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Fix/Friday -September 4

TikTok

Has the TikTok soap opera come to a premature end? With the Chinese amending their list of technologies that cannot be exported, two new categories seem to perfectly describe the TikTok business;

Just what that means for the deal I don’t know. The FT puts together a fairly convincing case for why Microsoft and Walmart might make good joint owners. But are the four English speaking markets (excluding the UK) really worth over $30bn? The market cap for Snap globally is just $35bn. And how do new owners manage their relationship with Bytedance and the rest of the world TikTok? What happens post the election if Trump is out? Is there a money back guarantee? Are US citizens forbidden to download the UK TikTok? It’s a mess.

But back in the real world the founder of Vine shared his thoughts on how TikTok can stay innovative and this piece on the density of TikTok content sparked some thinking. And brands are still keen - here the luxury brands are getting their heads around the platform.

AR

The team at TikTok is growing fast and doing more to entice brands to invest. Next week they are holding a masterclass on Branded Effects - their AR tools. And Burger King used QR codes in TV spots during the VMA awards which triggered an AR experience with the King and Lil Yachty.

Merchant

This week's deep dive was all about Merchant and we covered Amazon, Grocery and Ad experimentation in depth. Catch up here if you missed it.

The Walmart answer to Amazon Prime is live - Walmart Plus. The $98 a year service gives you free delivery on items over $35 and some same day delivery. There is a reduction on petrol and an app that can help you avoid queuing to check out in store. Is it enough?

Probably not. It’s likely most of Walmarts most valuable customers are also Prime Customers and the one advantage Walmart has is their huge store network - they claim 90% of Americans live within 10 miles of a Walmart store. They will add other benefits, but something that adds real value to a store visit is needed for this to be a significant success. Look at how the new Amazon Fresh store changes the grocery shopping experience.

There is a lot of talk about tough times ahead for the classic DTC brand, busily handing VC money over to Facebook as they struggle to acquire profitable customers. Here a bootstrapped founder talks about how their approach has led to a profitable business.

Shopify is building out its support function for its shopkeepers and have lured the former GM of Yeezy to run their creator and Influencer programme.

Our midweek Merchant mail led with this great piece on 10 trends in ecommerce. It's so good I am shouting about it here again.

Adtech

Lots of good discussion in our Guild group at the moment. We covered the Digital Sales tax and how GAFA is just adding the 2% to customer bills. Should we be grateful they are not charging a handling fee too?

The big topic is the imminent changes to the IDFA - with debate over whether this is designed to help Apple ambitions in ads, or just a customer issue. I think they have plans in advertising, but not sure they recognise the ramifications of their move. So I agreed with the idea that the changes should be delayed - and last night we heard the changes had indeed been delayed until the new year. Apple released some more information on their plans and promise an update to the App Store Review Guidelines will follow ‘this fall’. Keep appraised of this in our Guild.

This is a key topic in the panel I am moderating at the Poq App Commerce event next week - see the end of the mail for more info.

The other event this week is the news that AT&T are thinking of selling their digital ad business Xandr. Having bought AppNexus for $1.6bn they then built a strong team and did good business - getting revenue to $2bn. But when their CEO left a few months ago the writing was on the wall. And his replacement left last week to join WPP.

They have good assets but it’s hard to see who has the appetite and the cash to buy the whole business. And a fire sale of assets would be unlikely to get near the current value.

It’s not really a surprise – nearly every Telecoms companies has talked up the idea of running ad businesses and most have started them at least once and sometimes multiple times. But the corporate interest soon wanes and they get reorganised out of business.

One drum I keep beating is the opportunity for Facebook to sell ads for publishers. This new tool where Facebook links user accounts with news subscriptions makes the plumbing even easier. I now get Washington Post stories at the top of my feed, but I guess the ads are sold by the Post without any profile data. How much more could Facebook make here for the Post? What am I missing here?

newTV

I have long argued that Netflix will eventually offer a free service; enabling non subscribers to sample the service - supported by ads. Guess what? They just announced this. With one wrinkle - the only ads (for now) are for Netflix shows. And it’s through the browser, rather than an app.

The economics of the streaming wars are based on pre Covid maths and that no longer adds up. We will see more moves like this over the coming months.

Other than Netflix I think the most interesting company in newTV is Roku. They have made the transition from a seller of cheap electronics to a gatekeeper for this most lucrative sector. This Variety piece has great background and a lot of insight from the CEO - including confirmation of their approach to deal making;

Roku’s standard ask is 20% of subscription fees and 30% of ad inventory on partner channels.

Remember that Pixelate think Roku has 59% of the programmatic CTV/OTT ads - three times what Amazon does. And this Seeking Alpha note goes into a huge amount of detail on Roku and is very positive from an investor viewpoint.

As the Variety article covers, Roku can’t afford to properly expand globally and it sounds like the CEO is inviting offers - they will be bought by someone who can help them achieve their real potential.

Another newTV adtech firm is raising money - with an investment from ITV. Just last week ITV announced they had chosen to work with Infosum as their data partner and now we see they are one of the investors in his latest raise. And Barry Lesser, the former head of AT&T XandR - the one up for sale - has joined Infosum as Exec Chairman.

If you want to understand more about the firm this online event is worth signing up for. Barry and Terry Kawaja

Plus

Snap seem to be doing well with record downloads in August. Is this driven by the TikTok furore or the Cartoon Face filter which lets you Disneyfy your pet?

Our friends at Spirit have a great initiative this weekend - a Digital Detox Day. Get involved

Finally I am really pleased to be taking part in the POQ AppCommerce Virtual Festival next week. I am on a panel talking IDFAs and moderating one on how to engage with GenZ. If you are in the retail space, register for your free ticket.

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