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Mobile Fix – November 13

Advertising

Lots of commentary this week around a good piece on advertising in the FT Magazine (the physical Saturday FT is one of our favourite media – no app comes close)

We share a lot of the sentiment but remain optimistic that the talent can be expressed in digital. If Don Draper was still around Stirling Cooper would surely find the opportunity of data driven creative hugely exciting, as long as we can get past the DSP/DMP/SSP gobbledygook. Our Route55 project aims to connect real creative talent with platform knowledge.

A timely reminder from some of the cleverest thinkers on effectiveness, that advertising usually works also fuels the debate. There is nothing about digital and mobile that preclude smart, effective work – it’s just that the time to really understand each platform and develop appropriate creative -that employs the data insight possible - requires investment. But our contention is that investment is worthwhile as it can dramatically improve the effectiveness of the media spend.

And GAFA continue to strive for evidence on effectiveness – even if some big spenders don’t think Facebook have cracked response just yet. Of course a huge proportion of the mobile ad spend is app downloads where everything is about response – and ROI.

Our take has always been that good advertising has two effects;

It makes the brand more important to a particular person

And it makes that person more important to the brand

We end all our talks with the message that it’s time to experiment. That’s never been more true than now – mobile is mass market, mainstream and making lots of money for many people. Add in the fact that it’s still quite cheap and that there is every chance your competitors are really bad at this stuff. There is a real opportunity to gain real competitive advantage by being early in mobile advertising. And we’re happy to help.

Notifications

We have this work in progress theory that all forms of messaging will eventually merge on your mobile stream, and the only real categorization is this remix/ version of Donald Rumsfeld;

Messages I know I want – useful notifications from brands I value

Messages I know I don’t want – spam, too frequent notifications etc

Messages I don’t know I want - discovery driven by data insight advertising

Fix Friend Ben Wiener built on some of our thinking in this smart response to VC Fred Wilson – essentially agreeing that notifications are a step change and could herald a new era of apps and people wanting to connect with apps.

Facebook stepped up with another new standalone app – this time focused on notifications. The Techcrunch review of Notify is worth reading as they see it as a competitor to Twitter, leveraging the news content Facebook harvest through Instant Articles.

Can advertising work in a similar way? Could I set up a way of approving ads on certain topics? Doc Searls has long championed this through VRM and a new piece from him suggests this ad blockers are driving the evolution of the next chapter of the internet. We are still fascinated by the idea of Ad Regulators – instead of blocking ads you swap them for ads you would be happy to see.

AI

The Betaworks piece also makes the point that the future of notifications is inextricably linked to AI. Google are open sourcing their machine learning system TensorFlow, hoping that wider usage speeds up the development of AI.

One of our Microsoft readers pointed out that they are very active in this space too and the ability of Azure to read moods shows they are in this game. With such a complex topic having big teams and a lot of history can help and both Microsoft Cortana and IBMs Watson demonstrate this. But the challenge they have is how they reach consumers – the GAFA (and Baidu) AI tools have the advantage of huge reach.

This is a really good piece on how messaging, AI and notifications all come together and require a new interface – essentially no interface.

Banks & Mobile Money

One key element in disruption is when someone with a different business model sees your business as away to drive growth for their business. Because they can offer the service for free - as a type of marketing investment - you have just been disrupted; almost as collateral damage.

We see Netflix as a possible victim of collateral damage with Amazon continuing to improve their Video service to encourage sign up for Prime – which drives more sales of everything they sell.

As Messaging services fold in payments as a way to make them more sticky, are high street banks likely to be collateral damage too?

Facebook are keen to push into payments – and hiring a CEO of Paypal says a lot about their ambitions. WeChat - which acts a sort of R&D lab for every other messaging app (and many other app businesses ) – now has 200m users for its payments service. (More on WeChat at the end of the mail)

Everyone in payments is looking to expand their services – Apple are talking about a person to person – or iPhone to iPhone - payment service to better compete with PayPal. This would seem to require a social element - does Apple try and build that themselves? As part of Music perhaps?

Now talking with some Banks they still see themselves as safe, given that the bank card is the engine of all these services – but will millenials have the same loyalty as the current bank customer base does? All our work on Howard from the Halifax taught us people are more likely to get divorced than switch their banks.

Some US research shows that a new category of financial services apps outperform banks apps. Expense trackers are scoring really highly and they solve a key problem – giving someone a more complete view of their various Financial Services providers. Combine that with the power of Apple Pay – marketing funded by just about every UK bank over the last few months – and we think the position of a bank is in jeopardy if they don’t offer a world class mobile service. New research into the UK shows that mobile bank apps are now the most popular way to bank, but also points to some of the global developments.

When my son needs to move on from his Osper will he open a traditional bank account or will one of the new pure plays be more tempting? Or will Apple Pay evolve to be all people need?

Remember that Apple use Pay as an Anchor – a way to keep you buying the latest Apple device. So they can give the service away for free. Collateral Damage isn’t their problem.

AdTech

The one real rival to Google and Facebook in adtech is App Nexus; their new product is a direct play for publishers against the Google DFP stack. News they are considering an IPO or a sale isn’t that surprising – AdTech is a game for people with deep pockets. And you can imagine that people like IBM, Salesforce etc could be interested.

We suspect WPP may be in favour of a sale too. As well as crystalizing the value of the stake they took after a technology swap - it could solve a political problem too.

Just as GroupM embrace their new acquisition Essence they have promoted the head of Xaxis to head GroupM in the US. Having bought Essence in part because of the access it gives to Google tech, requiring them to report to someone on the board of AppNexus might require some robust Chinese walls.

“Google, as you might imagine, is keen on its global digital agency using the full set of Google tools to deliver its advertising,” said GroupM Chief Digital Officer Rob Norman. “As a consequence, they use Essence as a power user of the Google stack, and they also use Essence to beta new features, whether it’s in their services or their programmatic bidding products.”

However they reconcile this, Essence is a real jewel (we were delighted to have them speak at our event) and WPP have positioned themselves well in adtech.

Quick Reads

We hear good reports on AppleTV and as developers get busy on TV apps we think this helps build out the experience. This is a good thorough review of all the streaming media players – and Apple nudges to first choice.

The other half of the newTV ecology are the content plays and YouTube Red has a battle if it is to take on Netflix, Amazon etc. This is a good analysis of that battle and looking at how NBC built their audience with must see TV, suggests that Google too needs content that can’t be got elsewhere. The talent emerging from the YouTube shows will be useful but they need something big too. NBA? NFL? Champions League. Again they don’t care about collateral damage to BT, Sky etc

The whole idea of unicorns seems to be under some scrutiny as people realise that valuations often aren’t really valuations. Fidelity have written down their stake in Snapchat by25% It seems that looking at IPOs sobers up some investors.

Our favourite VC is Chamath Palihipitiya who seems to be making smarter bets on more interesting projects than most. And he owns a Basketball team. His latest project seems the most audacious – an attempt to build a carrier – taking on Verizon and AT&T. Given what Google have done with Fiber and the success of Free in France there is some precedent, but not at this scale.

As we wait and see whether the UK does Black Friday this year, in China Singles Day has eclipsed last years figures with huge sales – Alibaba sold over $14bn in one day – a 60% increase. And nearly 70% was sold through mobile.

In the UK Very reported stellar sales the other week – with an ‘Explosion’ in mobile sales – 44% of all sales – up from 4% just 3 years ago, getting mobile sales is now possible – you just need to deliver a world class mobile experience.

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