In our piece on CES last week we talked about the Internet of Things (IoT) as a big theme – but were a little scathing about connected fridges, connected toothbrushes and connected coffee cups.
Google then paid $3.2 billion in cash for a connected thermometer company, so what do we know?
But with the Nest acquisition Google get so much more than a business that has sold maybe just over a million devices;
They are getting some phenomenal talent. One of the founders designed the iPod and has been able to lure many people from Apple to Nest. Whilst Google have got a lot better at design and UX recently, this injection of talent should have a big effect.
They now have a successful foothold in the connected home – which means they can revive some of the thinking behind the Android@Home debacle. Abandoned before launch a couple of years back, the idea of using Android as the infrastructure behind the connected home still makes lots of sense. A connected Fridge makes a lot more sense if Tesco or Ocado can use a common infrastructure – like Android – to connect. And a wide range of OEMs already use Android in consumer technology
The other thing Google get from this deal is data. They will know when people are in their houses and which rooms they are in. They will know when people are cold and when they are too hot. And expanding the Nest range gives them lots of other data points in the future; maybe even knowing what that connected fridge is running short of.
Google feeds off data like this to make its ad products better. Having this simple business model gives Google a clear advantage over the other IoT players. Cisco want to be the glue, but they need to sell the hardware and software to make money. Wolfram have a play in connected devices but again it is unclear how they would make money.
Sorry for harping on about our futurology project yet again, but in there we talked about Tesco sponsoring the connected fridge so they handled the restocking of the groceries. Could Google afford to subsidise connected home appliances because of the data and the marketing opportunity it gives them? Amazon does that with the Kindle. And Google does it a little in their WiFi and Fiber projects.
Given Google have around $50billion in their cash reserves and their stock is at an all time high – and has just about doubled from June 2012 – this isn’t that big a buy for them. But we think it’s really significant and worth watching.
One thing we are pretty sure about; Nest won’t stay on sale in the Apple store.
Mobile & Money
Whilst O2 shelved their plans for a mobile wallet, there is still huge momentum in the space. Weve are pushing ahead with their plans and recognise that initiating the transaction through an offer makes more sense than just launching a wallet app. They are also looking to use loyalty cards as a core component, which makes sense. Paypal continues to innovate but a new player has grabbed the headlines this week.
Zapp is backed by a number of leading banks in the UK and promises to spend millions building its brand. There isn’t a lot of detail about yet, but digging around we see a slightly convoluted user experience; you find something you want to buy using your smartphone browser and hit the pay by Zapp button. Your bank app is opened and you sign in, then you see the Zapp transaction. You choose which account you want to pay from, confirm with a click and you are taken back to the retail site to see a receipt for the payment. The goods have to be sent to the address your bank has in record.
For launch Zapp will just work with online purchasing –with instore promised later.
We’re not convinced this is the next big thing. Is this really that much easier than paying by debit card – or Paypal? Anyone wanting to use a credit card can’t use this option. Anyone wanting the parcel delivered to work can’t use this option. And the task of persuading retailers to add this option isn’t going to be easy – we suspect the millions on marketing are designed to get retailers signed up. Maybe then people will follow – but there will be more compelling options available.
In this good look at how eBay is fighting Amazon for the future of retail, the PayPal mobile payments app sounds impressive – lots of personalization and a blend of offline and online whilst in store. And Square is now valued at $5billion. The bar is being set very high in this space.
And some think banks haven’t got their act fully together on mobile and security yet, which could hold the whole sector back. This report suggests 90% of mobile banking apps have security issues.
Creative & Social
Talk with anyone about Facebook and the subject of too many ads comes up. We suspect the problem is less about quantity and more about quality.
With all that targeting capability brands can target people really precisely. But without creative that is tailored to that group, the potential of additional targeting is diminished.
Facebook are retiring Sponsored Stories and extending the social actions to all formats. With the erosion in organic reach for posted content, the logic for creating better brand messaging is obvious; good free posts will go further through sharing and good paid for content is more likely to work – justifying the media spend. When we spoke at Facebook in the summer this was a hot topic and continues to be so.
But for agencies this remains a problem – industrializing the creation and production of content at scale needs lots of people and lots of time. So the cost is high. But given great creative can have a huge effect on performance this effort can be the best way to make your ad budget go farther.
Google have shared some good examples of work that goes the extra mile and how it has spayed off for Burberry, VW and others.
Sky Adsmart is finally here, with a good selection of brands using the opportunity to targeting their TV spend based on geography and household profile. It will be interesting to see how these brands get on.
Addressable TV is a big focus for Google and this report looks at their strategy and their options. It’s clear that sport would be a good place to start and watching BT take on Sky shows how to do this.
But rather than going for the big expensive deals could Google find a smarter cheaper way in? The NBA game at the O2 last night sold out quickly and its clear that basketball has a big following in the UK yet it gets little or no TV coverage. Sky showed some playoff games last season and BT shows some games now. But could YouTube make a deal with the NBA to show their games in countries where they don’t have a TV deal? And could they do a similar deal to show Premier League soccer in the US.
Dreamworks have partnered with YouTube to produce YouTubeNation, a show that curates the best YouTube content and provides playlists. Is there an opportunity to do the same thing with a more local flavour here in Europe?
This is the Yahoo memo announcing their key ad person is out. Given he may walk away with over $40m after little more than a year he probably isn’t that upset
Brands can now target on Twitter using customer email addresses. Facebook offer something similar meaning brands need to rethink their CRM strategy.
A media Agency friend pointed out that a key reason for schlepping to Las Vegas for CES is the chance to discuss media deals with the big digital players – often without ever making it the show.
Net Neutrality is an issue in the US after a legal ruling – suggesting Comcast, Verizo etc can start to choose which content has priority. VC Fred Wilson articulates the issues here. It is less of an issue in Europe where we have much more competition but we will feel the effects.
Apple told to compensate parents whose kids fell for the in app purchasing scams where kids buy $65 bundles of smurfberries etc. Wonder if that applies here as we are £35 down. Surprised that Apple risks it reputation by letting these practices fester for so long.
A great example of using data – how Google reads the house numbers in Street View
Finally a Gartner survey says less than 1% of apps will be considered a financial success. The survey doesn’t look at brand apps but given other research showing most are rarely downloaded, there has been a lot of money wasted. Not many brands need an app, but they all need a Mobile Strategy. That’s where we can help.