Fix/Friday — October 30
Dollar Dollar
The Q3 results came out last night, on the last night of my St Ives holiday so a quick review for now. The FT wrote a good piece on what to watch for and generally it was all good.
Google shares popped as their revenue grew — with YouTube revenue up 32% year on year. Amazon blew the doors off too — revenue up 37% and others — which includes ads — was up by 51%. Facebook fared less well — modest growth in revenue but a slight drop in US Daily Active users. The ARPU in Europe was up though. Apple beat expectations but weak iPhone sales — especially in China — worry people.
The biggest firms in the world — the most valuable businesses we have ever seen — are advertising companies. Even Apple make money because the iPhone is the best way to access a plethora of content and services from businesses that make their money from advertising.
As we have argued for the last decade, every business needs to understand how to make the most of GAFA. Are you doing enough?
I will be reading the transcripts on the train home and will share more thoughts in our Guild group. If you haven’t joined yet click here.
Adtech
The anti trust inquiry into Google is clearly politically inspired and this Techdirt look at the machinations behind the inquiry is a good read. But whilst the Google enquiry is mentioned by Trump, GAFA face similar issues whoever wins on Tuesday;
The issue from the inquiry that is getting the most attention is the question over Google paying Apple for access to iPhone users — with Google being the default search engine in Safari browser.
In Fix we have covered this lots over the years; it is the San Andreas Fault of Tech and has always been the most likely shift in the tectonic plates of Google and Apple. The deal gives Google access to a huge chunk of mobile search and the most active and affluent user base. Without the iPhone, Google would still have access to all the Android traffic, but would be more about quantity than quality.
Google have been quick to make their case with this blog post;
For Apple, the notion that Google know so much about Apple customers, through their searches, must hurt. Especially as their focus on privacy has grown. But what could Apple do? Google pay well and even if they changed the default, most people would work their way back to Google as the alternatives just don’t stack up.
But. Google don’t pay that well; it was always thought to be around $3bn until these rumours of $8–12bn emerged. A Fix reader points out that total TAC was $15bn in 2029 so Apple is unlikely to be so high.
And a few years ago Apple hired a former Google search expert. And in iOS14 some search queries are now answered by Apple. And the FT think Apple plan their own search engine
It’s hard to see who can genuinely compete with Google. In the EU a different process is used to select which search engine is used by new Android users — firms bid to be displayed most prominently — and rivals say Google continue to dominate. Others have tried in the past — remember Amazon A9?
I think Apple want to play in advertising, but display seems easier and more fruitful than search for them. But we’ll keep watching.
Publishers
Legacy media brands seem to suffer most in the adetch world. DMGT shares went up as their latest results were not as bad as was expected. The latest UK forecasts from AA/Warc suggest Q4 for newsbrands will be down almost 16% — but online only down by 4%.
A leaked report on the WSJ shows the challenges many face — with ageing audiences and subscription churn outweighing new customers. How do we protect this important sector? Or is it just too late?
Tiktok
The TikTok hoo haa seems to have gone away for now. The latest news is that a judge will rule on Nov 4 whether they can be excluded from app stores. But confidence within the firm looks strong — announcing they plan to hire 3000 engineers — mainly outside the US ( and China)
And a new partnership with Shopify enables users to easily add social commerce. It’s a smart move by both parties and underlines the trend we see elsewhere — commerce will be an integral part of social.
As a Shopify exec told the FT;
China
Two weeks out from Alibaba Singles Day, research predicts revenues will surpass last years $38bn, but that Chinese brands will be favoured over Western ones.
Alibaba rival JD.com also go big on Singles Day with a particular focus on live streaming. And this year some of the parcels will be delivered in their new fleet of autonomous delivery vans.
newTV
This is a good Wired piece on the chicken and egg dilemma facing cinema chains — when the films do show up, will there be any screens to show them on? There are some independent chains that have weaned themselves off the diet of blockbusters and the CEO of Curzon is hungry for change;
It is legacy business issues holding everything back. The vertical integration of conglomerates like AT&T make them fragile. And it’s legacy thinking that makes the Bond team unwilling to sell their new film to Amazon or Netflix for less than $600m. Read the comments in Variety and no one thinks cinemas are coming back soon — so we may see this conversation revived.
More legacy thinking over carriage or affiliate fees also hinders newTV development as this long article shows.It reinforces how old models can be too lucrative to give up.
Lots of people are picking over the bones of the Quibi demise.I agree with this piece saying that new ideas are to be welcomed and encouraged rather than vilified. Long time media commentator Jason Hirschhorn has some smart thinking on what Quibi got wrong in this Podcast
Creative & Social Ads
Following on last week’s piece on creative tech, this thread from Common Thread on how they approach creative is a good resource. As is this from the same people on acquisition costs. Post Black Friday there has been a lot of talk about spikes on social costs — maybe the $200m spent by the Trump and Biden campaigns is a factor?
Merchant
Amazon are relaxing their standard layouts to give brands more room to promote products, reverting to the standard UX a couple of clicks in. This is how Fitbit use it. And as Amazon strive to understand their shoppers better, they will now pay customers for data on non Amazon purchases.
Grocery is a hot topic everywhere — because nearly everyone buys this category, all the time. In Russia the largest food retailer is investing in delivery to fight off tech rivals. At the hottest LA grocery store Erewhon- delivery isn’t a big thing. Showing up at the store is.
Our friends at RB have partnered with Founders factory to search out the next generation of home and hygiene DTC brands
Plus
Resetting online commerce — Benedict Evans
No surprise that Shopify had a great quarter but the fact their Gross Merchandise Value — the value of goods sold though the platform — doubled year on year is quite staggering.
Martech 2030: Five Trends in Marketing Technology for the Decade of the Augmented Marketer
Facebook adds hosting, shopping features and pricing tiers to WhatsApp Business
Instagram to crack down on UK influencers’ ‘hidden advertising’
Byron Sharp on the legacy of How Brands Grow — and why he disagrees with Les Binet . Not a huge fan of Sharp but this makes some sense.
Foursquare’s Marsbot for AirPods offers location-aware audio tips
QR codes are finally having their moment because of Covid-19
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