Facebook have upped the ante in newTV with a rethink of Watch as a place for premium video advertising - dropping over half of their current programming. The ad sales strategy for this premium video is changing: away from the auction model that they use for everything else and towards long term packages. Similar to the Google Preferred model for YouTUbe launched last year.
As a short term tactic to take money from trad TV budgets this makes some some sense, but is the audience for Watch ever going to be big enough to make this significant? And with the rest of the industry skating towards signal driven TV, are they missing a trick? This TradeDesk piece looks at connected TV as the heart of cross device strategy. Blending the wealth of Facebook targeting options with premium content makes Facebook compelling. Selling by content genre? Less so.
At the heart of the issue is the content. Watch joins the melee over new IP, talent and formats that everyone is engaged in; they are commissioning new shows and buying library content too. The way Snap approach original content is explained well in this piece. Their success with Dead Girls Detective Agency (14 million unique viewers, 40% of whom watched all eight episodes) is worth reading about too.
In the bigger picture the UK is finally going to get Project Kangaroo - 10 years late. The UK version of the ITV and BBC US streaming service Britbox will launch this year. It will be interesting to see what business model they end up with in the UK. ITV is essentially an ad driven business but likes the idea of diversifying into subscription revenues. People think the BBC is as ad free business but they have been good at commercialising their content with Worldwide. Given that all the BBC content has been paid for with License Fee revenues, will the UK public be happy to pay again to see it. In a post Brexit economy?
Wall Street firm BTIG estimate that as much as 85% of Snap advertisers are now self serve and they make the point that this has reduced the quality of the advertisers. They also see that a lot of the Snap growth in the US is coming from non US businesses - suspecting that the Games firms are finding Snap a good vehicle for app downloads.
It’s also worth looking at the gallery of ads they have with their article - the standard of creative is so poor. Anyone who does good mobile ads will clean up.
As our top graphic shows the size of the Gaming market is quite astounding - almost $140bn in revenue in 2081 - with over half on mobile. Estimating the size of the ad spend that drives that growth is hard and this long piece eventually gets to a figure of $100bn. Even accepting that could be wildly out, it’s a big sector. A French games studio called Voodoo is now the third biggest publisher with 1 billion downloads. Thats up from 25th position a year ago, so we guess lots of that comes from a big increase in ad spending. Facebook and Google are - obviously - the biggest in downloads.
An entertaining A16Zpodcast interview with the CEO of Activision Blizzard ( Candy Crush to Call of Duty) looks at how gaming is going mainstream with mobile. And this piece explores how business models are changing - it used to be about how many people bought the game but subscription is now growing quickly.
It’s a while since we did a lot of work in mobile and money but one thing we used to find was that people were very open to the idea of GAFA offering banking or other financial services. That has not really happened but the growth of payments through GAFA has continued. And now Apple have partnered with Goldman Sachs to develop a credit card that will be integrated with the Apple Wallet app on the iPhone.
All the card companies have two key objectives - get your card into someone's wallet then get that card chosen for more transactions. So the bright Monzo cards are designed to stand out when you open your wallet. But in your smartphone the card set as default tends to monopolise, so the ‘native’ Apple Goldman card will probably tend to do really well. The new sonic logo from Mastercard, which will sound when the card is used, feels like an attempt to influence this default positioning
Connecting retail stores with digital has so much potential. All that first party data. Adweek looks at adtech in retail spaces and the Grocer looks at the challenges facing grocery digital ads. Driving sales at Amazon, Ocado etc is a huge opportunity but measuring the effect on sales - online and offline - is still a challenge. This doesn’t help that some of the location data used to prove a store visit may be spurious.
And a Snap survey shows how using different apps affects your moods. Of course the people paying for the research come out of it well. But there is a bigger point here - you cannot lump social all together. The idea that Snap isn’t needed on a plan as Instagram delivers all the same people is really naive, yet seems quite widely spread.
Emarketer think Amazon ad sales may be growing faster than people think. As ever they have lots of charts pointing to the top right corner. For me the key thing was noticing that in Q4 that Amazon ad sales at c$3.4bn were already about 20% of that of Facebook ($16.9bn). And they are just getting started.
It’s likely that Apple News will be a big part of the upcoming event Apple have announced. And as Facebook has pulled back from news, it’s become more important to publishers but they aren’t seeing the revenue they hoped for. In the past Apple just haven’t been interested in Ads but maybe we will see a new enthusiasm as they look to better support their content creating community.
One more piece of A16Z content - a video interview with a former Apple designer who has a new book with the SEO friendly title of Creative Selection: Inside Apple's Design Process During the Golden Age of Steve Jobs
Finally….. this is a fascinating video interview with a Bain Capital exec on consumer confidence and changing preferences - and how they use that to drive their investments. Really interesting - especially as they describe their skill as abstract pattern recognition. Which is sort of what we try and do with media
(HT Darren Herman and his excellent OP newslettter)
We just sent you an email. Please click the link in the email to confirm your subscription!