Friday / Fix — April 17

Adtech

Anything Terence Kawaja does is entertaining and you usually learn something so an hour for his webinar with Geoff Ramsey of eMarketer is a good investment of WFH time.

I am sure the day job is keeping him busy as the effects of the Virus decimate the ad business — newspapers are suffering as no one is around to buy the print copies and too many buyers are blocklisting news, so the dramatic increases in digital audiences are not being matched by revenue. It is very likely that the downturn in ad spend will hit Google and Facebook as well as mere mortal media. The WSJ report Facebook Ad Rates Fall as Coronavirus Undermines Spending

As startups conserve cash and think about survival we are seeing some interesting M&A. UK firm MediaGammer has sold its ML driven Programmatic business to Beeswax- who will use it to bolster its engineering team. The proceeds will be used to build out Nozzle.ai — the promising Amazon focused business that MediaGamma have been nurturing. A good deal for all parties.

Rather than lamenting the loss of cookies and the problems caused, smart people are thinking about solutions. Wayne Blodwell provokes with 4 questions marketers should be asking

newTV

Our second mid week edition of Fix / newTV went out on Wednesday — if you missed it catch up here — lots of interesting stuff on Quibi / Disney / Snap / Roku and more

The next event in the space is the launch of Peacock — due in July but some Comcast customers can access a version now. Comcast and NBC have a rich library of current and old shows so they have 15000 hours of content. It’s quite a complicated offer — a free versions with ads but not all the content, a $4.99 version with ads and all the content and a $9.99 ad free version with everything. If they can communicate that range, we should get an idea of where people stand on ads — post Corona I suspect the appetite for subscriptions will wane. This Bloomberg story quotes a NBC exec on their offer launching a free service “is arguably more relevant now than at any other moment.”

One big issue for the entertainment industry is how to manage film releases — rather than wait for cinemas to reopen we see films like Trolls go straight to Pay per view and Artemis Fowl will be streamed. In China they face similar issues and Huanxi Media have agreed a $90m deal with TikTok sibling Douyin to stream their new releases. Their share price soared suggesting going back to the old model may be hard.

Merchants

As China emerges from lockdown many are wondering whether we will see Revenge Shopping — people responding to their newfound freedom to buy, with a surge in spending. One new Hermes store saw $2.7m in their first day sales.

In the UK Next came back online after a 3 week break (caused by worries over warehouse staff) but had to close after an hour as they had exceeded capacity. Not everyone is buying but apps that let people interact with fashion and clothes report good traffic — hopefully that is all being harvested or 1st party data that can be used in the future.

That budget pressure is helping buy now pay later firms with Klarna seeing their baskets move from clothing toward health and beauty.

The online market is mainly about essentials now but the definition of that is different for different people. As Amazon try and meet that demand they are lengthening delivery times for other items and even putting new grocery customers on a wait list. They plan to hire another 75k workers — on top of the extra 100k previously announced — and are encouraging 3rd party sellers to resume selling non essential items.

But in France they have been ordered to stop selling non essential goods whilst they implement new safety measures for warehouse workers — but struggle to understand the regulators definition.

As circumstances force many to try ecommerce will people stay with them when life gets back to some sort of normal? With many of the benefits elusive right now — ease of use, quick delivery, low prices etc — it’s not the ideal trial. But Amazon share price is at an all time high — up 50% on the price last month — and with as many as 250K US stores closed they are going to create new habits

Some months after Mailchimp and Shopify fell out the new Shopify email service has launched. Shopify are keen to grow their ecosystem and a new App challenge is designed to get them closer to their developer community.

And one very practical point — some Merchants we talk with think sales are lower because of worries about returns — no access to a printer for labels etc — and are now messaging about workarounds. Generally returns are an issue for many right now

AR

In a good Times interview Snap CEO Evan Spiegel talks about many subjects — including content — a good quote in our newTV Fix — and AR. This is a really interesting point;

“The next three to ten years are ours to lose, because we already have this huge community of people engaging with AR all the time,” says Spiegel. He grabs a pen and paper to illustrate his point. He draws a rectangle, divided diagonally into two triangles. On the left one, he writes, “iPhone.” On the other, the top one that will soon push the first triangle into the corner, he writes, “Spectacles.”

“Over the next ten to twenty years, iPhone [usage] is going to migrate to Spectacles,” he says. “So the question is, on what timeline? What’s interesting, though… If we lose this [hardware] bet, it’s still OK, because we have the [digital] AR platform. We’ll still have a very, very large business. But what would it look like if we also win the hardware piece? Why wouldn’t you try?”

Think about that and then watch this video of AR and the Apple card. I have no doubt we will see Spectacles take off and I also think Snap has the audience that will adopt early. The interest from the art world is going to help accelerate this too.

Social

Lots in the Snap interview but little about Instagram who have more new features — a way of supporting small businesses with gift cards is neat. There is a redesign of IGTV too — with a Discover button as a key new feature. Do Instagram really think that IGTV is the future of video? They will have to come up with something much more radical to even compete.

The Piper Sandler Taking Stock With Teens survey is always interesting but the Spring one shows little change from the Fall picture — except TikTok comes from nowhere to get 62% — but no sign of where that time comes from. And as I argued on Wednesday the distinction between video consumption and social engagement is fragile.

There is a lot of coverage of TikTok but few are as insightful as this from an Asian perspective. Lots of good content but this on business models jumped out;

The company sells ads directly on Jinri Toutiao and Douyin, but it has also begun to blur the line between e-commerce and content. Users can watch videos of apple harvesting, then click to buy fruit directly from the video’s creator; talk shows can be leveraged to sell merchandise or movie tickets. On Douyin, viewers can buy virtual gifts for their favorite livestreamers, tapping the valuable and growing “fan economy.” Last year, Douyin and TikTok together grossed nearly $177 million in in-app spending, based on Sensor Tower’s estimates.

It also talks of their really strong talent base and they are now hiring more — adding 10k new jobs with a view to grow their workforce to 100k by the end of the year

China

First some more evidence that Chinese business models and approaches are spreading — Model / influencer / entrepreneur / Kardashian affiliate Blac Chyna added some new products to her cosmetics website this week. Fans can buy a facetime call for $950 or an Instagram follow for $250. It got lots of press — which was probably the point — but these business models work. Maybe at more reasonable price points though.

Take a look at how it works on Douyin — as the FT points out Chinese apps profit from millions staying at home

More on live streaming here and some good background on how JD and TMall battle it out for luxury brands. From the same site an interesting look at how luxury brands advertise — driving traffic to live events and offline events and selling straight from ads. For Merchants there is lots to learn here — and as more proof ideas flow between East and West we see a Klarna clone has been launched by Tencent

Plus

Very proud of leading the team that developed the first PlayStation website in the 90s — and have always loved the brand. This FT celebration of the brand as we get ready for PS5 is a good read.

For a long time there have been rumours of a low cost iPhone — often called the iPhone Nano — designed to capture the low cost end of the market and see off Android. It never happened and Apple has prospered anyway. But times change and we now have the iPhone SE — looks like an iPhone 8 and has the features of an iPhone 11 — all for $399. Or £419. Bear in mind the original iPhone cost $499 in 2007.

Good piece from Benedict Evans on how Covid is forcing experiments

The smart people at Acast on how podcast revenue will bounce back

New technology means new ways to reach the consumer at P&G — Marc Pritchard on how P&G are experimenting with new media

Fortnite: Unique Partnership With Quibi For Next Event

Aha! + Aaaah: Creative Insight Triggers a Neural Reward Signal

Google expands AI calling service Duplex to Australia, Canada, and the UK

Thrasio, who rollup Amazon third-party private-label businesses, has closed on a $110 million financing at valuation of $780 million

Houseparty Vies With Zoom to Be Homebound Chatters’ App of Choice and people are ‘hacking’ Google Meet to make it better

Finally …it’s not easy to work out a role for advertising in these troubled times — but brands can and should be solving problems for their customers. The smart people at Gousto recognised their customers may be struggling to find good food with so many shops closed and came up with the Food Finder App. It’s like Branded Utility is back.