With some interesting thinking around on the plight of Agencies we return to this subject. Noah Brier was an influential NY digital ad guy and - despite being out of the space for a while - has a really good take on the issues. He argues that big business are now convinced on digital and therefore taking it inhouse. It’s a point we have made for ages - when digital becomes a core competence you can’t afford to outsource it - in every sense of the word.
This is a topic I discuss in some detail with both Rory Sutherland and Tom Goodwin on our RadioFix podcasts, The problem is that Agencies have never managed to be paid for the value they create - the Alchemy as Rory terms it in his excellent book. Instead most Agencies have become Factories that charge for their output - TV Commercials, Media Plans, Apps, Digital Transformation Workshops ( with free PostIt notes) etc.
And eventually people realise that making things with artisans in London is a luxury - and find cheaper suppliers.
The consultants moving into the space have some clear advantages - Board level relationships, a more commercial approach and a culture of offshoring to reduce costs. Ex agency head Nikki Mendoca of Accenture points out that Marketing and business transformation are inextricably linked. Their creative Agency Karmarama has a good new report Brand Nirvana on Closing The Human Experience Gap which has some interesting research including that people are willing to spend more on brands that treat them like humans,
But it’s Alchemy that business wants / needs and Agencies used to be the best place to get that amazing thinking - do brands now need to go direct to the talent?-
Last week Google announced they were going into banking and this look at now Chinese smartphone firm Xiaomi got into banking is interesting. To be fair it’s more accurate to say that Google are getting into payments - with a traditional banking partner for actual banking. But in Asia most people are unbanked so there is a huge opportunity - talking today with someone in Jakarta i heard that people there use GoJek like cash.
The closest UK business are Monzo and this week they were found to be the most recommended brand in the UK. That’s a good sign of brand strength and it must come from the experience of being a customer - which is the only way to really build a brand. Everyone I know loves their iPhone but that is 100% down to the ongoing experience of using the device - even though Apple do great ads.
So this debate over brand or performance always amazes me. The best solution for any brand is being bought and used - so brand and performance ads need to work together. And for Monzo one genius piece of marketing is their unmistakable Coral card, which drives great word of mouth.
Google have made some significant changes - some which seem related to the ICO talk and others less so. The reduction in context information seems to meet the ICO concerns that content being read can be used to bracket people by race, sexual identify etc. But some in the industry are questioning this.
The bigger picture with Google can be found at their Chrome Developer Forum where the theme Protecting users on a thriving web shows the balancing act they face. Apple are very focused on privacy and the fact that some of their actions on Safari degrade the web experience doesn’t really matter to them - they want everyone to use apps instead of the mobile web. Google want to protect privacy and protect the web ecology too. This video from the Forum is a good summary of the issues and the Google approach
So much going on around social commerce and influencers. Micro influencers have an authenticity that many of the more established ones lack and millenials are a big opportunity. A Fix reader shared their thinking on this and their research is really interesting. A great way of unlocking this potential is Soreto which enables anyone to share their purchases and be paid when a friend buys.
The original front runner in AR and VR appears to faltering. Magic Leap has seen two key execs leave and they are rumoured to have used their patents as security for more funds. They have kept raising money whilst restricting news on their product to occasional leaks - but we were always told by VC etc that the product was amazing. They also said that about the Segway.
A story on Snap and their AR shows that some demos are already very involved in AR
The expansion of addressable TV in the UK is getting traction even though some are concerned at the premium pricing. One of the key players is this space are TheTradeDesk and their UK lead spoke on a panel at the excellent RampUp event this week saying she thought it likely some of the streaming services will take ads. Her CEO agrees and makes a good case on this video for why he thinks it is inevitable that Netflix will eventually show ads.
The key issue in the growth of addressable TV is measurement - unless you are confident in the audience you are reaching why would you pay the premium? Part of the problem is that digital measurement and metrics are seen as incompatible with trad TV metrics. In the US Google have added Nielsen reach data to their reach planner. Will be interesting to see the reaction.
Bytedance are planning a music service; they already play a huge role in music as people use songs in their videos but now are looking at a more traditional service to rival Spotify and Apple. And their CEO is making out they are quite independent of China. Not sure this will work and with Zuck having dinner with Trump again (along with Peter Theil who thinks the Chinese have infiltrated Google) the Chinese issue is not going away.
This long New York Times piece looks at how the SuperApps have changed life in China and draws parallels with Google and Facebook efforts to import some of this approach into the west. It’s a great read but it does focus on the big city life in China, yet small villages have also been affected - many are TaoBao villages.
Business of Fashion has a good piece on the problems facing VC funded DTC brands - many of whom are finding they can’t sustain the growth the heady valuations demand. My thinking on Bonsai Brands still stands - getting beyond a certain size may just not be possible for many of these businesses.
One of the issues is that freely available VC money combined with a hunger for growth leads to frantic ad spending - and often a hasty switch from digital to traditional. Sifted look at this and cover the smart people at Habito who have been very methodical in how they expand their marketing - helped by outstanding creative. Unfortunately many others have wasted money on weak creative and woeful strategy.
Coty buying Kylie Jenners 5 year old DTC brand for $600m was the big story this week. It’s easy to be critical but she has built a very good business very quickly and whilst that level of fame obviously helps, she got a lot of other things right too.
And Amazon has lead to a US TaoBao village - a small town in Montana full of people repackaging goods to be sold on Amazon. Fascinating look at how ecommerce drives adjacent businesses - could this be one answer to driving investment and employment in UK small towns?
I know that digital ads can be hugely positive but often they are executed badly. If you need help on the architecture of your digital advertising I can help.
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