Mobile Fix — May 18
Performance
The most clicked item last week was the twitter storm from Andrew Chen, where he got into detail on measuring the real effectiveness of marketing. If you missed it, it’s still well worth your time. As is this interview where he gets into work he did on product market fit at DropBox and Uber.
This is important stuff as what our clients buy is growth; any C level exec now wants growth and is looking at who has the skills to help deliver this.
Being able to really understand the raw metrics and see the real patterns is essential, yet so many aren’t looking past the headlines.
DTC
With all the hype around direct to consumer brands it’s worth remembering that it is actually hard work to acquire customers and sell profitably. Early success for Birchbox — who inspired many copycats in adjacent fields — has not translated into long term value. They have struggled to find a buyer and ended up taking a relatively small investment that wipes out some early VC money. With thin margins, the point we make above kicks in — it’s essential to know what is working.
New ways to emulate DTC success are emerging — the Craftery offer to help small brands — owned by big firms — adopt the ways of DTC and drive renewed growth. This approach echoes people like Science — behind Dollar Shave Club — who act as incubators for start ups.
Our sister firm KBSAlbion has a wonderful track record of building propositions and brands — Zoopla, King, Skype, GiffGaff etc — and with our ability to drive growth, we are looking for people how need assistance to re-energise their business.
One of the better newsletters on this area is 2PM and this is an interesting interview with the guy behind it
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newTV
In the US this is a big week for traditional TV and a good NYTImes piece looks at the challenges they face — an ageing audience, declining ad spend and increased competition from GAFA and Netflix.
But as fashion brand Old Navy explains in the same piece, some people have already moved to what we call newTV
“When we say we buy TV, even within that, a percent of that buy is in the digital video space and is on platforms like Hulu and Google Preferred and programmatic buying and Facebook,”
Things are changing. A Turner exec even admitted the current Nielsen measurement just isn’t good enough as their shows now live on streaming and VOD as well as Broadcast — plus the social element and live events. We have pushed this for a while; context works on TV too — if you believe a programme is the right environment for your brand be sure to be present everywhere the show lives.
UK Broadcasters are looking at this new environment too and it’s likely we will see some smart cooperation. The current regulatory situation should be easier to navigate now the US players are so strong. A recent FT article on the BBC pointed out some of the current issues; shows dropping off catch up after 30 days meaning the only place to watch them is by paying Amazon or Apple.
The Scott Galloway interview we shared last week explored whether distribution or content was king and the UK industry needs to play better in distribution. But alone, each broadcaster is too small and arguably too late. Together they have a chance. The scale of the competition is shown by Hollywood exec Jeffrey Katzenberg raising $800m to start making high end short form video. He is betting that the right content will earn the right distribution.
Sports
One content genre where the Brits have clout is sport. Perform is one of the UKs most valuable media firms and their DZAN service is a major player across Europe and Japan — although not well known in the UK. They are now going after the US market with a new $1bn Boxing deal amid talk of them being the Netflix for sport, as the expensive pay per view model is replaced with a monthly subscription. They are currently ad free — like Netflix — but seemingly starting to think about advertising.
That would be quite timely, as it looks likely that the US will relax the ban on sports betting. As anyone who watches gangster movies knows, illegal betting is rife in the US and surrogates come and go like Fantasy Sports games where FanDuel and DraftKing were spending huge sums on ads. Our friends at mporium have some smart thinking on WinView where a prediction game feels like gambling
But opening the door to the real thing would be good business for the European online betting firms and it could make sports rights even more valuable. Some of our AdTech friends are launching new services for the World Cup which should make betting ads more effective — these will soon migrate to the US. Sky reinvented football coverage when they won the rights and if GAFA can better blend sports and gambling, they can afford to bid more that the current broadcast partners.
Ads
In recent earning calls Facebook have been open about their Ad Load and the fact that — in the US at least — they are running out of places to run ads. And when you restrict supply demand drives up prices. New data from a US firm suggest ads on Facebook are costing up to 37% more in Q4 compared to Q3. Now seasonality may have a lot to do with that, but it does highlight the challenge facing GAFA — as the price of digital ads rise what happens to ROI?
Some brands are moving money away, but others know the outcomes they are driving and feel they are getting value. As we opened with, it’s essential you really know how your ads are performing.
Snap AR ads are doing well, with lots of brands trying them and some good insight (and examples) in the article
As Amazon apparently pulled their money from Google shopping ads they launch a new ad retargeting format that competes with Google and Criteo. Quite how it works isn’t clear but following Amazon users around the web and charging brands when they click back to Amazon looks like a good business for both Amazon and the advertiser.
Wall Street really like the Amazon ad business and we see most brands now are at least considering it alongside the duopoly. Martin Sorrell — as part of his come back tour — feels Amazon have an advantage as he says they have better ad people than Google and Facebook. Not sure that makes much sense — they undoubtedly have a good team but so too does Google and Facebook.
Grocery
Amazon have made their first big play with Whole Foods, developing a loyalty scheme that gives Prime customers 10% off everything they buy at Whole Foods. That’s a huge move and should counter any possible churn caused by them upping Prime membership by $20. It also stirs up the whole US grocery market as suddenly Whole Foods is as cheap as the discounters — at least to Prime customers.
The competition is fighting back. Ocado goes into the US with a partnership with Grocery chain Kroger — and their shares leap by 40%. Instacart is hiring new talent and Walmart are battling Amazon on a new front — India, with a $16bn investment in FlipKart — the leading ecommerce firm in India.
What should we expect in the UK? Merging Sainsbury and Asda seems a good move if you are fighting Tesco but doesn’t do much versus Amazon.
One week to GDPR
Doc Searls has been mentioned in Fix many times over the years and his latest Harvard blog is one of his best. It’s a long read but well worth reading. I am not sure that GDPR will kill AdTech but we are going to see a reset and in many of our conversations we find people optimistic about the future. A world where quality wins over quantity and context and creativity have more value, has to be good news.
Exchange Wire are less optimistic but their 10 unintended consequences of GDPR are worth reading too. It is going to be a messy few months and i think we will see a big slow down after next week, as the reset will take a while to play out.
Quick Reads
Another music label has sold its Spotify shares. This is a good investigation of how much they paid for the shares and what’s behind the sales.
Scott Galloway has been quite successful at calling stocks and he now thinks Spotify has potential to be really big
Twitter are taking steps to stamp out the hate speech and abuse
The tech firm watching us all is Palantir — funded by the CIA and ran by the first investor in Facebook, who is still on their Board.
As the latest newspaper circulation figures show dramatic falls the FT gets close scrutiny. I worked on the launch of FT.com in the dotcom boom and The Weekend FT is my favourite bit of media. But it only sells 60k copies yet has more revenue than all the other days combined. News is a tough business
Our friends at the World Federation of Advertisers have a new charter calling for the industry to collaborate to create a safer, more transparent, more consumer-friendly environment
Finally ….speaking with some key people in adtech this week, and then someone very close to clients, we keep hearing how debilitating the transparency issue continues to be. McKinsey have shown that, for all the speeches and calls for change, this is a swamp that isn’t being drained — yet.
Their report makes the point that sorting this out could free up sizable budgets that can be reinvested for growth. An illustration of how odd things have become, is the news that an adtech firm has filed for bankruptcy owing $35m to a media agency. Imagine having to explain to your clients how that came about?
The fact The Media Kitchen is totally transparent — and always has been — makes our life so much simpler.
What’s happening at The Media Kitchen
Busy week for new business, with New York colleagues over for a key meeting. Our current clients are keeping us busy too — Spirable continue to do great work with Facebook celebrating some projects here.
Our best conversations are around specific problems; Could we do smarter planning? How do we drive more store traffic? Should our spend be working harder? Have we the right tech stack?
What problems are you wrestling with? Could we help? Happy to chat.
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