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Mobile Fix - June 22

Duopoly

With lots of the Ad industry in Cannes the US senate has been hearing what enabled the Duopoly. This is a good analysis of the handful of deals that locked in the advantages Google and Facebook have built their ad businesses around

The expert cited is John Battelle and his full testimony is here. Well worth reading for the extra context.

On Wednesday Google, Amazon, Facebook and Netflix hit stock price highs and Apple is just off it’s all time high. Together they are worth more than the entire FTSE 100.

For all its faults and issues a huge part of this value is predicated on Advertising. Amazon are growing their business very aggressively and Apple are ramping up too - watch for an announcement regarding the very senior GroupM exec they have just hired. And I am convinced that the big content plays from Amazon, Apple and Netflix will - eventually - feature some advertising.

The Rose and the yachts in Cannes might be superfluous but the biggest brands in the world - along with all their new DTC competitors - rely on Ads to build their business. Many of the best content creators rely on Ads to fund their talent. And billions of people use Ads to discover their next meal movie or mortgage

Now we just need to make it better.

Third Force

It’s this financial logic that is driving the huge investment by AT&T. Their purchase of Time Warner changes the TV business by accelerating the push to OTT and TV delivered through streaming. But the prize here is advertising revenue and the chance to be the third player.

As GAFA reshape their businesses to attract TV dollars AT&T hope to stem that flow by bringing targeted ads to TV. They already have the data on their millions of customers and with their DirectTV business they play in the OTT space. But with much more inventory they can move faster.

They haven’t finished spending yet - the acquisition of AppNexus is pretty much a done deal with their ex WPP Ad chief knowing that business very well. Combine that tech with the data and reach and it’s game on - at least in the US.

Whether there is an appetite for a wider geography remains to be seen. But if there is, some form of revival for the original Weve ambition - as a collaboration between Mobile Operators to monetise their data - could be on the cards. The challenge though is getting access to good inventory in Europe. The AOL deal with Weve a couple of years ago showed the potential.

Could the new digital ad partnership between the UKs quality publishers be an early sign of more general collaboration? Similar models already exist in a number of European markets. Would AppNexus be a catalyst for mobile operators to work more closely with premium publishers? Remember; your enemies enemy is your friend.

We were interested to see the US MNOs suggest they will cut off access to their location data for shady third parties. Location data is hugely valuable and it looks like the MNOs are realising that controlling access could be really lucrative for them. It’s an area we are very interested in as this can be a powerful signal.

Video

Premium video is a key focus across GAFA.

As Facebook gets close to a full ad load they see video as the best way to create more inventory, with pre roll and mid roll. But to work they need eyeballs and that requires content. We see more video appearing in the newsfeed - often tagged popular across Facebook. I tend to get old Coltrane Videos and Only Fools and Horses Clips - which is fine. But the watch next algorithm seems to struggle because there isn’t enough content.

So whilst Watch hasn’t really taken off Facebook is now using Instagram as the hub for longer form video. With IGTV the previous one minute limit has been replaced by one hour and whilst anyone can upload video they are encouraging the top IG creators and will seemingly pay them. No ads at launch but they won’t be far behind - autoplay video ads are now on Messenger.

The obvious target here is YouTube but they have the dual advantages of vast amounts of content and the worlds second biggest search engine. Instagram need to get their algorithm working really well to recommend what to watch next - a huge driver of views on YouTube mobile app - but will still be limited by volume of content.

YouTube is looking to increase brand spend with some new tools in their Creative Suite. These allow testing, sequencing and some customization. Our friends at Spirable are looking to bring their more sophisticated Contextual Video capabilities to YouTube too.

Content

The other side of the video coin is the big platforms investment in long form video. What you find on YouTube, Snap and Facebook is quite different to that on Amazon Netflix and the more traditional - Southern Californian- firms.

The smart people at Loup make the point that Apple is not as far behind as many think - they are at a similar stage to where Netflix was just a few years ago - and catching up may not be as hard as people think.

But it’s about quality just as much a quantity and little of the Apple pipeline looks that great. Still, early days yet.

We keep talking with brands about the fact everyone can be an entertainment brands now - the barriers to entry for Branded Content have never been lower as there is so many distribution opportunities - including new things like IGTV. But it’s still about Quality. The Kevin Hart work from Lyft gets this and is doing well because it’s quite good.

Yet another reason to mention Leeds - Championship clubs will be able to stream a few of their games this season through the FAs iFollow. I wonder if/when Amazon etc take a look at that opportunity? The current Leeds owner makes his money selling Media Rights so I expect him to be be driving this.

Influencers

The Influencer marketing space is going to change dramatically over the next few months. Keith Weed from Unilever has gone public with what we have heard privately; clients feel they have been ripped off. Now Unilever and others will be much stricter about who they work with. Add into that the regulatory issues and the fact Facebook now expect people to tag their posts with #Ad and #nameofbrand. This kills two birds with one stone - it meets the regulatory issues and helps Facebook work out who to approach to have posts boosted by the brands featured.

Now Facebook have a new set of tools to support this space. The headline is the search engine for influencers - or Brand Collaborators - so brands can find the right talent and Facebook is seen to help them get paid. But the Facebook Creator app will probably be most welcomed as it has lots of ways of making life easier. And new monetisation options - 55% of mid roll ads or Ad Breaks revenue and the Patreon / WeChat like option to charge followers for exclusive content.

China

Google making a £550m investment in Chinese e-commerce giant JD.com is interesting for a number of reasons. It’s one of the first connections between GAFA and BAT - albeit indirect as tencent are an investor in JD.com too. And it lets Google compete with Amazon be directly selling good through its Shopping Ads. One to watch. The FT has more on how Google is engaging with China - where it is still banned.

And this is a good look at the fierce rivalry between Jack Ma of Alibaba and Pony Ma of Tencent - a battle that will be increasingly played out in the West as they look to export their home land dominance.

Agencies

With Cannes closing up today we have to look at the future of Agencies. The HP CMO is calling time on them - apparently it is so frigging easy to get great ads from anywhere. (No, I can’t think of any great HP ads either)

In the Wall Street Journal Brian Whipple of Accenture talks about what they bring that Agencics can’t. And WPPs Essence is helping TMobile take digital media strategy in house.

Having started a number of agencies over the years (5?) and now expanding one of New Yorks’ finest into London, I think Agencies are a little more resilient than many give them credit. But so many are not fit for purpose as they have not moved with the times. A truly modern Agency can add value in a way no consultancy can do - because they solve problems with creative thinking, rather than just logic.

My friend and colleague Glyn Britton nailed this in a Google Firestarter talk this week - making the often missed point that consultants are running out of road for their old model too. The one thing we disagree on is nomenclature; I still like the term Agency as long as we are channeling Stirling Cooper with Don Draper solving client problems by inventing the Carousel.

Quick Reads

Facebook have another money making option for users - you can now charge subscriptions for Facebook groups

Ads are coming to Reddit - one of the most trafficked sites on the web.

Google now have a podcast app - a further boost for this burgeoning category

John Hegarty talking about great advertising. I agree agencies need to go back to the future but don't accept data is making ads boring

Finally - wonder how all those yachts get paid for? These charts explain the Tech Tax. Much of this is justified but your agency should be able to explain exactly where the money has gone and why. If not, ask someone else to take a look for you. We keep hearing of agencies essentially outsourcing the buying to FB Marketing Partners and other middlemen and taking their cut for doing very little.

Fix is my thinking rather than that of MediaKitchen. We now have over 5600 subscribers across Google, Facebook, Snap, Amazon etc as well as many VCs, Brands and Agencies.

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