Mobile Fix — February 1
The shine has come off Apple and the Q4 figures showed a 5% drop in revenue — but people expected worse after the recent warning about China — where revenue was down 27%. The story that Apple is now telling is about services and they revealed — for the first time — that 900m iPhones are in use, so the addressable audience is bigger than people thought.
The biggest element of this is the imminent TV service — which is still under wraps, but we are now getting a few clues;
But put it all in one place, speed it up, and what you get is: “We are going to sell a bundle of other people’s TV shows and movies, and add our own, and make sure you can watch it anywhere you want.”
And they seem to want to play in the Game space too with some sort of AppStore subscription. Another interesting move.
One thing that is really interesting is that as Apple submits to gravity and sales slip, it will have to be more orthodox in how it sells — as a price cut on the XS shows. And worth noting it’s Amazon discounting Apple, so that must have been agreed at the highest levels — further evidence of a better relationship between the two firms?
Despite all the bad press, the big news for Facebook this week is their stellar Q4 results — a huge 30% increase on 2017 and their Daily Actives Users grew too — albeit just 1m in the US. The slides make interesting reading; the US still drives the business with ARPU well over 3 times that of Europe. The transcript of the Investors call is a good read too; they have over 7m active advertisers — 2m of which use Stories,
You can’t cover Facebook without mentioning Privacy. It’s how many framed commentary of the cross messaging that the merged back end will allow. And their Project Atlas is getting fevered headlines — despite it being little more than a research tool, used by a small ish sample of users — some of whom were teenagers. The UK ad industry relies on a very similar app for the IPA touchpoints research — monitoring mobile use.
One final thing that relates to Facebook and many of our other themes — targeted ads. We know they work and have lots of evidence. In the call transcript they talk about how well the ads are working and it was mentioned in Mark Zuckerbergs Wall Street Journal article on the Facts about Facebook. . But a NYT survey says this isn’t the case — that when asked people don’t want tailored ads. What people say they want and how they react to tailored ads is quite different.
Privacy & Signals
A key Google exec talks about privacy and tracking and how both GDPR and ITP have had a severe effect on the industry. Next up is Mozilla making similar changes that preclude cookie tracking in Firefox. How long before Chrome does something similar?
So what’s to be done? Well first, even it does get harder, smart people can make 1st party data work really well — the Google guy mentions L’Oreal as a good example in his talk. Second there is some value in old fashioned approaches like context. AdContrarian gets into this — in an over simplified way — but does have a point.
A perfect example of context working is Vogue. Think of the magazine. The ads fit the context perfectly — in fact they are just as valuable to the reader as the content is. Some smart kid with a programmatic hat on can find those readers elsewhere, but is eBay, Yahoo Mail or the Daily Mail the right context for Prada, Gucci or Clinique?
Now Conde Nast are trying to charge more for advertising to digital subscribers than people who don’t pay for content. We have seen some evidence that suggests social traffic to a site pay less attention to ads than those who choose to go to a site — like subscribers. So this has some merit, but it does feel like an area worth exploring in more depth — again, keen to partner with any publisher who is also curious about this.
One more thing on data — could allowing people control of their data change the internet and resolve many of the problems we face?. John Battelle has written a lot on this topic and we have mentioned his thinking before. This new long piece is worth reading.
French telecoms firm Altice is pushing into newTV with an investment in Molotov — a French OTT streaming service. They already own video adtech firm Teads. In the US TMobile are planning a mobile OTT service.
A study from TV measurement body BARB says Netflix are in almost 10m UK homes — about double that of Amazon Prime — and will soon overtake Sky to be the biggest pay TV player in the UK. You can read the full report here.
This huge increase isn’t affecting TV ads too much according to Agency sources quoted by Digiday — apparently brands are pulling spend from Facebook and spending it with On Demand TV services. We suspect this view is due to the schism in how some Agencies handle digital video; some have spend on All4 etc handled by the same teams that buy broadcast TV whilst Facebook budgets are handled by the digital teams. If you have that separation you get an unjoined up approach which misses lots of synergy.
In another piece Digiday tell us that OTT isn’t threatening linear TV budgets. Well not yet anyway. We think this will change quickly as the targeting capabilities of OTT become better understood. In a pitch last week we proposed adding Samsung to a Social Video campaign as their ACR tech meant we could target really precisely.
And the next opportunity is customized ads. This Axios piece on addressable sort of misses the point — when you can use the data to target so precisely, tailoring the ad message is the best way to maximise effectiveness. Channel 4 are working hard on this and have brands testing it out. And with our friends at Spirable we are looking at how this could work on Sky Adsmart, Twitch etc. Always keen to talk with brands who want to experiment with this, as we know from Social video how effective this approach is.
But as legitimate streaming services proliferate, illegal ones are doing really well too. In LatAm it’s easy to buy a black box for £100 that gives you access to hundreds of channels.
As demand for iPhones plummet in China, the business models of BAT may be a factor. The latest update to WeChat gives users what is essentially a new homescreen on their device,showing all the mini programmes (or apps) within WeChat.
The success of WiFI MasterKey is another example of a Chinese success going global; it is in the top 10 most used apps. The app facilitates access to WiFi by a sort of peer to peer system that logs you into the coffee shop wifi by using the password someone else used there in the past.
A16Z VC Connie Chan is our go to source for trends in China and she tweeted that this talk she did in 2017 is still worth watching as the trends are still novel nearly 3 years later. A must watch.
Our friends at Tubular Labs are working with the top video publishers to explore better measurement of social video
A good new post from Benedict Evans on Alexa
An interview of Martin Sorrell by Scott Galloway should be better than this. Curious energy between the two of them, but it’s probably worth watching. My favourite quote is Sorrell saying;
The battlefield is for the control of first party data
The new Ofcom report on kids and parents use of media is a must read. TLDR; kids don’t watch Telly.
Finally … there is a lot around on the downsides of ubiquitous smartphones — seemingly Steve Jobs didn’t want us to use them like we do. This FT article is much more on the money;
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