Fix/Friday — February 26

Merchant

The latest results from RB show how CPG brands can embrace change and organise a ‘traditional’ business to take advantage of changing behaviors. ecommerce grew 56% year on year and now accounts for 12% of total group revenue.

Doing some work for a Google talk I looked at how Tesco hired 3000 drivers and 10000 pickers to cope with the spike in demand for online grocery. They closed their 24 hours stores at 10pm and the pickers worked through the night packing orders. Enabling them to go from 600k orders a year to 1.5m. And they beat Ocado in the latest Which research on online supermarkets.

The inflexibility of the Ocado warehouse model is underlined by the news Asda plan to close two of their warehouses and switch to picking in local stores. But in the US Instacart are exploring use of robot-driven warehouses though they have a business model issue. Most of their 500k gig workers are picking up groceries in physical stores and those stores worry that Instacart may try and disintermediate them.

newTV

In this weeks Deep Dive we considered whether Content is King? And covered the Roku results, Sports and Asia. Catch up here.

The last of the legacy TV dynasties played their streaming card this week. Viacom CBS announced their plans for Paramount+ and hope to double their current customer base to 65m by 2024. The content they announced doesn’t really support that optimism — Paramount has a good back catalogue and they got some good coverage with the plan to revive Fraser.

They are launching with a $10 monthly price tag but an ad supported service costing $5 will follow shortly.The one advantage they have is the CBS array of Sports rights. And ad supported Pluto.

Staying with sports the surprise hit on AppleTV is Ted Lasso — a comedy about an American who gets the job of coaching a British soccer team. Anyone seen it? Is it worth a look? (There is thread of interest in US comedies and UK soccer — Veep had a subplot around Leeds united for a while) And AppleTV is now available on Google TV — and Chromecast.

This is a good summary of all the Streaming launch events. Looking at them all together you realise it does come down to the content.

Audio

The Spotify Stream On event this week was subtitled the future of audio, and the breadth of announcements almost justified the hype. I think it boils down to 3 issues;

Unique content — recognizing that every music service has — more or less — the same content, Spotify continue to invest in exclusives — with their new Obama and Springsteen podcast getting lots of PR

Creators — the expansion of Marquee — where musicians can run campaigns promoting their music across Spotify is a parallel to the rise of retailer media. Spotify — like Amazon — double dip by taking the ad revenue and their share of the ‘sale’. But along with the Discovery Mode, where artists prioritise which of their tracks they want promoting, Spotify want to be seen as the artists supporter. I think the expansion of Canvas — all artists can have visuals while their music is playing — is really interesting. Does this see a new art form ? — the evolution of the pop video? And does it blur the line between audio and video?

Advertising — the success of the Spotify ad business looks set to continue. They can exploit the reach against unique audiences and their SAI tech gives them a better set of tools and metrics than their RSS based rivals. If they can pull off their Audience network ambitions and bring in more audience and more inventory, they can really grow the sector.

Snap

With their first Investor Day this week Snap is projecting confidence. The event was 3 hours long and covered all their business — the slides and transcript are worth flicking through if you don’t want to watch the whole thing. I was struck by the range of their ad business.

In its coverage the FT makes the good point about the Chinese influence;

Executives at Snap’s investor day did not name Tencent — which has a stake in the company — but the Chinese mega-tech conglomerate’s influence is everywhere. If Snap users used Minis for similar-sized transactions, Snap would be reporting over $50bn in gross annual transactions.

And the Day paid off — Snap shares were up 11%.

Display & News

Things have settled down downunder, with Facebook settling after reaching some deal with the Government. It all remains quite unclear and Lord Rothermere, the owner of the Daily Mail, asks some cogent questions in a letter to the FT;

Politicians everywhere have watched events in Australia with increasing alarm. Now they must ask themselves, who makes the rules? Do the platforms decide what news the public can read in secret deals with the publishers they favour? Or will governments and regulators act with genuine resolve, to ensure fair and transparent treatment for all?

This uncertainty affects issues like the rumoured sale of the LA Times — should bidders factor in a revenue stream from Google and Facebook? Does the recent sale of regional press firm JPI seem more of a bargain at £10m?

And what do publishers plan to do with this windfall? Hire journalists? Improve the dreadful UX that plagues so many titles now? Do something about the terrible ads they all run now?

Adtech

As third party cookies wane and wither away, those with 1st party data are recognising the opportunity. In the latest Walmart results call, advertising is mentioned many times, with their CEO answering one question;

We have big goals with Walmart Fulfillment Services and with Walmart Connect, our

advertising business, we have a multibillion dollar opportunity when you consider our reach. Our website [indiscernible] (01:44:43) our TV walls and self-checkouts, and our ability to help suppliers place ads outside the Walmart ecosystem.

Five years from now, we expect to be well within the top 10 advertising platforms in the US, ahead of big players like Hearst, Fox and Twitter. And Walmart is one of the biggest buyers of media in the country. We understand the relationship between advertising spend and business returns. So we know what marketers want.

In terms of the flywheel, the Connect model will grow as other parts of the businesses grow. Because we can do things like help marketplace sellers reach target audiences, creatively place targeted ads and buy buttons on digital platforms. And this is something that’s happening a lot in other markets, but it’s totally underdeveloped in the United States. And as Walmart+ drives loyalty and brings more data, we can help brands create new ads and

experiences for our members.

ASOS are on the same track, with 4 programmatic hires being made. They are emulating Zalando who have a very sophisticated ads business — primarily for the fashion brands stocked, to drive sell through.

For any ecommerce business this approach makes perfect sense — enable your brands to run ads that drive more sales on your platform. And double dip with the ad revenue and share of the sale.

For brands it makes perfect sense too. Context and good data. Back to theSpotify ad proposition;

All media available via the Spotify Audience Network will be addressable based on demographics (age, gender, and location) and audience segment (ex: fitness enthusiasts, gamers, luxury shoppers) with contextual targeting (ex: business & tech, lifestyle, gaming) coming later this year.

Is that not enough to create magical experiences for consumers, which drive business outcomes for brands? Do we really need more than that? If we can get great creative into the mix, we are on to a winner.

China

What Douyin’s Pivot to Search Means for Brands — and what could it mean for sister business TikTok? App content is beyond the reach of Google and with Instagram search being quite poor, Douyin could have a huge opportunity if they can nail video search.

Why do we take such an interest in China? E-commerce sales in China set to outstrip bricks-and-mortar retail in 2021

Plus+

Regulation could kill Klarna. But it could also save it

YouTube’s ‘supervised experiences’ help parents choose what content their kids can see

Excellent (long) Tim Ferris podcast with Katie Haun, the go to VC at A16Z for anything Crypto and a former federal prosecutor with the US Department of Justice

Why an Animated Flying Cat With a Pop-Tart Body Sold for Almost $600,000

eugenewei : American Idle — TikTOk & the network effects of creativity

Power to the Person — The Creator Economy, NFTs, and the Rise of the Solo Corporation

The link in bio is a friction point for DTC and for Creators — a new firm hopes to help

Finally Twitter announces paid Super Follows to let you charge for tweets