Category Archives: disruption

Mobile Fix – February 27

Mobile TransformationA new report from Boston Consulting says that consumers benefit from mobile to the tune of $3.5 trillion globally – as much as $4k for each user. Whether you buy into this type of analysis or not, their data on what people would give up rather do without mobile Internet is quite powerful. The report is quite a long read but interesting.

Fix readers know that million of people have transformed how they live their lives because of mobile. What may be surprising is just how concentrated the attention is;

A report from Ericsson shows that around 2/3 of peoples mobile time is taken up by just 5 apps – with social and video dominating. If your mobile strategy is based around your app it’s an uphill struggle – especially as Kantar research suggests a quarter of Android apps are uninstalled within 10 minutes of being downloaded.But it is clear we are still quite early in this switch to mobile and there is lots of potential – the Flurry CEO predicting that 2015 is the year of mobile commerce.

In his talk at the Yahoo conference the other week he showed one chart that reinforces the size of the mobile opportunity – the OTT messaging apps now have more users than the mobile operators do

Mobile advertisingThe business model of this new mobile world is clearly advertising.  Stratchery make an interesting comparison between TV and Snapchat – big audiences with a good level of engagement but little or no targeting. And he makes the point that brands want big audiences, especially of young people. And that Snapchat have learned from Facebook that size matters so they are seen as;

the mobile messaging app with the rather old-fashioned business model ready and willing to take the place of TV.

US research shows that young people are just not watching traditional TV in the same numbers.

Mr Juenger at Bernstein Research argues that television is undergoing a “structural” migration from ad-supported networks to streaming video services. “We don’t think those viewers are coming back,” he warns.

But is that old fashioned business model enough anymore?New research approaches from Facebook Yahoo and others are correlating product purchase with ad exposure with increasing reliability. New academic research confirms what we have known for a long time – digital is equally able to drive brand metrics as TV is.

Smart marketers are moving a proportion of their TV spend to digital with Facebook a major beneficiary. But is taking a spot designed for TV into social media the best approach?

Facebooks new Atlas supremo reminded us on Twitter of a point ad guru Dave Trottt made – most advertising is academic because it either isn’t noticed or isn’t remembered.

Headroom: “£18.3bn is spent yearly in the UK on advertising. 4% remembered positively, 7% negatively, 89% not noticed/remembered”@davetrott

— Damian Burns (@damianburns) February 26, 2015

(Read the original Dave Trott article here)If 89% of ads are not noticed or remembered in traditional media should we really be taking the same ads into digital?

Advertising has also talked to strangers – because it had no alternative.

So ads have to be ‘bland’ enough to appeal to everyone. And bland doesn’t get noticed.

But in our brave new data driven world advertising to strangers is an anathema. We can know lots about the people we’re talking to, so we can and must tailor the message to be relevant.

It then has a better than 1 in 10 chance of being noticed.

So the economics of creative change – and when you blend in technology, we can industrialise creative production – and make it more effective.

SME s – The neglected ad opportunity

When we talk about advertising we all tend to focus on big brands spending large amounts through their agencies. But the hidden part of the advertising iceberg is the small advertisers who have a local footprint. Many of these SMEs have already weaned themselves off traditional media – look at how thin local press, trade press and directories tend to be these days.

A large element of Google growth has been these small advertisers using search as a wonderfully efficient way to reach customers.

But Facebook is making big inroads into this market – and seem to be taking revenue from Google. A friend tweeted about this;

Top analysis @brianwieser Pivotal Research: Small businesses represent 25% of @facebook ad revenue much of growth at the expense of @google

— Christophe Cauvy (@ChristopheCauvy) February 24, 2015

And Sheryl Sandberg said in an interview that Facebook now has 2 million active advertisers – up from 1.5m in the middle of last year. A smart Fix friend who works with smaller brands thinks Google is too slow and now focuses on finding leads on Facebook.

As recognition of this growth Facebook now has an app SMEs can use to manage their ads

Quick reads

Boom. As predicted Google are finally going to use mobile optimised as a signal in compiling search results and they expect it will have a significant impact in our search resultsYou have until April 21 to get a mobile site

Given the mystery over the Apple Car this detailed look at the auto industry is an interesting read. It’s noteworthy that the report is from a firm better known for focusing on mobile.

Following up our look at Mobile money last week Google have jumped back in the game by buying the wallet firm the US operators developed. Your enemies enemy can sometimes be your friend. Some think the big opportunity for Google is to buy PayPal.

And this report from Brightons’ smartest thinkers is a very good take on the trends shaping the financial industry.

The UK government have made a huge success of improving their digital presence and it is being copied around the world. Most brands could learn something from the way they approach digital.

A good look at Line – the messaging app that makes vast amounts of money.

Is Pinterest the next big ad business?

Some good examples of retail blending with mobile

YouTube doesn’t make much money – even before the competition really gets going

good new blog post from Ben Evans pointing out that disruption in mobile comes from the top as well as the bottom.  And this is a good profile of Evans and his work for VC a16z

Finally…. I spent last Friday at the Techstars Demo Day. Having been a mentor to the really smart people at Big Data for Humans I had met all the teams at the start of the process. But I was astonished at how the 12 weeks had transformed some of them and the day was a succession of compelling pitches from really promising start ups. This list of some bigger, more established, start ups, reminds us how this start up energy translates into our everyday life.

Mobile Fix – January 30

This week provided yet more evidence that mobile is changing everything.

Apple made more money than any other company ever. $18bn in profit in just 3 months. Only oil companies have come close. And Facebook blew through predictions to have a record quarter – their results deck is worth flicking through. Whilst the topline figures above are amazing, the stat we think most relevant is that over half a billion people use Facebook each month only from their mobile. And over on the other side of the world Alibaba customers spent over $50billion on their mobiles in 3 months.

The world has changed and we need to evolve marketing to take advantage..

Apple 

The huge success of the iPhone drives the Apple performance, as iPad growth continue to slow. It’s likely they sold more iPhones than all the devices that Samsung sold over the same quarter. And they lost more money due to currency fluctuations than Google made profit in Q3.

The watch is next and the talent drive continues with the hire of the person behind Burberry digital retail initiatives – who dreamt up things like this Christmas window display at Printemps in Paris.

Pay is a key Anchor for Apple – a service so good people will be reluctant to move to an Android – and a new deal takes it into 200k vending machines and self serve locations across the US

Facebook

Another key stat from the Facebook investors deck-  is that the Advertising ARPU is $8.26 – up 55% on the same quarter last year – whilst in Europe it is just $3.22 – up 36% on 2013. So despite fantastic growth, there is still more potential – supporting what we hear from brands.

They continue to grow their suite of tools for brands and a new tool lets advertisers test ads against control groups. The FT looks at their ambition to take TV budgets and concludes by quoting an analyst who says she thinks it will happen very slowly. We disagree. The ability to target video and optimise creative messaging using data will be hugely attractive to smart brands.

And the other end of their mission is to bring people in emerging markets onto Facebook which is helped by a new app for emerging markets. Designed to work on low end Android devices this ‘lite’ app is being launched in 8 markets across Africa and Asia.

Google

The Google results were OK - not quite good enough to beat estimates but healthy rises in revenue and income was 40% higher than the same period last year. Although this was helped by the proceeds of selling Motorola.

Google search share declined by 1.6% after Mozilla switched to Yahoo as its default search engine – showing its vulnerability to the same happening at Apple.

And they continue to drive new/better ways of connecting to the internet, with Fiber rolling out into new cities and investments in Elon Musks’ SpaceX  programme so they can use satellites to deliver internet access to remote parts of the world. But the most surprising thing is their rumoured partnership with Sprint to develop an MVNO – where US phone users could use Google as their phone network. It’s what Virgin and GiffGaff do in the UK and we suggested it was a good idea for Google back in 2006

Not all Google projects are on such a grand scale – the ability to pay bills via your gmail still solves a problem and is now available in the UK.

Amazon

Amazon beat estimates  - the first time for a while – and surprised everyone with a modest profit and impressive growth in Prime customers. But their wallet has been withdrawn - although the benefits to Amazon of knowing what people are spending on is so huge we are confident they will keep trying.

And they continue to try new products – they now offer email with a new WorkMail product.

Alibaba

Of course we now know that GAFA is not the only game in town and the moves made by BAT in China are increasingly influential. Yahoo cooked up a smart way of dealing with their hugely valuable Alibaba stake saving billions in taxes.

The key thing though is that Alibaba users spent $126 billion over the last quarter – of which $53 billion was on mobile.

Snapchat

There is a lot going on at Snapchat. Their news service looks really good. Their ad products are getting a good reaction.  And they are attracting brands looking to innovate, with ATT launching a scripted content play. The production company behind HollyOaks have already used Snapchat stories to reveal a storyline and we are convinced that episodic content with thrive on social media.

Adblocking

I think the ad industry massively underestimates the amount of ad blocking software that users deploy #Adblock

— Darren Herman (@dherman76) January 28, 2015

We agree with this tweet from a key person at Mozilla.  The economics of content creation are fragile enough without users avoiding the main monetization method. Our friends at econsultancy have taken a good look at how publishers play with pay walls and subscription barriers. We probably need better ad models to deal with this and Rezonence are doing some good work on this with their Freewall, as are TrueX for video, who were bought by Fox recently

Quick reads

An FT feature on mobile money points out that across Africa innovations with mobile continue to get mass market acceptance. Lots for Western banks to learn here.

A good take on driverless cars and how they will change the world – faster than you think. One thought – will Google use these as mobile wifi hotspots?

And Googles own futurologist Ray Kurzweil makes some very interesting predictions about the future here. In 25 years non biological intelligence (robots) will be a billion time smarter than biological intelligence (us)

We are increasingly convinced that O2O retailers are going to beat online pureplays. Having an offline presence makes so much sense and this article looks at how people like Warby Parker are investing in shops. And even good old fashioned mail order catalogues are enjoying something of a comeback. Combining the best of both worlds has to be the best bet.

This is an interesting look at how a Vine celebrity is created

With the inexorable rise of programmatic there is some debate over how agencies are approaching the space. This anonymous account of the UK scene is interesting but should probably be taken with a pinch of salt.

But the targeting inherent in smart digital can cause unexpected problems. WeChat users have reacted angrily to a BMW campaign – people complaining that they haven’t been targeted.

Finally… this presentation from the DLD event in Munich last week is a must watch. One of the few people I have found that talks even faster than me, Scott Galloway gives a great take on GAFA.

 

Addictive helps businesses profit from Mobile, Social & Content

Our clients hire us to do strategy consulting, creative thinking and to create the mobile and social apps, mobile sites and ad formats needed to make the strategy deliver.

If you could do with some smart thinking or doing around any of the subjects we cover then do get in touch

We produce Mobile Fix every week to share news and views on mobile and related topics. We have over 3300 subscribers across tech firms like Google, Facebook, eBay, Yahoo etc as well as many Brands and Agencies. We’re happy for you to forward this mail to anyone you think might be interested. If they do find it useful they can sign up for email here.

Mobile Fix – January 23

newTVPicking up on last weeks thoughts on how TV is changing, the new KPMG research supports our view that watching on demand is growing rapidly – particularly amongst the young and the upmarket.US commentator Michael Wolff also picks up that TV is in the ascendance but points out that the quality needs to be high and it needs to cater to an audience that will pay for content. As we have pointed out in the past we may be moving to a world where the people who see advertising are the ones without much money. Because the rich will be able to avoid advertising whilst the poor won’t.

(On that tip we are seeing a general rise in ad avoiders with new data showing adblocking is growing in popularity. We will come back to this in the next few weeks.)

But Wollf sort of misses the point on digital – the future of TV and digital are inexorably intertwined.  The new players like Netflix and Amazon rely on broadband. BT Sport has turned off the service through the TV aerial and are now giving Chromecasts to their customers

This slightly overexcited piece looks at the background, newish players like Sling and how the US are trying to restrict the power of then cable companies.

And in Europe the push towards quad play has put O2 in play – with Sky a likely suitor although a merger with 3 is possible. now underway Much of our thinking around Quad play remains valid and we continue to believe that the media rights for the Premiership will show us what the new landscape looks like.

The latest entrant seems to be Discovery - who own a stake in Eurosport – and in turn are owned by John Malone, whose Liberty empire now own Virgin. Who have complained to Ofcom about the way the TV rights are handled- pointing out that fewer Premier League are shown in the UK versus top level games in other countries. So they look likely to bid for some rights too. Who else will get involved?

One piece of friction around TV is the fact the data isn’t that useful at the moment – research designed to facilitate trading around mass audience TV programmes doesn’t give the granularity now needed. Nor does it embrace newTV options like Netflix etc. The UK research people are moving ahead with new data on cross device viewing and on demand, which should be available soon.

Whilst the industry plays catch up, the pace of change continues. Yahoo – who have hired a lot of people with TV experience – are to show a Simon Cowell talent show focused on the DJs on the EDM (Electronic Dance Music) scene.

The money involved in EDM is huge, but whether Simon Cowell can add anything remains to be seen. And how a digital platform handles this type of content will be interesting.

Video

Whilst the Mary Meeker money chart (showing money has yet to follow audience onto mobile) remains burnt onto the retina of many, we are seeing TV spend migrate to digital. As the Omnicom quote from late last year showed, the rise of online video is being driven by a recognition that moving some money from TV to digital makes the campaign more efficient.

Facebook have partnered with Nielsen in the US to hammer this home. But whilst shaving 10%+ from TV budgets helps drive those quarterly numbers, the ambition is for more. Much more. With the upcoming Superbowl we will see a change as Facebook push brands to use their video player, rather than just sharing the YouTube video across Facebook. The way Facebook have built their player makes it much more prominent in the News Feed than a YouTube video. And they have auto play too. Whilst Facebook haven’t shared any research – yet - it seems the Facebook player is much better at getting engagement.

Mashable have more on this, pointing out that Buzzfeed has switched most of their video they share on Facebook from YouTube to the Facebook player. Of course it still makes sense to have your video on YouTube and, with Twitter Video imminent, brands will need to get really good at using all the channels.

If you want to dig deeper this is a good look at some of the video tactics you can use between YouTube and Facebook, which gets into some more detail on how Buzzfeed does this. And long time YouTube fan VC Mark Suster explains his thinking on how to build a successful YouTube business.

This is an area we are fascinated by and we would love to find some brands to partner with to explore this huge opportunity. If you are interested, get in touch.

Retail

Our coverage of retail changing sparked lots of conversations, with the general point being that people have changed their behavior whilst shopping and retailers and brands have yet to work out how to respond.

The best example we know is still Shopkick where they have significant scale and solve a problem for both retailers and users. This video of one of their key people is a must watch.

Another retail brand we admire is Nordstrom. We use them as examples in Digital Transformation workshops often – not least for the way they have organized their Labs to drive real innovation. This Harvard Business Review article celebrates their digital strategy.

One of our mantras is that brands need to find a way to solve a customers problem whilst solving their own business problem. Most marketing failures are when something achieves just one side of this equation. Starbucks are another brand we often focus in in workshops as they are really really good at this.

Most of their innovation improves their business process and makes their customers happy. The latest example is wireless charging for customers smartphones.  Now they just need to sort the coffee.

The biggest investment in retail currently is around grocery deliveries with Amazon and Google pushing ahead in the US and Instacart is now valued at $2bn. The Wall Street Journal has gone back to look at Webvan which IPOd in 1999 and was worth $8bn before it imploded.  With mobile now mass market, many of these dotcom busts are being recognized as great ideas launched too early.

Quick Reads

Despite them being so unfashionable we are still convinced QR codes have a future and the Chinese are showing how they should be used. Alibaba have invested in an Israeli firm that is focused on this space.

Flurry point out that the end of the PC is coming, but spend any time in a Starbucks or other coffee shop and you can see that the laptop is still the device of choice for some people for some tasks at least some of the time. The same applies in most offices, so smart brands build experiences that work across devices – so WhatsApp now have a desktop product. And we love the fact they use a QR code to connect your mobile to the desktop service.

It is still possible to have a good idea and go viral overnight. It’s not always a good thing as the story of the Glitter ecommerce firm shows. We tweeted this and were followed by two more Glitter sites within minutes.

Talking of Twitter we met a smart analyst who is convinced Twitter is doomed until they change leadership and direction. We tend to disagree but accept that the product needs to evolve to make it easier to use for civilians. Our solution would be around Twitter lists and this post shows how someone uses them very effectively.

In our Vertical Stack work on GAFA the lack of a Facebook hardware play is probably the biggest anomaly. But as Home showed they do have ambitions in hardware and it now seems Facebook came close to investing in Xiaomi. That would be a very interesting collaboration.

This is a good look at how Google continue to innovate around search. Quite long but very thorough, it’s a must read – as are the follow up articles.

We believe that getting really good at using the emerging platforms is a vital skill for brands as there can be real competitive advantage here. Here are 10 good examples of campaigns on WeChat. What can we learn here?

More on Snapchat and advertising – they are partnering with media to distribute content

Not so quick reads

There are some good reports around at the moment that are worth digging into;

WPP media agency MEC has a good preview of 2015

Behavioural Insights specialists Canvas8 asked lots of experts (and us) for thoughts on the big shifts expected in 2015

And the clever people at WeAreSocial have put together a hugely detailed document of stats around mobile social and digital. Essential stuff.

Finally – we are out and about again and next week I am speaking at a fascinating event about Programmatic and Branding organized by the smart people at Infectious. My bit is around the huge opportunity for creative that works with programmatic – drawing upon all that data to make more relevant and more effective ads. If you work at a brand and are interested in this area we may be able to squeeze you in – let me know.

Addictive helps businesses profit from Mobile, Social & Content

Our clients hire us to do strategy consulting, creative thinking and to create the mobile and social apps, mobile sites and ad formats needed to make the strategy deliver.

If you could do with some smart thinking or doing around any of the subjects we cover then do get in touch

We produce Mobile Fix every week to share news and views on mobile and related topics. We have 3400 subscribers across tech firms like Google, Facebook, eBay, Yahoo etc as well as many Brands and Agencies. We’re happy for you to forward this mail to anyone you think might be interested. If they do find it useful they can sign up for email here.

Mobile Fix – January 9

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?

Retail

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.

Media

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.

Apps

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.

Quick Reads

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.

A teenagers view on social media

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;

John Battelle

Benedict Evans

Fred Wilson

Mobile Fix – Dec 19 – The Christmas Issue

On holiday already? Go straight here and enjoy the soundtrack for your Christmas

Still working? Scroll down

Have a Soulful Christmas - from addictive!

 

It’s that time when everyone either does a round up of the year or predictions. But we’re going to resist the temptation. As they say in Hollywood, No-one knows anything And our last attempt at predicting the future back in 2002 still stands up quite well.

So instead we thought we should focus on some of the big questions for 2015; 

Will the M&A fervor around AdTech ever quieten down? Fox have just paid $200m for an interesting video ad startup.  Or will VC money start to flow elsewhere? In the excellent Google Ventures summary of their year Life Sciences got the biggest chunk of their investment.

Who will win the battle for the money migrating from TV to digital? Google or Facebook? Facebook seem to be winning the battle for display. And this analysis of the reach of the new Apple ad on Facebook shows video is getting really interesting too; broadly 20m views on Facebook (vs 2m on YouTube) is more than you would get with an ad in a big TV show like NCIS. Not that scientific, but more evidence that Facebook can now get close to the reach of TV. Finally a quote from one of the key AdTech people at Facebook sums up their pitch; “Don’t spend a dollar unless you know that dollar is delivering ROI,”

What is the next big thing in messaging? Payments are going to be important; Facebook have poached another PayPal exec to work with David Marcus who made the same switch earlier this year. Kik have a smart new idea on how to use hashtags to create micro social networks.

Which of the next tier firms has the best chance to grow? Twitter are going after app download ads with their new features around phone activation. Even with all their smart acquisitions are Yahoo hampered by their CEO? – this is a pretty damning attack on Marissa. 

Will peripherals* get significant traction? The idea that Netflix will serve up recommendations to your smart watch shows what a lack of imagination there is around watches and wearables. Right now – like Google Glass – they don’t solve a problem for civilians. *Given none of the watches etc seem to function properly without a smartphone close by, we think wearables is a misnomer and peripherals a much better term.

Are QR codes going to be cool again? We have pointed out that WeChat reinvented them in China and amongst the leaked SnapChat emails we see they paid $50m for a startup focused on QR codes and NFC, beacons etc. The ability to instantly connect mobile with the physical world is a big deal, even if we haven’t really worked out what to do with it yet.

Can anyone make a success of Media on digital? Michael Wolff thinks its all crap but Wired has a good look at some of the newer players like Circa and Buzzfeed. John Battelle has some good advice; To me, just one question matters when it comes to a publication and whether it has a chance of long term success: Is it a must read?

And how will Programmatic change the ad industry? It’s already making big changes to the media side of the industry – and this interview with GroupMs  Rob Norman is well worth reading.  Next it’s the turn of the Creatives to adapt. Or not.

Over the next couple of weeks you will probably have some time for reading so we recommend you flick through these;

The 10 year anniversary ContagiousX.

Boston Consulting have shared a good report on Mobile in Europe

Criteo have an interesting Slideshare on the state of mobile commerce

The guy behind the XPrize and the Singularity Hub has a good post on Mobile, the megatrend of the decade.

And if you get really bored you should read this and change all your passwords.

Finally 2015 is going to be another rollercoaster ride on innovation, change and hype. Those that seize the mass market opportunity of ubiquitous mobile with a social layer baked in can profit. Those that hang back and keep repeating their old strategy are running out of time. It’s time to experiment.

Now we recommend you recharge the batteries and are delighted to share our soundtrack for a Soulful Christmas. Best enjoyed with a large glass of something red.

Have a great Christmas 

Mobile Fix- December 5

Own Goal?

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.

Ad Avoiders

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.

App Ads

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 

Mobile Only

The data on Black Friday and Cyber Monday show a huge increase in mobile usage. But it’s just not surprising anymore. More big brands are spending money on mobile – but that’s is only natural.

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.

Quick Reads

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.

Google have a good report on viewability

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. 

 

Mobile Fix – November 28

WhatApps

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.

Quad play 

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

(Good background on the Quad play here)

Dialogue Marketing

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.

Quick Reads 

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? 

 

Mobile Fix – November 7

Mobile Money

The word on Apple Pay seems positive in the US. As this article points out the rapid adoption is one of the key strengths of Apple.  And this well thought through post points out the strategic importance of Pay for Apple. Having tested all the key ingredients Apple could launch a fully ready product and they are taking advantage of the fact the upcoming switch to chip and pin requires everyone to install new POS terminal – (nearly) all of which will have NFC.

As we mentioned last week, US retailers have an alternative system – CurrentC – brewing and some stores have refused to accept Pay in the meantime – switching off the NFC terminals as it’s the only certain way to stop Pay. This interview with the CEO of CurrentC doesn’t suggest that Apple have much of a fight on their hands.

It’s hard to see anyone really countering Pay in the iOS ecology so I guess the opportunity for all these other Mobile Money players is Android, But can any get the scale to dominate? 

The obvious contenders are Google, Amazon & PayPal. It seems to have gone quiet at Google Wallet but we should expect some movement. And newly independent Paypal are still innovating – their One Touch payment is coming to Europe soon.

Amazon showed one strategy with their partnership with AllSaints. As well as being able to pay using your Amazon account, being a Prime member gets you free shipping.  As they get more sites using the Amazon pay button, an offline payments system makes more sense. But will high street retailers feel comfortable partnering with Amazon and sharing data on purchases 

As well as helping push payments this partnership is probably part of a bigger Amazon (stealth) push into fashion.

China

As the debate continues over how apps and mobile content evolve what can we learn from China? Their BAT, like our GAFA , are dominant and shaping the market. And finding the big switch to mobile something of a challenge.

Because of the great firewall that keeps US competitors like Google, Facebook & Twitter out of China, the Galapagos effect is interesting as it shows alternatives to the way our market is changing.

It’s the largest internet market by far – with 632m internet users it’s over the twice the size of the US (in second place with c270m users) – even though penetration is relatively low at 48%. When/if it gets to the UK figure of 90% the market would be over 1.2 billion users – the vast majority by that time on mobile.

The three big players in BAT (Baidu, Tencent & Alibaba) see messaging apps as the key to maintaining their dominance and both Alibaba and Baidu are investing heavily to compete with the Tencent owned WeChat and QQ.

These apps that have daily usage often have ‘smaller’ apps bundled within them; the most quoted example is a hotel booking app bundled in the Baidu maps. As linking between apps become more common we expect this focus on partnerships to grow in the West too.

Alibaba have taken another approach that has paid off really well. They invented the idea of Singles Day, where Chinese people who don’t have a partner treat themselves with some online shopping. Last year this event drove nearly $6bn in sales – twice the size of the US Black Friday and Cyber Monday – and with Alibaba sales up by 54% in the last quarter expectations are high for this November 11.

Of course just as the Chinese own lots of physical infrastructure in the west who is to say they don’t become equally acquisitive of digital businesses?

Visual recognition

One of the issues for the CurrentC people in their fight with Apple, is that their payments system uses QR codes and, despite that being hugely successful for Starbucks, it positions the product as a little dated. Even Google Goggles seem quite old hat now – but their acquisition of WordLens suggests they are still moving forward .

One area where there is lots of action is in FashionTech where a Shazam for clothes is the Holy Grail for many. Upmarket US department store Neiman Marcus have been quick to embrace mobile and have launched a new service called Snap Find Shop. Using a Canadian technology called Slyce, shoppers take snaps of clothes or pictures of clothes and the NM app shows you matching items.

That’s actually quite hard to pull off and this piece points out the difficulties andlooks at the various players – many of whom are in London.

One killer application of this tech is in making print catalogues and magazines shoppable. When Net a Porter launched their print magazine Porter they also launched a Layar powered app to make all the content shoppable. Other AR players like Blippar (who now own Layar) are active in this space too.

Mad Men/Math Men

It’s one of the most persistent clichés, but the tension between Mad Men and Math men gets repeated because it’s largely true.

The Chief Creative Officer of Facebook has made an impassioned plea for creative people (the talent celebrated in MadMen) to get more involved in the distribution of ads. He is right that at the moment the Math Men tend to drive the digital element and the benefits of right/left brain collaboration are lacking.

Too many creative people still dismiss digital as just banner ads and on their 20th anniversary they are getting a bit of a kicking. Somewhat unjustly really , as many very smart digital creatives have and continue to make them work for both brand and response. But too often they are left to the last minute and given to the most junior people. On mobile it’s even worse, as frequently desktop assets run unchanged  – just smaller – or are chopped up by mac jockies at the media network.

But there are better formats on mobile, as we find ways of integrating messages into the flow of peoples mobile stream.

Michael Wolff laments the loss of the old (Mad Men) advertising world here, but we remain optimistic – you can blend art and science and those brands that do can perform alchemy; turning the lead of small ad formats into the golf of customer attention and action.

We have been doing a lot of work looking at how Programmatic and Creative interface and we see a huge divide. And a huge opportunity.

The best way to improve any Programmatic campaign is by making the creative more relevant and more effective. As we develop our new project in this space we’re keen to talk with anyone who wants to see the two worlds realign. If you are interested get in touch.

Quick Reads 

Building on the Apps are the new CDs thought we shared last week Forrester have made 8 predictions  on how apps are going to change

And a look at how Messaging Apps are so addictive

An interesting look at how Facebook are approaching partners in Europe

More on the new Twitter developer tools Fabric

Good stats on the rapid rise of Mobile Search – you need to be getting this right, right now.

Finally – our favourite media remains Vanity Fair magazine which always has a great mix of insightful articles. This one on the Uber CEO is well worth reading

 

 

 

Mobile Fix – October 10

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.

Advertising 

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; 

“For us, display is really about brands storytelling, and display 2.0 is 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

“We are cutting through a lot of the new technology stuff around ads to the core of it: telling a story that leaves people with a new feeling,” he said. “They aren’t fancy, they are not targeted.”

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.

Money

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.

Quick reads 

Good thinking from Harvard Business School on the war for attention

More on Softbanks hunger for content 

Is Instagram The Next Great Ad Network? Yes

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.

How linking between apps is getting better

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.

Mobile Fix – September 26

Mobile & Money

As the details of Apple Pay become clearer, analysts are generally positive – although not quite as bullish as the Chamath Palihapitiya view we shared last week. Many people site Starbucks as evidence that payments can and do work.

In the last data we saw, Starbucks dominates mobile payments in the US. In 2012 around $500m was spent using mobile payments – and Starbucks was around 90% of that. They have been hugely successful – and now 15% of all their US transactions are using their app – but the Starbucks Chief Digital Officer points out it’s not just about payments – the loyalty aspect has been a big driver. 

They are one of the brands that Apple have partnered with for Pay – but interestingly they don’t intend to let people but coffee with Pay – just top up their Starbucks app. Their brand is so strong they have ambitions to expand outside of Starbucks;

“We want to get mobile ordering right first, but you could be hearing more about us in the mobile wallet or universal loyalty space sooner than later

A smart Fix reader made a similar point about the Oyster card and how it could have become a means of paying for items outside of Tube tickets. Now with a plethora of new players like PayM, Zapp Powa etc as well as the Mobile Operator wallets, PayPal and Google iPhone  et al users have a lot of options. But it seems to us that Pay will become a real Anchor for Apple by making it so easy.

And as more people use Pay, more retailers will come on board. Talking with UK supermarkets, they have resisted payments because they tended to slow down the checkouts. Starbucks have focused on their point of sale tech and processes; 

We were able to save 10 seconds a swipe for any kind of Starbucks card, mobile payment, credit card or debit card transaction. That ended up saving us 900,000 hours of line time a year. 

If Apple Pay can contribute to that sort of improved efficiency, people will rush to sign up.

(btw  – one of most hyped mobile money startups has been Clinkle; ran by a 23 year old, they raised $25m seed money and has a  long list of VCs as investors, along with Richard Branson. Lots of smart people have joined and many have quickly left. And it was in stealth so no-one knew quite what they were up to.

After 3 years it has finally launched a rather average debit card linked to an app. Sounds a lot like the Osper card we mentioned the other week)

The Chinese are coming

The Alibaba IPO was the biggest float ever, raising $25bn – eclipsing the $16bn that Facebook raised. Some have questioned the ethics of investing here – largely because the BAT Chinese digital giants  (Baidu, Alibaba, Tencent) benefit from having no competition from Google, Facebook, Amazon, eBay etc in their home market.

There is a lot to learn from how these companies operate and we now look at BAT when consider the vertical stacks of GAFA. And this good article looks at how important China has become to the global tech economy – with good insight into their M&A activity.

But perhaps the most immediate effect of the IPO is that it (probably) puts Yahoo into play.

Yahoo’s market capitalization is about $39 billion, while its Alibaba stake is worth $37 billion and its Yahoo Japan stake is worth $8 billion.

So someone could buy Yahoo and sell those stakes and essentially get Yahoo for free. Who could that be? No doubt clever Private Equity people are hunched over their calculators right now, but to GAFA, Yahoo would be a valuable acquisition.

Despite some peoples misgivings over their progress under Marissa Mayer, Yahoo still have huge reach (on desktop and mobile) and throw off huge amounts of cash.

Given that Yahoo is still a major player in search its hard to see the EU etc allowing Google to swallow them without divesting the search business to Bing. But for Facebook and Apple they would get lots of content to feed their userbase. And Amazon would get lots of potential buyers that it currently has to advertise with Google to reach. And perhaps even Microsoft or Murdoch could be interested?

Or how about Softbank?. This Japanese company has been very aggressively trying to grow the US business with the merger with Sprint, but its pursuit of TMobile has been unsuccessful. Combing an operator with a content business like Yahoo has been talked about lots, but this could be a first.

As JV partners in Yahoo Japan, the two sides know each other well. And, of course, Softbank now has a new leader who knows a little about the digital space; Nikesh Aurora moved over from Google a few months ago. Is this how he makes his mark in his new role?

We think it’s unlikely that the Wolves of Wall Street will leave something this vulnerable (and valuable) alone, so watch this space.

Beacons

Just like Big Data there is rather more talk about Beacons than there is action. It’s clear there is huge potential, but so far few people have actually started to use them. This piece looks at some of the innovations around the internet of things that use beacons – but there isn’t a killer app. Yet

The people at Estimote have done much to shape the market, and this article considers how they see the potential – including indoor locations. We think that Beacons will be used for simple ideas that improve various situations. For example when Starbucks get around to pre ordering, how do they stop the coffee going cold before you get there? A beacon could detect when you arrive at the store and the coffee is made then and there – and you don’t need to wait.

This example of coupons in Passbook working really well shows the potential – and Beacons could add another dimension. There is a huge opportunity for good old fashioned sales promotion thinking (or Shopper Marketing as its now called).

We’re keen to help kick start this area, so hungry to work with retailers, restauranters etc to test out ideas and try and make some progress.

Quick Reads

Blackberry has a new square device that is going to save their business. We’ll see.

The clever people at Betaworks have revitalized Digg

Apple have bought a firm that makes it easy to create magazines for mobile. Another sign that content creation is being democratized. Will we see the return of the fanzine?

More good thinking on the Apple Watch

More proof that Apple are only human. After the live screening debacle at the launch event, the latest iOS update has been withdrawn.

Eric Schmidt has a new book out – How Google Works. It’s now on our Kindle but we are still engrossed in Goldeneye

Finally…we are big believers in the sharing economy and are looking to rollout our collaborative consumption platform SkratchMyBack in more regions. But the some elements of this movement are proving controversial.

In New York lots of people don’t approve of their neighbours renting to strangers and this long piece looks at both sides of the argument. And the way Uber treats its drivers is questioned in this MIT article. Enabling people to share their assets makes perfect sense but we need to consider the losers as well as celebrate the winners.