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Mobile Fix / October 11

#adtechPerfectStorm

The vice like grip of GDPR and CCPA keeps tightening. In Europe courts rule that users must actively consent to cookies and “a box checked by default is therefore insufficient.” Interestingly the ICO has now a new consent pop up ( see above) which is rather more stringent than the CMP they were using (which I think was a quantcast one?). In the US the Don’t sell my data button will need to be on most web pages which suggests most people (as high as 87%?) will opt out.

We are seeing some people taking action. A US group of adtech firms led byMediaMath have an initiative called Source designed to introduce transparency and counter the dominance of the GAFA Walled Gardens. Proctor &Gamble accept that these gardens are going to stay walled and instead they are focused on the 1.5 billion consumer IDs they have collected. This 1st party data is hugely valuable and CMO Marc Pritchard mentions using it to better modulate ad frequency, for example. This video interview with Pritchard has some more detail.

Publishers see the value of 1st party data too and this piece rounds up the steps being taken by leading publishers to manage the switch from 3rd party to 1st party. And here Digday looks at how Business Insider is preparing. One great example of how smart people can prosper is the FT and the dramatic increase in their Private Marketplace deals.

Ciaran O’Kane is a smart commentator on this space and his ideas on what we will see in the next year as a result of this switch, are interesting. Not sure I agree with all of them but good to get a debate going on single sign in and how mobile app inventory gets used.

Regulators continue to take an interest. The OECD are taking aim at tech giants with plan to shake up global tax on GAFA and whilst it’s not directly related to privacy it sets the weather. As do ‘inadvertent’ breaches such as Twitter using the wrong data for ad targeting.

This long piece on the Taboola Outbrain merger is a good read on the economics of online ads and the consequences. Is one of those consequences an unbundling of adtech? There are some good companies up for sale right now.

Business Models

Related to the likely consolidation in adtech is the whole question of business models. The WeWork debacle and the post IPO troubles of Uber have highlighted the nostalgia for businesses that make money. A good NYTImes article looks at how Silicon Valley is struggling with the definition of what a tech firm is and how some firms - like WeWork - don’t deserve a tech multiple. Super smart VC Christian Hernandez draws on his experience at Facebook - which has always made money - and sums it up well;

it seems a number of entrepreneurs are surprised that a “pure” growth story now has to be balanced with a plan to make money.

Whilst the ad business sometimes feels like the dirty secret of Tech - Benedict Evans once pointed out to me that no-one in Tech ever talks about ads, other than the ad sales people - it continues to create the vast majority of the revenue at many tech firms

newTV

The squabbling has begun. Disney will not take Netflix ads on any of its properties; originally they planned to say no to all streaming services - then decided to take them all - apart from Netflix. Disney is also struggling to reach agreement with Amazon over having their apps on FireTV; Amazon want the right to sell a substantial proportion of ad inventory and Disney are saying no. Disney+ won’t carry ads but ESPN and ABC do.

There are two key issues here. First the power of Amazon as a distributor and the consequent control they will exercise over the market. And second the apparent desire of Amazon to run ad sales across these other services. Using Amazon data - through their own tech stack - across a wide range of streaming services gives them even more power than we anticipated.

Further evidence of the squabbling is the news that Disney CEO Bob Iger has resigned from the Apple board - after 8 years. (Worth reading this profile of Iger and his amazing success at Disney)

Barclays have a new study on who they think will win streaming, backing Comcast and Verizon as likely winners in distribution. The advantage they have is the installed base of set top boxes (like Flex) that let them make streaming services available. This distribution role isn’t as high profile as the streaming services themselves, but is a fascinating battle, with revenue from affiliate fees for subscriptions as well as potentially selling ads.

Working out who is selling what ads is a problem now, as connected TV takes off - it’s one of the many challenges of newTV now and going forward.

And this contrarian thinking on newTV and sports is interesting - a view that piracy is a real threat to the value of Sports Rights

China

Always lots going on in China and we see that DTC has a Chinese angle; 38% of the top 10000 Amazon sellers are based in China. So no surprise that Shopify are building a Chinese team in Shenzhen.

The luxury space keeps evolving - Tmall, the top ecommerce platform in China, has doubled the number of luxury brands and this Gartner study has good insight into how they have lured these brands back after issues around counterfeits. And GQ in China does great business with luxury brands creating content for their WeChat and Weibo accounts

But the Key Opinion Leader influencer is losing its lustre and instead real people are being used for authenticity, recognising that people have realised celebrities were being paid to endorse products. So now KOCs are being used more. The Chinese state is proving adept at using Social to engender Patriotism amongst young Chinese

TikTok

The Chinese connection for TikTok is proving an issue, with a US senator urging a US Government agency to launch a full review of the national security implications of TikTok’s acquisition of Musical.ly.

The latest Agency pitch deck for TikTok is shared here. And it’s odd that the latest Piper Jaffray teen survey doesn’t mention TikTok but does have some good insight on teen behaviour.

Retail

As the DTC space grows, the tools and support firms are jockeying for position, looking to make themselves indispensable. Shopify and Mailchimp have ended their collaboration and the Mailchimp app is now longer in the Shopify marketplace. It’s clearly quite a bad natured break up and both blame each other. It seems that data is the key issue but the fact Mailchimp has a partnership with Square to launch shopping pages can’t have helped.

Collecting customer emails (and consent) is a core competence of DTC as so much value is unlocked and some firms are looking at strategies that don’t involve discounts as the incentive.

As online and offline blend the treasure hunt experience that typifies stores like TKMaxx is moving online. Learning from Japan is interesting - subscription boxes are still very popular there having gone out of fashion to some degree in the West. The Japanese culture of games and Loot Boxes has some influence here - and in the West these techniques are gaining ground.

Novel retail formats are proving popular; Bodega had loads of bad press on launch but a rebrand to Stockwell has seen them prosper and raise more capital for growth. We mentioned the McKinsey shop experiment and here is more detail. 

Glasses

We covered all the action around hardware two weeks ago and the energy behind glasses continues. The top rated Apple analyst thinks their AR headset will arrive next year and I am convinced it will be a Glasses product. Snap CEO said this week he thinks mass adoption of Glasses is ten years away. That’s a long time. The appstore is only 11 years old, so we have seen huge changes over the last 10 years and with so many people focused on Glasses i think it will be much quicker.

Quick Reads

Postmates on how they find a small budget an advantage. If you can’t outspend the competition, you need to outsmart them.

James Murdoch buys stake in Vice - doesn’t he close it down in a recent Succession episode?

Finally…. I am out and about over the next few weeks. First I am talking 5G at the Kinetic This Concerns You event next week. For the IAB Nonference I am running a game of Bingo and sharing some thoughts on newTV along the way. Then I am speaking at the Adludio evening for DTC brands. If you are at any of these events come and say hello.

And a little further ahead, I have some buy one get one free tickets for the TBD Lates event. Book one here and we will send the free one over.

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