Mobile Fix — October 5
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Amazon
The big news with Amazon is that they decided to increase the pay of their warehouse people. As well as being the right thing to do, it’s a very smart move as the availability of people is limited by low unemployment in the US. And in the UK the competition for good people will dramatically increase once they close the borders.
And whilst Amazon can afford to increase its cost base, can its competitors?
The ability of Amazon to shape the weather around them is best shown by Prime Day and this analysis by McKInsey gets into why that works so well for them. And the ad supported TV service from Amazon is going to be under the IMDB banner
Apple
For a long time we have been following how much Google pays for being the default search choice on IoS through Safari. The latest estimate from Goldman Sachs is that they pay $9bn and that could rise to $12bn next year. Just last year the estimate was $3bn and court papers mean we know it was $1bn in 2014.
That’s a lot of money but this feels bigger than the price tag. Google need the deal so they can play in mobile search; take away the iphone audience and they lose their market dominance — if not in overall numbers, certainly in terms of the most active and valuable mobile users.
Apple like the revenue but how do they feel about Google knowing so much about their users? And given their antipathy towards ads and their focus on privacy doesn’t the Google presence compromise their ideals? Talking this week with someone who has been working very closely with Apple we were told ads just aren’t a priority for them.
This is the one place Google are still baked in to the IoS ecology and our view used to be that, at some point, Apple will kick them out — just as they did with Maps and YouTube.
I now think the deal is too valuable for everyone, and that Google is safe. The way that Google track with signed in users inoculates them from most of the Safari curbs in tracking. And who could replace Google and provide search? The system searches in IoS and Siri use Bing but we can’t see that Bing could monetise mobile search anywhere near as well as Googe so the price would be too high for them.
And is Google search — perversely — an Anchor for the iPhone user? If search became less good for the iPhone user would that increase the allure of the Pixel and other top end Androids?
We think Apple see a bigger prize. The Shazam acquisition is a case in point. Turning off the ad revenue is a small hit to revenue but if they can use all that data on music discovery etc to drive Apple Music subscriptions, the deal quickly pays for itself. As this study shows iOS already gives Apple Music big advantages — converting customers into paying ones 2.5 times faster than Spotify.
iTunes used to be one of the biggest Anchors for the Iphone — if I shift to android I lose all that music I burned from CD. Spotify broke that model and Apple are determined to rebuild these Anchors.
Consider this quote about the push from Apple into publishers to build Apple News
So Facebook can’t get a break.This weeks bad news was a hack that compromised 50 million users. And a significant part of the coverage was a theory that they waited until Kavanagh was dominating the news before announcing it. It looks likely will be the first big GDPR investigation — and fine.
Last weeks bad news was the departure of Instagram founder Kevin Systrom and an interview he did before he announced his departure, was published this week. It’s a good read and there is little to suggest he was about to leave, so it adds to that mystery.
What is clear is that he a great product guy and the challenge for Facebook and everyone else in the mobile space is can you keep developing products that people fall in love with? The business as usual conveyor belt of ad products (with some interesting new video formats ) continues but most of these are me too formats. As, of course, is the engine of Facebook current growth; Stories — inspired by Snapchat.
In a widely shared piece Scott Galloway argues that Snap (and Tesla) is now for sale as a distress purchase — and sees Apple and Disney as potential buyers. I am not sure it doesn’t have a good future — as this tweet shows it remains very popular with its core audience — and if it can convert that traction and audience insight into new products it still has a chance. But maybe that is under new ownership.
Retail
A new Deloitte study suggests that the retail industry is overly focused on a smallish group of affluent millennials who are distorting the general view of the market. It’s a US study but the thinking — essentially retail is now about Lidl or Luxury — makes sense over here too. And the importance of traditional stores makes good sense too — a new project we are working on focuses on how you better connect online and offline.
The new Nike store in Los Angeles epitomises this — using the Nike app on customers own phones to add context to products tailored to that locale. And using the app in store gives Nike great 1st party data. An Albion colleague digs deeper into the benefits of focusing on local consumers — and the dangers when you don’t. As ever China is in the vanguard of these moves with a new Sephora store in Shanghai experimenting with this online offline blend.
An article about DNVBs from a US college sees millenials as key to their rapid growth and talk about transparency (provenance and costs) as a big factor. And Vogue have tipped the Top 50 Digital native brands that will be everywhere in 2019 — and look at how fashion and tech are getting closer
The piece on DNVBs that Fix friend Darren Herman wrote in his excellent newsletter is a must read as it goes into the parallels between the rise of DTC brands and the democratisation of media buying.
Quick reads
One of our constant themes over the last few years is that traditional TV has lost the war for attention. New Facebook research shows just how true this is — 94% of people in the US have their smartphone close by when watching TV. Their new research looks at how people use their mobile when watching TV and — echoing work done by YouTube — it show a quarter of people pay attention to mobile when shows are on and that rises to half in ad breaks.
One way to take advantage of this is syncing ads on mobile with TV ads — and our friends at Mporium can even sync your mobile ads with your competitors TV ads.
The FT look at the latest moves by the Murdochs and speculate what’s next
For GAFA to win the battle for sports they need to improve the viewers experience — like Sky did when they started showing football. Amazon have an advantage with their XRay tech that tells you on Prime Video who is who in a scene or what the music playing is. For the Thursday Night (American) Football games they are using this tech to show live stats and offer the opportunity to buy team merchandise.
The new Amazon 4 star store in New York is getting reasonable reviews — but it highlights the fact online shopping is yet to crack discovery.
One brand trying to solve discovery in restaurants is Infatuation who recently bought Zagat from Google and have raised a lot of money from Mr newTV Jeffrey Katzenberg. One benefit of the Google deal is that Infatuation now have a tab in Google maps for New York and a few other cities
Chinese video app TikTok is the most downloaded app globally and could soon be the most valuable start up with a $75bn valuation.
ITV is moving into addressable TV but struggling to find a tech partner. They are not working with Sky Adsmart. We see this area as a huge opportunity and the power of ITV could really accelerate adoption.
Mckinsey looking at how Google manage their marketing efforts around the world. Really insightful on how they treasure both data and creativity — and are pushing for 60% of digital spend to be programmatic.
Blockchain gets thrown around so much it risks becoming a hollow phrase. It’s even being touted as the way to solve the Irish border with Brexit. Walmart announced they would use blockchain for their Lettuce supply chain. But read the article and it sounds very like a good old fashioned database. Too many Agency people are dropping the B word — along with AI and Machine learning — without any real understanding. I even saw one quote about Media in the age of Quantum Computing, which seems a little premature. This McKinsey podcast transcript is a good summary of what is working and where things are going.
From the shock if the new to the oldest medium; Out of home is undergoing something of renaissance with more brands and more spend. Lots of potential still to better connect outdoor and mobile — a huge opportunity for QR codes.
German media owners are collaborating to share a unified login. Lots to learn here for other markets especially as ecommerce firms and agencies have also joined the initiative.
We are big fans of betaworks and their long piece on the things they are thinking about looks fascinating — a weekend read.
Finally one reason we are so focused on the blending of data and creative is that it taps into a key human behaviour — best summed up as the Cocktail Party effect. Richard Shotton explains it here in an extract from his excellent book. There is huge potential to adjust creative — based on data on the audience — to make the ads more likely to be noticed. So creative becomes the best way to optimise a media plan. Happy to help.
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