Fix/Friday — August 14

9 min readAug 14, 2020

Old Media. NewThinking

Traditional media has suffered through the Covid crisis. UK out of home audiences were down 90% in April as everyone stayed home. Newspaper sales fell off a cliff as newsagents closed as people avoided shops. Broadcast TV did quite well as the daily Covid press conferences topped viewing charts. But ad revenue dried up and streaming took more and more attention.

Just like every other sector, we’ve jumped forward 2 or 3 years in media and for those who have been losing the battle for audience and revenue, this is pretty disastrous.

But the core elements of these businesses remain valid and important. British news journalism has never had a bigger audience, with the digital reach of titles like the Guardian and the Mail being strong internationally. For all the problems with ad revenue, British TV has never been more successful, with the big streaming services keen to partner with the BBC, C4 and UTV to make quality shows.

The Mail shows the problems this week with print revenue down 69% and as many as 100 jobs could go. But some do get it right and this McKinsey interview with the outgoing CEO of the New York Times, Mark Thompson, is a must read;

So the broader idea of trying to deepen and broaden engagement — to broaden the appeal of the organization and to get smarter about how you attract people of different levels of income, in different cultural contexts and so on — is the way forward. The ultimate scale of the thing could be really immense — maybe 50 times, 30 times what the ambitions of the company were when it launched the pay model in 2011.

In another good interview he suggests the print version has at least 20 years left. A UCLA professor once told me he thought green issues would drive the end of the print edition — driving huge piles of paper around New York every day would become unacceptable.

Media and content is one area where the UK is world beating but the Government seems slow to act. Given the importance of ad revenue is it time to rethink business models and refine how we spend our ad budgets to better support these businesses? If we lose all this talent we suffer and so do the digital platforms that rely on it.

Out of home is evolving. This piece from Kinetic captures the way the industry is adapting and in the FT the Clearchannel CEO talks of how they will use mobile data to enhance their understanding of their audience and their habits. I did a similar project for ClearChannel a few years ago and they just weren’t ready for it — despite some super smart people on their team championing change. It’s great they are now moving ahead.

One issue that plagues many old media businesses is that in their costcutting, they have jettisoned much of the commercial talent needed to chart a way forward.

TikTok

The TikTok soap opera rolls on, as the 45 days Trump has given them ticks by. Microsoft seem to be the only credible buyer, but as the Guardian asks; is this a $50bn bargain or a blunder? There is talk of a Twitter involvement but that doesn’t seem likely — they lack both the team and the cash to make a deal of this magnitude work.

We found some interesting thinking about why TikTok is so intoxicating. And so valuable. Eugene Wei draws the analogy of the Harry Potter sorting hat for the power of the TikTok algorithm and makes the point that this algorithm could work in lots of different ways, for content other than video.

His piece reminds us of a key point; this is perhaps the best example of digital marketing we’ve ever seen. Tik Tok were spending about $2 billion a year on advertising to recruit users for their app. That $2bn has turned TikTok into a $50 billion asset in short order. And it dismantles the misunderstanding about branding. The love for the TikTok brand is driven by using the service, not anything to do with the ads. So the only legitimate measure for the ad spend is does it drive user growth.

The team are seemingly preparing advertisers for the possible ban. Another consequence could be problems for Apple as the WeChat ban could cause them problems in China. Adding fuel to the fire, the Wall Street Journal find that TikTok have been tracking user data using a tactic that Google banned.

But the New York Times took a look at Reels, the Facebook alternative and were not impressed

I still think this story has a relatively happy ending. TikTok will be bought and continue to be available and will remain a huge opportunity for brands. Following our webinar, we’ve got a regular email now looking at TikTok creative; read the first one here on how Apple use the platform, and sign up for future ones.

Merchant

We covered the Pepsi move into ecommerce a couple of months back — it came around the same time they were pulling money from the TV markets in the US. Pepsi epitomizes the classic FMCG or CPG business, so their switch towards ecommerce is really significant.

In their latest earnings call ( where US ecommerce sales doubled in the quarter) their CEO answered a question on growing market share with this;

There are some spaces in the market that are — I think will determine the share of market of the future. For example, I think e-commerce, if you see the growth of e-commerce, it is going to be quite strategic, I think. Whoever wins in e-commerce now and is able to capture those families that are trying this e-grocery service for the first time, I think, is going to win those families in the future. So we’re investing heavily in trying to be the first in that channel and trying to — and again, the investments that we made in the last few years, last year in particular, are helping us both from the data availability, the agility of our infrastructure to supply those channels, et cetera. So e-commerce is a key area where we think we can gain

market share.

This more sophisticated thinking moves ecommerce to the centre — the 1st party data becomes a competitive advantage that can be used across distribution and marketing.

Retailers continue to innovate around online orders. Morrisons reported £1bn in online sales and have coped well with demand. Coop have extended their partnership with Deliveroo to 400 branches and offer 600 items to be delivered in 30 minutes. In the US Walmart has partnered with Instacart to offer same day groceries in 4 cities and in China JD.com has invested in local convenience chain Fook to offer faster delivery. Delivery in Turkey has been a long standing tradition but a 2015 start up called Getir offers 10 minute deliveries. And a London based start up aims for 15 minute delivery

This convenience is welcomed by customers but it’s hard for the retailer to make money. The challenge for Pepsi and every other grocery firm (old or new) is to be available on these delivery services and then to maximise takeup.

Thrive Market, a health based online grocery store, is adopting the Costco membership model to offer better pricing. There is still value in physical stores and this Pop Up grocery firm is interesting — showcasing new dtc brands.

In related news Google have an AI tool that recognises packaging and can show information on price, reviews, nutrition etc. We pitched an app to advise customers of the nutrition and green footprint of grocery brands, but were a little premature. Adding a layer of advice to shopping will go mainstream at some point.

The physical presence of stores and the logistics for delivery and driving changes in retail real estate. Amazon is working with mall owner Simon to convert old malls and department stores into fulfilment centres. Simon is now buying old retail sites to make these changes.

Facebook is such a key partner for so many Merchants and they have a new initiative with the Facebook Accelerator: Commerce aimed at start ups who help merchants.

newTV

This Wednesday our midweek deep dive was on newTV and we covered lots of streaming in the US and globally, Roku and newTV advertising. Catch up if you missed it.

The global take is interesting as different markets have different ways of telling stories, so Bollywood and Nollywood have a different approach than Hollywood. A few weeks ago a Fix friend wrote that Anime is the most underrated entertainment asset. This style originated in Japan and is now popular globally.

Now we hear that Warner Media want to sell Crunchyroll — the leading platform for streaming Anime — for $1bn

Adtech

As Third-party cookies wither and die, much of the action around ID is coming from Europe This is a good profile of the key players from Ciaron O’Kane. Eric Franchi of New York based VC firm Math Capital is bullish about investment in European ad tech and cites our experience of GDPR as a driver of new thinking. So it was good for something.

People are starting to be more vocal about the negative consequences of removing IDFA.

Facebook told investors that changes in IOS 14 would hurt its ad targeting and that has to impact what they charge for ads. These comments reprise much of what they said with their post on the value of personalised apps back in June, after Apple first shared their plans on privacy.

Fix Friend Eric Seufert also makes the case for personalized ads in this twitter thread — arguing they are a public good. I agree and suspect that the app developers will be the one who suffer most — with much higher acquisition costs for new users and much lower ad revenue from those they have.

But it is not in Apples interest to have disgruntled developers. Look at the last line in your iPhone settings and read what Apple can use as contextual information to target ads. I think Apple will get much more involved in the ads on their platform and their SKAdnetwork looks like the way they will do this

In our Guild group we have an interesting conversation about the attribution opportunities when someone chooses to stop showing an ad often because they’ve already bought the product.There is also good debate around IDFA. Read more and get involved here.

Agencies

Agency trade bible Campaign says Virus accelerates need for agencies to change ‘at speed of WhatsApp’. Well yes — but you could argue they have missed similar signals for the last decade.

Looking at the poor performance of the holding companies there is little good news. Another quote from the Pepsi results talks of inhousing marketing work, saying “So, we can actually get [the] same or more value for less money, which is obviously a terrific outcome for the company,”

They do acknowledge that a new breed is emerging, mentioning Sorrells S4Capital and You&MrJones. Their good growth is one proofpoint but I think more significant is the way they embrace new opportunity. I mentioned on Wednesday that MediaMonks has partnered with talent agency CAA and this week You&MrJones bought an influencer agency

There is a lot going on with smaller agencies too — particularly those that are focused on ecommerce and performance.

If you are clearly adding value then an Agency can still be a good business. But if you find it hard to define the effect of what you do, then it’s a struggle. Given so many brands chose to slash their spend on traditional media, it’s likely they can’t see the value. Will that spend ever come back?

AI — Creating Ads

When we shared the essay Fix friend James Chadwick wrote last year on how to make the most of Facebook ads it was the most popular piece of content that month. His new one — How to create Facebook ads with AI — deserves to be just as well read. He has been working with the Pencil team and this piece draws on the latest AI skills and techniques. A must read.

This is a good look at some of the other firms pioneering AI and hypotenuse focuses on copywriting.

The Guardian looks at GPT-3 but worries about deep fakes as does the FT

And here’s why Apple believes it’s an AI leader — and why it says critics have it all wrong

Plus

The FT looks at the daily grind for Uber as the BBC looks at its’ rivals in the Taxi wars

And the Uber CEO writes in the New York Times about how gig workers deserve more — but he doesn’t want to employ them.

Pinduoduo and Vertically Integrated Social Commerce

Instagram morphs into an information powerhouse

Digital Consumers of Tomorrow, Here Today — a good Facebook research report

How ‘hyper-casual’ games are winning the mobile market

Would breaking up ‘big tech’ work? What would? Good thinking from Benedict Evans

‘You’ve been smoking too much!’: the chaos of Tony Wilson’s digital music revolution