The demise of HMV and Blockbuster hasn’t surprised many people (except those of us amazed that Blockbuster still had over 400 stores). But it does disappoint. There is still a huge value in advice and discovery that the online players don’t do that well – yet.
Just 5 years ago HMV was worth around £500m. All the factors in it’s demise were already here; Amazon was a major player, iPods were everywhere, Facebook was taking off. Whilst Spotify wasn’t around, LastFM was. And the VAT loophole that enabled people like Play (which is also closing its retail business) to undercut UK retailers has been closed. So why was the business valued at just £5m before they went into administration?
As we know smart retail businesses are combining their high street presence with online; for example most fashion brands sell through eBay and ASOS as well as their own stores and their own websites.
Whilst HMV diversified into other aspects of music such as live venues, and sought to innovate around eBooks when they owned Waterstones, they were slow to innovate around their core business.
The one bit of the business that really worked was (is) Fopp –who HMV saved from closure a few years back. With a big selection of music, books and DVDs (in quite small stores) aggressive pricing and helpful staff, we have spent much more time -and money – there than in HMV in recent years.
As the recent revival in local bookstores has shown, there is a market for good selection and advice, so people can discover new content. Even Amazon struggle with discovery – other than the simplistic people who like this, like this.
We think the next big step in this space is social discovery – where knowing what your friends like is a big help, but still quite unstructured. And where you could see what people who like similar things to you, are enjoying. We have a concept in this space we have been working on, so happy to share thoughts with anyone in this space.
Facebook does Search
Social discovery came into the spotlight this week with Facebook announcing their Graph Search – enabling users to see what their friend have done and what they like. It feels like this is still early days, with a limited beta program. By the time it goes public we expect it to have evolved – and to have some advertising opportunities baked in. John Battelle has some smart thinking about Graph Search here, where he speculates it will (eventually) extend to content and to all the stuff that gets into Facebook through the Open Graph.
One thing he mentions is that people will work to polish their profiles as they understand how people use search. So will people still check in to cool bars o Foursquare and review the new local restaurant on Yelp, when doing so in Facebook will better populate your profile?
Recall that when Google burst onto the scene, it prompted a dramatic response from owners of web pages, who immediately began rewiring their sites to be optimized for search. Similarly, Facebook’s Graph Search will incent Facebook users to “dress” themselves in better meta-data, so as to be properly represented in all those new structured results. People will start to update their profiles with more dates, photo tags, relationship statuses, and, and, and…you get the picture. No one wants to be left out of a consideration set, after all.
There is also a new requirement for brands on Facebook – working to ensure you get found in the right kind of searches. So SEO comes to social.
It is another example of how Facebook is slowly sucking the oxygen out of the web ecology, increasingly positioning themselves as a rival to Google as the one stop shop for brands looking to reach people online.
The battle lines in the new search wars have now been drawn. From Amazon, which handles more product-related searches than any other company, to Apple’s iPhone-based Siri and now Facebook’s social search, the new combatants are starting from their own positions of relative advantage.
Last week we saw how some of the big retailers had fared over Christmas. We now have eBay sharing their success story – sales up by 18% in the last quarter with mobile for the year hitting $13bn. And Paypal did $14bn across the whole year.
Their CEO has been outlining plans to push Paypal into more retail partnerships – and says
Mobile is quickly becoming the new normal,
His forecast for this year is both eBay and Paypal to reach $20bn in sales. Of course in a flat economy that is a huge chunk if money that someone else is going to lose – so the tough times on the high street aren’t over yet.
Another big factor on the High Street is delivering targeted discounting and we think the best people in this space are ShopKick. This app has 4 million users making it the biggest shopping app other than Amazon eBay and Groupon.
They have announced they are profitable and their deals drove sales of $200m across their partner retailers. We expect them to arrive in Europe some time soon.
The interesting thing will be when they embrace payments, as without that they remain vulnerable to people like PayPal
We were invited into Facebook this week to share our views on mobile and social advertising. We talked about the need for ads that fit into the Flow of content and discussed the depressing fact that most campaigns use a very small numbers of creative and there is little creative testing going on.
.. levels of targeting granularity at IP, individual, household, set top box, zip plus four, zip and zone level and you can safely conclude that delivering exactly the right message to the right person at the exact time and place required, overlaid with feedback loops and data is a reality.
In all this lies a problem and it’s all about manufacturing the assets to populate the opportunity presented by the changes above.
As we keep saying, we need to find ways to industrialise creative production, without losing the magic of the idea. Are there any startups making any progress on this?
Ben Evans has found a way to hack Facebook to show what apps are being used and hence what mobile devices users have. There is some good detail in the data – and the key story is that Android is growing faster than iPhone. And there is more growth potential in Android too – so that’s why Facebook is hiring Android developers really fast.
Google have launched a new app that showcases some of the best mobile ads. Right now it’s Android only, so another reason to beg, borrow or steal the Nexus.
Following the success of PingIt for Barclays the ability to pay by text will roll out to the other banks in 2014 – without the need to set up a separate account as PingIt does.
Finally we spent this evening listening to Seth Godin talking in London as a promotion for his new book. With a sell out crowd, he spoke for over an hour and was as inspiring as usual.
The best quote?
We live in revolutionary times but we have forgotten how to see opportunity