The ‘unlucky for some’ issue

NewTV + new advertising economics

This week Las Vegas is full of people gambling on what new tech products are likely to take off. The Consumer Electronics Show is now the tech trade show and most of the big players – other than Apple – are there.

But the hot area this year isn’t mobile, although Nokia have made a big impression with the Lumia there.. It’s all about connected (or Smart) TV, with Samsung, LG and Sony pushing new hardware and coming out as Google TV partners.

As background to the emergence of newTV – connected TV, 2screen and TV delivered over mobile devices – some new research heralds the decline of traditional broadcast TV.

Research from Accenture suggests that less than half the population watch broadcast TV on a TV– down from 72% in 2009. Instead people are watching TV on other devices – 33% on PCs and 10% on smartphones.

And new Neilsen data shows that 145 million people watch video online in the US, compared to to about 290 million who watch traditional TV. Of course much much more time is spent watching on traditional TV but Netflix is getting 10 hours a month and YouTube almost 3 – which is only going to grow.

Of course there is a way to go here – some data suggests that 25 million US households have internet connected TVs – but only around half are actually connected.

But around a third of the people who watched Downton Abbey, ITVs most popular show over Christmas, did so on timeshift – using Sky+ of ITV Player. And as we reported last week people are being weaned off cable subscriptions to find content online.

We continue to believe that traditional TV is losing the war for attention – and that mobile devices are capturing that attention. And the interesting thing about this theory is economics – as the attention shifts from one device to another does the money follow?

This week Sky made a big investment in 2Screen pioneer ZeeBox.  As well as adding social functionality to their already impressive range of mobile services Zeebox gives Sky a lever to disrupt the TV ad market in the UK. Right now advertising is a relatively small part of Sky revenues – they make most of their money from subscriptions – and as most of the audience is watching channels other than Sky, they only get ad revenue for a small portion of their customers viewing.

But now they can go to big advertisers and offer what they call Synchronised Ad Inventory– which means that when the ad appears in the middle break of X Factor on ITV, Zeebox will know which ad is on (by using the soundtrack to identify it) and can offer advertisers a way to offer additional content – a response mechanism or a part 2 to that ad. And that deal doesn’t involve ITV at all.

Sound a little futuristic? Shazam is already offering a similar service in the US where their app (now on around 175 million smartphones) recognises the ad from the soundtrack and serves up related content. Around a third of all the ads in the Superbowl are expected to use this service.

Our key prediction for 2012 is that smart brands will use mobile to deliver participation opportunities, where TV ads act as the invitation to participate.

New economics for Mobile Network Operators?

A business in France has launched a new service that is being lauded as the future for operators. Having ran a successful broadband business, Free combines 3G, WiFi, Femtocells and it’s own fibre network to deliver a fast mobile service at a very competitive price. One very smart feature is that each of the 5 million set top boxes in customers homes share a proportion of their bandwidth with other Free customers over WiFI – meaning they have one of the biggest WiFi clouds covering Paris and Lyon etc. Ewan Macleod has looked at Free too, calling it the most exciting announcement since Steve Jobs launched the iPhone

And a good article on Twilio also suggests that innovation from new players will disrupt the operators business model.

So as operators prepare to bid for the 4G Spectrum, in the UK – with the auction rules published today – they have to factor in how tech players are going to change their business. And the auction rules Ofcom have published are a little surprising as they don’t feature the expected guarantees for Three and Everything EveryWhere

Managing Social

Some of the smartest thinkers on Social work for Altimeter and one of their people has shared a good report on how to manage the proliferation of social media.

Still on social Booz & Co have produced a new metric for measuring the success of social – likes per $million of revenue.  Whilst the industry desperately needs some smart thinking around the real value of social, we’re not sure this makes much sense. The data would probably be more interesting if they used number of customers rather than the revenue.

GAFA

John Battelle has produced a very interesting chart looking at how the GAFA companies (and Microsoft) compare across product categories.

Quick Reads

As the UK waits for the Kindle Fire, in the US people are starting to develop apps for it. We were invited to a developer event at CES focused on how to sell apps on the Kindle and US bank Wells Fargo have launched Kindle apps.

Clay Shirky has some typically clever thinking on newspapers and paywalls.

Analytics guru Avinash Kaushik has some good thinking on why companies are not getting real value from analytics.

We’ve had a number of conversations with clients about how email marketing needs rethinking given how many people are now reading emails on their smartphone. This data puts some numbers against this – a rise of 20 million in the US

The new edition of the Google Think Quarterly is out – well worth reading.

Finally

We’re on the board of the MMA and wanted to tell you about the next event. It’s taking place between 8.30 and 11 on February 1^st  in Central London and features speakers from Groupon, Nielsen and Evans Cycles.

If you work for a brand we can get you a free ticket – just let us know.

It’s almost the end of the year and still the pace of change is relentless.

Facebook have just announced that timeline is now available on mobile. Over the coming months we’re going to see lots of developments in how Facebook use mobile and that’s going to have a big impact on the whole ecology.

And Amazon have broken with their usual secrecy to release sales figures for their Kindle. In the US they are selling over a million Kindle devices each week with the new Fire the topseller. UK data is less specific but Amazon tell us they sold over 3 million items on just one day (December 5 – Cyber Monday) with the Kindle the top seller.

Facebook are rumoured to be ready to jump into mobile advertising early next year and given the wealth of targeting data they have access to they should do very well.

And this week we heard that Apple are struggling with their iAds product – dropping the minimum buy to just $400k (down from $1million at launch) and allowing a cap on the cost per click they charge in addition to the cost per thousand for the campaign reach. As George in Seinfeld was told, Double Dipping isn’t popular.

Still on mobile advertising, new data from a good Ofcom study showed that the UK is doing pretty well in mobile advertising compared to some – but there is still a way to go. Looking at mobile ad spend per head of population, the UK is at £1.33 compared to the US at £1.25. But Japan shows the potential with £6.52.

And eMarketer gives us a clue why we are lagging; whilst mobile gets around 10% of peoples time in the US, it only gets 1% of adspend. The UK figures are probably similar. As Mary Meeker points out there is a $50 billion opportunity as this gap between time spent with digital and adspend closes. All the data and charts are on our blog.

Money always follows audience and we will eventually see mobile take its deserved share of adspend – specially as brands start to be able to close the loop between ad exposure on mobile and actual transactions.

We’re not that far away from campaign measurement that links exposure on the mobile device with someone checking in at a retail store, redeeming a mobile coupon and buying the product with their mobile wallet. When this happens we’ll see huge shifts in budget.

But one issue that needs work is understanding how mobile advertising works. Right now mobile is hampered by the disdain for banners and buttons that plagues online advertising. Whilst mobile is unlikely to emulate the clutter that mars online we need some thinking about how and why digital advertising works.

Ignoring clickthrough for a moment we see some advertisers like P&G buying mobile and online ads for reach. Studies from all the research companies show that online can and does affect brand metrics. But we need to understand how it works and we think its time to think about how low involvement processing works in digital. This theory from Robert Heath is well respected amongst marketers and is accepted as one of the ways that TV advertising works. The basic thought is that whilst we don’t consciously pay attention to a message, our sub conscious processes it with low involvement from our brain.

We suspect that’s how digital banners work and we’re keen to explore if we can prove this in mobile. Years ago we invented a brand (YesSirNoSir) and advertised it online, to see what the effect of pure digital was. One of our plans for 2012 is to replicate this on mobile and we’ll be looking for partners; if you would like to get involved get in touch.

Quick reads

Booz Allen have looked at which brands are getting organised for social

Our friends at Infectious are nailing the emerging space of exchanges and have shared a great case study showing that this approach works for brands as well as response advertisers

The smart people at WeAreSocial point out an interesting new opportunity for brands in Facebook – Private Messages.

Amazon have upset some people with their aggressive push on mobile price checking – whilst Google point out that retailers need to improve how they use mobile instore.

Google+ is building out the features and now has facial recognition. Maybe we’re being slow but couldn’t you hack this security with a photo of the person?

And the Google answer to FlipBoard has launched in the US. The skunkworks name was Propeller but its launch name is Currants. Reaction is generally good but its lack of social features seem to be an issue.

The Adobe Investor presentation is – as you might imagine – a little dry . But it’s worth reading as what they offer sounds very like what a digital agency might offer.

Finally

its Christmas and we’re out of here.

Rather than cards we thought we’d share some of our collection of soulful Christmas music we’ve been building over the years. In the past this has been a CD and a YouTube playlist. This year it’s a Spotify playlist.

This will be the soundtrack as we enjoy Turkey and Pinot Noir on the beach in Sri Lanka. However you spend your Christmas we hope you enjoy listening and that you have a great time.

By the way if you still haven’t sorted New Year, our place in St Ives is available.

The Fireworks issue

Privacy Matters?

It’s clear that the battle between Google and Facebook will be one of the biggest themes of the next 12 months at least. They are battling for talent, the time spent with them by users and for advertisers cash

A key skirmish is going to be around privacy. In a very entertaining presentation at the IAB engage yesterday new Google Chief Dan Cobley talked about everything going digital. And towards the end points out that society has a role to play if digital is to grow – and states – quite forcefully that Privacy Matters. Followed by Mark Zuckerberg Law of Information Sharing. You can see the presentation here – well worth spending 10 minutes on.

It is clear that Google see Google + as a different way of sharing information – even denying that it’s a social network.

They are promoting their Why These Ads programme – to explain why people see the ads they see and allow people some control over the data used n the targeting.

And even their ads around online safety ( in partnership with the Citizens Advice Bureau) seem to promote the concept of privacy.

With Facebook facing more scrutiny over its tracking of users when they have left the site – this time in Germany, where privacy is a really big deal – are we seeing Google attempting to paint Facebook as cavalier with their users privacy?

In a conversation with Eric Schmidt a couple of years ago we were told that Google felt legislators in Europe were more likely to investigate Google than in the US or Asia. Will we now see Facebook facing real problems from regulators over here?

Another problem for Facebook is that, whilst smart brands now see Facebook as strategically important, most of the ways that brands use Facebook don’t involve spending much money with Facebook. In an eery echo of ‘traditional’ online, direct response advertisers spend money on Facebook advertising, but brands tend not to. The WSJ has a good piece on how big brands are underspending on Facebook. And Scoble looks at the money Facebook are leaving on the table, with some thoughts on how their ad model could develop.

Waiting for NFC

Despite all the hype NFC doesn’t seem to be moving that fast. Given Apple chose not to support it with the 4GS and relatively few Android devices have it – yet – the installed base is still low.

We have yet to hear a convincing argument of who is going to pay for NFC readers instore. Chip and pin terminals were introduced everywhere because the banks wanted to reduce credit card fraud – and pass the responsibility to the consumer at the same time. There seems to be no similar business case for NFC so we will have to depend on the replacement cycle for chip and pin terminals etc, with the next generation likely to have NFC capabilities in the chips – as Intel are developing.

So in the meantime smart brands are focusing on technologies that do have mass reach now. We continue to see QR codes being used more and more widely, even seeing them on a Circus poster last week and Unilever have put them on every pack of their Tony & Guy haircare range, opening mobile friendly videos with hair styling tips. This sort of smart use will build consumer usage. ( Unilever rather than the circus)

But there are other alternatives. Square is morphing from a neat payment solution into a platform for dialogue between merchants and their customers. Their new iPhone app – called Card Case – uses the geo fencing capabilities of iOS5 to open a tab whenever the customer is within 100 yards of the merchant. This means that to buy a coffee, or whatever, all they need to do is give their name and the merchant can see a tab is open on their iPad.

And Amazon have just launched Flow – an app that uses image recognition (similar to Google Goggles) to identify products and open the relevant page on the Amazon site so you can buy it. It’s not available in the UK yet, so we haven’t tried it, but we struggle to see what the Augmented Reality element is.

First Mobile Christmas

Nearly half the UK population now own a smartphone – and 70% of all current phone sales are smartphones, so we can expect that figure to keep rising. People who get smartphones quickly adopt the new behaviours that exemplify the mobile opportunity; they use the internet on their phones to search and access content, they start to play games with apps, take pictures etc.

So one area we think we’ll see huge changes is retail. Whereas we have seen an online spike at Christmas before, this year we will see mobile commerce spike. Remember those Booz Allen figures we shared a while back? – mobile will influence $110 billion of sales, this year in Europe.

That influence – checking review sites, comparing prices, look to see who has what in stock etc – is going to create winners and losers this Christmas. Against a worsening economic climate people are going to be very careful how they buy. In the US they are being termed smart shoppers and research suggests;

27% of US smartphone users will use the device during in-store holiday shopping: A new Deloitte survey (Oct 26) of 5,000 U.S. consumers says of the 42% of consumers who own a smartphone, 27% will use the device while shopping for the holidays. 67% of these shoppers will use the devices to find store locations, 59% to compare prices, 46% to check product availability, 45% to shop at online stores, and 40% will scan bar codes.

Consequently we believe the big online players will do very well – at the expense of those retailers who just don’t get it.

Liberty – an amazing retailer –are buying mobile search terms that go to their desktop site. Selfridges don’t have a mobile optimised site. Neither does Primark or Top Shop. Fenwicks have a flash intro so their site is just blank on a mobile.

We expect that, come January, these may be amongst the brands Mary Meeker talks of; wondering what just happened.

Quick Reads

Google providing more resources as they encourage brands to GoMo. Read the full story here.

Music giant EMI is opening their vaults of content to app developers to see whether there are new business models for music and mobile. We intend to have a play around.

Two of our current projects are focused on Responsive Design – where we are building sites that automatically optimise for the device being used. So rather than have a desktop site and then a mobile site, you have one that works beautifully on all devices. This is a good summary of resources and tools for this approach. (And because this approach uses HTML5, it’s relatively easy to turn out a Facebook app at the same time)

PayPal are looking to protect their strong position in mobile with their own mobile wallet

Google are tweaking their algorithm to give more recent results in the 25% (ish) of searches where this will be relevant.

There are some videos here of interesting mobile sessions from the recent Omma event in the US

And Google are pushing Google TV – just as the buzz on Apple iTV – Steve Jobs final project builds. (We wonder what ITV will have to say if that is the name Apple choose to go with?)

Finally

we got the chance to do some reading over half term and thought we should share our reading list with you – as well as Seth Godins latest list.

Don’t call it a comeback

This has been a big week for some of the device manufacturers who have suffered as Apple and the Android first division (Samsung, HTC & Moto) have grown over the past couple of years
Nokia have launched the Lumia – the first fruit of their partnership with Microsoft and initial reaction is that they have made a good job of combining Windows Mobile OS with their hardware skills. There is an in-depth look here.
Coupled with good results last week – largely due to the continued success of Nokia featurephones in some emerging markets – Nokia are now back in the game. But they have a lot to do.
The other people back in the game are Sony; as predicted a couple of weeks back they have bought out their partner Ericisson and will now produce devices under the Sony brand. Can they get their mojo back? – there was a time when Sony was just as influential in design as Apple is now. And with products like the WalkMan, PlayStation and the PSP they have disrupted before. But their past success has been hardware based, whereas the smartphone sector is all about software – though we should remember they do get content much better than any of GAFA.

TV disrupted by tech

One area where Sony should have some advantages is connecting TV with mobile – and one benefit of the deal is that Sony now have access to patents that help here.
In the US, Simon Cowell has now seen the light on Twitter and US viewers can now vote on XFactor using Twitter. With new UK data suggesting that 75% of TV viewers watch whilst multi tasking this sort of partnership is going to become more comment as screens fight the war for attention. And when Ofcom tell us that amongst 12-15 year olds the mobile is now the tech they would most miss – 28% versus 25% for the internet and only 18% saying they would miss TV most. Of course this is due to the programming now being available on mobile and the internet. And once we have apps on the TV imagine how that will change behaviours.

Facebook Mobile

“A Few Years From Now, Most Every Single Person At Facebook Is Going To Be Working On Mobile”
In more interviews the Facebook CTO stresses just how central Mobile is to Facebook. And at the London f8 developers conference this week Facebook Head of Partnerships Christian Hernandez talked of mobile being key for all web companies.
And we’re now seeing Facebook trial the use of Facebook credits as a payment mechanism for websites outside of Facebook. As the only currency permitted within Facebook, they have a strong chance of becoming a major player here

Quick Reads

• Search firm Latitude say that 1 in 7 searches are now mobile – up from 1 in 15 a year ago.
• eBay are the latest to copy the Tesco QR wall in Korea – with an inspiration store in New York
• Cool US start up Twilio – who enable voice and SMS within web services have opened for business in the UK. No SMS over here – yet – but a good API for building voice services.
• We’ve been neglecting the infographics recently (didn’t they used to be called charts?) but this one showing the impact of tablets in the workplace is worth sharing.
• The co-founder and CEO of the brains behind Siri, has left Apple.
• Google to buy Yahoo?
• Ever since they launched the Golf GTI with an iPhone game, it’s been worth watching VW marketing. The site for the new Beetle is a great example of what can be done with HTML5. And their new poster ads use Augmented Reality in a fun way.
• Not optimised for mobile? If it’s Tuesday, You Must Be Closed For Business
• Some good new stuff from McKinsey;
• A look at the future of retail
• Your wireless wallet
• What European consumers want from mobile banking

Finally – our smart friend Glyn Britton from Albion has been channeling Jamie Reid and produced a cool logo for GAFA – which we intend to use lots. All these planners are just frustrated creatives really.