Fix/Friday — December 4

Merchant

Lots of figures showing how big BFCM was this year — with the performance of Shopify getting most headlines. $5bn in sales is remarkable — we will get into more detail on Shopify, Amazon and the rest in our Merchant Deep Dive next Wednesday.

But the other headlines this week are just as important, with the closure of Arcadia, Debenhams and other high street stalwarts looking likely. When these big anchor stores close all the surrounding small stores suffer as traffic reduces.

Part of the problem is Covid and its role in creating Doughnut or Bagel towns and cities — nothing happening in the centre whilst the surrounding areas do well. But most of these businesses have looked fragile for a while — as their customers embraced the convenience of online, they under invested in digital.

This quote from Philip Green complaining about iPhones tells you all you need to know about his digital thinking.

“If you drive around London, you could kill 15 people inside half an hour, just walking in front of your car,” Green growled. “They look at you like, ‘How dare you be driving along?’ In my office, they get in the lift and I ban them from using their iPhones for 40 seconds.”

One senior Google exec tells the story of visiting a TopShop store with Green and being amazed at the level of detail Green knew about the store, the stock and its performance. But asked about basket abandonment rate on topshop.com, he had no clue.

The luxury end of the clothing markets seems to fare better, but LVMH have lost their ex Apple head of digital to aFrench fintech firm. There are some musical chairs as Yoox Net-a-Porter promotes a new CEO — amongst rumours of a possible merger with Farfetch and the closer involvement of Aiibaba.

Livestreaming shopping is here. The NTWRK runs 10 minute Snap Original shows called The Art of the Drop — and they sold out within hours of the show going out.

Super App

Everyone loves the idea for a super app that does everything and Wechat from Tencent is the one everyone aspires to.

It’s clear that Facebook shares this ambition and the role for WhatsApp seems to be evolving. For a while Messenger was touted as the platform for customer service but that emphasis seems to be shifting. The latest Facebook acquisition is Kustomer — a customer service platform, that is already integrated with Messenger and more recently Instagram messaging. At a rumoured $1billion, will it be added alongside the recent WhatsApp for Business tool kit? For a good example of how people are using WhatsApp for business take a look at how a local restaurant has used it for its lockdown takeaway service. BTW the whole turbot is expensive but it is spectacular — although I would wait for a table at the London Fields Brat rather than have it delivered.

The NYTimes sum up why WhatsApp is important

Of course Google are not sleeping on Super Apps either. Google Maps feels the closest and the addition of a newsfeed is a smart way to let all those people with Google My Business profiles share news, offers and menus. And it also taps into Local Guides. Some think the rehashed Google Pay is a Super App contender too.

Audio

The Audio goldrush continues — now Amazon are tipped to buy podcast firm Wondery — of the few players of any size that are still independent. The rumoured price of $300m is triple what the company was valued at on their last raise in 2019.

Our friends at Arete are bearish on podcasting and share their latest research in our Guild community. Well worth reading.

Spotify have a new way of making money — a reduced royalty payment in return for

better promotion through the algorithm. Many have compared this to an old music business model Payola, which is illegal.

Both the Northern soul scene and the Rare Groove scene were indirectly built by payola. DJs and fans kept finding brilliant music that had sunk into obscurity as it was overshadowed by music played, and made into hits, because of payola.

You can also see this as another manifestation of vertical ad nets — in a commerce environment, letting brands pay for better prominence, and hence improved sales, aligns the platform interest with the brands. Amazon typifies this; it makes money from ads and from the sales, so wants to ensure the brand gets value. We see this model growing — from a Walmart to a niche wine retailer. It’s modern shopper marketing. Or digital shelf wobblers.

One of our Acast friends has an impassioned plea for podcasting to respect the creator — and the open podcast ecology. Their recent partnership with Patreon gives creators an alternative to ad revenues and subscriptions. And new Spotify data shows that their Anchor acquisition has given them a long tail of over 1 million podcasts, as well as the big name shows. Whilst the economics of podcasting are still quite fluid, it is proven as a medium for creators.

Like us, the BBC believes listening to articles is the future of consuming content and their project Songbird uses synthetic voices to read articles out loud. In our Always In world of Airpods I am convinced there is huge potential here — and it’s something email apps like SuperHuman should enable. In a way, the Philip Green quote above sums up the absurdity of millions of people walking around trying to read their screens and not walk into someone. (I did predict this in our 2001 futurology project)

Adtech

The chart above comes from a new GroupM forecast showing digital taking over half of all US ad spend next year. In a good WSJ take on digital advertising the GroupM CEO nails it;

“The biggest beneficiaries are Google, Facebook and Amazon….They have done a good job of showing ad performance — and when they show performance marketers shift dollars.”

The relentless rise of digital is down to just that. Performance. And whilst it’s right to think about fraud and poor attribution etc, we should remember; this stuff works.

(Their UK report I shared on Wednesday predicts that ⅔ of UK ad spend will be pure play digital next year.)

Back in September, the delay of the IDFA deprecation was welcomed as a stay of execution. But now we are in December, we are wondering what early next year actually means?

There is a lot of smart thinking about Cohorts as a new way to think about user targeting. On Wednesday I shared an article that mentioned how Netflix use Taste Communities or clusters to think about their customers. A Fix friend at MightyHive has shared good thinking on cohorts;

Micro cohorts are small groups of people, such as a household, a small geographical area or any collection of up to a few hundred people, that are measured as a privacy-safe surrogate for the underlying individuals. In cross-channel measurement with no unifying 1:1 identifier, you don’t know which individuals were exposed to a campaign, but you can determine the exposure probability of each micro cohort, along with other demographic and behavioral data at the micro cohort level.

Another Fix reader shared the idea of SimCity as the future of ad measurement. And that doyen of the industry Rob Norman looks at how context and data together lead us to cohorts.

Some of us are old enough to remember when geo demographics was the next big thing. Lots of potential to use this data as one ingredient in our new tracking recipe.

Inside Google’s Deal with the French Media — a good read.

Regulators

The Civil Servants are coming. As the FT reports the UK is to create a new tech regulator to try to hold huge online platforms such as Google, Facebook and Amazon in check against their smaller rivals.

The full report is here — and the new Digital Markets Unit (DMU) will be in place by April. Hopefully it will be better managed than GDPR etc — we are still waiting for news on when the ICO will resume their investigation into adtech — which they put on hold in May

Maybe having the CEO working on Canadas’ Pacifc Coast Time zone doesn’t help.

The EU is also looking to regulate and plans to allow regulators to go after fast-growing companies before they are able to achieve the kind of market dominance enjoyed by Google and Facebook

There is a real issue here. Post Brexit does the UK continue to work with the EU or do we try and do our own thing? And if it is our own thing, will GAFA etc really care? All the revenues still go through Dublin.

Creative tech

Another Fix reader writes a good piece on Creative Tech with this quote standing out;

I’ve seen enough creative tech case studies out there, and some are good, but I can’t help to feel that most of them have little to no idea behind them, which limits their potential.

I agree that much of the current Creative Tech work is more about technique than an idea. I see creative tech as a set of tools. Smart people can save time and money with these tools. Creative geniuses can create art with them.

It’s like the Roland 808 drum machine — when anyone can make music you get a lot of crap, but you get some amazing stuff too.

We are starting to see the transformative effect of creative tech. RoundBarnLabs are one of the most prominent growth agencies and they have shared their experience of working with Pencil — using that platform to create effective, data-driven image and video ads in a range of sizes and lengths. The results are good — with a 15% improvement in ROAS

Technology is impacting Creative in other ways too. Martin Sorrell owned agency Mighty Hive is looking to automate other elements of their work too. An agency started by Facebook execs looks at how Creative now takes precedence over targeting on Facebook. Essentially Facebook looks at cohorts to decide who to show the creatives to. And London’s CreativeX (formerly Picasso Labs) clinches £2.5 million to grow their AI driven data analytics and brand protection platform

newTV

This week’s Deep Dive on new TV covered Netflix Churn, Growth, Discovery and gatekeepers. If you missed it, catch up here.

We have another new streaming service. Discovery have launched a streaming service — obviously called Discovery+ — and it will cost $4.99 a month with ads and $6.99 without.

After the news that a bunch of PE firms are keen to buy the rights for the Bundesliga, the NFL is worrying US TV firms. Hit hard by Covid, causing games to be postponed, the broadcasters are concerned more disruption will cause more cord cutting. Rights prices are soaring; a pending deal will cost $8bn — up from the current price of $5bn. With GAFA taking an interest, can these broadcasters still afford to play?

Plus+

Apple Hires Prominent Venture Capitalist for App Store Role

Media Trends and Predictions 2021 from Kantar

Inside YouTube’s plan to win the music-streaming wars

The Year on TikTok: Top 100 — and don’t forget to read the latest GoodTikTok Creative — this time we focused on Celine and TikTok Collab Houses.

The rise and fall of J. Walter Thompson, the world’s oldest advertising agency

Facebook cryptocurrency Libra to launch as early as January but scaled back: FT

Finally…With so much happening in this space we have partnered with our friends at FTI Consulting to run two webinars in January. On the afternoon of the 12th we will focus on Streaming — covering topics like distribution, subscribers and content, the different business models and the Impact on linear TV — competition for eyeballs — reducing audiences and ad dollars.

On the afternoon of the 19th we look at Streaming and the Cinema, with topics like the closer alignment of studios and cinema chains, the new deal on Windowing and Impact of a cinema release on residual revenues.

We already have super smart speakers from Sony Pictures and Lord Puttnams office confirmed and will confirm others over the next couple of weeks. Save the date and if you would like to be considered for our panel, do let me know.

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