More consolidation in the adtech world; Sizmek have acquired RocketFuel. I am sure the press releases talk of synergy and that these companies can work well together. But the real story is the bonfire of money this deal represents.
The WSJ say the deal works out at $2.60 per share. The same shares that traded for $66 at one point after their IPO. Which means the company is now worth around $145. Versus a high of $2billion. And as one Fix reader pointed out in a comment elsewhere, the bankers and advisors have all had healthy fees from the IPO and the other deals that have been done.
If investors keep getting their fingers burned, they eventually learn.
The negativity around Agencies and their prospects continues. Fix Friend Dominic Mills has written a good summary of the current state of the nation. We have read the Redburn report he mentions and it is damming.
But it’s the big holding companies that have the problem. For all their talk of horizontality, smart clients are assembling their own marketing stack – and many smaller, more nimble agencies benefit from this. The consultancies are influencing this and also facilitating the drive to take agency functions in house.
This gets to the opportunity. If Agencies can solve problems for clients – and the perennial problem is growth – then they have real value. But as the world changes rapidly – like Facebook now delivering more referral traffic than Google – Agencies need to be able to react and too many are still wedded to outdated ways of doing things.
With growth so core, more and more businesses see digital customer acquisition as a core competence - too important to be left to an Agency. Read this lecture by a former Facebook growth expert and you see that you need marketing people to sit with UX and coding talent to best optimize the acquisition process. Or you can watch the video here.
We believe that in house teams can benefit from many Agency skills – top level strategy, creative thinking and market intelligence – whilst doing the core buying themselves. This approach needs a different business model and Agencies should move from time and team to start asking to be paid for being clever. Working in a way where your income is dependent on success, aligns interests and has the potential for Agencies to be better paid. Seemingly Lyft have struck this sort of deal with their new agency
And as the business model evolves so too should the structure. We are big fans of the Architect Builder model and have been for years. Have the Architects - the thinkers - on the team full time, but use the Builders – the doers - as and when you need them. And use the ones that best fit the task.
It may be that the Agency has the Architects and the client employs the builders.
Another week and another business gets crushed because Amazon enter their market. As they announce they are to start selling white goods in the US $13 billion was knocked off the share value of Best Buy, Home Depot and other big box retailers.
In China everyone uses their mobile for payments and Cash is dying. With mobile operators like Orange looking at how they provide banking services and new legislation like PSD2 imminent we could see these behaviour changes here too. Amazon are pretty good at driving behaviour changes.
Lots going on with Snap too. They seem to be looking to spend some of that IPO money on more adtech as they look to demonstrate that their ads are effective. Rumours are that they looked at Adroll in a deal that would echo Google buying DoublClick a decade ago.
When the firm that lead the Snap IPO changed their tune and said Snap were now worth rather less than they argued for at the IPO, they outlined their issues – all to do with ad sales. But Snap are moving pretty fast - the acquisition of Placed has quickly led to a tool for measuring store visits and the effect of ads.
This is a good profile of Snap founder Evan Spiegel and this is an interesting look at his nemesis – the former Twitter exec who now leads Product for Instagram and is the man behind all those features which look a little like those of Snap.
Smart publishers are reducing ad clutter in an attempt to boost revenue. Our favourite old media is the FT Weekend and the one or two 20 x 2 ads on a broadsheet page are really visible. Our friends at Ezoic have good tools to help publishers test the impact of changing their ads around
One of the big challenges around programmatic campaigns is the wealth of data created. With AI and Machine learning, the problem is compounded. Facet, a new tool from Google, aims to make insights easier to derive with interactive visualizations.
A Gartner exec on the challenges - and the possibilities –of Dynamic Creative. Our work with Photospire shows huge success from doing Contextual Video in Social well and Cablato do a good job in Display too – but we need more creative thinkers and brave Brands to unlock this space. Come and talk with us if you want to profit from this huge opportunity.
Benedict Evans doesn’t think Content is King. We see his point, but Sky was built on the back of Football, Sony still won’t sell its production businesses and Lovebox sold out because Frank Ocean isn’t paying anywhere else. It’s not the only game in town but having rare, valuable content is a business asset that GAFA will come to value more and more.
Finally ……..along with the Blockchain I would love to better understand crypto currency. Having once mentioned it in Fix we had someone come to our office looking for a Bitcoin ATM, as Google search seemed to suggest we had one. It’s actually in Dalston and we sent him on his way. Chances are he did quite well as the price has rocketed. A Norwegian bought 5000 for £18 in 2009 – they are now worth around £10m.
That sort of value has driven many people to launch their own crypto currency and the market is booming. But it’s probably a bubble and many people rushing to invest don’t really understand what they are buying.
There is a lesson here for everyone involved in Programmatic and Adtech. The Einstein quote If you can't explain it to a six year old, you don't understand it yourself applies.
Make sure the experts advising you really know what they are talking about. Otherwise you may be buying into a bubble too.
It’s the summer and for the next couple of weeks I am on a Cornish beach reading Norwegian Crime novels – and maybe some stuff on BlockChain.
Fix returns in early August. Have a good one.
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