Google I/O

The Google developer conference was the big news this week. Last year we saw Google Glass wearing sky divers and everyone there was put on the list to get Glass. This year we had a 3 hour keynote packed with new features. Oh, and everyone there this year got a Pixel laptop.

With so much news it’s inevitable some of the announcements won’t get the attention they deserve. So over the coming weeks we will probably dig into some further.

The Music streaming service where Google takes on Spotify (and takes a lead over Apple) has got lots of press as has the news that voice search is now available on the desktop for Chrome users. Expect lots of office tension as people start talking to their PCs.

Google+ got – as you would expect – lots of love. A new look, awesome photo tools and Hangouts is now available as a standalone app for iOS, Android and Chrome. Maps is getting a makeover – all the folk at Apple striving to get parity with Google Maps now have a longer To Do list.

We suspect the ability to send money via gmail could be a sleeper – it’s a great way to get people using a Google wallet. Only available in the US for now – and for desktop only – it’s a way to go, but it is an interesting start.

On the hardware front a Nexus remix of the Samsung Galaxy S4 was announced – arguable they best hardware with the best software.

And CEO Larry Page closed with a Q&A, making the point;

“In every story I read about Google, it’s about us versus some other company or some stupid thing,” he said. “I don’t find that very interesting. We should be building great things that don’t exist. Being negative is not how we make progress.”

This is a pretty comprehensive list of what was announced.

Prior to the event Sundar Pichai – the new head of Android and Chrome – talked about the dual OS strategy and explaining that;

It’s a world of multiple screens, smart displays, with tons of low-cost computing, with big sensors built into devices. At Google we ask how to bring together something seamless and beautiful and intuitive across all these screens.

And underlining how long it can take for I/O initiatives to get out, this is a good look at Google Glass and where it could go.

Viral & Daft Punk

The subtle marketing from Daft Punk over the past months is a great example of using social (our friend Glyn has written a good description here) and it has worked incredibly well. One question is whether the campaign can have any longevity or are social driven campaigns inevitably short lived?

Harlem Shake seems a long time ago now, but this piece on how the meme got traction – and the role of ‘professionals’ – is good reading. And this look at the latest meme – Ryan Gosling won’t eat his cereal – gives some more clues on how this stuff works. But now that a big brand has got involved we expect Mr Goslings people may have something to say.

Publishing

With the expected announcement that the Sun is moving behind a paywall, this is an interesting look at how the Washington Post and the New York Times deal with digital. The porous paywall of the NYT has driven up their subscriber revenues, with digital subscription revenues of $100m – and the Washington Post is belatedly following.

Whilst paying for ‘quality’ journalism is becoming the norm in the US, its less clear that this trend will take off in the UK and the Sun is the first redtop to try.

But the Sun is now run by a former Sky exec and he has brought some of his experience to bear, paying £30m for the internet and mobile rights to the Premier League. And by bundling this into what will be called Sun+ he may have a chance. Talking about the paywall move Mike Darcey said;

“…We did not buy mobile and internet [football] rights in order to sell mobile and internet rights. We bought them to integrate into an existing product and enhance that existing product.”

Emerging markets

Following our look last week at some of the innovation in mobile around the world we were interested to see that ecommerce is starting to take off on Africa. In Nigeria you can get same day delivery of groceries; BuyCommonThings has partnered with P&G to become the ‘ocado of Nigeria. They just need a mobile website. Konga is more of an Amazon and does have a mobile site. Jumia is another key player – run by the German Rocket Internet group.

More on this topic in this FT feature. And some really good stats about mobile usage across India, Indonesia, Vietnam and more here.

Quick Reads

This is a good look at the 3 German brothers that have built a digital empire (including Jumia mentioned above) ‘inspired’ by US start ups.  This makes the point that’s it is execution where you find the value.

An article in Harvard Business Review on apps suggests most people download around 40 apps and use about15.

Few people use social media better than Guy Kawasaki. Here he shares the tools and processes he uses to manage all this. Some good tips..

New data from the Office of National Statistics prompts headlines that 7 million people have never used the Internet. We’re more interested in the other side of the story; that 43million people in the UK are now online.

Le iTax – France is to tax smartphones, tablets and just about anything else that connects to the internet, to fund culture

Finally …the emerging data driven world of exchanges is still below the radar of many. But within those that do get it there is a lot of ignorance and suspicion as its not quite clear what everyone’s motive is. This article is a good summary of the current situation.

But to put the whole thing in perspective this interactive visualization of the adtech ecosystem is required viewing. Showing exactly what happens as banner is served it describes all the players involved over just a few milliseconds. This is why the MadMen MathMen cliché gets aired so often.

And just like the financial services industry got changed by their Big Bang this one is going to reengineer marketing and advertising. Do you have the right partners to deal with this brave new world?

Facebook results  

Facebook released their latest financial results this week and their stellar growth continues. They now have 751m mobile users – up 54% year on year. And mobile revenues were 30% of the total – higher than expected. One interesting question came up on Twitter – what does this definition cover? The results deck says;

The number of MAUs, DAUs, and mobile MAUs do not include Instagram users unless such users would otherwise qualify as MAUs, DAUs, and mobile MAUs based on activity that is shared back to Facebook.

So what if I log into Spotify etc using my Facebook identity? Does that make me a mobile user or do I actually have to visit the site or use the app? Can anyone clarify this?

A report from Spruce looks into why advertisers are so pleased with Facebook – lower rates, higher clicks and more inventory.

One analyst was a little picky, pointing out that mobile ads in newsfeed meant the shift to mobile is money they were getting already. But most media owners would love to be that successful in monetising mobile users; very few come close to matching their share of revenue to share of eyeballs. The FT do better than most yet have 34% of their traffic on mobile but just 12% of ad revenue.

This is a strange failing on the part of media buyers. What logic says we want to reach readers of the Mail, Metro and Guardian, but only the ones that read it on newsprint? Leaf through any newspaper and you see ads on every page – go to the mobile or tablet edition and there is a distinct lack of advertisers. And those that ads that have made the transition to the tablet tend to be the press ad, without any interaction or call to action.

Media brands with a strong identity have the opportunity to sell their audience across screens and the ones that do this well will prosper. Otherwise GAFA will soak up all that ad revenue as they embrace an omnichannel approach.

Creativity in social

Facebook have awarded brands for good work across their platform. There are some great examples here of how brands are going beyond the like and using social to deliver big ideas in a lightweight manner that makes the most of social.

The man in charge of creative solutions at Facebook is Mark D’Arcy – who joined from Time Warner where he was in charge of helping advertisers make the most of that (largely) old media business. In a good interview he explains what Facebook mean by lightweight and talks of 4 main requirements for succeeding in social;

Respect Peoples time

Respect Peoples information

Design Lightweight experiences

Be Creative at the speed of Culture

This speed and quick touch approach makes sense whatever marketing channels you are using – as adman Trevor Beattie says, you have to embrace impatience.

Some agencies are evolving the way they work and moving towards a newsroom model – but this throws up some issues with the relationship with clients. Do you need to get everything approved and risk slowing down the cycle or do you have a broad remit agreed around the brand character in social and the brand voice, so you can execute within that without constant approvals?

One of the clients doing social and mobile well is Mondelez (formerly known as Kraft) Their lead on Global Media and Consumer Engagement is B Bonin Bough and his interview at the FT Conference last week is a master class in modern marketing. A must watch as he talks about the work they do for Oreo – a winner in the Facebook awards – and others.

Now all this can seem a little trendy for some clients; doing cat videos may work for Purina but is it relevant for most brands? Well McKinsey think so. They have just published some very smart thinking around On Demand Marketing where they describe;

Digital marketing is about to enter more challenging territory. Building on the vast increase in consumer power brought on by the digital age, marketing is headed toward being on demand—not just always “on,” but also always relevant, responsive to the consumer’s desire for marketing that cuts through the noise with pinpoint delivery.

Do you have agency partners that can help you with that? Or is putting the latest TVC on YouTube the extent of their digital thinking. Or even worse are you being sold Vine strategies – maybe with a cat involved?

McKinsey talk about how one CPG brand is raising their game and how;

…structural and talent changes led the company to realize that it needed to reshuffle its agency relationships, replacing a single brand-and-ad agency with two agencies—one for brand programs, the other for digital and CRM direct marketing. The company also brought more media and digital analytics in-house.

Google Glass

As the lucky few start to receive their Google Glasses we’re getting a better understanding of how people use them. This unboxing story is a detailed look at the product.

As you might expect there are different views. Tech blogger Robert Scoble has written a great piece on Google Glass – saying

I will never live a day of my life from now on without it (or a competitor). It’s that significant.

UK Tech writer Mike Butcher has a different view. He thinks it’s this eras segway.

Our favourite VC and visionary Marc Andreessen is very excited about Glasses though;

The other thing I can’t stop talking about is Google Glass. Google Glass could be transformative for the entire industry

Our view? It obviously depends on the price point – but we expect them to be priced for the mass market – and it is still early days. Consider how much smartphones have evolved in the 6 years since the iPhone launched; when the consumer version of Glasses arrives it will be at a lower price and with a higher spec – plus all the innovations that the developers will bring.

Quick Reads

Rumours around Apple continue – design genius Jonathan Ives is now focused on software and his sweeping changes may slow down product releases – and possibly iOS7

Starbucks report they have 10 million active users of their apps and they handle around 4 million mobile transactions every week.

Google are promoting their Full Value of Mobile tool – which attempts to calculate the value of getting mobile right – with a nice video showing mobile use cases.

The Pentagon are embracing smartphones – until now they have been strictly Blackberry but Apple and Samsung devices are now approved – which should convince some of the other laggard companies that its time to ditch the BB. We still find that many of the people who just don’t get mobile have a Blackberry welded into their hand. Sticking with a Blackberry is like sticking with Black and White TV.

A good piece on the FT mobile success story includes the quote

Most of the savvy developers have switched to HTML5, even if they’re still delivering those apps in a native wrapper. I don’t think it will be long before a lot of those apps start emerging as pure HTML5 apps in browsers

We mentioned that chat app Whatsapp now has 200m users and is bigger than Twitter. Some of the Asian players in this space are huge too – a Japanese app called Line is at 150m users  – up from 100m at the start of the year. The FT suggest that these apps will have double the volume of SMS by the year end – a big blow for operators who earn around $120bn from text messages

Ajaz Ahmed of AKQA has written a good piece on how new technology is best matched with old fashioned values to create real value for people.

Finally…..The huge changes in business driven by GAFA are an issue for any brand. Getting a strategy for managing how your business profits from this new world is a priority, but the old fashioned ivory tower approach doesn’t work.

As McKinsey puts it;

To deliver these new experiences, executive teams must rethink the role and structure of the marketing organization and how it engages with other functions. The changes are likely to cut deeply, transforming the way companies manage campaigns and communities, measure performance, provide customer support, and interact with outside agencies.

And a new book from Dachis picks up on the need for experimentation to validate strategy;

Emergent strategy requires that the company continually generate a broad range of hypotheses, testing them in small-scale experiments, and feeding the more successful experiments while pruning the failed ones

This is an area we are increasingly focused on, so happy to chat with people who may need help.

Amazon on the Box

Whilst we have given lots of attention to Google and Facebook in recent weeks, we haven’t had too much from Amazon to think about.

But there is lots going on here. Amazon has hired quite a few smart sales people here in the UK recently – paying well above the competition seemingly. Their ambitions in advertising have been well discussed, with their data their main advantage. As Razorfish put it;

“In today’s marketing world, data is gold and Amazon is Fort Knox,”

We remain convinced that a priority for Amazon will be to get brands to use the data Amazon has for targeting, with the intention to drive sales on Amazon. A digital equivalent to Tesco or Walmart encouraging brands to invest in instore promotions (Gondola ends of BOGOF) that drives instore sales –so both the retailer and the brand benefit. For Amazon the whole web is their store.

And another tenet of their vertical stack strategy has emerged with stories that they plan to launch a set top box enabling them to stream video. Given their investment in Lovefilm and their move into commissioning programming , controlling distribution on TV is just as crucial as controlling distribution on mobile devices. So just as the Kindle is the Amazon response to the iPod, iPhone and iPad so this could be their response to Apple TV.

GAFA need to be present throughout the value chain of digital content and services if they are to avoid being pushed out. As Amazon saw Apple develop into a major retailer of digital music with iTunes, they have to fight back and TV is the next arena.

One other rumoured move is Amazon physical stores. You can build a reasonably compelling case why Aamzon might consider buying the HMV stores to act as a hub for their business – but it’s not that convincing – yet.

So this recruitment ad for an Amazon store at Westfield probably isn’t kosher. It has now been taken down and we suspect it is more likely a scam to get people to divulge the details of their Amazon accounts; a clever attempt to get credit card details.

(stop press  – their latest results show sales up 22% at $16bn in the first quarter of this year)

Retail 

Talking of retail we chaired the afternoon sessions at the excellent Mobile Retail Summit this week and learnt lots from presentations by supersmart retailers Schuh, Pizza Express and Morrisons Kiddicare.

One interesting theme was that QR codes are still alive and kicking; Kiddicare use them instore and a Waitrose client in the audience shared her experience was that they were incredibly effective both in store and in advertising. I asked about the TV ads from a couple of years ago where they featured QR codes  and was told they had worked well – the third most clicked code of the whole campaign was the TV ad.

The Pizza Express client was less convinced about QR though – they have found them to be really ineffective. Maybe we’ll learn more when the 10000 adshels with both QR codes and NFC tags start to get traction with advertisers.

Pizza Express are a real pioneer with mobile and we learnt that their app has had 500k downloads and has around 200k users a month. Yet 80% of their mobile traffic is via their mobile optimised site. And since they made free WiFi available in all their stores they have 600k users each month – spending an average of 38 minutes connected. So now they are running instagram and Twitter promotions instore and getting good engagement.

What is refreshing about this brand is they have followed their gut – based on their good understanding of their customers – and it’s working really well. What are you waiting for?

Morrisons focused on how they use mobile in their Kiddicare stores and again we saw some great thinking driven by customer insight – and an approach built around testing and learning. As Morrisons get closer to launching online grocery shopping (with an Ocado partnership rumoured to be close) they are using Kiddicare as an R&D Lab.. They describe themselves as a tech company that happens to sell baby stuff.

The two key take outs for us were around testing and learning and that mobile is one part of a multi channel approach – something that Googles Nikesh Arora is pushing as they seek to break down the silos around each device.

But the truth is we won’t build the future of advertising device by device. We need to learn to look at these devices as a way of understanding the context in which consumers are looking for information. Real people use these newest devices — phones, tablets, “phablets”, touch-screen laptops and Web-enabled TVs — to connect with each other, shop, navigate the world, watch videos, play games, and take pictures. It’s how, when, and why people use their devices we should be paying attention to and less so the devices themselves.

We increasingly see mobile as a key part of an overall digital strategy but find that knowledge and expertise across both areas is rare.

Twitter

So following the news last week of keyword targeting coming to Twitter and the launch of Twitter Music, we got some more news this week with the announcement of a major advertising partnership between media agency Starcom Mediavest and Twitter valued at “hundreds of millions of dollars over several years”.

Some question quite why agencies announce major deals and what the implications are for those agency clients; will twitter feature heavily in future media plans because its the right thing or because they need to meet the agency deal?

Given the deal was announced through the FT rather than AdAge or Campaign and on the morning of the Publicis results (Publicis is the Starcom holding company) suggests PR was an issue.

Especially as Publicis made a big thing about their focus on digital, inviting comparison with rivals WPP. Given Martin Sorrell stated he sees Twitter as a PR medium rather than an advertising one, it feels there is some point scoring going on.

So it’s not a huge surprise that Sorrell was talking up the WPP digital push this week too. He claims that shortly Google will surpass News Group to be the biggest media customer of WPP. As we’ve point out before, this sounds quite impressive until your realize that the combined WPP spend with Google, Facebook and Twitter is just 3% of their overall media spend. To be fair Sorrell was warning the traditional media owners on the same panel they were being complacent. You can watch the whole session from the FT Media conference with Sorrell, and the CEOs of Bertelsmann and Time Warner here.

For more on how digital marketing is shaping up the FT have published some good articles this week summed up well with this quite from the CEO of Razorfish

 “In the last 50 years, we have been working in black and white,” . “What technology does is it brings you new talent and it brings you into colour.” 

And from the Omnicom head of Digital;

“You are seeing the industry really shift fast right now, the budgets are moving really quickly to digital. But we’ve only just scratched the surface.”

We live in interesting times but you have to wonder whether traditional agencies are well placed to advise their clients about these changes.

The Social first generation

Some fascinating new research from Deloitte suggests that the UK population is characterised by the under 24s who are social first in their internet usage whilst over 25s are search first.

They also show the usage of various social platforms across early adopters, early majority, late majority and laggards. No surprise that Tumblr and Pinterest score most heavily on early adopters. And Facebook too performs best amongst this group with nearly 70% using Facebook. But Facebook also has around 60% of laggards too. Truly the ITV of social

Book of the week

We haven’t actually read this one yet as it is brand new, but it feels like a safe one to recommend.  Eric Schmidt gets it and his thinking about the future of people nations and business has to be interesting. And the recommendations of the book support this; if Tony Blair, Bill Clinton, Henry Kissinger, Madeline Albright, Mayor Bloomberg and the former head of the CIA all say read it, who are we to argue?

So our book if the week this week is The New Digital Age: Reshaping the Future of People, Nations and Business by Eric Schmidt and Jared Cohen

Quick Reads

We keynoted a Yahoo internal conference this week and as well as sensing the renewed energy and momentum of the company heard some fascinating research. Whilst looking at tablet usage amongst consumers Yahoo have seen that they embrace more of the senses than other media. The thing we were excited by was their view that sound has a role to play in advertising on mobile and tablets. Having spent lots of time working on campaigns where music was crucial and not been able to use it in digital this feels like a really valuable insight. Whether or not this means the Yodel is back, we don’t know.

A couple of weeks ago we spoke at the MAP 2013 conference and in our research for a deep dive into tablets we were quite impressed by Pulse, a news aggregator app that has had some decent investment and was used by around 30m users. Linkedin has now bought them for $90m. Compared to the valuations given to those traditional media companies who do old fashioned things like actually create content, this does seem slightly crazy.

Facebook keep up their push into mobile with the acquisition of Parse – enabling them to offer mobile developers a richer range of backend services. A big problem for Facebook is their developer community has been very Flash orientated and obviously that doesn’t play well on mobile. Finding the talent to convert all those desktop flash apps to work on Facebook mobile too is a challenge – and deals like this improve their attractiveness to mobile savvy developers.

Finally ….our friends at eConsultancy have developed a Manifesto for Modern Marketing – which is well worth reading. It makes lots of sense and we particularly like their thinking on multi screen world;

We believe that the mobile revolution is only just beginning. But we see beyond just ‘mobile’. TVs are screens, books are screens, in-store kiosks are screens, billboards are screens. We believe we are marketing in the context of different screens and experiences rather than different devices or channels. Customers do not recognise lines and nor should we. Online, offline, above the line, below the line… we need to think and deliver customer experiences without delineation. Modern marketers think about the whole customer experience and the many screens that control and mediate it.

This Big Picture thinking chimes with our approach. Mobile and social are now just modern digital and the silos are (slowly) starting to disappear.

Big Numbers

Over 50% of the population now has a smartphone

Digital ad revenue is now over £5.5 billion. And over £500m of that is on mobile

Facebook has 15m mobile users every day. 50% of all internet sessions on mobile are on Facebook or from Facebook links

55% of mobile search conversions (call, store visit, purchase) happen within an hour

So what’s everyone we waiting for? It’s time to experiment and start learning.

New Motorola phone won’t be a phablet

We’re starting to get rumours about the first Motorola phones under Google ownership. Their head of design says;

From a software and UI perspective, our strategy is to embrace Android and to make it the best expression of Android and Google in the market. It will be the unadulterated version of Android, and I feel really good about our embracing Android and being the best Android experience.

But they won’t be following the trend towards bigger and bigger screens. Rather than bigger is better they think better is better. These phones are scheduled for the second half of the year and many suspect the next Nexus will be a Motorola device. Eric Schmidt said of Motorola this week

“They have a new set of products, which are phenomenal,” “Very, very impressive.”

Thinking about phablets Lenovo have got an extreme version – a 27inch screen tablet.

Facebook Home

We chaired the panel at the Facebook mobile event in London last week and felt the visceral focus on mobile that everyone at Facebook now has. With Home they are innovating at the top end of the market but they also have Facebook working in very basic phones and feature phones.

Home is now available and is getting mixed reviews – although we suspect a lot of the 1 star ratings are from people trying to get it to work on unsupported phones.

Inevitably there are rumours about Facebook looking to get Home on to Apple and Microsoft phones  - we continue to believe that we’ll see deeper integration on the next version of iOS, but it won’t be anything as extensive as Home on Android.

There has also been some suggestions that Google are unhappy with Home, which Eric Schmidt has been quick to deny and also stressing good relations with Samsung. With Home not officially available for the Nexus 4  – officially– it will be interesting to see whether the new Motorola phones support Home.

Facebook ads

Sheryl Sandberg has been in town and talking up the power of Facebook advertising;

“The size of the audience makes this – the phone – a mass medium. It’s as important to a marketer as TV,” she told journalists at Facebook’s headquarters in London on Monday. “This is as important – if not more important – than television.”

We have already termed Facebook the ITV of social and their huge reach does mean that they are the first digital opportunity that can truly be compared with TV. And Engagement at Scale will become easier to achieve as they role out video ads in the Newsfeed. Launching in the US in June these ads will expand to take up much of the users PC screen  – exactly how they work (especially on mobile ) is still being worked on but they are being sold now – with an asking price of $1million

The ads will be capped at 15 seconds and frequency capped to ensure that no user sees more than three per day, with an asking price of upwards of $1 million,

Now 3 video ads a day sounds like quite a lot. At the London event a number of people raised the issue of too many ads – with Facebook restating that their data shows no negative effect and that they will be careful not to spoil the user experience. With new research from Nielsen showing that 33% of US users agree ads on social network sites are more annoying than other online ads Facebook will have to be careful with these video ads. But for brands this looks like a great opportunity – even though the sophisticated targeting that epitomizes Facebook won’t be available at first.

Latest research on Social

The new report on Social from Nielsen shows a drop in number of people using Facebook  - down 4% on the previous year – whilst some Experian research also shows a fall in the time spent on social sites; in the UK 22% of time spent online in 2012 is spent on social networks and forums  – down from 25% in 2011

And the Nielsen data goes into some interesting detail on what people are doing when they are second screening – and showing some significant differences between smartphone behaviour and tablet behaviours.

It’s well worth spending time reading these reports as the granular detail is probably more interesting than the headline figures.

And another new study shows that 71% of Twitter users now use mobile – with tablet usage doubling to 18%. And the UK is the top market for Twitter with 21% of respondents frequent users – is they use Twitter at least once a week.

One surprising stat this week showed that messaging service WhatsApp is now bigger than Twitter.  It does seem that teenagers are finding these chat apps more relevant than Facebook. This Daily Mail article is a surprisingly good look at the chat apps market and well worth reading.

And the stories about a Billion dollar sale of WhatsApp to Google are denied – quite why someone with 250m users and a robust business model would sell for the same as Instagram was never clear.

Google Fibre

We talked about Google providing a city wide fibre connectivity a while back. This super fast broadband service (between 75 and 100 times faster than typical broadband) was tested in Kansas and it has obviously been a success as they are now launching in Austin, Texas. Here they go head to head with AT&T so we’ll see how they get on signing up customers.

Those who have used the service in Kansas are very positive

Lets talk about the weather

Yahoo are slowly renovating their mobile services and the latest version of their weather app is really good. Yahoo were an early mover in mobile and – despite losing some momentum  - still have a sizeable mobile audience. Now they are focusing again, we should expect to see some interesting product and services.

As a native app (for both iPhone and Android) it looks beautiful, but another new weather app reminds us that apps don’t need to be native. Forecast is a great weather app that works in the browser, so easily found through Google and available on any smartphone

The blog post about the launch is a must read as it deals with most of the native vs web apps debate really well;

if it looks and feels like an app, and lives on your home screen, it’s an App. With a capital “A.”

We also love the url – Forecast.io – and hope that it was inspired by Scorchio from the Fast Show.

Quick Reads

Google have some new research that gets deep into mobile search. A must read.

Ben Evans from Enders always has good data and smart insight – this new deck summarizing where we are with devices sales is very helpful.

One cliché that keeps coming up is the idea of the connected toothbrush – with an app that measures how long you have brushed for etc and gamifies dental hygiene.  Colgate, P&G, Philips and others have all looked at this and now a US start up is launching one.  Just because you can doesn’t mean you should.

We were really interested to find from a Fix reader that Nectar has a service rewarding people for rating ads. Apart from this review we can’t find out too much about it  -does anyone know how it works?

Finally…..We had to miss the excellent Firestarter event this week but heard good reports. And we love this thinking from the event about agencies and innovation from Brilliant Noise.

McKinsey isn’t saying “we are a digital agency”, it is saying digital marketing is broken and we can help you fix it.

When I say become McKinsey faster than McKinsey becomes you, I’m not saying: become a management consultancy. I’m saying re-invent, re-engineer how marketing works, or someone will come along and do it for you.

Mobile advertising is broken

For our live Mobile Fix at the excellent MediaPlayground the other day we took a quick look at mobile advertising. Spending 20 minutes or so on the Guardian mobile site the night before, every campaign we saw failed for one reason or another. (We don’t think it’s the Guardians fault – it’s the Agency planning buying and creating each of the campaigns that is at fault)

By flicking about from the front page we found 4 brand campaigns, plus we saw Google adwords ads a few times too. Given 99% of the people seeing ads won’t click, we would have expected the messaging for all of them to work a bit harder. But when you do click, three of these four went through to a site that wasn’t otimised for mobile. The 4^th ad drove to a Facebook page but also had the option to click through to the app – opening the iTunes store page. All fine – except we were using an Android phone.

We’re not going to name names here, but you can see the examples in the deck we shared at the event.

With honourable exceptions many brands are relying on the ad networks to chop up online creative, rather than invest in a creative agency to do the job properly. We remain convinced that mobile banners can and do build brands (our research project to evidence this is almost ready to roll – we just need another media owner to get involved – get in touch if you’re interested)

But as with any media, if you don’t put any effort into the creative, the targeting and the experience, you waste your money.

Sainsbury trialling new mobile shopping system

The opportunity for mobile in the grocery market excites lots of people. We know the big FMCG players have been looking at shopping list apps, mobile coupons etc for some time – and the big retailers are equally busy. This US piece is a good round up of the current state of play.

We have found that in the UK there is a new test underway, with Sainsbury trying a mobile shopping service in a handful of stores. The basic idea is that the shopper downloads the app (iOS and Android) and registers with their nectar card. Then at the store you scan the QR code, grab a carrier bag and off you go. As you choose an item you scan the barcode and put it into the bag. When you are finished you go to the check out, put your bag in the weighing area and scan the qr code on your app. The till tells you how much to pay and you pay in the normal way. Presumably the scale in the weighing area ‘checks’ your bag weighs the right amount for the goods you have scanned.

It’s an interesting idea as it should speed up the shopping process. The only flaw in the plan we have seen so far is that when you first get the leaflet announcing the service, you scan a QR code to start the application form.
But the page you go to isn’t optimised for mobile. Doh!

Google Keep/Google Go

Shortly after Google announced they were closing the much used Google Reader service, they launched a new service called Keep – which looks a lot like the Google answer to Evernote. There aren’t many services which inspire the passion that Evernote does, so Google will have a tough job luring people away them – especially when some question whether they will keep it going.

Now that may seem a little unfair given RSS is an old technology and Google claim usage has fallen – and they are closing lots of other things in their spring cleaning. But they do have a track record of opening and closing services – and Google Keep sounds a lot like Google Notebook which came and went a few years back.

But Keep is interesting – leveraging Google Cloud and with voice notes being automatically transcribed, and it is definitely worth a try. The real promise is how Google Now might use this repository of data to deliver a better service. Time will tell.

Whilst on the subject of productivity tools the acquisition of Mailbox by Dropbox came as something of a surprise. Mailbox is a new app that promises to vastly improve email. It launched in February with a smart marketing campaign that got hundreds of thousands of people queuing up to get the app. So to be bought for close to $100m within a month is pretty good going. And for DropBox to be the buyer rather than GAFA is an interesting move too.

newTV

YouTube celebrates one billion users this month and says that every one of the Top 100 US advertisers is running campaigns with them. Coupled with the explosion of interest in creating content specifically for YouTube, the disruption of TV is real.

FastCompany have a feature around the creative community focused on YouTube and it’s well worth reading. This focus on Big Frame, one of the main studios making shows and representing the talent that YouTube is making famous, is a good place to start;

Penna’s story mirrors YouTube’s own story in Hollywood. In the course of just a few years, she has gone from being a marginalized “weirdo who was into online video” into a digital power player.

As audiences spend time with YouTube etc the whole cord cutting thing becomes interesting. As Google expand their Kansas Fibre trial to more cities –albeit still in Kansas - a good FT article points out that John Malone – the new owner of Virgin Media – has gone back into US cable after a long absence.

Why? He thinks owning the cable is getting more valuable. But what customers want is changing;

Gerald Belson, head of Deloitte’s media and entertainment practice, says when it asked US consumers in previous years which services they most valued, 80 to 90 per cent put internet access and pay TV in the top three. This year, 93 per cent cent chose internet access but only 58 per cent named pay-TV. Among those aged 14 to 23, the pay-TV figure falls to 43 per cent.

A new report from Accenture looks at the way the TV world is changing and predicts;

Ten years from now, the TV will still be one of the largest pieces of furniture in the living room, and it will still have a central place in family life. But the TV business overall may be unrecognizable—certainly when compared to the operating models and industry makeup that prevail today.

With the news that Amazon is commissioning 11 new pilots, we agree.

Agencies in flux

More on how Agencies are facing competition – this time from Consultants. And Harvard Business Review has some good thinking from clients about how Agencies need to evolve;

But does the Madison Avenue business model survive their clients’ demands for content at scale delivered in much more nimble and efficient ways

Martin Sorrell wrote a piece on digital for the Telegraph and he makes an interesting new point on how WPP now see Google et al as less of a Frenemy and more of a competitor;

We compete not only with advertising and marketing and market research groups , but also with the new technology companies such as Google, Facebook, Twitter, Apple and Amazon (which are essentially new media owners) and with technology consulting companies such as Infosys, Wipro, IBM, Accenture and Deloitte (our auditors!)

When you see GAFA as competitors, how can you advise clients on how to get the best from them? For all their bluster about digital, WPP spend around the same with Google, Facebook and Twitter as they do with Murdochs NewCorp. Wouldn’t brands get the best advice from people who see GAFA as partners rather than competitors?

An old Dilbert cartoon sums up the key problems Agencies still face – we give away too much thinking for free;

SXSW

The SXSW event in Austin Texas last week seems to have matured from the super hip event of a few years ago and captured lots of the energy that Mobile World Congress seems to have lost.

This year the starts ups were joined by many brands  – and consequently lots of agencies showed up too. And whilst there wasn’t some clear break out as in previous years ( Foursquare and Twitter both gained attention when they blew up at previous SXSW) there was lots to think about.

Essentially there are two strands worthy of attention – the thinking and the tech. The model where people propose panels and then whip up social buzz to drive voting on PanelPicker does lead to quite a lot of froth – over 100 events on storytelling? But there are a lot of smart people sharing some smart thinking.

Our favourite was probably John Hagel of Deloites talking about narratives as an alternative to stories. There is no video yet but these notes get the point over. With a book on the subject due we expect this to be very influential over the coming months. (one of Johns books from the 90s – Net Gain – still influences our thinking around community)

On the tech front there was lots to look at too and this review is really useful. We’d agree that brands should be experimenting with things like Leap Motion, proximity communications like NFC, Vine and Android, but they need to do so within a strategy. For a fuller picture of the hits of SXSW this Verge feature is pretty comprehensive.

Future of Agencies

As you might expect there is some cynicism over the Agency attendance at SXSW and this Digiday piece on the Real Reasons Agencys Go is really cutting. And AdAge have an odd piece on SXSW suggesting that digital agencies days are numbered as startup tech has the undivided attention of the world’s largest brands. Who knew?

There is an increasing recognition from some brands that Tech is important and in our conversations we find an uncertainty over where to get smart advice on how to navigate the GAFA ecology. But whilst some digital agencies are getting over excited over the new new thing, a few are looking at the business transformative effects of tech and using their knowledge to add value, rather than just extract a fee for building some new artefact that will be redundant in a matter of months.

The idea that Traditional agencies now get digital and therefore the role for digital specialists has come to an end is an enduring myth. But it is a myth. New data from the UK shows that the income of many traditional agencies has declined sharply in the last 12 months. The analyst view on why?

“growth had come from boutique players with digital offerings and decline from mature traditional players hit by the macroeconomic background”.

Despite talking the talk (Big Data, agile, social, blah blah) the business model of most agencies is around charging clients for the output of their factory. And most of those factories are designed to deliver TV commercials, TV buys or big websites. One question we’d like to see in industry reviews is the proportion of agency revenue that comes from digital. WPP make a big thing of their 30% – but that’s an average as they have some businesses which make all their revenue in digital, so they will have others that make rather less than that average. Back in our DLKW days, digital was around 20% of the total revenue – despite digital was unfashionable then. We wonder how many traditional agencies would pass Saul Kleins 8% test today?

So we are seeing new entrants into the space. Former UK publisher St Ives has added digital agency Amaze to it’s growing Marketing services business. As we have talked about in the past, tech firms like Adobe, Oracle, IBM and Salesforce are acquiring marketing capabilities – those four alone have invested over $20bn in marketing based M&A in the past 2 years. Consultancy firms like Deloitte and Accenture have substantial teams devoted to marketing services too. And increasingly brands are taking the skills inhouse; the latest example being Ladbrokes who are building their own digital marketing team.

Design agency Landor have shared their view on the future of advertising and they recognise the challenge

The ad agency of today must therefore become the “marketing maestro” of the future—leading the vast communications industry as curators of best-of-class ideas and their implementation

And of course there is an infographic on the Agency of the Future – which concludes;

Many marketers will rely on agencies to help them evolve. The agencies that embrace this new technology now will soon find themselves in the possession of a huge competitive differentiator……

We believe the jury is still out as to who will earn the right to be a brands trusted advisor – and there is a lot to play for.

Search Works

One of the downsides of social is that a story can quickly get shared around, without always attracting the scrutiny it deserves. So this story in the Harvard Business Review has been heavily shared, Did eBay Just Prove That Paid Search Ads Don’t Work?

Well, no. They didn’t.

Essentially the article reports that eBay have realized that paying Google for a eBay ad to be shown when someone searches for eBay isn’t really that necessary, if the top organic listing is eBay. Rather than giving the user two places to click to go to eBay – one of which means Google gets paid – they have decided to rely on just one; the free one.

For any other search eBay, like every other brand, can measure the effectiveness of paid search and make a decision. And as just about every smart brand has found, search tends to be a very good investment.

As this article points out eBay have been big users of search over the years. Both they and Amazon used to blanket Google with search ads using Dynamic Keyword Insertion – meaning that whatever you searched for, an eBay or an Amazon ad would appear with your search query in the ad, suggesting they probably had it. Now this does give you some unusual results  - but it did build the brand for both companies by reinforcing the breadth of their product offering. And because most of the ad don’t get clicked on, they did this essentially for free.

There is more evidence of just how effective mobile search can be in a new report from Google – with one fact jumping out; over half of the actions or conversions from mobile search happen within an hour of the search.

Publishing being disrupted

We spoke at the excellent Measuring Ad Performance conference this week and focused on tablets. In researching the talk we found that tablets now account for a higher proportion of web traffic than smartphones. We also saw that aggregator app market remains buoyant – with Flipboard continuing to innovate and Pulse seemingly about to be bought for upwards of $50m.

Our main point was that the established media brands have done little more than port their existing business onto the tablet and that all the innovation is coming from new players – many of whom are curating content from established media, but finding ways to add value. We ended with a picture of a wrench – as this was used in a DW Griffiths film in 1911 as one of the first examples of the close up – the technique that defined film as a medium, which prior to this was essentially theatre captured on one camera.

Our point is that we have yet to work out the defining use of tablets – but it doesn’t look like many of the established media brands have the ambition to truly innovate. One exception is the New York Times who have a new site design coming – which we expect to heavily influence their tablet strategy.

And they are extending their Richochet ad format to other media brands (including Conde Nast). This format enables an advertiser to attach their message to specific stories and share them in social

Quick Reads

Google have launched an initiatve to blend creative and tech. Building on the archetypal agency creative team of copywriter and art director pioneered by Bill Bernbach in the 1950s, Google propose Art Copy& Code and amongst the thinking is the very clever Smileage from VW.

A Coke campaign from a couple of years ago has resurfaced to show the potential for mobile when you combine a good idea with technology

One thing we were surprised didn’t catch attention is Austin is the excellent Google Field Trip app – which is now available on iPhone having been available on Android for a while. This is the future of mobile – location driven information delivered politely in the background.

Building on the tech involvement in marketing this look at Adobe is interesting.

The FT have taken a good look at the Mobile Ad Gap – the shortfall in spend on mobile that threatens the content creation industry.

Out & about

Next week we are speaking at Sapient and at the Mediatel Media Playground event where we are doing a live Mobile Fix review of how tech is disrupting everything. There are a few tickets still available. If you are at either event do come and say hello

Book of the week

We are going to share some of the stuff that inspires us, with a regular book recommendation. If you agree or disagree with our choices let us know. First up is the new book from Dan Pink. Everyone in the marketing business is essentially a salesperson – we are all selling our ideas to our team, our clients and ultimately to real people. To Sell is Human is a typically smart book from Pink and really useful – and a good read too.

Finally….Seth Godin makes the point that tech has evolved and is now ready for us all

If you’ve been waiting for the next big thing before you dive in, it’s here.

So, what’s everyone waiting for? It’s time to experiment and its time to learn.

We again resisted the temptation to join 70,000 others in Barcelona this week for Mobile World Congress. So, what did we miss? Well not that mucb, seemingly.

Lot of new devices were announced and / or launched. They all look pretty much the same  – the phones are getting bigger and the tablets are tending to get smaller, so a new category of Phablets is emerging. With form factors converging we are at that stage where mobile is like the TV markets – every device looks similar and the content is increasingly the same.  Size matters but does brand?

Can Samsung continue to be the main competitor or will formerly strong players like LG and HTC come back? Are we moving to a world where the hardware is less important and device makers are looking to the content and services to differentiate?

The operators still don’t like the OTT (Over The Top) players – GAFA to you and me. They all lined up to complain about the pressures on their business and how they should have a bigger share of the spoils.  Now they said pretty much the same thing last year and we haven’t seen that much action.

If you compare the constant innovation from GAFA – the stuff that fills Fix pretty much every week – with initiatives from the operators it’s clear where the energy is.

To be fair, this is starting to change. Weve is up and running. Orange has bought the rest of video service Daily Motion and O2 is looking for content rights to buy – saying they came close to beating News Corp to the Premiership mobile rights.

As their business comes under pressure from cut price players ( French telecoms company Bouygues saw profits drop by 41% because of our favourite French firm Free) Operators are looking at content and services to differentiate.

The one area where there was real news in Barcelona was around operating systems.  Browser firm Firefox is developing a new mobile operating system to compete with iOS and Android and has attracted a lot of support from both operators and device manufacturers.

Aimed at lower end users in developing markets it seems these key players are keen to try and slow the growth of Android in particular. Because of the Firefox heritage the OS will be open and apps can be developed as webapps – which is another boost for HTML5.

Samsung have officially announced their Tizen OS  - developed with Intel. This has been known about for a while but with Samsung dominating Android sales, this OS gives them a lever if Google should choose to give Motorola any family favouritism.

And in another OS twist, Palm webOS (once seen as the key competitor to Apples iOS) has risen from the ashes having been bought by LG. But they plan to use it on their smart TVs, rather than their mobile devices.

Does any of this really matter? We saw research last year that a large proportion of smartphone users have no idea what OS they have on their phone. Real people don’t buy Android phones; they buy a Samsung, an LG or an HTC. Ultimately all they really care about is whether the phone does its job and they can access the best content and services.

You will have spotted that we think the whole market is getting to a stage where the content and services are what really matters. So rights owners and developers are key to the success of the whole ecosystem.

3 or 4 years ago this was quite a simple business. You made an app for the iPhone and you had a huge potential reach of the available audience – and had the best infrastructure for monetizing the reach you achieved. Until a year or so ago it was the same with tablets – create a native app for the iPad and you were sorted.

Now with so many form factors and different OS this one approach doesn’t work. In one of our workshops we drew an analogy with the grocery market. Being on the iPhone is now like being stocked in Waitrose – it can be really good for a niche player but most brands need to be in Tesco, Asda, Sainsbury and Morrisons too. Otherwise you are leaving money on the table.

And to stretch the analogy, you really don’t want the hassle of remaking the product for each distributor. So we believe these new moves are a further boost for creating your content and services in a web focused way – yes, HTML5.

Talking about the Firefox initiative one of the key people at America Movil (the mobile firm owned by the worlds richest man Carlos Slim) said;

“I believe this is the beginning of the end of walled gardens,”

That may be a little premature, but if you are a brand or a rights owner you can’t afford to perpetuate the walled gardens by limiting your reach and increasing your costs with native apps.

Other MWC news 

GAFA didn’t really show up in Barcelona. Having had a huge Android stand last year, Google made do with an Android party this year – with Florence and the Machine and Tinie Tempah. Facebook had plenty or people there, but it was quite low key.

Connected cars was a big story this year, with a number of marques showing how the car is becoming a mobile device (sorry). One of the things we have talked about for years is finally happening – Ford will partner with Spotify to offer an in car music service that doesn’t require flimsy CDs etc.

Mastercard have made their move into mobile money with Masterpass – a mobile wallet that enables people to store their card details and loyalty cards in one place. It also acts as a digital checkout service for retailers – online and also offline, through a QR like code that can be used in store.

And Visa have announced a partnership with Samsung to have their NFC solution in the Samsung wallet. Oddly though this doesn’t seem to have made it into the new Samsung wallet announced at MWC – where the influence of Apple Passbook is quite clear. And as further support to our point about walled gardens it looks like this app will only be available through the Samsung appstore – meaning brands that want to maximize distribution for their loyalty cards have yet another player to deal with.

Shazam has 300m users and sees TV second screen as its future

Quick Reads

20% of Dominos pizzas are ordered on mobile – up from 10% a year ago

30% of FT.com traffic is on mobile devices and 15% of new subscriptions come from mobile.

Nearly 40% of Groupon US transactions in January were completed on mobile devices – up 44% on a year previous.

In the US Nielsen will now include online viewing in their ratings, so people watching Modern Family on their laptop will count just as people watching it on their TV do.

US music charts will now include YouTube views as well as streaming data from Spotify et al and radio plays. Actual physical sales still count too. So guess what is number 1? Harlem Shake

Mobile SEO is becoming crucial – this econsultancy piece is a good summary of the issues.

Mobile advertising is a tough market – Millennial Media  sales grew by 71% and the stock fell by 38%.

Apple are going to reimburse those parents who were ripped off by in-app purchases aimed at kids. We expect that Apple will be collecting this from the app developers who gamed the system to steal candy from kids.

Whilst the High Street is suffering, ecommerce has a few issues too

Finally…..If you read Mobile Fix you know the world is changing. And that this is having a profound effect on marketing and advertising. But there are lots of people in our business that still don’t really get just how significant these changes are.

This week we have seen some smart thinking about these changes and we think you could usefully share these with your team and your colleagues. And maybe even your boss.

Our smart friend @NeilPerkin pointed out this good piece from Barbarian, summarizing the key things to be thinking about in 2013. Apps as microsites and Zombie audiences particularly resonated with us.

Winston Binch of ad agency Deutsch has written a great summary of how Agencies need to respond to these changes – Advertisers need to be Inventors.

Experimentation is too rarely rewarded in our industry. Work with your clients to carve out space for experimentation in your budgets and clearly define your objectives and measurements of success. Start small. The great thing about digital is you can do a lot with less.

And McKinsey weigh in with thinking about Driving Digital Change;

Everything is trackable — how a campaign happens, costs, performance targets. I think we’re about to see a dramatic streamlining of a lot of inefficiencies in the marketing process.

If you believe the world is changing, use this thinking to get your colleagues, clients and your board on the same page. And maybe they should sign up for Fix too.