Ads – the Good News
The bad news about digital advertising ( see below) gets lots of attention but there is lots of innovation going on. The Financial Times have rolled out their new Cost per Hour ad model where brands are charged for how long their ad is seen for. As well as solving the issue of viewability it seems to correlate well with performance –the white paper is very detailed but worth a look to better understand the thinking behind this.
Our thinking is that for any advertising to work it needs to deliver against 3 criteria
Viewable, Noticeable & Relevant
Any new model that lifts the standard for advertising has to be welcomed.
Microsoft – who are still relatively big players in digital advertising have published a new study into Attention, which is worth a look.
As the fervor about the AOL Verizon deal wanes, it’s worth remembering that advertising and the AOL adtech in particular drove this deal. And advertising remains the dominant business model in most digital businesses. Whilst the adtech business may have been overinvested in and there could be a bit of a bubble, solving advertising problems – like viewability, fraud and the generally appalling standard of creative – remains a big opportunity.
Brands depend on ads to tell people about their products and people value ads that help them discover and buy the things they need. And content creators still find ads a really good way to be rewarded for their ability to aggregate an audience.
Advertising – The Bad News – Ad Blocking & Ad Fraud
Ad blocking got lots of attention again this week, triggered by an FT article suggesting some European Mobile Network Operators are about to use ad blockers to put pressure on GAFA for a share of ad revenue. Whilst the MNO view of OTT players such as Google remains fairly hostile we don’t think anyone is about to go nuclear on this.
Reading the article it feels like the Startup with the adblocking tech (Shine) have got themselves some great PR with a bit of a smoke and mirrors press release. Although the fact they have investment from people who own 3 and now O2 does add to the credibility. But we think the regulators would take a dim view of such interference with the user experience in order to disrupt rivals business models.
We have been digging into ad blocking for a while and were introduced to Pagefair – a Dublin based White hat firm that (sort of) blocks ad blocking - who have a great take on the space. They confirm that typically ad blocking is in double figures on desktop but mobile hasn’t been that impacted – yet. They pointed out a new app getting great take up in China and India and having a dramatic effect on publishers; the user proposition is that this app saves the user data by blocking ‘unnecessary’ ads. The new Android app from the key European AdBlockers is now in open beta and they talk of saving on data and saving battery life.
Now that logic may appeal more to regulators. Finding innovative ways to reduce a users data usage – and hence charge them less – might play better in Brussels. But at the end of the day the business model for any ad blocker is essentially extortion. They take out other peoples ads and put their own back in – through agreements with major players like Google, Amazon and Microsoft
There is a real danger that this slippery slope accelerates. Imagine for instance a free wifi provider deciding they can save themselves quite a lot of bandwidth – and therefore money – by blocking the ads. They then work out there is another revenue stream from reinserting other peoples ads. Would regulators care? Would consumers?
One of the conundrums of the modern digital world is that the Brands and Agencies don’t take digital advertising that seriously. The talent – generally – doesn’t focus on it and the money still lags behind eyeballs. It seems everyone would rather play with content and look for organic ways to reach people and drive advocacy.
The people who do really believe in the potential of digital advertising are the fraudsters and criminals who have moved on from banking fraud and credit cards scam to focus on skimming money from digital advertising – with over $6bn to be made in 2015. The biggest loser is Google – as they have the biggest share of ads – and this is a fascinating look at their efforts to prevent ad fraud.
Music & Video
At around the same time that Vodafone announced almost half their data in Europe is used for video, Spotify stepped up with a new video product. As we’ve talked about, YouTube is one of the major sources for music streaming and as they move to a subscription model Spotify respond with the introduction of video and podcasts – working with partners like Vice and Comedy Central. The initiative seems designed to counter the imminent launch of the new Apple / Beats service – almost certainly announced at WWDC on June 8 and rumoured to launch later in June.
The Vodafone results show huge growth for Instagram (+120%) and Snapchat (+260%) over the last 6 months underlining the evolution from Text to Pictures to Video we keep talking about in our client work. Imagine the effect of Periscope and Merkat on the next set of figures from Vodafone
After the New Upfronts in the US Google have a good summary of the opportunities for brands with online video
Atomisation of news
Following the launch of Instant Pages from Facebook last week there are two divergent strategies for publishers – atomize your content and distribute it far and wide and think of it as (revenue generating) marketing or keep it behind a paywall and treat it like golddust and hope people can’t do without it.
Quartz are firmly in the atomization camp and talk of their business as an API;
GroupMs Rob Norman shares some typically good thinking on the news business and looks at those News businesses that are supported by taxpayers or corporate profits – public service news. The new players on content can seem to have a very different agenda – ViralNova is one the most controversial media companies - using click bait headlines and a sophisticate understanding of how and why people share, they have grown to be very influential and very profitable.
There are some more promising business models being tried and Blendle is one of the most interesting – an iTunes of journalism. But in the past most news organisations were funded by advertising (and to some extent cover price) but now the move to mobile is undermining that. Some blame agencies for not wanting to run ads in hard news but the bigger issue seems to us that the context isn’t valued. Our project to learn whether a NYT reader is move valuable when reading NYT content versus reaching them on Yahoo Mail etc is gathering momentum. If you are a premium publisher and interested in taking part please get in touch.
Again ahead of the June 8 Apple event, reports suggest they are shelving the idea of creating an Apple TV set. We think they are much more likely to focus on a peripheral like a set top box or a dongle, that will work with whatever TV set you have. Our Amazon Stick has been a revelation, getting much more usage than our Chromecast. Why? Because Amazon have all the key apps preinstalled and a great TV interface, making the user experience really good. For example despite have the complete Breaking Bad boxset, watching it on Netflix via the Amazon stick is so much easier. Amazon are pushing it with TV advertising and have dropped the UK price to £25. If you want to see the future of TV we suggest you buy one.
Our Apple Watch finally arrived. Beautifully packaged and some weeks ahead of the schedule, Apple really get the user experience from the start. But getting the most from the device is going to take a while as it less intuitive than the iPhone – or even the iPod. The most obvious issue is that most of the apps need reimagining; they take too long to load and many seem clunky. Probably because most were built without using the device. Version 1.01 of the apps will give us all a better insight into how the device adds value to the iPhone that you still need pretty close at hand.
We can see why some are returning theirs and accept that the experience could be improved but we’ll be sticking with it to better understand it. The one key thing we have learnt is that the future is going to be about the right bit of content arriving at just the right time – so the ideas of cards and notifications seem more important than ever. And we are using Siri much more than I ever do on the iPhone. Oddly the thing we think the Watch would most benefit from is Google Now. Ben Thomson of Strachery goes deep on this here
The other big play in peripherals are Glasses and Google are rethinking Google Glasses, using the talent they brought on board with the Next acquisition. Bear in mind most of these are ex Apple people, many of whom were key to the iPod and other devices.
We have been pushing the idea of episodic video content on Facebook etc for a while and MIC have proven the model. Their series Flip The Script has reached 33 million views on Facebook. The way they approach content is really interesting and we wonder why couldn’t a brand do the same?
Google are planning to add buy buttons to paid search ads on Mobile – working with brands like Macy’s. This goes to the heart of their battle with Amazon where more and more commerce searches originate as people go straight to Amazon. Another front of this war with Amazon is Google Express, the grocery delivery service Google have been testing in New York, San Francisco and some other US cities. But a series of senior execs have left causing questions over the future of the programme.
A Design mistake we have made – along with many other people – is the hamburger menu on mobile devices. For designers it solves lots of problems, but the mistake is that no one bothered to tell the user what it means. Adding the word menu to this icon increase clickthrough by 70%. At the Google event I keynoted a few weeks ago Luke Wroblewski did a brilliant presentation on mobile design and he covers Hamburger menus as well as kebab ones. It’s a long video but you can learn a lot about design from him.
The IAB FAQ on programmatic is really useful and a good antidote to all those people who insist on confusing everyone with a plethora of TLAs.* Get past the arcane differences between DSPs and SSPs and programmatic is a huge opportunity to make advertising better. * Three letter acronyms
Deloitte have a new research paper on the Digital Divide that focuses on retail – suggesting digital will influence over $2 Trillion of retail sales in the US this year.
This is a good view on what winning at Search looks like. In our experience most brands could do a lot better at search – particularly mobile search.
This new interview with Marissa Mayer is a really good insight into Yahoo. But she makes a point about Apps dominating how people spend their time on mobile, which we tend to disagree with. Whilst the data does show a huge proportion of time the spent on mobile is within Apps this does include music and gaming. Which of course – prior to mobile – were typically accessed through different devices. And the data also puts everything you do on social as app time – even though much time on Facebook etc is spent reading content other people have shared – usually web content wrapped in Facebook. A key question we are always asked is whether people should focus on apps or a mobile site and this is my answer from that Google event in Dublin. Benedict Evans also covered it in a recent blog post. Apps are important but a good mobile web experience has to be the first priority.
Benedict also nails the Mobile First issue in another post; The most complete digital experience is now mobile, and desktop is the restricted one;it’s actually the PC that has the limited, basic, cut-down version of the internet.
Finally… It’s been a while since I attended a Google Zeitgeist but the feedback from this years was as good as ever. You could even go for a run with Mo Farrer. Most of the talks are available on the web and the best one is probably Demis Hassabis of DeepMind talking about AI. Really worth watching. And if you want to dig deeper into AI this interview with Andrew Ng (who was Googles top guy on the subject before moving to Baidu) is worth reading. His take on how people can learn to be more creative is particularly interesting
And we are out and about in a couple of weeks. Our friends at @Balderton have asked me to give a talk for some of their friends and family - and there are some spaces for Fix readers available. If you can make June 3 RSVP here
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