Fix/Friday — October 9
In this weeks Deep Dive on new TV we looked at the battle between cinema and streaming. I took the view that if Disney is holding back on its major movies until next year, the business case for a streaming launch was not made by the experiments with Hamilton, Artemis Fowl or Mulan.
The FT have been looking at the same issue and this is a good take — essentially the studios have hung the cinemas out to dry. Rumours of the studios buying the cinema chains persist
“If Disney bought AMC, there’s no reason why they could not show The Mandalorian 2 in theatres on opening weekend, and then start streaming it after, and they would make so much money,”
Amazon was rumoured to be considering the acquisition of AMC (who own the Odeon chain) but why buy distressed assets like debt laden cinema chains now — better to wait and buy them debt free after a bankruptcy.
An activist investor in Disney is bullish on streaming and wants Disney to axe the dividend and double the streaming budget. Their math;
By permanently cutting its dividend — worth about $3 billion a year — the company could more than double its Disney+ content budget of about $1 billion a year. Combined with raising the service’s monthly fee, currently $6 a month, and reducing so-called churn, or subscriber defections, the hedge fund thinks that the “lifetime value” of a Disney+ customer could rise to $500, from $100 today. (Third Point says the market values Netflix customers at about $1,200 apiece.)
But whatever content you have on your platform you depend on a number of gatekeepers making it available to their customers. The big players here are Amazon and Roku and we keep covering their strong arm tactics to get ad inventory to sell in return for distribution. We covered the new Chromecast and this good Digiday article looks at their aggressive strategy to build their newTV business. They make the good point that the rise of Google makes it harder for Amazon and Roku to hold out against HBO for example
The regulation of GAFA seems inevitable and getting closer. A new 449 page US report decries the monopoly power — this is a good summary;
The EU have signalled they will make more use of the power to investigate GAFA as they win their case against chip maker Broadcom.
Benedict Evans has written a good essay on why regulation is a bit more complicated than just breaking them up. Which raises the question who has the expertise to design the regulations and actions that will work in the consumer interest? Previous interventions like the cookie rules and GDPR have done little more than ruined the customer experience.
Another story telling us that digital ads don’t work, This ex Google engineer sees Adtech as the next internet bubble, making a convoluted comparison with the US housing market crash. This sort of ties in with the news that Cambridge Analytica were judged not to have influenced the Brexit campaign. Or the Trump campaign.
As we have argued before, there was no secret sauce — these campaigns just understood how to buy Facebook ads really well. At that time, it meant highly targeted audiences with lots of relevant creative — so mums in Heckmondwike see ads that relate to their concerns, and their engagement with different creative, gives off signals that trigger the next ad they see.
The same approach that has led to the burgeoning D2C sector — all seeing that digital ads are highly effective at driving sales.
There is one element of the anti digital opinion that has some merit. A relatively small share of digital spend is bought programmatically outside of the main platforms. And these buyers choose really low CPMs over old fashioned things like context. So you see campaigns from smart brands buying across long tail sites — the recent Isba report talked of a number of big brands spending on tens of thousand of sites
That’s where the problem is. That’s where the fraud is. And it has no effect on people. If that money was switched to premium publishers, we would all be much better off.
Investors get this. It’s why the most valuable companies in the world are advertising companies. And the ecology of adtech continues to attract investors as a new Luma report shows confidence has returned
Of course in this long tail are some publishers with real value and a smarter use of the technology could add real value for them and for the brands relevant to their audience.
A good feature in the Press Gazette — the trade title for journalists — gets into the pros and cons of programmatic and is worth reading. Our friends at Ezoic have a lot of tools and resource for these smaller publishers.
Google — along with the Sorrell agency Mighty Hive — have created a data playbook for news publishers to help them achieve better results.
Axios believe News Corp is softening their attitude to GAFA — just as Google agree to spend $1 billion on licensing and curating publishers content. The article goes through the partnership News has with tech firms. This makes perfect sense. We have always argued that everyone has to learn to make the most of the opportunities with GAFA — that’s where the people are and it is where the money is. If you can do better than your competitors with GAFA you have a real competitive advantage.
When we first started covering China there really were just 3 firms to think about and BAT became the Chinese equivalent of GAFA — Baidu, Alibaba and Tencent. How things have changed, with ByteDance, Xiomai, Ant, JD.com and more all very active and influential.
The one that has lost some of its shine is Baidu. Its reliance on advertising means the company stock value has flatlined whilst competitors with a number of business models have soared. This very detailed Seeking Alpha piece argues that Baidu is now really cheap. Given the Baidu expertise in AI they may be right.
One reason Baidu dominates in search is because Google search is blocked and I was surprised to learn that Chrome is the most popular browser in China. Its success comes down to similar reasons for its success in the west — it’s fast and the home page is uncluttered.
The Chinese economy is getting back on track — shown by this look at the crowds at the Beijing auto show.
And for a masterclass in Chinese digital business browse through the presentations from the Alibaba Investor day — so much good stuff.
The whole of Asia is full of innovation and energy — Jio in India is building a remarkable business with help from Facebook and Google
We have to mention the C word — even with our current difficulty, Christmas is going to be huge for Merchants. With Prime next week we can expect ecommerce activity to run from now until Christmas. Digiday see brands shifting money into retailer media and talk up the need for adaptability. It’s hard to call how this year will go — no one wants to go too early, nor be too late.
Getting the basics right is as important as ever. With Google Shopping bringing their free organic listings to Europe that must be a priority. It’s also worth getting your Pinterest presence on point — and they have some good new paid for ad opportunities. Facebook have lots of good advice too.
With all that browsing, making retargeting work harder has to be a priority — this paper from Common Thread has some good thinking.
I saw that a new event celebrated the impact LA has had on ecommerce — they claim it’s the capital of ecommerce. The people behind the event shared some good advice on using email and SMS to drive Christmas business
Fix friend gives a great refute to flat earth thinking from Byron Sharp
No real news on TikTok — I believe nothing will happen this side of the election. But a London hedge fund has made a bid and thinks it could step in if Oracle backs out.
Facebook Widens Ban on Political Ads as Alarm Rises Over Election. Too little. Too late.
Finally…. I think one of the unsung achievements of the ad industry is that it has invented a hugely valuable skill set. The planner.
I was at an event in Brighton a few years back and it was full of the cream of Londons planners. But I realised most people there had left the agency world and were working for themselves. And applying that skill set across a much wider set of issues than just ads.
Snap are hiring a planner and their head of Creative Strategy has written a great piece on this skill set and its value to a wider set of businesses. Including Snap.