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Mobile Fix - October 19

Dark Kitchens and Dark Patterns

More on Dark Kitchens - the concept that Deliveroo isn’t getting your Chicken Korma from the shop down the road, but instead from a kitchen on an industrial estate somewhere. At its best this is a huge change in the food industry in that anyone can now start a food business and outsource both the cooking and the delivery. Essentially these new restaurants are apps on the Deliveroo platform and success is driven by the marketing - of which the menu is a big part.

But at the other end, is it a betrayal of the brand bargain? i order from my favourite chain and the food comes from somewhere else. A local example - one of the fine pubs in Victoria Park does really good Pizza and the best way to get them is go along and order and have a cheeky pint whilst I wait. Always really good. But order on Deliveroo and they’re just not as good because - i think - the guys making them know they are for delivery. And you miss out on the Pint.

Now clearly any restaurateur worth his Sea salt will have a process to keep standards high, but as price pressures grow from competition, saving money on food prep could be attractive.

This is part of the same play as Dark Patterns - the feeling online isn’t a level playing field.

We find lots of people know the idea that prices can fluctuate online - for example the idea that Mac users pay for flights than Windows users - and they aren’t happy. Could this slow the growth in online shopping? Should smart brands be really transparent on their pricing and sacrifice the extra margin for some longer term loyalty?

In China the competition is driving mergers, with Alibaba putting its food delivery business together with another service that focuses on enabling local commerce. The idea of a stand alone food delivery business probably doesn’t make sense when you are trying to maximise utilisation of staff. In the US Instacart is at the other end of delivery, focusing on groceries and has raised more money at a huge $7bn valuation. Could someone - Uber or Amazon bring these type of services together?

Agencies

Talk of inhousing is everywhere - and a new ANA report suggests it’s the biggest threat for agencies. For some brands, driving the right sort of traffic is so business critical that bringing it inhouse and having it as a core competence makes strategic sense. And increasingly the necessary skill sets are available across the country, with local talent a lot cheaper than a London based team.

But as this article points out, there are lots of costs involved in taking programmatic in house.

The Vodafone initiative to bring their digital in house got lots of press a few months ago but the news they are delaying taking programmatic in house has had less attention. Vodafone have a good team and have built a very impressive tech stack, so it’s not due to a lack of smarts.

Clearly one of the drivers of inhousing is the lack of trust between agencies and clients - the new ID Comms study shows 40% believe the level of trust between agencies and brands is low - up from 29% in 2016. Brands concern over transparency - which drives the trust issue - are obviously reduced when they take control.

We find that smart brands do recognise that agencies can still bring a secret sauce to their business; the core competence of any good Agency is smart thinking. That creativity - across Creative, Strategy and Media - is still hugely valuable. And quite hard to get from an in house team. But many Agencies make their thinking hard to buy by wrapping it up with lots of process and extra people.

DTC & Retail

One of the original DTC brands Allbirds have arrived in the UK. They now ship here and have opened a London store. This video is a good intro to the brand. It’s clear from their success that having a compelling story is so important for these new brands.

The fact they opened with a store is more evidence of how a good retail store is becoming key for online brands. Amazon have their first European store with a pop up in London for Fashion - but only open for a week.

In the US a new startup called Fourpost offers DTC brands a simple way to open their first stores, handling location, staffing and all the back end. A sort of WeWork for retail.

In a workshop for a client this week we argued that going forward brands essentially have just two channels - high street stores and mobile - and making those work really well together is the big opportunity.

People use all the options offered by their mobile to connect with brands and retailer Luxmart doubled sale conversions with a Progressive Web App to better service customers who don’t want to download a native app. We still convinced that a great mobile web experience is a huge competitive advantage.

Mobile Games

The mobile games space generates colossal revenues - kids game Roblox has made nealy $500m in mobile. But new games are not getting the same traction (other than Fortnite of course); the top grossing games still include Candy Crush and Clash of Clans. This interesting analysis shows that the rise of streaming has dented the games space. When data was expensive, games that could be played offline were popular but now data is cheaper former gamers are streaming music and video.

Spending time looking at the app charts is always interesting.

Devices

Ad business launches a new devices that captures data that will be used to target ads. No shocks here. But Facebook originally seemed to say that the data from Portal would not be used for ads.

The tech from Portal will be used to launch a new TV connected device called Ripley, which sits on top of your TV and lets you use the TV for video calls.

This is interesting as a major gap in the Facebook video play is a way to get your Facebook video onto the big screen. With Apple TV, Chromecast and Firestick people have plenty of options but we think Facebook would like to control that access rather than rely on others. Could Ripley do more than just video calls?

NewTV

Remember when Netflix missed their figures and saw Wall Street cut their value by $billions? That was 3 months ago and new figures show Netflix remains very healthy - with over 7 million new subscribers. The company value shot up.

The Shareholders letter is worth reading for the detail. But simple maths shows one concern - the company valued at around $150bn and it has around 130m subscribers - so each one is apparently worth over $1000. Even at the Premium level it takes 6 years subscription to get to a $1000. And that ignores the fact it costs around $100 to acquire each US customer.

With DisneyFlix etc coming, does that sound realistic? And Apple are coming too. They plan to give away some premium content to iPhone users - content as an Anchor as we keep saying.

The other danger for Netflix is inflationary rates for content. As more shows get made does the money for talent have to keep rising to attract the best to your platform? The rising cost of sports rights shows this and the huge transfer fees for top sportsman is the consequence. Now sports streaming service DAZN has agreed a $365m deal with boxer Canelo Alvarez to show his fights over the next 5 years.

If you want to get a deeper understanding of how the City sees the M&A and deal making across TV this panel interview is worth 30 minutes. Not sure I am as bullish about traditional TV players as these guys but their thinking is interesting.

Remember, all these services are fighting for the attention of the people our clients need to reach to sell their cars, cornflakes and current accounts.

Food Delivery

More on Dark Kitchens - the concept that Deliveroo isn’t getting your Chicken Korma from the shop down the road, but instead from a kitchen on an industrial estate somewhere. At its best this is a huge change in the food industry in that anyone can now start a food business and outsource both the cooking and the delivery. Essentially these new restaurants are apps on the Deliveroo platform and success is driven by the marketing - of which the menu is a big part.

But at the other end, is it a betrayal of the brand bargain? i order from my favourite chain and the food comes from somewhere else. A local example - one of the fine pubs in Victoria Park does really good Pizza and the best way to get them is go along and order and have a cheeky pint whilst I wait. Always really good. But order on Deliveroo and they’re just not as good because - i think - the guys making them know they are for delivery. And you miss out on the Pint.

Now clearly any restaurateur worth his Sea salt will have a process to keep standards high, but as price pressures grow from competition, saving money on food prep could be attractive.

This is part of the same play as Dark Patterns - the feeling online isn’t a level playing field.

We find lots of people know the idea that prices can fluctuate online - for example the idea that Mac users pay for flights than Windows users - and they aren’t happy. Could this slow the growth in online shopping? Should smart brands be really transparent on their pricing and sacrifice the extra margin for some longer term loyalty?

In China the competition is driving mergers, with Alibaba putting its food delivery business together with another service that focuses on enabling local commerce. The idea of a stand alone food delivery business probably doesn’t make sense when you are trying to maximise utilisation of staff. In the US Instacart is at the other end of delivery, focusing on groceries and has raised more money at a huge $7bn valuation. Could someone - Uber or Amazon bring these type of services together?

Quick Reads

Uber as its own team of Economists. Good read on how they and other companies get value from Economics. For example it was their idea to introduce tipping.

Guess who did best from GDPR? Google. Well a new browser called Cliqz thinks so.

The Guardian is no longer suing Rubicon over their Programmatic buy. This court case was eagerly anticipated by many as it could have seen some dirty laundry being washed in public. But with this settlement we will not get insight into how the plumbing really works.

The other good news for the Guardian is the fact their membership strategy is paying off - 900k people have made a contribution and its tracking at 12% of total revenue. They believe it could reach 20%

Finally…. emarketer is predicting programmatic will reach $69bn by 2020 - around 86% of all digital display. Now these charts that always point to the top right hand corner can be misleading but the power of Signals makes this move inevitable.

Done properly brands can reach the right people at the right time and with the right message. Right now. And Signals will soon work across TV, OOH and Audio.

Are you getting real effectiveness from this revolution? Or is your current agency just using it to spend your budget more efficiently?

Whats happening at the Media Kitchen?

 

Busy week with the delivery on a project looking at how brands will handle customer interactions across all channels in 2023. Crystal ball gazing is fun but rooting thinking in what we see at the moment gives it credibility

We updated our Amazon proposition too reflecting some more changes we have seen. Such a great opportunity here.

And we are helping our friends at Spirable recruit a head of Growth. Great opportunity with a wonderful company. On the jobs tip our friends at AirBnB are looking for a Connections and Media Activation Lead for EMEA. Another amazing opportunity

Fix is my thinking rather than that of MediaKitchen. We now have over 600o subscribers across Google, Facebook, Snap, Amazon etc as well as many VCs, Brands and Agencies.

If you enjoy it please share it with anyone you think might be interested

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