It’s that time of the quarter again, with GAFA etc reporting earnings to Wall, Street and – in the process – sharing some insights into how their business is doing.
Facebook went first and whilst revenues were close to targets the fact their profits were down due to increased R&D costs was of some concern with analysts.
The law of big numbers (which means growth has to flatten off at some time) has yet to kick in – with monthly active users up 13%. For marketers the figures on the continuing shift to mobile - almost 800 million daily mobile users – up 31% year on year and 46% increase in mobile revenue has to be the best news.
Yahoo missed their earnings as they continue to turn the business around – but mobile growth and some financial engineering around their Japanese business did prove attractive to Wall Street. The changes to their search partnership with Bing sounds like they could prove interesting.
Google showed a 12% increase in revenue but the cost per click was down - reflecting the growth of mobile which continues to be discounted.
Amazon showed a small loss as expected but for the first time gave figures on their Cloud business Amazon Web Services – making around $5bn a year.
The other big news this week was the awfully named Mobilegeddon – the change to the Google algorithm that got lots of slightly hysterical general news coverage. It is unclear as to when exactly the changes happened and the effects will take a while to surface but our friends at econsultancy have shared some practical advice.
And Facebook tweaked their algorithm too- seeking to better balance content from your friends with that from publishers. If you have time, this long post from Ben Thompson is a good look at the implications of this switch.
Their Mobile Virtual Network Operator – which we floated as an idea back in 2006 – isn’t quite as ambitious as expected. Initially it’s only available to Nexus 6 users in certain US cities but the feature set is really interesting; talking and texting switches to wifi when available and data is a simple $10 per Gb – with a rebate for what you don’t use.
We don’t expect this ever to become a fully fledged alternative to Sprint or TMobile; their launch partners. Instead we think it is an exercise to show what’s possible – and encourage the industry to improve. A little like their Nexus products do for other hardware manufacturers. Switching automatically to the best available network (be that wifi or another MNO) makes perfect sense for the user – and hence for Google. Fi is – on part – designed to push the operators to work better together.
This week we saw Facebook also move a little closer to what an operator does with a new Android app called Hello. This uses your messenger contacts to mediate your phone calls – telling who is called and enabling you to block nuisance numbers. Coming the same week as WhatsApp allows you to call people as well as message them the inevitable redefining of the phone call is starting to happen.
This tweet we saw is a good summary of how the MNOs view Facebook;
Vodafone CEO Vittorio Colao: on Facebook’s free-of-cost internet plan: “It is almost like Zuck does philanthropy, but with my money.”
Benjamin Evans has a good take on this struggle and doesn’t believe the Over The Top players like Google and Facebook want to be Mobile Network Operators – but they are going to drive change in how MNOs do business.
Some other interesting news from Facebook is around their desire to influence how people build apps for mobile. Famous for trumpeting the use of HTML5 for their first mobile efforts and equally famous for switching back to native to improve performance they are now pushing React Native.
This is a possible solution to the need to develop separately for iOS and Android and will be watched carefully. We have seen various hybrid tools promise to solve the issues of time and cost inherent in building twice, but the compromises have usually proved too much.
Digital & Mobile advertising continues to boom
New data from the IAB in the US and the UK evidence the ongoing health of digital advertising.
Mobile revenue in the US is up 76% for 2014 and is now worth slightly more than banners ads – and the digital total is just shy of $50bn a year. TV made $66bn in 2014 – down from $75 in 2013.
Here in the UK the total digital spend is now over £7bn, with mobile up 63% to £1.6bn.
Marin has a new report which looks at Mobile advertising around the world and is useful for benchmarking. And Google have published a guide to programmatic for brands which is full of useful advice on how to get the most out of digital. One thing we fully endorse is the need to stop building digital ads in Flash – but we would say that wouldn’t we as we are helping launch Responsive Ads in Europe; really rich media built in HTML5 that adapts to whatever screen it is seen on – dramatically reducing production costs and improving both impact and engagement.
There are a couple of clouds on the horizon though. Some App developers claim that they are bring priced out of Facebook and are looking to TV as an alternative. And comscore have shared some slight depressing research showing that around half of all digital ads in Europe aren’t viewable by their audience. We still have more to do to unlock the full potential of digital advertising.
We continue to believe that – for most brands – getting GAFA right is the best way of ensuring they take maximum advantage of the huge opportunities in mobile; essentially modern digital.
This week I keynoted at a Google event in Dublin for 300 of their top customers. It was great fun but the key thought I left with is just how much potential there is for smart brands to do more with Google. I learned huge amounts from 2 Google speakers ( @jos_tweets and @danielwaisberg )who talked through some of the measurement possibilities in Google Analytics. Including easy ways to track offline events and even use loyalty cards as a means of measuring ad effectiveness. @OptimiseOrDie then have great advice on testing and avoiding the many pitfalls. Finally @lukew gave a masterclass on designing for the mobile world.
Much of what they discussed applies equally well to Facebook or Yahoo etc – people can get real competitive advantage by being really good at this stuff because the odds are your competitors aren’t taking it that seriously.
You should be looking at how you get more than your fair share of value from GAFA and others. Once the videos of the sessions are up I will share them in Fix
Facebook have some good advice on video – making the point that much of the impact is delivered in the first 10 seconds. It is surprising people don’t work harder at how to get cut through on Googles True View videos where you only pay when someone watches
after the first 5 seconds. the whole ad if less than 30 secs or at least 30 secs of a longer one
The quest to improve/ solve delivery continues - Amazon will now deliver to the boot of your Audi in Munich. Is the next step a posh Instacart where you get paid if you take packages for friends and neighbours too?
Martin Sorrell shares lessons from Jack Ma of Alibaba. They are already valued higher than Amazon with just 5% of their revenue outside China. They plan to grow that to 50%.
We went to a fascinating Instagram event the other week – with Paul Smith speaking – where they shared some early success stories from brands using Instagram. These cases studies are here.
There is an instagram app for the Watch – do you really want to see your friends latest picture on your wrist?
We mentioned the other week that the elephant in the room for Spotify etc is that YouTube is the biggest player in music streaming – this article explains more about this.
And this long New Yorker piece on the guy broke the music industry is worth reading to better understand music piracy.
Finally…. I am out and about next week at the BSAC Film TV & Games conference and then at the Rutberg Summit. Rather than pontificating, I will be listening and learning. If you are at either event do come and say hello