Happy New Year
It’s 2015 and the world has changed. Flurry tells us app usage grew by 76% in 2014. Variety point to 3 key deals from last year with the potential to transform the entertainment industry. Video views on Facebook grew by 75%. Messaging is huge and WhatsApp has 700m monthly users. And the Washington Post points out that tech disruption is only really getting started.
Everything is Mobile. Everything is Social. Anything is possible.
And smart brands have never had a better opportunity to profit from change, as their slow competitors continue to do what they did 5 years ago. What are you waiting for?
Some sectors are changing faster than others and retail is one of the canaries in the coal mines everyone should be watching. Over Christmas we saw that digital has profoundly changed the way people shopped.
John Lewis saw over a third of their sales online – up 19% – with click and collect bigger than home delivery. House of Fraser saw digital sales increase by 31%. Mobile was a key factor with John Lewis telling us their mobile sales on Christmas Day peaked during Downton Abbey.
This year we will see more of this online offline mélange, with delivery and click to collect driving who succeeds and who doesn’t. Making your stores work for you as both experiences that inspire purchases and destinations for the collection (and returns) of ecommerce is key. But lots of the high street are struggling with this.
Amazon sort of won Christmas in the UK, as they managed to make their delivery system work just as well over the holidays as it does normally. So too did Ocado. The people that had problems with late or non deliveries of parcels and groceries are not going to give people a second chance next Christmas. Owning delivery is an increasingly important part of vertical stack.
Ebay are looking at how they stay relevant and as well as the Rebecca Minkoff concept stores we mentioned they have an interesting innovation lab too. And Westfield are being very active, looking at ways of keeping their malls an attractive option. In this interview their head of digital talks about their experimentation with search on apps and using beacons to connect before people arrive at a mall.
Knowing how online and offline channels are connected remains the holy grail and the new Google metric of Store Visits as a Conversion Action in Adwords. Now the scarily detailed data Google have on its app users would let them see exactly who and when visits each store, but that would freak out those concerned with privacy. Instead Google use estimates from aggregated anonymous data from a sample of people with location enabled on their phones.
One fascinating snippet from the Flurry data shows how shopping apps are used across a typical day and commuting and lunch times are key. US retailer Target view mobile as the new front door to their store.
This whole area is clearly crucial for online and ecommerce retailers, but it is also hugely important for the brands stocked in these stores.
The other canary is Media – a business that is attracting increased investment but it’s still unclear as to whether new entrants will find the mobile world any easier than legacy media. The poster child of the sector is Vice, which has attracted investment and partnerships from a number of old media businesses.
Digiday have a good look at the difficulties faced by those who seek to emulate Vice, Buzzfeed and the Huffington Post. And Elizabeth Spiers – who has been involved in some of the better attempts – goes into detail on how to be a good media owner. Essentially, be good at herding cats. Though this long New Yorker read on the King of Clickbait shows that you can still do pretty well by gaming the system.
And this piece from an investor boils media businesses down to one thing; Revenue. And he predicts carnage in 2015 as the VCs look for a return – or at least some indications that one is likely.
As the Flurry data shows apps are taking a bigger and bigger proportion of peoples time on mobile – reflecting the fact that a handful of destinations now monopolise peoples attention.
The new data from Apple showing that their AppStore revenues grew by 50% in 2014 – to around $15bn – proving some people are making a good living from apps
But the very nature of apps continues to morph and whilst the constellation effect (where an app ‘splits into two or more connected apps) doesn’t seem to be working that well, deep linking is getting traction.
This long piece from the NYTimes gets into some detail on who is doing what with deep linking. And this piece from the former Deezer head of Mobile gets right into how to make it work. Both essential reads.
Along with things like motion design, this level of sophistication means app development a now a fairly rare, specialist skill. Even though there are still lots of mac jockies knocking out cheap and cheerful ones, that are unlikely to ever get any traction.
Forrester have taken to calling mobile the anti channel as it eliminates the whole notion of channels by blurring online and offline. Their new report suggests only 4% of brands are truly prepared to take full advantage of mobile. Getting your apps right is a big part of this – along with a truly mobile optimized site.
Twitter found Ev makes a great case for better metrics. Monthly users just isn’t goo enough
Google continue to push for faster cheaper internet access – now with a new way to make wifi work with an underused section of wireless spectrum.
A new book dishes lots of dirt on Yahoo. VC Jason Calcanis comes out in strong support of CEO Marissa Mayer. And it looks likely they will merge Flurry with Gemini to take on Google and Facebook for mobile ad revenue.
A good piece on BlockChain – the technology behind BitCoin that may have more potential than the currency
A valuable part of the Tesco firesale ( after TalkTalk bought Blinkbox) is Dunn Humby. This firm was profiting from data before anyone started with the Big Data cliché and where it ends up will be a good sign of how the industry us shaping up. WPP have made it clear they are interested but some private equity firms have also declared an interest. Any of the big players in adtech and marketing automation would find this a smart acquisition. Adobe, Oracle and Salesforce are all looking to help brands make the most of their data services and even Facebook and Google could benefit from the expertise here.
Facebook search has matured and their ability to mine the resultant data is quite amazing. Maybe Dunn Humby would help here.
Nike ( and AKQA ) show us the future of advertising – 100k personalised videos. Smart use of data to make layered/relevant messaging.
Finally…there is some more quality thinking around what is likely to happen in 2015, so here are three of our favourites;
The moves in the Quad Play space we talked about last week continue, with rumours that Vodafone will take Blinkbox off Tescos’ hands to accelerate their move to video content. Blinkbox has had a lot of investment from Tesco when their management were focused in the potential threat from Amazon rather than the more urgent disruption from Aldi etc. This could be a good deal, which when added to the content Vodafone already offers to mobile customers (Netflix, Spotify and Sky Movies) and with a settop box would catapult them into the battle with Sky, BT and Talk Talk.
There are also rumours of a much bigger move by Vodafone; a takeover of Virgin owner Liberty Global which would give them a significant base of TV customers as well as their broadband network.
One area that will be impacted by these changes are the upcoming negotiations for the Premiership TV rights. BT changed the game by winning a chunk of games – surprising everyone – and used this to launch their TV offer and aggressively compete for broadband. If, as seems likely, they do end up with a mobile operator their appetite for football will increase. The same applies for Vodafone.
In our opinion it’s the mobile rights that are more interesting. News Group have the digital rights now having paid around £20m. That was apparently an increase on the previous deal when Yahoo had the desktop rights and ESPN bought the mobile rights – which they struggled to monetise.
And it looks like it may have paid off for News Group. Digital subscribers to the Sun have doubled to 225k – with the Times reporting profit for the first time since 2001, so the Paywall seems to be working but growth in subscribers is slowing. How much of this growth is driven by the football is debatable, but £7.99 a month for the Sun and Footie seems reasonable value.
We have often suggested that GAFA could be bidders as Google and Apple look at their TV ambitions. As YouTube moves to a subscription model what better case study than the way Sky built their business on the back of the Premiership? And we still feel that content could become an Anchor for Apple – although they currently seem to prefer to retail other peoples rights in music, games and film.
The FT look at the main rights and how the balance could shift between Sky and BT. This time around the mobile rights are going to be worth a lot more and we can forsee more bidders. But as News Group have shown, you need a subscription revenue model to get the real value – ad revenue is just a nice bonus.
Whilst a surprising number of people choose to us adblockers most ad avoiding is less calculated, More and more content providers are choosing to offer ad free services for subscribers – Spotify, Netflix etc. And if you buy or rent content through iTunes or Amazon its ad free. And YouTube are moving to an ad free subscription model.
This opinion piece from betaworks summarises it well – the rich can avoid advertising through subscription, whilst the poor will just have to put up with ads. You can even imagine that Spotify source the worst ads to drive people to upgrade from their free service.
This article makes the point that we have made advertising so cheap it’s no longer that attractive for many publishers – especially when people also block ads too. But it makes the very good point that, whilst inventory is virtually infinite, peoples attention is fixed. And consequently, quite rare.
And that’s what all marketers really want to buy – the attention of the right people. There is a media issue here – being willing to pay the right price for the right amount of attention. And a creative one too; having just the right message to make the most of that attention.
Wall Street takes a real interest in advertising, given the number of adtech companies that have floated as well as GAFA dominating the market in terms of sheer size.
Barclays have released a fascinating report that looks at many of the big tech players and makes a good job of explaining the market – including the rise of programmatic where they are bullish. Their conclusion is that the market will reward the biggest players and that Facebook and Google are likely to grow at the expense of the rest. This supports our view that brands should be maximizing their investment with Facebook and Google and trying to understand how to make the most of these 2 huge opportunities.
Despite protestations the key drivers of Facebook growth –and most of the rest – is still app download advertising – although both Google and Facebook are very focused on getting brands on board.
TechCrunch have a good look at the app download ad market and get into some detail on what Facebook, Twitter and Google are doing to improve their attractiveness to app developers. Fabric from Twitter and Parse from Facebook are really smart attempts to get closer to developers and bake themselves into the app landscape
Of course Google and Apple could change this market overnight were they ever to sort out their appstores. It is amazing that Google can’t use their unrivalled expertise in search to make Play easier for users to find things. And it’s equally amazing that Apple, with their obsession over user experience, leave users to stumble through long lists of apps, in seemingly random categories.
A smart VC, that used to be at Facebook, has a good look at how Facebook are using Parse and think it has huge potential.
There are huge revenues at stake in this area and anyone who can help improve performance can make a lot of friends
The surprise is that other brands seem to have missed the fact 35 million people in the UK are using a smartphone to rewire how they live their lives. Eric Schmidt makes this point well when he talks of the world moving from Mobile First to Mobile Only
Benedict Evans has a new blog post where he talks of the New Questions in Mobile. This is really interesting stuff and we’re excited about the future possibilities of cards, notifications and deep linking between apps. But the war is over and Mobile has won – there are just too many brands acting like Japanese soldiers who didn’t get the memo and continue to fight the old battles.
For the first time in a long time brands can get real competitive advantage by being much much better at this new stuff than their rivals. Let the laggards focus on their big Christmas telly ad whilst you unlock the value of your data with smart advertising that delivers the right message at the right time to millions of your customers.
At a Ridley Scott premiere this week we were reminded of a quote we heard that the tech people like Scott use in epic movies, only takes a few years to arrive on everyones laptops. The new Beyonce video demonstrates how tech is transforming the creative world, with a great film shot entirely on an iPhone.
Blending retail with tech and mobile is still more talked about than real but a new eBay initiative shows what is possible.
The Chinese influence on new developments in messaging continues – everyone wants to be the western WeChat.
Finally… one simple benefit of digital is that you can now learn from the best people in any field. Follow them on Twitter, read their decks on Slideshare and find interviews on YouTube. This long interview with Reid Hoffman (Linked In & PayPal) is very good.
As we mentioned before we play WhatApps at the start of any workshop we do; people pass around their unlocked phone so others can see what apps are on their homescreen. As well as reminding people just how personal their phone is, people see that people tend to have a number of the really popular apps and a few that are very personal to them.
Twitter is the latest media company to take an interest in what apps you have downloaded. By doing this they claim to deliver tailored content that you might be interested in. This plays to their need to better engage new and occasional users who don’t follow many people and hence tend to see little content when they use Twitter
In a happy coincidence, this same data can also be used to better target advertising and equips Twitter with a stronger argument to win spend from the app download campaigns that still drive a large proportion of mobile ad spend.
We think there is good learning for any brand from the apps that have been downloaded. In the old days we believed that knowing which TV shows people watched, and the newspapers and magazines they read, was a much richer insight into people than their age or social class. Now apps probably define people as well or perhaps even better than much of the other data available.
Apple and Google have the best knowledge here through their, appstores. Facebook have a good idea through the apps that use the social login. And Yahoo with the acquisition of Flurry and Aviate, are building their understanding.
And this is why peoples homescreens are so interesting. Betaworks probably started this with their study of people sharing their homescreen on Twitter and Instagram. Now they have launched an app that makes it easy for you to share your homescreen. #Homescreen takes your screenshot and posts it to Twitter and adds it to a website, where people can hover over the apps to see how popular they are. You can see ours on the site here.
We find more and more people are starting to organize their apps and for many people the home screen is where the most used apps are – so this should become a great source of data on which apps are getting the most traction.
The revival of BT continues and they are believed to be in the market for a mobile operator and either O2 or EE could soon be swallowed up so BT can offer their customers a complete comms package.
The mobile operators have pushed broadband in the past but none have made that much progress, with O2 handing their broadband customers over to Sky. EE have preserved and Vodafone are now taking it seriously.
Virgin have been very aggressive and their cross selling is shaking up the market as they use the experience of new owner Liberty to focus on a Quad Play – Mobile and fixed line telephony, home broadband and TV.
It’s the TV service that has really turned BT around and TalkTalk have used YouView to offer a reasonable TV service which has given them around 1m TV customers. They are switching their MVNO from Vodafone to O2 and are being very aggressive on pricing
Vodafone hinted they are going to offer TV services bundled with their home broadband and they are getting closer and closer to Sky – who have long lusted after a mobile offer.
So what does this mean for brands? Advertising has never been that significant for any of these players when compared to subscriber revenues – in the last quarter Sky took £104m in ad revenue against subscriber revenue of £1.6bn – but technology will change that.
Sky has started to make money from their AdSmart offer where brands can target individual postcodes (and targeted TV is getting traction in the US) Weve is now starting to drive mobile ad revenues for the mobile operators. And as cross device tracking improves – take a look at what Device9 are doing – the ability to run activity on both targeted TV and the smartphones of viewers watching that TV show will be feasible. That sort of opportunity will drive significant revenues and as the operators have to compete on price to attract and retain customers, ad revenue will become much more important to them
Last week we talked about the pieces falling into place as mobile matures, and now its time to focus on what brands can get from this mass market opportunity.
Like Marc Andreessen we believe that much of the thinking of the dotcom boom was actually quite sensible – it’s just that the scale of users weren’t there. With 35 million people in the UK using smartphones, digital is now both mass market and mature.
One line of thinking that we really believed in was the idea of 1 to 1 marketing. Championed by Peppers and Rodgers this approach argued that we could talk to people as individuals. Lots of email marketing has it’s roots in this thinking (although very little gets it right) and we developed the idea further to come up with Dialogue Marketing, where the ability to see some ones actions (their digital body language) also informs how you talk with them. DLKW Dialogue was so named to try and live up to this and we did some really interesting work across all digital channels.
But digital advertising spend then was a fraction of what it is now and CRM was another silo, often handled by another client team / and or agency.
Now the idea of fusing CRM and digital advertising is really feasible. Why? Because all the messaging gets delivered on the same device –a smartphone. And the CRM data on existing customers can be fused with first and third party data on individuals to target digital ads. Equally CRM can now be actioned through social (to some extent) and through app notifications
Custom audiences on Facebook and Twitter are hugely powerful tools – enabling your existing customers to be targeted – and helping find lookalikes. Yet few brands are using the services – perhaps because the idea of paying to reach people who have already given you permission to email them seems a little extravagant. Yet with Mailchimp saying typical open rates struggle to get over 20%, new ways to reactivate these users can be a really good investment.
It is getting easier to track people across devices and across channels. And many marketers recognize that getting more purchasing from existing customers can be a more effective approach than trying to find new users.
Of course advertising has always reached both existing customers as well as prospective ones. In smart digital advertising the level of targeting sophistication means brands can choose whether or not to speak with existing customers. But in most cases taking advantage of what you know about an existing customer should make driving a sale easier.
The one thing needed to deliver Dialogue Marketing though, is a range of creative messaging that fit the targeting – if you just give everyone the same message then you are probably wasting money on the targeting. This is still the Achilles heel of programmatic.
QR Codes just will not die. Despite many experts declaring them over, businesses are still finding ways to use them. Powa are trialing payments with Tesco using QR codes and the airlines find they work really well for boarding passes. A new firm is pushing a modified version of QR codes but we wonder whether they can get people to use yet another app.
Getting one of the YouTube stars to wax lyrical about your product to their millions of fans has got a lot of brands and agencies very excited. And the pay rate has got the YouTube stars pretty worked up too. Now the Advertising Standards Authority has dampened this enthusiasm, pointing out you have to make it clear when a brand has paid for a mention. Lots of native advertising is running the risk of an ASA sanction.
Dark Social is a huge factor in sharing. This is the new term for sharing done outside Facebook, Twitter and the other trackable social platforms. It includes email and messaging, which is how lots of content gets shared.
Last week we talked about Firefox changing its search partner to Yahoo and speculation is increasing around the Apple relationship with Google search that we mentioned. Now we see this pop up when you leave a Yahoo page on Safari. It doesn’t actually work, but it’s an interesting tactic.
Facebook have launched a new initiative to help app developers, including some funding
Finally… We see music as the canary in the coalmine for digital content. What happens to music is a pretty good glimpse of the future. So the way the US charts are changing is fascinating – including streaming and YouTube views as well as purchases and radio play gives you a much richer data set. And that data will now be a much better indicator of just how popular a track is as frequency of consumption is monitored as well. How might consumption data change the way other digital content is value and funded?
Privacy comes up more and more in our work. In the last couple of weeks two clients have mentioned feeling slightly disturbed by the way data is being used in marketing. One, a German, felt quite strongly that brands that ‘overuse’ data run the risk of alienating customers.
Which reminded us of Google location – just click on www.google.co.uk/locationhistory/ and, if you are logged into Google, up will pop a map like the one above, with a calendar, so you can see exactly where you went on a particular day. (The random day I picked from last summer happened to be the last time I went to Facebook and – being before Citymapper launched in that city – I was probably the only person to turn up on the bus)
You can also run it as a movie, showing exactly how you travelled around that day – presuming you had a smartphone with Google turned on. Of course Apple also know quite a lot as does Facebook who are poised to launch hyper local location based ads.
Now we are all watched over in many other ways; if you drive in London your number plate is recorded and checked constantly to see if you have paid the congestion charge/ taxed your car/ have valid insurance. And in the city with (probably) more CCTV than anywhere else on Earth , you can be tracked as you move around the city as improving facial recognition makes this easier and easier.
But the depth and breadth of what digital firms know is worrying people. A good Wired piece on data and how it is used was picked up by the Standard this week. It’s a really good take on the subject.
Tim Berners Lee argues that this data should be owned by the individual, as it is really useful to that person;
“In general … if you put together all that data, from my wearable, my house, from other companies like the credit card company and the banks, from all the social networks, I can give my computer a good view of my life, and I can use that. That information is more valuable to me than it is to the cloud.”
The idea of Vendor Relationship Management where a person has control of their data and capture the value themselves has been around for quite a while – we featured it in our 2002 futurology video – but it has never caught on and one wonders if it’s now too late?
A good piece in Quartz points out the rapid growth in social login, where access to a site or app is given when the user logs in with Facebook, Google, Twitter etc rather than registering with the app itself. Some US research says 77% of people had used social login, up from 53% the previous year. Other research says Google and Facebook account for over 80% of all social logins.
Talk to any good growth hacker and they’ll tell you that social logins are a great product feature as people find them convenient – and perversely some think privacy is better protected this way.
As brands understandingly migrate to vendors who have first party data, enabling cross device tracking, and Google and Facebook extend their ad networks, the monetary benefit for the app owner to favour social logins will only increase.
The strong are going to keep getting stronger and their favoured diet is our data. Hard to see anyone changing this in the short term.
But Apple may have a go; a friend spotted this now pops up on iOS8.
The new IAB figures show burgeoning growth of UK mobile adspend continues. The figures for the first half of 2014 are up 68% with video doing incredibly well.
Agencies are increasingly adding online video to traditional TV campaigns, with Omnicom recommending US clients switch between 10% and 25% to online video. Much of this still flows to the big broadcasters for their catch up services but clearly lots gets directed to newer players. Which is why Yahoo are so focused on video – much of their European management team has a TV background and Marissa sees the future as video;
Probably the most intriguing advertising news this week (other than the Facebook local play) is that SnapChat are ready to offer advertising. Given they have a lot of reach and not much data, there won’t be too much targeting and users will be able to skip ads
Sounds like the need for smart creative in mobile is back. News that Google are pushing tools that measure the brand effect of digital ads supports this. Brand Lift isn’t that revolutionary but making it a core tool rather than an add-on is a significant move.
One of the emerging tools to measure the longer term effect of mobile advertising is to look for a sales effect and much of the energy around mobile money and wallets is that they could be the best attribution measure ever. Imagine person a saw the Facebook ad on their mobile, watched a YouTube video on their mobile, clicked on a mobile banner and subsequently visited the store and buy the product using their mobile wallet. Data doesn’t get much more compelling than that.
That’s why we think Google will buy PayPal or Square to accelerate their mobile wallet. And it’s why Facebook hired the PayPal CEO and have a payments product ready to go.
Apple however has a different agenda and ads don’t seem that big a part of it. Tim Cooks note on privacy a few weeks ago set the tone. They want to sell great products and build what we call Anchors – services so compelling that moving to Android would be a huge effort.
Apple Pay is clearly an Anchor and they have eschewed the opportunity to harvest data from these transactions. This plays nicely to privacy but also to security. When the Target CEO gets fired because hacker stole 40m credit card profiles, security is moving front and centre and Apple don’t want to risk their reputation. The breach of iCloud to steal celeb selfies was damaging but containable. A similar scandal with Apple Pay would not be.
In this in depth look at Apple Pay we can see that the system is built around a new way to handle payments. Whilst complicated, its benefits are really clear. This is much safer than using a credit card in the normal way. (And the fingerprint recognition on the device is also hugely impressive for users)
All the other players are going to have their approach compared to Apple Pay and we suspect people like Zapp will struggle, despite signing up retailers well in advance of their launch.
That doesn’t mean we aren’t going to see real innovation in FinTech –Marc Andreesen believes the whole system is ripe for reinvention
“We have a chance to rebuild the system. Financial transactions are just numbers; it’s just information. You shouldn’t need 100,000 people and prime Manhattan real estate and giant data centers full of mainframe computers from the 1970s to give you the ability to do an online payment.
‘‘You would not today, starting from scratch, invent any of these financial businesses in the same way. To me, it’s all about unbundling the banks. There are regulatory arbitrage opportunities every step of the way. If the regulators are going to regulate banks, then you’ll have nonbank entities that spring up to do the things that banks can’t do. Bank regulation tends to backfire, and of late that means consumer lending is getting unbundled.”
One start up that has been able to disrupt the market is Square – the $billion side project of Twitter founder Jack Dorsey. Despite some negative commentary recently, they have raised more money – $150m at a valuation of $6billion.
And picking up the point we made regarding Starbucks last week, they recognise that payments in and of itself isn’t a problem that needs solving – it’s the areas around it where you find friction. So Square are getting into pre ordering - just like Starbucks. I guess this takes Square into the same space as JustEat and HungryHouse.
A look at the changing music industry. As we have discussed in the past, the future is really good as streaming delivers increased revenues. Its just that the sharing out of these riches may prove controversial.
Finally …we are out and about next week. I’m on a mobile panel at the Facebook Upfronts on Monday morning then talking about location and mobile at an Omma conference in the afternoon. As ever, if you are there come and say hello.