Mobile Fix — March 23
Cambridge Analytica
Much of the ad industry was focused on London AdWeek this week. The chatter there has been — unsurprisingly — dominated by the revelations over Facebook and Cambridge Analytics. As the News brands with the story expertly dripped out the news, it’s been hard to keep up. Rolling Thunder works really well, even in a world where Binging is most talked about distribution model for media..
There is no point going over the story here, but some thoughts. I have seen a number of CA presentations (live and on video) and we had them speak at a recent MDC event. Talking with their smart commercial people they always played down the secret sauce, even though the CEO usually alludes to it. Watching the C4 interviews it seems clear that politics is where they made their money and secret sauce is a good sales tool to that sort of audience. This BBC clip we shared a while back mentions the CA secret sauce and also reminds us that Facebook had people sat in the Trump campaign HQ, alongside Cambridge Analytica — as did YouTube and Twitter — so it’s surprising that these revelations appear to have surprised Facebook.
I think that, probably, Cambridge Analytics are just really good at making the most of the Facebook targeting. Very precise audiences, with creative tailored to that audience — then doubling down on what works.The BBC clip talks of 30,000 simultaneous campaigns for Trump on Facebook.
An extreme version of the sort of agile, signal based marketing that smart brands now employ.
And that’s the depressing thing. As data driven precision (as P&G term it) becomes the norm, more and more people will use it to sell their product. Be that washing powders that get things whiter or murky political views. I don’t for a moment think that Facebook are complicit in this. But others have seen the opportunity and seized it. Remember that the first investor in Facebook was Peter Theil — ex Paypal Mafia but also the founder of Palantir. The first investor in that business? The CIA.
It’s clear that the original ‘rules’ over how apps could hoover up data were naive and whilst the stable doors are now bolted, the trust of consumers has been violated. But will we see #deletefacebook have a significant effect? We stated a while back we have seen peak Facebook and I think this will reinforce the gradual drift away. The tobacco analogy does work — whilst people used to enjoy smoking, it loses its cool and it becomes smart to say you are cutting back or giving up. Same for Facebook. But Instagram will probably benefit.
In my opinion the real issue isn’t about the data leakage. It’s about how political messaging is regulated. The current rules don’t work — as this investigation into Vote Leave spending £millions through what appears to be the Canadian branch of Cambridge Analytics proves. And even this week, the regulator threatened to search the Cambridge Analytics London office (which overlooks the Google offices) but hasn’t managed to do that yet — and no-one knows who was taking boxes out of the building this week.
Facebook can and will work harder to identify political ads, but without external regulation the bad guys will keep finding ways through. Better State regulation on Trump and Brexit would have minimised these issues but our Russian friends will still be trying to find the weak spots.
News
Back to business. As we mentioned last week Apple are buying Texture. An app that could be the Netflix or Spotify for Magazines. The story reminded us of the early ( pre iPad) demos of digital magazines from Sports Illustrated and others. Great promise but nothing happened — most digital magazines are straight PDFs of the print ones. Apple believe there is a better way and we expect them to encourage more experimentation, but without some new economics it’s not going to happen. Publishers cannot afford to produce dfferent versions unless there is revenue — ads and or subscription — to pay for it. We have done a number of mobile web projects for magazine publishers in the past and whilst the appetite for innovation was strong, the business case usually wasn’t.
Google have recognised that the News business needs better economics. As part of AdWeek they talked of advertising that works for everyone — with Matt Brittin and Sridhar Ramaswamy covering the key issues in this video. Amongst lots of other things there is some good insight into the Bad Ads initiative they have been driving. Well worth the 40 minutes.
They mentioned one concrete move — publishers will now keep 85 percent to 95 percent of revenue when readers first buy subscriptions via Google, up from 70 percent previously. And the feedback from publishers is quite positive. With more to come, it seems.
Along with Apple and their focus on News, things are looking more positive for publishers. Given this supports our Advertising Trinity we are obviously in favour.
There seems to be renewed energy in publishing — Cheddar has raised money on the back of their US success and will use this to expand into Europe. And email newsletter Skimm has also raised money — a vote of confidence in email as a distribution mechanism. Again something we are big supporters of.
Retail
More and more of our time is spent looking at retail at the moment. After all the purpose of marketing is to — ultimately — sell something, and the gap between ads and the sale is evaporating. Now Instagram enables direct selling from an organic post — and doesn’t charge. (Suspect that will change as they learn what works and what doesn’t and enable paid posts too) Click on a product and you are taken to the product page on the mobile site.
We can see that retailers will smooth this process out — if you have Apple Pay enabled it could be just 2 clicks. Shopify have seen this and have offered Apple Pay as an option for a while and now they offer Google Pay for Android shoppers. Talk with any mcommerce business — especially the home delivery firms — and Apple Pay has a huge share of transactions, as it is so easy.
Snap are keen to play in this space too. Their AR commerce with Nike was a big success and is being watched by other retailers who covet that young audience. But maybe a simpler integration is the way to go rather than an AR one?
These initiatives open up the possibility of a move away from traditional media metrics like CPM and towards the platform taking a share of revenue. Google has had to chop and change their Shopping products to appease EU regulators but are now looking at taking a share of revenue through Shopping Actions. Teaming up with major US retailers, they all share a desire to reduce sales through Amazon. Early results look promising and the service includes Google Home.
The usual narrative is that online growth is causing the retail apocalypse and leading to store closures. A new study from Deloitte shows it is more complicated than that in the US. Luxury stores are doing well and so are low cost retailers. It’s the ones in the middle that are suffering. The new Comscore study on US online retail is a good resource — lots to learn. And so is this piece on the rich data that can be garnered through something as simple as offering digital receipts. This sort of data informs our approach; recognising that to make the most of ad investment you need to optimise the whole customer journey — from landing pages to minimise bounce and check out to avoid basket abandonment. Our experience building apps and mobile sites for the last few years helps here.
We are developing a suite of products for retailers, ranging from driving store traffic, instore comms and offers, dynamic video retargeting and CRM initiatives like birthday videos which are proven to drive additional revenues. All part of our Uberfication of Retail initiative. Get in touch if you would like to learn more.
newTV
The new economics of TV are demonstrated with this look at how Amazon measure the success of their Prime content. Whereas every traditional broadcaster looks at audience — usually as a surrogate for ad revenue — Amazon look at cost per frst stream; the production costs divided by how many viewers choose that show as their first one to watch when they sign up. The Grand Tour delivers new customers for $49 and The Man in The High Castle for $69. But on series 2 of the High Castle the figure had deteriorated to $829.
So does that make ads on Amazon more or less likely? The traditional subscription model works well for Netflix so ads feel less likely but the opportunity for Amazon to broaden the reach through a cheaper — ad supported — approach must be under consideration. Especially as Amazon can double dip with ads — take ad revenue and profit when they sell the item. The attribution data from that would be invaluable.
YouTube are taking a different approach. Their subscription service Red is proving so popular they became the top grossing app in the US last month. But new plans to increase the ad load, in an awkward attempt to drive more subscriptions to their music service, seems the wrong approach. Boil it down and Google is an ad business. Using ads to annoy people is not the right message to send to any of the three audiences that Google discuss in their Adweek talk mentioned above.
The Google support for 6 second Ads has been a key factor in its success and the most viewed content in last weeks Fix was their retelling of Fairy Stories in 6 second ads. At Adweek a panel of Creative Directors involved in this initiative talk about the process and share some good case studies.
Another facet of the new economics of newTV is illustrated in an interesting Credit Suisse report on the subject. Published last year, it is bullish about the benefits of targeted TV seeing a $100 billion upside. One chart echoes how we look at the opportunity — targeting eliminates wastage, so reducing the overall cost to the brand. But the broadcaster can charge much higher CPMs for the targeted inventory, meaning the aggregated revenue is significantly higher
Quick Reads
Industry commentator Brian Wieser doesn’t believes Agency Holding companies are dinosaurs. He thinks the better description is Cockroaches
More good thinking on DNVBs and new retail.
The Duopoly isn’t thriving quite as much as it was. Emarketer thinks their share of digital ad spend will fall — but only slightly. And the continued growth of the market means they will still grow their revenues significantly.
One positive sign is increased revenues for the candidates for third place; Amazon, Oath and Snap. In the UK Snap is doing really well — delivering 10% of global revenue — and is expected to pass Twitter.
In China Influencers are called Key Opinion Leaders and KOL marketing is just as hot as Influencer marketing is in the West. But the platforms are changing rules to try and better control the space and increase their revenues from all this activity. As Facebook encourage influencers to tag the brands they mention and enables brands to boost influencer posts — for a price — there may be some useful learning here.
With GDPR looming we are seeing people declaring their hand. I have seen a good document from GroupM and Oath have outlined their approach. Lots is still unclear though. The IAB published some guidelines but the people at PageFair don’t think they are compliant. It’s an odd situation, with no-one clear about what is and isn’t acceptable. We think we will see a massive slowdown in May.
Lots going on with digital audio — Pandora have bought one of the key players in audio adsales
Finally we still believe the craft skills of digital are highly important and liked this look at the laws of UX.
What’s cooking at The Media Kitchen?
Our President did a Digiday slack Town Hall. Some good insight on how we think about media
A good piece from our friends at Albion on their pivot from ad agency to consultancy disruptor.
We shared their Facebook live video last week — here is the write up of our NY colleagues experience with the Amazon Go store
Lots going on in London too — new biz meetings, deep dive workshops and I was delighted to go to the Google & Marketing Society dinner for AdWeek at Borough Market. Our friends at Google know how to put on a party.
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