Mobile Fix — July 20

newTV

The latest Ofcom report into how the UK use TV and radio is fascinating reading. The trend for 16–24 olds to watch much less ‘traditional’ TV than older people continues to develop. The eternal debate is whether at some point these people start acting more like their older counterparts. But with more people now subscribing to streaming services than have payTV these changes seem permanent. And it seems more likely the behaviour of the older groups will become more like the young. Use of dongles and boxes like Chrome, FireStick, Roku etc have doubled to 10% of households since 2016.

And as we learn that 28% of UK households use Netflix ( closing in fast on BBC iPlayer at 33%) Netflix stuttered on Wall Street.

Adding 5m new customers in the last quarter ( the same as the previous year) caused Netflix stock to drop 14% — as everyone was expecting 6m

Wall Street firm BTIG point out that their share price dropped 13% 2 years ago on similar news — at $85. The low this week was $347. BTIG have now revised their target price to $420

A US subscriber now costs around $100 to acquire — up from $60 a few years ago, whilst the rest of the world is steady at $40/45 and US marketing spend has doubled since 2014/15 to $600m. As Adweek puts it, Netflix spends more on marketing than some of its competitors do on content.

At the moment brands sit on the sideline as these services remain Ad Free but the slowing growth and rising cost of new customers suggests to us that they are running out of potential subscribers. Until these businesses see sense and launch ad funded services as a gateway drug to subscribing, brands need to find other ways of being present. As well as product placement, brands should look at creating and / or owning formats. Brand funded content has evolved from the original Soap Operas through Unilever owning the rights to Wheel of Fortune and P&G funding Northern Exposure. When Tesco was looking to take on Amazon they produced their own romcoms exclusively available from Tesco.

With more money than ever before being spent on creating content and amazing distribution opportunities, new business models are emerging. An LA start up Brat is using YouTube to test out new formats like Chicken Girl — an hour long show that has got 10m views in 2 weeks. And they have raised $30m in funding.

Fremantle are one of the people behind shows like Got talent and have interesting views on how brands can seize the opportunity.

Retail

The Amazon Prime day keeps getting stronger.

A survey by consultancy AlixPartners ahead of this week’s sale found that 63 per cent of US consumers had planned to shop on Amazon on Prime Day, with 39 per cent saying they would seek bargains at other retailers.

Reports are that spend grew 33% on last year to over $4bn. Amazon don’t reveal sales but they did say they shipped 100m items. And don’t forget Prime — like Alibaba Singles day — is a marketing concept dreamed up by Amazon and executed brilliantly. With nearly 50% of all US ecommerce Amazon can and will shape the market.

But Chinese entrants could change things. If Alibaba or JD.com were to go after ecommerce in the West, their Chinese experience would be an advantage. And it’s not all BAT — a Google exec started an ecommerce business in China 3 years ago and PInduoduo expects to float for $20bn

GAFA bashing

Google, Apple, Facebook and Amazon are all at — or very close to — all time high stock prices. Largely due to their continuing success in acquiring and satisfying users and driving revenue from their customers. But the noise from those who would clip their wings has never been louder.

The EU have fined Google $5bn for the way they run Android and use it to get distribution for their search service. A Channel 4 show reports that Facebook doesn’t take down extremist content even when it breaches their rules.

Scott Galloway is very vocal about the need for more regulation in this video interview with Silicon Valley insider Kara Swisher. She then went to interview Zuckerberg and pushed hard on fake news and hate content. So hard, he had to issue a Trump like clarification about his view on Holocaust deniers.

Policing an open platform is really hard given both the enormous volume and the debate about free speech. But for all the talk of other areas like Space and driverless cars these companies are ad businesses and need to keep their users and the advertisers happy. We have seem big advances on brand safety and brands can do a lot to avoid the unpleasant parts of these platforms. But debates about hate content are not good for business development — no matter how good the ROI is.

Wall Street are also expressing some concern over visibility into the more granular aspects of the GAFA ad businesses — one analyst points out on Google;

…the single most important driver of the stock over the past five years is related to the number of ads it shows in its mobile search results.

Quick Reads

Blockchain explained — first by the founder of Angel List in a 10 minute interview and then in a minute by a Penn student Undoubtedly a major development, but over hyped by many.

More and more people are convinced that WhatsApp etc is listening to conversations and showing ads based on what they hear. A video test of this we shared a few months ago has 6m views and most of the comments agree people are being spied on. Two New York Artists have a project on this phenomenon and make the point that targeting is now so sophisticated that ads seem psychic. Signals are a great opportunity — if used in a smart way

Our story last week on the new Nike concept store in LA gots lots of attention and our friends at PSFK have a good interview with the exc behind it.

Still on the retail tip, DTC luggage brand Away talks about using stores as marketing; profitable billboards

Blending brand funded programmes with experiential retail gets you close to immersive theatre — real life AR. This look at the US company Third Rail is good and you should also check out Londons’ Secret Cinema. Huge potential for smart brands.

Interesting thinking on the pros and cons of DMPs. Every brand has a different set of needs which is why we do a bespoke tech stack for each of our clients.

Good thinking on B2B from Mckinsey with a good build on their Loyalty Loop which we sue a lot to define touchpoint strategy

There isn’t a one size fits all for inhousing marketing skills. Most brands favour a hybrid model.

Gary Vaynerchuk is smart but his personal brand can get in the way. His thinking on Voice is spot on though — amazing opportunity.

Picking up on GAFA bashing Monday Note has a good piece on their responsibility to society

Common sense thinking on Outcomes from our friends at Xaxis. It’s odd that the majority of the ad business still focus on outputs — the media buy, the commercial -when, in our experience, every CEO just wants growth

Finally… it’s summertime and we’re off to live easy for a couple of weeks. So the next Fix is in August.

In the meantime these books are all well worth reading; Digital Darwinism by Fix friend Tom Goodwin, Frenemies by Ken Auletta and the book by my wife and her friend on rebooting careers Shes Back

And here is a soundtrack for the summer — originally done by me as part of a project Deb did repositioning Orlebar Brown, and updated with some Childish Gambino

Enjoy

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