It’s a paradox that the most interesting event in TV for a long time won’t be on TV. This Saturday the fate of Sky will be decided by a one day auction where the bidders Comcast and Fox / Disney get 3 bids to buy Sky. By 5pm we will know who the new owner is.
Whilst all that subscriber revenue and reach is valuable we think many underestimate just how good their tech is - taking Sky settop boxes across the US could be a strong competitor to Roku etc. And Sky are still doing smart deals - now partnering with Netflix. The news that Netflix have no plans to follow the rest of GAFA into sports rights probably made the deal easier to do.
As Amazon extend their successful bundles into the UK and Germany this seems a good move by Sky to protect their position as the most popular User Interface to TV.
The one player yet to really make their move in newTV is Apple. They have lots going on but it doesn’t feel like a big deal - yet. But this thinking about how Apple could bundle their hardware and software into a sort of Prime package is fascinating. With the replacement cycle for the iPhone probably slowing, expanding their subscription package that guarantees the latest hardware makes sense. And their increasing focus on services adds an extra dimension. If you are at Netflix, Amazon or Disney the one entrant you fear is Apple.
If you are as interested in how media is being reshaped by digital as we are, the new podcast with Jeff Hirschhorn of Redef is a must listen. The guy knows everyone, has a good take on what’s happening and is pretty entertaining too.
The reason we are so interested is that it’s where the future of the ad business lies. Combining the power of TV with Signals works for everyone - much less wastage for brands, more revenue for broadcasters and better ads for the viewer. So a forecast of $2bn spend in the US this year is just the start. And with Sky now talking about their plans for Programmatic ads next year it’s happening here too.
An FT article points out that the new iPhone goes on sale the same day as the new Kanye sneakers. Both will see queues of disciples and it underlines that Apple is now more of a luxury brand than a tech one.
But the new restrictions on ad tracking across Safari is ruffling feathers. It’s likely that one victim of these changes will be content producers who find their ad revenue in Safari reduced. Our view that Apple will get back into the ad business is getting more support - with some thinking they will focus on the app business, whilst squeezing the mobile web where Google dominate.
Doing so both makes life better for their disciples, making apps for iOS and gives Apple a share of the ad revenue their devices have done so much to facilitate.
Bloomberg digs into the data and whilst the Amazon revenue is getting close to $5bn it is still well behind the duopoly. But, as we find with our clients, the Amazon money is coming from the Big 2. In some ways this isn’t a fair comparison - lots of the ads on Amazon aren’t really ads; they are sales promotion and the digital equivalents of gondola ends in Tesco. Not sure that Amazon care much - they double dip with most ads; taking the ad revenue and the commision when a product is bought.
"I very rarely get pulled into the today," Bezos says. "I get to work two or three years into the future, and most of my leadership team has the same setup."
So the fact Amazon are not in your space now should be no comfort - you may be on a whiteboard in Seattle somewhere. Bankers need to worry too - Bain research shows that two thirds of Prime customers would be willing to try a free banking service from Amazon
There is one cloud on the horizon. The regulators are taking an interest - focusing on the fact that Amazon acts as both a competitor and a partner to many firms.
Walmart acquisition Jet has relaunched as an urban focused site offering same day delivery service in New York and other cities. Another Walmart acquisition was Bonobos and their CEO sees parallels between Walmart and Netflix - a focus on brands.
That is what is working on the High Street and the FT look at how the wonderful Paris department stores are thriving. Media brands are also trying to make retail work - Good Housekeeping have a store in Minneapolis and have partnered with Amazon so everything can be delivered the next day.
We are very builish about the podcast market but a look at China shows that there is a long way to go. In the US podcasts make about $300m - alll in ad revenue. In China most podcast are subscription based and - along with live streamed lectures and interactive Q&As - the value is $7bn. There is lots happening with audio and podcasts on the web and this FT article is a good round up of the current state of voice.
A new podcast on the Chaos of the Ad Industry from Jules Ehrhard, one of the original UsTwo guys, is well worth listening to. We mentioned his articles on the same topic earlier in the year and this builds on those.
I’m not sure Chaos is a good description though. The business is changing but it does like to navel gaze. There are problems - particularly around Transparency which is still corroding trust between agencies and clients. But as this article points out if you ask your agency to chase price you get what you deserve.
The next problem for the Agency world is the sky high cost of making creative work. Despite all the advances in tech, many ads are still done in the old way and cost a lot of money. Wired demonstrated the new world by getting the director of Crazy Rich Asians to shoot a film using only an iPhone XS Max. If you have the right talent maybe you don’t need the big budgets
Remember the Black Mirror episode where people were scored based in their social media usage? Apple are now giving you a score based on how you use your device. But relax. Its only to spot fraud. It’s nothing like Chinas Social Credit score
Finally... a good look at Ad Tech consolidation. FNAC - feature not a company - is an idea whose time has come. Agencies and brands struggle to spot the good adtech amongst the metoo firms so anything that simplifies the business has to be good.
I promise this is the last time i mention Firestarters but Neil Perkin has done a good write up of the event. As he says I was very optimistic about the opportunity for digital advertising and made the case for media and creative working together.
So the news that The Media Kitchen parent company KBS is merging with Forsman and Bodenfors - one of Europes’ top creative agencies - is really exciting. Under the Forsman name we will have a global footprint and we plan to embed media into each office. The work from F&B is exemplary - the Volvo Epic Split, the SK Marriage Market takeover and the Ada app are great creative ideas that have distribution thinking baked in.
We look forward to doing more of this type of work; in partnership with our new family and with our direct clients. If your business needs world class thinking - Strategy, Creative and Media - come and talk.
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