Fix/Friday — January 29

Dollar Dollar

It’s earnings time and Facebook went first — with another big quarter — revenue up by 33%, beating expectations. Ad revenue per user tops $51 for Q4 in the US — over 3 times that in Europe. And Zuck took every opportunity to have a go at Apple and their Privacy driven changes to IDFA etc;

“Apple may say that they’re doing this to help people. But the moves clearly track their competitive interest,”

I think the idea Facebook takes a significant hit from the Apple privacy changes just doesn’t hold water. The best estimate is probably the 7% hit predicted by Eric Suefert. In this quarter the surprise — by how much they beat expectations — was just over 6%. It is a lot of money but manageable in the economics of this business.

They will need to change though. As Forrester say;

“The hyper-targeting that makes Facebook’s properties so attractive for advertisers won’t disappear overnight but will grow increasingly more difficult — forcing Facebook, Inc to rethink its ad model.”

Apple reported too and also beat targets. One area of note was wearables — up by 30% with Tim Cook saying

“We’ve brought this thing from zero to a Fortune 120 company, which was no small feat, but I still think we’re in the early stages of those products,”

Adtech

Apple don’t seem to have mentioned Privacy in their results but yesterday (Data Privacy Day) the Apple home page gave privacy the same prominence as their top products.

Clicking through gets you a piece on Your Data Your Choice — and a link to a well crafted PDF A Day in the Life of Your Data. And Tim Cook spoke at an Apple organised event on Privacy and without mentioning Facebook, trashed their business model.

(Later in this event Jane Horvath of Apple was asked about changes that Eric Seyfert spotted — apparently giving an advantage to Apple Search Ads — and she dodged the question. This supports our view Apple will launch its own ad solution — geared to their Privacy policy. She also fudged when asked if Apple would change the default search engine from Google to Duck Duck go etc.)

Suggesting the ATT / IDFA changes are due in early 2021, Apple aren’t helping the industry with a specific date, and everyone is getting ready. Facebook have updated the way they measure attribution — with the 28 day option disappearing. This is a big change and this analysis of the effects for a number of advertisers shows that cost per purchase increases significantly.

But I wonder what has really changed? Does that FB ad you saw on January 2nd really influence a purchase you make today? I have written before that loose thinking on viewthrough drives money being wasted on mobile banner ads and think the same may be true with Facebook. There is a lot of good advice around on how to rethink your FB strategy — like this from Andrew Foxwell.

And Google are making progress with their thinking on what replaces cookies. Still with the bird thing they have settled on FLoC — Federated Learning of Cohorts. To me the approach makes a lot sense but their claim it is 95% as effective as Cookies has stirred the industry.

Here a number of smart people share their views. The fact this initiative is driven by Google colors much of the dissent.

It’s going to be next year before this is fully implemented and I suspect lots may change between now and then.

This Cohort thinking fits quite nicely with the work many publishers are doing with their 1st party data. Zeus from the Washington Post is getting wide traction and the addition of video will help. 1st party data is also high on the agenda for the smarter brands and here a Mars exec explains their approach.

btw I was pleased with the reaction to my call last week for a new approach to display — a big focus for the coming months. One key element is creative and the link for the super rich shoppable ads last week didn’t work — check them out here & ping me for a proper demo.

Regulation

Another element in the Perfect Storm are the regulators — and the Civil Servants are coming now. The ICO have announced they are resuming their investigations into adtech and a Guild member pointed out that they coordinate and cooperate with the CMA and Ofcom through the Digital Regulation Cooperation Forum (DRCF).

This quote from ICO announcement sets out their priorities;

“Enabling transparency and protecting vulnerable citizens are priorities for the ICO. The complex system of RTB can use people’s sensitive personal data to serve adverts and requires people’s explicit consent, which is not happening right now.

Which dovetails with the action their Norwegian counterparts have taken — a €10m fine for Grindr. This is subject to appeal and people will watch closely as Grindr say;

We most recently required all users to provide consent (again) in late 2020 to align with the GDPR Transparency and Consent Framework (TCF) version 2 which was developed by the IAB EU in consultation with the UK ICO.

In the absence of much detailed advice from the ICO, many have followed this guidance driven by the IAB — because it was developed in consultation with the ICO.

Social

Tiktok is ramping up its marketing to brands and agencies, with lots of activity recently. A piece on how they set the bar for music now. A Grocer article asks is it the right time for FMCG and retailers to use TikTok? Spoiler alert — they think it is. And their global head of marketing talks of marketing at the speed of culture.

At Facebook their News initiative is launching in the UK. With all the controversy over the relationship between Google and publishers in Australia, this is something to watch.

Bloomberg on GenZ and the gaggle of disruptive brands is deftly targeting consumers born between 1997 and 2012.

AR/VR

More Snap moves in AR with the acquisition of a UK start up Ariel AI. The WSJ has a good profile of Snap which is very positive — including this quote;

….analysts increasingly eyeing the company’s innovation pipeline, which MKM Partners’ Rohit Kulkarni calls the best in social media.

We have said before that Snap has the best Product team with great insight into their audience. Apple see the potential in AR and VR too and there is a lot of talk about their VR headset but it seem years away from launch.

newTV

This week our deep dive was on new TV and we covered Subscriptions, Customer Acquisition, Advertising, Cinema and Asia. Catch up here.

One big topic in Streaming is Sport and I intend to look at that over the next few weeks. Peacock see it as an opportunity and their new partnership with WWE is really interesting

Plus +

Excellent new presentation from Benedict Evans — The Great Unbundling

Shutterstock makes a $75 million bet that the future of photography won’t always involve cameras

Daily Mail owner suffers fresh fall in advertising

Andreessen Horowitz is developing its own media outlets. That might not be good news..

The podcast business is booming, but few are making money

A16Z ‑ — Investing in Clubhouse

The Social-First Brand — Whitpaper

China — Can Luxury Reach Gen Z With Anime?

Walmart enlists The Trade Desk as it plots big growth for its ads business

Finally we’ve covered the metaverse a little — and here is some super smart thinking here from @packym — The Value Chain of the Open Metaverse.

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