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Mobile Fix – May 5

Money

It’s the end of the quarter and it’s all about the paper

Facebook ad revenue was up by 51% year on year - with $6.7bn on mobile - now 85% of the total. Daily active users are up 18% year on year to 1.28 billion – and remember these figures don’t include Instagram, WhatsApp or Oculus.

It is worth digging into the slides and the call transcript. In there we learn that the average price per ad is up 14% - supporting what we have heard from brands about it getting more expensive. And that adload will start to impact the business this year. And yes, they are experimenting with mid roll ads but think they will generally be for long form content, where they are looking for revenue share partnerships for Anchor content to educate people on what is behind the video button.

Last week Amazon announced sales were up by 23% y era on year and the long list of product launches is quite amazing. And Alphabet were up 22% .

Apple didn’t do quite so well at the top line. iPhone sales were down 1% and it’s clear people are waiting for the next iPhone. Stratechery dig into the numbers and think that China is turning into a problem – essentially because the dominant app is WeChat and that experience isn’t much different between IoS and Android. Why pay the iPhone premium price when the device is a little dull?

It’s the Levis effect – once 501s were the coolest jeans and nobody wore anything else. Then when everyone realised their Dad wears the same jeans the 501 became really uncool. Apple need something astounding with their next device.

But you wouldn’t bet against them – the main (controversial) innovation in their last device was the Airpods and people love them. 98% customer satisfaction and a net promoter score of 75 – which is really good.

As they push into services there was more good news – Apple Pay volume is up 450% as they extend into new markets. We keep hearing that adding Apple Pay to your checkout options is an easy way to boost conversion. And adding Android Pay makes sense too.

Print fights back

New Zenith data emphasises the power of the Google Facebook duopoly - taking $106bn between them in 2016 (Google on $79bn and Facebook $27bn). It takes the next 19 biggest media companies combined to get to near that figure.

But some of the more traditional media owners are fighting back. News Corp - at number 18 - have been very vocal about brand safety issues and the shortcomings of Google etal. Now helpfully they offer brands a free service that identifies sites where bad content appears, so they can avoid placing ads there. As investors in App Nexus and owners of video stars Unruly they are by no means neutral though. Don’t be that surprised if we keep seeing headlines about GAFA issues.

German media giant Alex Springer is also in the top 30 and is to switch its ad serving from Googles DFP to AppNexus. This is a big deal but reading between the lines it’s a gradual switch; starting next year and ‘gradually’ see the various brands adopt AppNexus tech. Switching adservers is a pretty complex issue – which is why Facebook abandoned its ambitions for Atlas – so such caution is probably wise.

But the deal is a coup and will help as App Nexus prepare for their imminent IPO

The scale of the challenges facing the traditional Print players is demonstrated by the latest results from the New York Times. Their print revenues dropped by 18% and their digital revenues grew by 19%.

The only problem is that print lost $17m whilst digital grew by just half that - $8.5m. Luckily their subscription base grows every time Trump tweets and ads are now just a third of overall revenues - down from over half in 2010.

All these players still enjoy a huge advantage over the vast majority of digital content, in that they offer a brilliant context for advertising. But too many brands and agencies see their readers as worth reaching with print ads, yet choose to ignore the digital readers. Why aren’t these Publishers trumpeting this advantage to the industry?

We keep pointing out the various research studies that support this context argument and its beneficial effect. We would be delighted to help any publisher build this case and get the story out.

O2O

The doom and gloom around retail continues and as we prepare a keynote on the topic for an upcoming Google event it’s easy to see a terminal decline. But there are also some green shouts around O2O – Online to Offline. Amazon alone is providing a case study on how to blend both and people like Argos are doing a good job too.

But interesting ideas like Doodle have struggled and after burning through a few million is rethinking its strategy. Last mile delivery is a real issue.

As traditional stores suffer we are seeing some good experimentation. Shopkick has been an innovator in instore deals for a while and is now focusing on CPG brands in stores like Target. Coke are pushing instore ads that use data derived from your Android phone to target messages displayed on Gondola Ends or End Caps. Wired explain how some apps are using audio signals from Beacons to gather data on the stores you visit.

And some online brands are trialing real stores; Greats in the US are signing short terms leases and AppearHere have good traction from ecommerce brands in the UK. Our friends at Form&Thread have experimented with pop up shops too.

New formats like the New Stand are interesting too – taking the retail experience to where people are – transit hubs and now Ferries.

In a couple of our workshops this week we have been talking about Voice and Alexa etc and its implications. The piece we shared last week on online shopping making suckers of us all has resonated, as we try and understand the ‘grammar’ of voice shopping. When I ask Alexa to buy coffee, does it presume I mean the brand I always buy or does it go for the most popular brand? And could it one day suggest a brand that is paying for prominence within Amazon in the same way they have always done in Tesco, Carrefour and Walmart?

This video suggests it is not quite as clear as it could be. I don’t think that Amazon is going to start scalping customers anytime soon. The Bezos letter to shareholder shows how much Amazon value customers and strives to keep improving their service. But they seem to be moving into Private label quite aggressively and if they can provide good quality products under their own brand at a good price, they are helping the customer by pushing them? Good for the customer, not so good for a brand that has always commanded a premium price.

We recommend to all our clients they sort out their Amazon strategy really quickly. As with all of GAFA, if you do it right - across Search, Facebook ads, Apple app store and Amazon etc - you can gain real competitive advantage.

But if you get it wrong – through the wrong partners and/or under investing - you will - eventually - suffer.

Gafa & Content

As the Facebook earnings call shows they are interested in long form content and the excellent BSAC conference this week we heard from people in Games, Sports, TV and Film that GAFA are starting to reshape their industry.

This piece on how Jimmy Iovine is approaching video at Apple is fascinating. It looks at the various shows they are developing and supports our view that content is an Anchor to keep people within the ecosystem, as well as another way to monetise the audience;

Apple wants to see if it can turn its music app into a one-stop shop for pop culture—and keep customers tethered to their iPhones

Peak TV

I don’t imagine that our contention last week that we have reached Peak TV, lead Adam Crozier to announce he is leaving ITV, but with the heads of both ITV and C4 stepping down there will soon be a new regime running commercial TV in the UKs.

So the new report from Barb makes interesting reading. Along side a good article from Rory Sutherland it explains how they seek to combine their panel data with census data for newTV. This is a work in progress but some of the issues are highlighted with the news that BARB have turned down a pilot scheme from YouTube as they won’t install BARB software on their site. And Barb insists on measuring average viewing time rather than a view being defined after a set time.

We believe the measurement of TV is going to evolve very quickly. As the YouTube approach to Barb shows, the online players want a way to compare old TV with new TV. Google hired the key measurement person from Channel 4 last year and it’s obvious they are looking at TV measurement. WPP are cozying up to Rentrack the US TV measurement firm and has a stake in Comscore too. If someone can develop a way to combine the measurement of TV viewing and digital video viewing that is acceptable to GAFA and the big agencies, then the game changes.

Influencers

Just as we find the term reductive, this piece looks at the negative connotation of calling content creators influencers. The FT go deep in this long piece about some UK players – and look at the blurred lines between what are ads and what are not. And an Influencer campaign is reacting to the regulations now being more aggressively enforced

More of the issues are highlighted by how the disastrous Fyre festival was promoted by Influencers – with one Instagram post getting 450k likes. The whole event was predicated on the involvement of Influencers and the pitch deck for the Festival is quite interesting. It looks like the author has been learning from Cannes Lions entries.

Quick Reads

Along with our local takeaway, JustEat, Deliveroo and Uber, Amazon now deliver takeway food. Given the natural cap of what is an acceptable delivery charge, there isn’t much margin in this business. So it boils down to who best manages the utilization rate of minimum wage staff. If Amazon can deliver my Patty & Bun Smokey Robinson at the same time as next doors Motown CD, can they win?

And the hardware from Amazon continues to surprise –their new Echo has a camera too.

Facebook are trying to help their many advertisers make better use of the platform and this guide to making a great Bot is a useful addition. Required reading for the many agencies currently building pretty crap ones.

Our look at the speed of ads last week got some good reaction and we have a couple of interesting meetings lined up as a result. And we found this intriguing look at an obscure Google technology which speeds ads up. Really keen to learn more about this so if anyone can help, get in touch.

Whilst we wait for AR and VR, 360 videos are getting big audiences – this is the 10 most viewed. And the new video from the Gorillaz has broken the records for a biggest debut – 3 million views in the first 48 hours

Finally…That live video on Facebook? Possibly not actually live at all. Some of the many hacks around video on Facebook. Again, to make the most of these platforms you need to really understand how they work.

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