning the commitment, but the piece does have some good insight into the type of deals Facebook are doing.

As this piece argues now is a golden age for content; lots of new distribution channels and funders and we have yet to define what mobile content really is. We are still waiting for the Wrench moment for mobile. In a 1911 film DW Griffiths defined cinema by inventing the close up – on a wrench that looked a little like a pistol and had confused one of the characters, in a key plot point.

Mobile content may well be vertical, captioned and short, but there is more to it than that. And the business models are equally open to reinvention. Music streaming is now bigger than physical. And writing ebooks can make you a lot of money even if the big publishers aren’t interested.

The old rules don’t apply any more and it’s quite possible that brave brands can help define this new world by creating and commissioning content that suits their product and entertains their potential customers. Who is going to invent the new Soap Operas?

New Rules

Facebook are committed to video as the best way to advertise and are keen to help brands make the most of this opportunity. This is a good summary of the issues they see and how they are trying to create a new golden age of advertising.

Traditional TV is changing too. Sky and Virgin are collaborating to enable brands to target 30m UK households with demographics and location – to a much higher degree of accuracy. The case studies we have seen, from the Sky AdSmart tech that powers this service, are really impressive. And the ability to sync search and social with TV content, as our friends at MPorium are doing, means buying a plain old TV campaign is now a poor use of money

Quick Reads

We worked with EasyCarClub on their app some time ago and they are now extending their business into ridesharing. The original business idea of AirBnB for your car hasn’t done that well in any market, yet.

The dramatic growth of podcasts has seen a lot of advertiser interest but until now the data on who is listening has been limited – Apple are changing that.

There was lots of talk about political advertising on Facebook over the election. This is a good summary of who got it right and why.

Is the duopoly squeezing VC money out of AdTech? From the people we work with we know there is funding around for firms that solve real problems. For everyone else, not so much.

Finally…..more evidence of a global slow down in ad spend. We believe this is symptomatic of a shift to CEOs wanting evidence that adspend delivers growth, which is all most CEOs care about.

If you are focused on ROI and diligently working through the wrinkles of digital, you should be OK.

If you are still spending money against broad audiences based on tiny panels, with little evidence of effectiveness other than a well thumbed Byron Sharp book, we’re not so sure.

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