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Mobile Fix – May 12

Snap

The Snap quarterly financials fall a week after the rest of GAFA and their first one didn’t please Wall Street. Their revenue grew by 282% to almost $150m and user number grew by 36% to 166m. But Wall Street expected more and the shares plunged. The loss was bigger than expected too and it seems that is largely due to the $800m bonus Evan Spiegel got for taking the business public.

The actual numbers show the issue – Snap is actually still a very small business compared to GAFA and no matter what they do, they will have little material impact on their bigger rivals. Instagram Stories – a feature inspired by Snap – already has more Daily Active Users than Snapchat in total.

But they can out think the others and the exciting new product innovations announced just ahead of the earnings are more evidence. Clearly these will soon be copied but Snap can keep their core users happy with constant fresh features.

As Spiegel said on the call;

And clearly there is huge potential for revenue growth. Ad load isn’t going to be a problem for Snap any time soon, whilst its imminence is causing Facebook to test out new formats like mid roll ads. And Snap ARPU is 90cents (up 181% year on year) whilst the Facebook ARPU is $17 in the US – after almost touching $20 for q4 last year. So there is a lot of head room and on the call Snap talked of going after the big brands that are driving Facebook growth. If they can keep coming up with ad formats that users like and brands find effective they can grow significantly.

Hardware

There is more and more happening with hardware. Amazon extend their Echo range to include a version with a screen – straight after the one with a camera. Some commentators think they are becoming a threat to Apple but we don’t see that. But they are working hard to reduce their dependence on Apple and Google. Their Fire phone may not have been a success but the logic remains sensible and we would not bet against another try for an Amazon smartphone.

Apple has just bought Sleep monitoring tool Beddit for an undisclosed amount. Having been sold through the Apple stores for a while the company was well known to Apple and it fits into their Homekit strategy.

The Smartphone revolution does mean that a factory in Shenzen can put together impressive hardware cheaply and quickly for anyone – using the components that drive smartphones. Orange demonstrate this with a new Home assistant called Djingo, to take on Alexa and Google Home.

TV looks like the next big battlefield and Google Chromecast, Amazon FireStick and Apple TV both complement and compete with Set Top boxes. The Sky Q Hub doesn’t seem to have been a huge success - yet - but in those households with it, Sky have a significant gatekeeper role.

With so many channels plus options like apps (Netflix and iPlayer) and boxsets, a better UX could be the real differentiator. The familiar grid doesn’t cope well with this complexity. Amazon Firestick is probably the best UX at the moment and using Voice with the App - and the newest Fire Stick - works quite well. The new Hulu app looks like a new standard but that’s only in the US

It’s inevitable that Facebook want all their video content available to be watched on the best screen. Which could make their mid roll ad formats seem less of an imposition. And the social signals could easily help surface the programmes people want to watch, rather than just what’s on now. How long until Facebook develop their own TV tool rather than rely on Chromecast etc

China

Always lots to learn from China, and shopping is a great example. Driven by the fact most people there skipped desktop and went straight to the Mobile web and that the Chinese love shopping. Ecommerce revenues in China are $750bilion – bigger than the US and the UK combined. This report from Boston Consulting is a must read.

So too is this blog post from YCombinator that looks at how WeChat grew. Many lessons on product development, constant experimentation and customer focus. It also gets into why QR codes work in China having failed in the West.

Brexit

One of the reassuring signs for the UK economy has been the news that Google and Amazon are committed to London as a base. Google plan to hire 3000 more people and Amazon will hire 5000 across the UK. With Facebook having their only tech centre outside the US here and Snap choosing London for their HQ, Brexit doesn’t seem an issue.

But maybe there is more to this than first appears. New policies from the EU underline how these big Tech firms are viewed by some in Brussels. The way the EU went after Microsoft is well known in GAFA. As is the EU funding their own Search Engine – though that was closed down.

So could we see more of their business immigrate into an independent UK to avoid EU legislation? Would some smart politician trade a benign legislative climate for the tax bonanza that would come from GAFA moving trading from Dublin to London? Sorrell did it for WPP. Is there any real benefit for GAFA?

Quick Reads

German newspaper giant Axel Springer is managing the decline of print better than many of their cohort. They still have a healthy classified business and that and their digital businesses lead to a growth in revenues and profit.

Audio is a big trend, driven by streaming music and relentless rise of podcasts. Pandora was an early mover in the US but is now up for sale as losses deepen. They are pushing ads hard and also seeing some success with video ads. Programmatic audio was pioneered by the UKs Global with Dax and Spotify are now more focused on ads too. With Dynamic Creative from AMillionAds working in audio, it’s an interesting space for brands to explore.

What does the P&G reset mean for their Media partners? Their new Media Director makes the excellent point that the industry should stop treating the challenges as a Spectator Sport and get on with sorting them out,

The concept of consumers taking control of their own data, and therefore regulating the ads they see, is something we have championed for a while. Now Telefonica is partnering with a start up to bring this service to their German customers. Will be interesting to see how this plays out.

As Evan Spiegel says, everyone will have a camera strategy. Pinterest are adding visual search to its Lens and Google are looking to turn image search into a shopping tool.

Our friends at Unruly have built a Connected Home to demonstrate the ways IoT will change peoples lives.

With Amazon keeping their CEO awake at night its not a big surprise that WPP have bought a business that advises brands how to make the most of Amazon.

With news on the Facebook push into original programming due soon, this is a look at the shows Snap have commissioned

Good thinking on how the plumbing of Programmatic is evolving with Supply Path Optimisation. And DoubleClick thinking on Programmatic Direct.

Could Albert – an AI platform – handle the media rather than needing a Media Planner?

Finally…research for our Keynote at an upcoming Google event on Retail has had us looking at all that’s happening in the space - from tech innovations instore to the latest moves in ecommerce. As well as lots to learn from Amazon and China, the luxury space is fascinating. They were slow to get digital but now it is seen as just as vital as their physical Brand Cathedrals. The next big move is LVMH launching an ecommerce site covering all their brands

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