The Chinese are coming
At IAB Engage this week Martin Sorrel warned the audience that the Chinese are coming, and pointed out the size of Alibaba and the growth of Xiami as two examples. Fix readers know this and also that the size of BAT (Baidu Alibaba & Tencent) is based on a market where internet penetration is around half that of the UK, so lots more growth to come. Of course not having Google, eBay, Facebook and Twitter to compete with, helps this stellar growth.
But the really interesting thing about China is that this Galapagos effect – an ecology cut off from the rest of the world – has inspired some fascinating business models. So there is a lot to learn from China, other than merely the growth story.
As this chart shows the messaging apps across Asia are developing business models other than taking ads and its likely Snapchat will be amongst the first to monetise their reach as a platform for other content and services.
And whilst Jony Ives may think that Xiaomi are little more than copycats this HBR piece shows they have an innovative business model that may prove more resilient than Apples.
If you want to dig a little deeper on China this report from Campaign Asia is worth a look.
With Samsung, Google and Apple all launching new product this week we have seen each brand get their 15minutes of social buzz before the next launch. First the Samsung Note 4 had everyone extoling its virtues. Then along comes Google with their new Nexus 6 – even bigger than the 6+ their new tablet Nexus 9 and the new version of Android, Lollipop. Early indications are that the new devices are impressive and the look and feel of Lollipop is a clear improvement and the other features sound promising.
And then there are the new iPads – with lots of upgrades and some data on sales to counter the theory sales are flattening out.
The Xiaomi model of longer production windows for their product does look smart as they profit from falling component costs– what are Google and Apple going to do with the 7 that makes people what to upgrade? And what will the next iPads do?
Clearly the iPhone and the top end Androids work as Veblen goods – status symbols – or at least as social objects; many people have raised bendgate when they have seen our new iPhone 6 and we know people comment on the size of the 6+.
But because most tablets aren’t actually mobile- they stay at home or in the office – they don’t cause comment and therefore don’t act as social objects – so is the desire to upgrade to the very latest model less powerful?
And because so few people bother to make tablet optimized apps- a huge mistake in our opinion – is there less need to upgrade to benefit from the new version?
Should ad fraud stop you investing in digital?
The recurring problem with fraud in digital advertising, is polluting the discussion over how much investment brands should be switching over to digital. Whilst the argument is clear – as consumers change their habits, so should brands that want to keep up – the background noise over fraud and viewability is a diversion.
The problem is that just as the sheer volume of money attracts VCs to invest in AdTech, it also attracts criminals. So the arms race between the adtech that can verify your spend is going in the right places and the bad guys is heating up.
This week we heard two great examples that demonstrate the problem. You have probably seen the meme of your porn name? The name of your first pet is the first name and your mothers maiden name is the surname – so mine is Pluto Clement. Great fun, but everyone now knows two answers to the most common security questions online.
Then at an event this week discussing fraud, one of the audience made the sensible comment that where a campaign is measured against a purchase, fraudulent views and invisible impression below the fold etc don’t really have any effect as the bots don’t buy things.
It turns out they do.
Filling forms online is pretty straightforward to a fraudster but they also have lists of stolen credit cards with which to make the purchase. Eventually the sale will be cancelled and the money refunded to the person whose card is used, but the fraudster is long gone with the CPA commission.
Now having the right partners and paying attention to how your campaigns are being managed can protect you from most if not all of this. And not investing in digital for these reasons is no more sensible than pulling your money off TV because people do go make cups of tea when the ads are on.
On the panel at the Facebook upfronts this week I made the point that we now have an unprecedented situation; for the first time for a long time it is possible to get a significant competitive advantage on your sector.
Your rivals have the same distribution as you do, similar brand awareness and a product that is probably top parity. So gaining advantage has been hard.
But we are now at a point when being much better at mobile and social can give you a clear advantage.
Your competitors’ agencies are probably just as good at making the most of ITV etc as are yours.
But if your team can get more reach, attention, engagement and, yes, sales from Facebook, Google etc then that’s a great place to be.
What are you waiting for?
The Mobile Marketing Association say that brands should invest 16% of their ad budget. Now the right figure for any brand depends on their objectives and strategy, but it’s clear most (all) brands should be spending more. What will you do if your main competitor gets there first?
Benedict Evans has shared a good presentation on the Industrial Internet – another name for the Internet of Things
Pinterest is gearing up to be the next big ad opportunity. Are your agency partners geared up to advise you on this? Really?
Finally… no Fix next week as we are off to Cornwall for half term. But there will be a RCKSCK Friday Edit later today and next week, so if you’d like some tips on how to get the most out of London sign up here.