Fix/Friday — January 22

Merchant

Wednesday saw our first Merchant deep dive since early December so there was lots to cover. We focused on Metrics, Returns and Churn. Catch up here.

One area with lots of action is Fashion. Asos reported sales up a third, with high street rivals being closed. Interestingly the profile of goods being bought now has a lower returns rate, so good for the margin too.

There are some really strong European players in fashion. German based firm MyTheresa is valued at $3bn after a very strong IPO — shares were up a third in early trading. The business changed hands for $200m in 2014. The other German fashion giant that is often overlooked is Zalando — at its last results it raised its forecast — with GMV expected to grow by over 25%

The big players still dictate the pace of change in commerce. In China WeChat advances e-commerce goals with $250B in transactions and How Shopify became the new retail empire

And I mentioned on Wednesday this Hedge Fund thinking on how the death of physical retail has been greatly exaggerated. A long read but really good.

newTV

Our second newTV event on Tuesday went really well. We focused on distribution — the balance between cinema viewing and streaming that is going to dictate the fortunes of all the players. Our guests were able to give great insight — Yvonne from Sony is operating right at the heart of this, Mary Jane works with Lord Putnam amongst others and Maureen from our friends at FTI had great data to share. You can watch the full event video here.

We are thinking about a third event and, like these two, intend to use the Fix community to source great speakers and our audience — so if you are interested in getting involved let me know.

There is no shortage of topics for another event. The new report from Moffett Nathanson covers many of the issues we did, but I liked this point on the new imbalance between the distribution and the talent;

Massive media entities control the pipes through which content is self-produced and distributed, reaping more benefits than the creators and middlemen. In the traditional distribution models, box office revenues and television ratings were clear indicators of success (or failure), ensuring talent was properly compensated for their work. On the film side, movies going to streaming services day-and-date immediately cannibalizes the box office, negatively impacting downstream revenues and limiting profit participation for creators while benefiting media companies in the form of direct-t0-consumer subscriber growth and retention

More on the talent in this Bloomberg article — Studios are being generous in compensating talent likely to be impacted by switching films to streaming but is there a longer term effect? Will talent choose future partners based on how their movie will get shown?

The latest Netflix figures support the idea that size really matters — increasing subscriber numbers and increasing prices make them think they can self finance their colossal content production bill. But the competition is intense and in the UK Amazon gained more subscribers over Q4 — helped by their Live Premier League coverage. How sustainable that is can be questioned, as the current televising of all matches will come to an end — but do the benefits of Prime help minimise churn?

The same research shows how well Disney has done and the FTI research confirmed our thinking that these 3 (Netflix, Amazon and Disney) dominate. But those O2 free deals for Disney are expiring, so we will see how well they convert customers to paying.

A US firm also believes in the rule of 3, and has good analysis of the bundling & unbundling that is going on with subscriptions. There is one big difference between the US and Europe. Cord cutting in the US frees up considerable household budget that can be reinvested in streaming subscriptions. In Europe, Sky (and others) don’t see these levels of churn and have been smart about bundling in new services.

Some good thinking on how Netflix re package their content to make it appeal to more people — which reminded me of this idea that some of the programming is ambient — designed to be in the background. It’s what happened to music — once it was something you sat and listened to and now it is something you hear whilst you do something else.

Creative Tech

I am working on a talk around Creative as a Superpower for a client and it’s fascinating how some are rethinking the impact of creative on media performance — and how that focus opens up new economics.

To work well requires a focus on tech and data. Our friends at Pencil are making great progress and this profile of the CEO calls out the USP of all Creative Tech

“We make it quicker and cheaper to produce your ads and we’ll also ensure they are more effective,”

Others have a similar approach but without the AI smarts — and process makes it work for them. This Facebook focused Agency shares their approach and this Common Thread video on how they reinvent AIDA is well worth signing up for.

With all the noise on newTV it’s good to see a focus on creative — will picture in picture ads get traction? YouTube are always testing new formats and their latest test is on shoppable video.

Our friends at ResponsiveAds have great shoppable ads with their super rich creative — making display ads that get attention. (If you would like your display ads to look like these, ping me for a demo)

Social

The current No1 song Drivers License has got its first 100m Spotify streams in just 8 days. The fastest growth ever. This achievement is down to a thoroughly modern marketing campaign centred on TikTok and using the best influencers, including Charli D’Amelio and Taylor Swift. Lots of learning here.

With great timing TikTok have released a report on how music is so integral to the platform — Sound On.

Twitch doesn’t often get the attention it deserves. The streaming platform had 17 billion hours in 2020 — up from 9bn in 2019. The huge success of rising political star AOC playing Among Us should help attract more events to the platform

Adtech

We still don’t know quite when the next squalls of the Perfect Storm will hit, but smart people are busy preparing. The changes to the IDFA are expected soon and Fix friend Eric Seufert thinks Facebook could take a 7% hit on revenue due to the new App Tracking Transparency. In our Guild group it was pointed out that this is a lot of money — over $5bn for the year to October. But Facebook revenue grew 22% year on year on their latest results (Oct) so they would still likely show substantial growth.

The real impact is on those app developers who acquire customers through ads and those who monetize through ads. Core Apple customers. Erics’ piece is long and (typically) thorough. Well worth reading.

The IAB is advocating preparation and experimentation and some agencies are advising their clients to make preparations — Wavemaker have a plan to wean their clients off third party cookies by June.

Smart publishers are ahead of most of the industry, as they have felt the effects since the Safari changes devastated mobile 3rd party tracking. The New York Times are in the vanguard of change — with 6m digital subscribers — and this is a good summary of their plans. I liked this quote

“I think this is like a turning point, a pivotal point in the industry.

“Big tech has their own opportunity to be able to do good stuff. But it’s a chance for the open web to come up with a very good and powerful strategy to be able to attract the marketers going forward, without the third-party cookies.

With the news that regional press firm JPI was bought for just £10m — a fraction of its value a decade ago, I have been thinking about how fragile quality press titles are these days. Arguably because the ad industry has chosen to avoid spending digital money with them. Big brands still spend on press ads but you rarely see brands you have heard of in the digital and mobile versions of these titles.

Instead you generally see programmatic ads — cheap, crap banner ads and MPUs that also run across the long tail of the open web — relying on 3rd party cookies to stalk users. Most of (all) the issues around fraud and brand safety come from these long tail sites.

One of the people who calls out fraud is Augustine Fou and his latest article is a sobering reminder of how toxic fraud is. Some think he exaggerates the issue but the (still) missing ISBA15% suggests there is at least some truth in his views.

So, could we use the demise of 3rd party cookies to reinvent Display? Could everyone buy on quality sites, using context, 1st party data and super rich ad formats, which enhance the page and grab attention with great creative? Measure the impact with brand metric studies as well as clicks, engagement and sales?. And stop the overzealous use of blocklists, so ads do run in News. Switch from quantity to quality.

That way Publishers and creators of good content are rewarded. Readers are not assaulted by crappy ads and pop ups. And Brands reach real people in a way that traditional media has taught us works pretty well.

Yes, it will be more expensive and harder work. But as we all know, things that are cheap and easy, tend to be crap. And most display today is a bit crap.

Am I being naive? Have I missed something? Can you help? Tell me in our Guild group. Let’s Fix this.

Plus+

And the FT reports that the EU is quizzing Google’s rivals about its advertising business. This has been going on for years. The Eurostar often used to have groups from Agency Holding Companies and Adtech firms making the trip to Brussels to gripe about GAFA.

Investors Push Home Depot and Omnicom to Steer Ads From Misinformation

The New Normal in 2021: Five Things You Need to Know in Mobile

‘StreamScam’: Connected TV households’ devices fraudulently spoofed — how ad fraud is growing in newTV — written by a Fix friend and panellist at our event last week.

Apple’s First Headset to Be Niche Precursor to Eventual AR Glasses?

Pattern Recognition / Strategy / Consulting / Creative Thinking from Simon Andrews — Sharing knowledge through our email newsletter Mobile Fix every Friday