With revenues of $38billion Google is now thought to be the biggest media owner in the world. The competition is likely to come from other GAFA players with Facebook growing very quickly – especially in mobile – but they are a long way behind. Amazon are also a growing threat – as their unique insight into peoples buying habits theoretically allows for very granular targeting.
This shouldn’t cause too many sleepless nights at Google HQ, but the very different business models do suggest Amazon can trouble Google in the future.
Because Amazon profit from the actual sales of goods, they can treat the advertising in a different way to Google – and as they could close the loop between advertising and actual sales they could be an attractive alternative for brands struggling with attribution. Of course Google hope their wallet will one day give them similar data on actual sales.
We see the Tesco investment in media as part of a similar strategy. Persuading brands to allocate marketing funds to Tesco TV as part of the deal for distribution could be attractive to both sides. Although we know that many (most?) CPG companies fear retailers getting more control over what brands do to promote their products. The biggest expenditure of many CPG brands isn’t media spend as is often believed – it’s the funds they give to Tesco, Walmart, Carrefour etc to fund BOGOFs and other instore promotions.
And this is why there is so much interest in mobile shopping list tools and coupons. Brands would love to find a way to use mobile to build relationships with their customers – and retailers are keen to thwart this. Could we see a mobile revival of the Project Jigsaw initiative in the UK in the 90s – where Unilever, Cadbury and Kimberly Clark combined their CRM efforts to offer coupons by direct mail?
The other part of the ecommerce business where Google and Amazon are going head to head is delivery. Google (and eBay) are trialing same day delivery in San Francisco and Amazon are expanding their warehouses across the US and here in the UK. Now they have announced plans to expand their grocery delivery service in the US adding Los Angeles and San Francisco to their current Seattle service.
This is seen as madness by some, but it looks like Amazon could use the low profit grocery business to subside daily delivery for non grocery items. Interestingly one of the sources suggested that the roll out will include some non US markets. Given the persistent rumours that Ocado is a possible acquisition target for Amazon, that could be interesting. Would using the ubiquitous Ocado vans to deliver Amazon orders push Ocado finally into profitability?
And given the very long term view that Amazon take, would they care as long as it cements their position as the dominant player in ecommerce? Despite their amazing revenue growth they seem quite uninterested in profits – which makes them a dangerous competitor to anyone with a more traditional affection for ROI.
This week saw Ocado announce they are to expand into non food areas with a standalone website targeting petowners and soon, toys, beauty and homeware sites. They are also allowing other retailers to use their platform and delivery service – we understand a very good Italian wine specialist will be one of the first.
Making digital efficient
Boston Consulting Group have taken a look at the inefficiencies most agencies have in the way they approach digital advertising. It’s a frightening picture – which we certainly recognise. Someone once said that digital advertising is the only billion dollar cottage industry as it is (was?) largely managed on excel spreadsheets.
BCG obviously recommends embracing technology to solve this problem. Given the report was commissioned by Google we wonder if they are about to ride to the rescue with some sort of platform for agencies to use? Bolting together DoubleClick and Google Analytics with some of the insight tools built into Adwords would be a good start. And Google have the most to gain as the biggest player. Maybe the fruit of their partnership with Publicis could about to be shared.
Channel 4 are to launch an iPad app so they have a proprietary 2 screen service. We remain convinced that all broadcasters will want to develop their own 2screen service so they keep control and keep all the ad revenue. Zeebox is building strong partnerships with broadcasters around the world and Shazam is doing well with some of the others in a narrower way. But the real competition is Twitter, which is where consumers go to share their views on TV.
Like a lot of the competition the C4 app incorporates Twitter, but we wonder whether on air promotion can pull a significant audience away from their usual Twitter client.
As agencies wind up for Cannes, the shortlist for the innovations Lion has been published. We have covered a few of these projects in the past and we will look at some more in coming weeks
Our piece on product placement last week didn’t really get into the way tech is adding new possibilities. MirriAd are doing some interesting stuff – particularly in Asia – and a Finish company Supponor demonstrated its approach in the England Brazil game the other day.
“With the exception of a few projects in Asia-Pacific, there are only three NFC mobile wallet services in the world that have an effective addressable market of more than 100,000 people”
As responsive design grows in popularity, various people are developing responsive advertising solutions. We see this becoming really important in the next 12 months.
PWC have released an interesting report on the Entertainment and Media Industry. These are some of the key points.
More Tech company M&A in the marketing space. Salesforce have paid $2.5billion for email/CRM company ExactTarget. Forrester think it’s a very significant deal and likely to lead to even more consolidation.
Book of the week
Dave Trott is one of the advertising legends and his blog is always worth reading. So this collection of blog posts is our book of the week. Predatory Thinking proves what we have always thought; great creatives are usually great strategists too.
Finally a couple of good articles that are well worth reading;