Last week the focus of Wall Street was on GAFA – now it’s the turn of BAT (Baidu, Alibaba, Tencent) as Alibaba prepares to IPO in New York
We have talked before about how the Vertical Stack model we apply to GAFA also works on the Chinese BAT. Baidu, Alibaba and Tencent all compete ferociously across virtually all online sectors– take a look at this infographic to get a sense of the scale – we’d include it in the mail but it doubles the length…
Analysts estimate that the IPO will value Alibaba at between $136bn and $245bn – which sounds a lot until you consider their sales in 2013 were $248bn. And look at how many western firms you would have to combine to match Alibaba; Amazon, eBay, Twitter, PayPal, uber, Spotify and more
A major beneficiary of the IPO is Yahoo who own 22% and they are expected to sell off $10bn of shares – prompting the question what will they buy with that cash? Almost certainly something mobile
Talking about the new focus on mobile she talks of serendipity – the idea that people who go to the desktop site to check their emails and end up reading Yahoo news. In their apps you will be able to easily switch between emails, news and weather. Hasn’t she heard of the trend for unbundling?
Given how hard it is to get an app onto the home screen, we think that this type of cross pollination has more legs than the unbundling.
First Party Data
In the era of the PC, digital advertising built its infrastructure on top of the third-party cookie, a reliable workhorse that wasn’t exactly controversy-free, but at least remained nonproprietary. In our post-PC world, however, it appears that the infrastructure we need will be provided by large and proprietary first parties.
This quote is from a good piece by a smart US agency head, pointing out the power of Facebook and Twitter in mobile advertising. As we have stated, the new ad world is divided between those with rich data – essentially first party data – like GAFA and Twitter – and the rest who use their adtech to add value to raw inventory through third party data.
Given the scale that GAFA and Twitter can deliver we wonder whether brands will continue to take the trouble to go buy others cheap inventory, in the hope of turning the lead into gold. Which is a worry for the main suppliers of this other inventory – traditional media owners.
Spend any time on a newspaper mobile site and the quality of advertising is terrible; poorly designed banners that often click through to non optimized sites and a surfeit of house ads. Yet they have something that could be almost as valuable as first party data – context.
Once upon a time the environment delivered by media owners was a key factor in the decision to advertise and the price paid. Of course you can now reach New York Times readers on eBay and Guardian readers on the Trainline app – but is it the same as reaching them in the right context? And could context be helpful as the debate around viewability in digital – and the continuing scandal of fake traffic. This NYT article looks into the problems around online video and we suspect many of the same issue plague display on mobile and desktop.
Despite great tech and robust research in digital, every time these problems get aired, conservative brands have another reason to maintain their investment in traditional media.
How do we get a sense of the value of context?
One brand that monetizes its context well is the FT – this is a great insight into their digital strategy.. Of course their subscriber base gives them some first party data too.
A key issue for Yahoo is how to revive their first party data – once they had millions of people logging in for Yahoo mail etc and that has virtually disappeared.
Despite no announcements and no leaks there is a huge amount of speculation around the next iPhone – googling it gets 2.5m results.
One thing that is commonly accepted is that the new device will be bigger. One issue this throws up is getting apps optimized for the new devices – could this be a way for Apple to reboot the app store?
Finding anything in the appstore is a nightmare – it’s a digital jumble sale with a million apps. Solving this is a problem that Apple have not really focused on. But if we have a new device with a different ratio screen, there could be a way Apple get to restart the app store. Clearly with a new device and new OS, smart developers will be quick to optimize their apps. But lots wont and all those zombie apps that never get downloaded are unlikely to be updated.
So stealing an idea from the Google PlayStore, Apple could organise the app store based on apps that are compatible with (or optimised for) your device. All the key apps are there and discovery should be much more manageable.
More idol speculation over the next few weeks.
Amazon will now let you buy from Tweets – Amazon Cart (or Basket here in the UK) is a good idea and we expect it could be used more by brands in sponsored tweets. A huge proportion of tweets relate to music, books and film – could Twitter build advertising around media brands?
Google apparently pressure Android device makers to include Google search etc. Google dispute this.
An interesting read about the Twitter purchase of Gnip –one of the firms that sells Twitter data to brands
eBay is getting into the content business – hiring talent to create a digital magazine. We think that they would be better to open up the site to curators – people who know a topic well and can help people find the right items on the site. We proposed this sort of role for our friends at Trekstock, so they could get a donation from people who found their help useful.
An interview with Hugo Barra gives more insight into Xiaomi – who are expanding into Malaysia. Very interesting Chinese company
When it comes to first party data the person best able to deliver that is you. Vendor Relationship Management is the term for people managing their own data and profiting from it. This is a good look at the area from a smart NY entrepreneur who is focusing on this exciting opportunity.
Facebook have launched a new tool so brands can better understand -and target them. Audience Insights is US only at the moment.
AOL results disappointed – leading to their stock price falling. Most interesting stat is they still make $138m profit from people who still use AOL as their dial up internet access.
Finally….a bunch of really smart people were asked their views of the future – on the basis that they are quite likely to invent it. Well worth reading