Mobile Fix — February 8

Fortnite

It’s probably just a coincidence that Fortnite chose Superbowl weekend to run their first live concert. But it did mean most of the ad world were looking the wrong way last week

With a conservative estimate of 10m concurrent users watching DJ Marshmello, this was a major event. A 10 minute video of the concert has almost 20m views on YouTube. It also had a significant audience on Twitch.

The Superbowl ad fest is all about who can afford an ad — although prices are flatlining and brands paid around the same as in 2017 -whilst Marshmello was not a commercial event. But you can imagine that might change for the next time.

It’s also very interesting to us as Epic — the company behind Fortnite — is 40% owned by Tencent. And a smart analyst hints their stake could be higher. So two of the most used apps — Fortnite and TikTok — are Chinese owned. I wonder whether the governments so concerned over Chinese tech like Huwaii may take an interest here.

Older readers may be reminded of Second Life but Fornite is real and hints more of ReadyPlayerOne. In a long but very well thought through piece Matthew Ball argues this is really significant and just as Netflix sees Fortnite as its major rival, so too might Facebook.

The revenue per user on Fortnite is already insane as the chart above shows.

Retail

The new Vogue answer to Business of Fashion, launched with a great interview with Apple head of retail Angela Ahrendts;

“No matter how that customer comes in and buys, you have to look at it as one P&L. This is the issue, companies try and make these stores work on a standalone basis. When someone buys online and picks up in-store the revenue goes to online and not the store, but you are doing all the work in the store. They need to look at it differently.”

As we prepare for our next VC Conference we have been looking at how retail has changed and the three big switches we see are; the arrival of one click buying, shoppable ads and the removal of the till in Apples stores so you can pay anywhere.

The influence of Apple on retail is profound — but too few have managed to move to one P&L.

But then we see that Ahrendts is leaving Apple. What she does next will be closely watched. But so too will what Apple does next with retail. As the emphasis shifts from selling expensive hardware to services, how do the stores evolve?

The DTC brands have taken most from the Apple playbook and Shopify is extending its online retail platform — relied on by so many DTC favourites — to work in physical stores. With new Point of Sale systems and ways to manage buy online collect in-store this is a smart strategic move.

GAFA & Next11

The bunch of smaller firms that seek to take users and advertisers from GAFA, struggle to compete. Alphabet results show Google doing really well in ads; paid clicks up by 66% whilst cost per click fell substantially so revenue grew by 20%. With GAFA continuing to suck the oxygen out of the market everyone else has to fight really hard.

Alphabet are spending money too though — staff numbers at almost at 100k and the R&D spend grew by 40% in Q4 to $6bn. But the other big cost increase was content for YouTube, which is a contest with Apple, Amazon & Netflix etc, so that is unlikely to fall any time soon.

Lots of people had written Snap off but with their results showing a stable user base (186m DAUs) and ad revenue up, their shares popped. As they get their Android app right, are positioned for a healthier future? And that was supported by the news that Twitter has just 126m DAUs — the first time they have shared that metric. The daily audience was up slightly and ad revenue rose 24%, yet the shares took a tumble because MAUs fell slightly. Their shareholder letter (PDF) is a good summary.

An interesting analysis of the Amazon results shows that their ad revenue is already 20% of that of Facebook — and that’s from a standing start.

A quote I saw from one of the network agencies captures the challenge. Snap ( and by implication Twitter) are almost too small for the big agencies to bother with, when the dominant platforms can absorb all their spend. Brands that recognise the value that Snap and Twitter can deliver — through a different audience and a different context — need to stop their agencies taking the easy route.

DTC

Demonstrating just how Twitter provides a unique context this a good Twitter thread on the challenge for DTC brands now that the golden days are over. Not sure we would agree with that headline but it’s clear that CAC costs are rising and there is some good data here. The emphasis on LifeTime Value also makes good sense and how brands use 1st party data across both CRM and acquisition is key

Cookies crumbled

The smart people at Infectious summarise the various projects seeking to develop identity solutions that might replace third party cookies. The problem is that no one solution seems likely to win, so the market has to deal with fragmented information.

You can make things work without third party cookies — publisher Immediate talk of 135% higher revenue through working with super smart tech firm Permutive. Their DMP approach is used by a number of smart publishers.

One odd by-product of the demise of third party cookies is that some of the practises which damaged publishers are a little harder now. It’s long been a ‘benefit’ of audience based buying that an advertisers drops a cookie on a user when they are on a premium site — say a newspaper — then watches to see when that same cookie shows up on a cheaper site. Hey presto, you have saved a fortune. That the context is lost when a Guardian reader is on eBay or Yahoo Mail doesn’t count in this equation.

Mozilla make the point that their restrictions on third party cookies are good for publishers and users.

With Safari and Firefox now restricting tracking, only Chrome still allows cookies and everyone is waiting to see whether that changes. Something is brewing — a document from the Google intranet has been made public to drive discussion over some planned changes to Chrome Extensions. As this would affect how ad blockers work, the adblocker firms have been quick to voice their concern. It would be odd if these changes happened in isolation of some moves on privacy.

Audio

As i pull together the material for my talk on Voice and Audio for my Swedish colleagues, the market keeps evolving. Spotify have made two significant acquisitions of Podcast firms. Gimlet has lots of IP and Anchor provides the tools for people to create podcasts. The big problem with podcasts is discovery and Spotify have the opportunity to become the place to go — especially if they have exclusive content, which is so hard to pull off with music. (Tidal is still the only place to hear the 4.44 JayZ album and others; I am convinced Apple or Spotify will buy it eventually.)

Quick Reads

Whilst Fortnite is a huge revenue earner lots of other games do great business too. Driving lots of acquisitions

Great insight into what’s wrong with a lot of digital media firms — they have taken too much VC money

Good insight into how the UK digital market is going Mobile — now 77% of time online

More talk that Apple should buy Netflix — what else are they going to do with their $250bn in cash?

Good look at the hot new book on GAFA — Surveillance Capitalism

Fascinating story on how Amazon persuaded P&G to change the packaging of one of their iconic products

Ocado launching one hour delivery service in London

Finally …Magazine Publishers giving up on context? Another example of how the ad industry has screwed up a valuable content sector by chasing cheap clicks. I think there is still value in magazines and brokering deals between desirable brands and the right magazine has real potential. After all what is Instagram but a collection of glossy fanzines?

Fix is my thinking rather than that of MediaKitchen. We now have over 6000 subscribers across Google, Facebook, Snap, Amazon etc as well as many VCs, Brands and Agencies.

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