The Amazon Dash buttons, where a single click orders washing powder etc are now available in the UK and Germany. Despite rumours they aren’t used as much as Amazon would like, they have been successful in the US at signing up brands in the US and creating an ecology where the tech is being incorporated into devices
If you are a washing powder brand you have spent decades investing huge amounts in TV ads with 2 real purposes; a/ to get the retailer to give you lots of prominent shelf space and b/ to get into the head of your potential customers so when they are wandering around that retailer they pick up your product rather than that of the competition.
As all our readers who are Byron Sharp devotees know, most of your customers also buy competitive brands so it’s hard to get off this treadmill. But if P&G or Unilever can convert the habit of purchase into sticking a branded Amazon Dash button on your washing machine, then they don't to spend all that money on advertising as they have locked the competition out. And as these sales migrate to Amazon, the need to impress the retailers – still (we hear) a major factor in the argument for TV spend – may diminish a little.
The ability of Amazon to create these ecologies and drive sales is evident in this staggering chart showing that their sales growth in Q2 was 10 times as big as that of their 8 biggest competitors combined
And they continue to outthink their competitors as their latest strategy to improve their logistics is their own airline – taking on Fedex. A huge factor in their growth is how they enable other businesses. We all know about Amazon Web Services but this story of a guy who became a major player in Coconuts through using Amazon as his first storefront is fascinating.
As Amazon becomes an alternative to the retailers that P&G et al have spent billions persuading to stock their product, they squeeze money out of the retailers and – probably – out of the advertising business too. The Amazon ad team is growing fast and we hear clients are seduced by the possibilities of promotion throughout the Amazon ecology – with clear metrics on the effect on sales. But we also hear of frustrations as some of their Agencies prevaricate over spending on Amazon ads, as they don’t have a trading agreement in place.
Twitter & Disciples
Anyone with an interest in Transfer Deadline Day knows the power of Twitter – much more energy and a little less waffle than Sky Sports. But the inability to convert the passion that power users feel into something newbies can appreciate is still proving a problem.
There is no shortage of advice – Jason Calcanis made a good case for Verification a couple of weeks ago and now VC Fred Wilson has made a case against dumbing down the subtleties that power users enjoy.
Like all platforms their health depends on what we term their Disciples – the people who choose to use that platform to share their ‘product’. For Apple these are the app developers who create experiences that keep millions hooked to their iPhones. For YouTube it’s the thousands of people making regular videos and building strong subscriber bases – over 2000 people on YouTube have over 1 million subscribers
For Twitter their Disciples are those who choose to share their knowledge – whatever the field of interest; from the Tech people I follow through to the Yorkshire Evening Post journalists who cover the trials and tribulations of Leeds United. Increasingly video is a playing a bigger part and the changes Twitter recently made to their video - including allowing up to 140 seconds – have helped greatly.
Now Disciples can have ads shown around their Videos and Twitter will give them an industry leading revenue share of 70%. (YouTube give 55%). They are also leveraging Niche – their platform for connecting talent with brands that Twitter bought a couple of years ago.
The usual term for the talent across these platforms is Influencers but we feel that isn’t a useful term anymore. As brands have spent more money with people with their own audience, we suspect the relationship between talent and their audience is changing. Product placement is hard to get right. Once you know that the Lipstick brand paid for the gushing review, the lustre fades a little.
The Kardashians have had to be clearer about their various deals across Instagram as US regulators insist in ads being clearly labeled as ads. US Research shows only around half of native ads are labeled as sponsored and just 5% as ads. In the UK it’s also under regulated – so far.
We had an in depth demo of the Tubular Labs software this week and we were impressed with the depth and breadth of the tool but also how the data showed the dynamism of this market. New ‘publishers’ are constantly appearing and some are growing really fast.
Data & Insight
Tubular is a good example of the power of data. The raw material is from the platforms APIs but their own secret sauce turns the firehose of data into real insight.
An Ex Google and Facebook exec turned VC makes the point that connecting data sets together can be the really valuable trick – whether that’s a way to see how full retail store car parks are or how many ships are sailing though the Panama canal.
For all the talk around big data, real examples of success can be elusive. This HBR article by an ad guy looks at some stories where data led to a real insight – examples from Amazon, Heineken and Buzzfeed
Over the summer we have spent a lot of time looking at retail and the fascinating tech that is changing the supply chain. One company has made a big success from data on who is selling what and what is discounted - and that data has become invaluable
It’s quite depressing to read about Agencies these days. Despite having lots of friends working in them and knowing that – at their best - Agencies have a remarkable knack of solving big business problems and creating huge value for their clients, it doesn’t feel like a fun business anymore.
As the ISBA report mentioned last week shows Clients don’t have the same level of trust they used to have. Nearly every time a big account moves we see that a New Model Agency is to be created to handle it. Given that this new Agency is being created by one of the Big 5 holding companies and is to be staffed by their existing people one wonders how New it is going to be. And every time you hear the term you have to wonder what their other clients – the ones stuck with the Old Model agencies - think about this.
Seemingly few agencies are happy with their current positioning and are trying to work out what they should switch to and in the US many feel they are struggling to meet client expectations for digital – and half rate themselves as novice or below in mobile. Is it any different in London?
We had a party trick of selecting any industry and imagining we could bring someone from that business from 1966 to now and show them how things have changed. Retail, Banking, Travel, Cars – huge differences and anyone would feel lost 50 years on. But put Don Draper in a Tardis and bring him to 2016 and he wouldn’t feel that out of place. Maybe some of the language (gobbledygook like HyperBundling?) would confuse him but not that much has changed. Media in a different building. Dozens of niche skills. Smart Casual clothes.
So is advertising immune to changes? Or has the Industry yet to transform?
There are different ways to do things. We can see how the Tubular tool could help shape a plan – and identify the right Disciples to work with. A fresh way of looking at data would be key – as would expertise in programmatic buying, especially across GAFA
Could the future be a small team of smart people who can architect the right solution to a clients problems then manage (transparently) the talent needed to deliver? And be paid based on success?
Making Ads Better
One of the problems for Agencies is that their core product isn’t seen as that valuable anymore. Ads aren’t valued by their target audience. Clients don’t pay for results and tend to look to reduce their Agency fees. And Media brands are suffering as the value of their digital inventory is a fraction of its analog equivalent.
This look at Click Fraud is old but still sobering. As VC firms switch their focus from AdTech to Martech the few winners in the digital ad world have tended to be crooks and a handful of investors how got their money back before it started going south.
Cluetrain author Doc Searls makes the valid point that if we hadn’t let Retargeting pollute the web we may not have got ad blocking. A smart Digital Media guy I know shared on social that he had finally succumbed to an ad blocker after seeing the same retargeting ads dozens of times. Another makes the point the industry is struggling and Much of what the intended customer experiences is explicitly poor.
Yet we know it can be made to work really well. Smart targeting, The right Creative – improved by data. Frequency capping. Clever measurement. All straight forward – albeit a bit more time consuming – and likely to result in sales.
The best Media Companies are helping too. The FT see that more brands are recognizing the benefits of data driven marketing and Facebook are imploring brands to make their sites faster – to give a better experience – and will penalise ads where the site isn’t quick enough
The light at the end of this tunnel is that those brands that do get this right gain real competitive advantage, because the rest of their sector are probably still pretty average at all this new stuff.
A YouTube interview with the FT is well worth reading as lots of new insight. Live viewing grew by 80% and the YouTube showing of the Champions League final was watched by 2.2 million people. But no data on the average duration
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