Our look at Brand Cathedrals last week (where we mentioned Wholefoods) feels like a good way to frame their acquisition by Amazon later the same day. We have argued before that it was inevitable Amazon would buy a retail chain and Grocery makes lots of sense. The one advantage the incumbent grocery retailers have is a very well established supply chain and, coupled with a chain of great physical stores, Amazon can tick lots of boxes with this buy.
But the UK is the most developed home delivery market for Groceries and they will need more than Whole Foods handful of UK stores to accelerate their growth here. With a partnership with Morrison already in place could another deal be in the pipeline?
They are looking at the friction in online retail and seeing where they can make improvements. Prime customers can now try on clothes at home without making a purchase – just paying for the items they decide to keep and returning the rest. This is smart recognition of a fairly common ecommerce behavior – people order a number of items in different sizes and return what they don’t want. This type of things sorts winners from losers; handing returns has to be a core competence and offering free returns is a common tactic. Amazon are probably better at this than most and removing the need to buy at the outset will probably increase orders.
Their next focus could be Car sales. They already sell Fiats in Italy and Seats in France and it looks like they plan to expand this offering. And they have a new Patent that would enable them to intervene if a customer in store uses their smartphone for price checking. It would also allow sophisticated coupons and offers instore.
A story on how Alibaba have used data to drive a 50% increase in annual revenues emphasizes how much upside is still possible for Amazon as they keep improving their Prime offer. And that there are still one or two potential rivals to Amazon.
GAFA & Content
Apple commit to content with the hire of two execs from Sony to drive original programming and Eddy Cue says there is much more to come. I am still convinced that at some point Apple buys Tidal and with the new JayZ album on there as an exclusive soon would seem like a good time.
Good & Bad Ads
In Cannes this week the future of the ad industry is being debated and discussed, largely powered by Rose expensed by VC backed Adtech firms. The CEO of the New York Times ripped into the digital advertising world calling it a Nightmarish Joke.
An ex BBH creative and Fix friend gets into why digital ads suck and thinks there is probably too much reliance on the Duopoly. And Quantcast agree, pointing out that whilst the majority of peoples time on the web is spent outside the walled gardens, the majority of ad money goes in there.
It is easy to forget that some brands do make digital ads work for them and there is some good work out there. Facebook celebrate some of the best ads on their platform here. And they are introducing new tools to encourage more – and better - use of mobile ads.
It’s not that surprising to see Zenith say data is having a minimal effect for clients but it is still quite depressing, Using data for media purposes makes sense but if you don’t adapt – or tailor - the messaging to reflect the data it can be wastful. You are treating people as strangers even when you know quite a lot about them.
Programmatic creative is proving to be a battleground between creative agencies and media agencies. In our many conversations about this hot topic, we see Media Agencies leading adoption, but a growing recognition from smart Creative agencies that they have a lot of offer here. We are well equipped to help anyone get into this space and the rewards are significant if it’s done well.
The debate about Media Agency versus Creative seems a little old fashioned and clients we meet are bemused by the disconnect. Martin Sorrell thinks it’s a watershed moment for Media shops. With MEC and Maxus to merge and Essence taking on the GAFA buys from some of the traditional agencies, Sorrell talks of the need for simplicity. Which is what most clients seek.
This good profile of superstar Ad Creative Dave Droga shows smart people blend digital with great thinking. And influential US agency Deep Focus is refocusing around data and creativity, which make perfect sense.
We are convinced the need for a Chief Digital Officer is often an admission that the company has lost sight of their customer. Smart CDOs make consumer insight central to their mission – but the challenge is how to get the host company to change and not reject the new thinking. This article from PW is a good insight into the challenge.
Finally …some of the hype and hot air about Agencies being able to add real value on Product and Propositions, as well as their traditional focus on Promotion, was validated this week. Our friends at KBS Albion won an Innovation Lion for the Ada Health service. This smart use of AI solves real problems, using real AI, and – unlike some Cannes winners – has real traction with real users.
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