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Mobile Fix - March 18

Mobile Programmatic & Search

We are starting to see programmatic mobile get some traction. Rubicon believe the rise of Private marketplace is driving quality and allaying some of the fears that have held the sector back. It’s very interesting that their research shows US buyers are very excited by location – a third of them saying they will spend 80%+ of their budget on location enabled inventory. We are convinced location is one of the key aspects of mobile and that the context that can be determined from location – past and present - is really valuable.

The sector is gaining confidence and more and more of the clients we talk to are developing strategies for programmatic, with a surprising number investing in their own DMPs. Will we start to see growth coming at the expense of other digital activities? – some are even suggesting that search is vulnerable to programmatic display.

We believe search is – within mobile at least – undervalued by many. All the noise about apps winning against mobile web has lead some to take their eye off the ball. With Google about to adjust their algorithm to make mobile friendly sites rank even more prominently, its foolish not to ensure you are getting the most from mobile search. And we now counsel our clients to spend time focusing on Bing too – the volumes from the iPhone Spotlight and Siri searches tend to make that worthwhile. And who knows if/when they take the default spot in Safari?

We think the big opportunity in programmatic is still in the creative and its good to see Google coming out with advice for their clients on this. The guide is pretty comprehensive but a little light on who you should work with to develop the assets. Our money would be on Cablato a London start up we are collaborating with. They have a great platform where combining data signals with compelling creative is relatively easy – if you want to see an early demo of the beta let me know.

On Demand Demise

There is a Mark Andreessen quote along the lines that all the businesses that failed in the dotcom bust were actually good ideas – just too early. And with the smartphone so mainstream right now he may be right. ASOS, Net a Porter, Lyst, Very etc are essentially Boo. Ocado and Amazon Fresh are Webvan. And Instacart is Kozmo.

But things are not going that well for Instacart – fees are going up and 1 hour delivery is suspended. And their relationship with their people seems to be problematic. In India Uber rival Ola tried delivery of take aways and grocery but have now closed those businesses.

Another seemingly good idea has gone south – on demand valet parking isn’t quite the must have people thought.

One key element in all these businesses isn’t variable. People. As this piece from the CEO of a logistic business details, unit economics make it really hard to make money out of people intensive businesses like food delivery. Maybe Rocket was smart to sell off some of their food delivery businesses?

For all these businesses you need 3 things;

A product that people buy from regularly (Fab boomed then went bust because people can only buy so many chairs)

The density to make servicing customers viable (Businesses that work well here in Hackney may not go down so well in Heckmondwike.)

And the ability to acquire customers for less than their life time value.

How much of the VC investment these firms have is being spent on customer acquisition? (This is a great reminder from our friends at Balderton on how to measure customer acquisition costs properly) Do these companies really think through lifetime value? In the Winner take all World the web tends to dictate, it is quite possible that one business will get enough scale to be able to make money. But most won’t.

This is playing out a little closer to home in grocery shopping – Sainsbury report that their online sales were up 20% year on year. And Ocado say their weekly orders passed 250k for the first time. But they all lose money on their online sales. And once Amazon finally enter this market we will see collateral damage amongst the existing players.

Maybe we are still too early and the real action is this space will happen once we have driverless cars and robots – thus solving the unit economic issue. Will Amazon buy the robot firm Google is selling?

Even more on Snapchat

More interesting thinking on Snapchat. VC Mark Suster wrote a good guide on the platform for “VCs and Old Folks” and followed up with a strong argument on why they are an Important Media Company Based in LA, Suster has a good take on the media and entertainment world and has invested successfully in video start ups like maker studios so he gets the space.

Many think they are over hyped – and that the content is not that great - but we think you ignore Snapchat at your peril.

Banking

The changes on banking that have been bubbling away for the past few years feel about to erupt. Brett King is one of the best thinkers in the industry and his new book looks fascinating. This extract looks at how Uber is the biggest player in small business bank accounts, the death of the credit card and how your self driving car will have its own bank account.

Atom Bank is one of the leading insurgents and has just bought a design and development firm – building on Kings point that products will make sway for experiences. This interview with their CEO looks at the challenge with regulators and the need for customer service

Mondo is another one to watch – they met their crowdfunding target of £1million in just 96 seconds. You can get early access here

Quick Reads

Apple seem to be back in the ads game. We dont think Apple care much about Ads. But they care passionately about their content providers and this helps them monetise their content, Which should keep them loyal to the Apple platform. They also care about their developers and want to keep them loyal, so we still expect them to make a play in ads, to help developers better monetise their Apps.

Lots of people advising Twitter as they approach their 10th birthday. Sean Parker has a bit to say on them and on Facebook. And another ex Facebooker Chamath Palihapitiya thinks they should go for algorithmic feeds as this has driven FB and Instagram growth

VC firm Kleiner Perkins have published a good report on design, Hopefully that means the next deck from their Mary Meeker will be a little easier on the eye.

Fred Wilson picks up on Benedict Evans notion that most of todays smartphone users were online before they went mobile. But most of the next 2.5 billion won’t have been. Will innovation still come mainly from the West? Of course not.

Ford have an interesting app to try and solve parking – probably more viable than valet parking

Finally – Back in our early digital days Big Blue beating a Chess Grand Master seemed like a validation that we were probably in the right business and we have since seen pretty much everything changed by computing.

20 years later Alpha Go beating the Go World Champion suggests we are all entering the next phase. AI is likely to change everything once again. How ready are you this time?

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