Opinions And Ramblings By Adam Kmiec On All Things

Category Archives: Marketing & Advertising

In A Biddable World, Does Buying Power Matter?

Consolidation

Read the history books. Take your pick. Ogilvy on Advertising? Juicing The Orange? Where the Suckers Moon? All of them will paint a similar story, when it comes to media and media agencies. Consolidate your spend with a partner and they’ll offer value in the form of buying power. Additionally, if you commit to buying all your media “upfront”, the publisher also returns some type of value to the buyer.

This has been the case for decades. Media agencies consolidate their clients’ spend into one large spend with a publisher. Where possible they try to orchestrate one giant upfront purchase, By consolidating that spend into one giant spend, they generate a more favorable rate from the publisher and then pass on the savings to the advertiser…well, most of it.

For example, company X wants to buy media on Yahoo. But, so do companies Y and Z. Yahoo, in theory wants to have that money, committed, as far in advance as possible. For this example, let’s assume, companies X, Y and Z all work with the same media company. That media company, now takes the consolidated investment from companies X, Y and Z and uses it as negotiating power to drive down cost and/or create more value for the spend.

Theoretical “buying power” was and is, still a reason, for selecting a media agency partner. Better buying power should lead to better rates, better value and in theory, create cost savings. All of the above made sense 50 years ago. It made sense 10 years ago. But, does it make sense, now, today, in 2017?

What’s changed? Well, buying power works in a world, where there’s a fixed cost to negotiate off of. Let’s say you live in a condo building with 9 other tenants. All of the tenants need to replace their front door. The cost of the door is $500. But, if all 10 tenants can agree to purchase their door from the same company, that company might be willing to decrease the cost by 10% to ensure they get all 10 tenants to purchase from them.

But, what happens if the cost is no longer, fixed? When that happens, the idea of buying power, goes away. Let’s use search engine marketing, as our example. Companies bid on terms, with the winning bid (s) showing up as a paid ad on Google. So, if company X bids $1 and company Y bids $1.25 and company Z bids $2, company Z wins. That $2 bid might have been good enough to win on Tuesday at 3PM, but on Wednesday at 8AM, would be been lost to someone bidding $2.10. That type of dynamic marketplace eliminates 2 things:

  1. The idea of paying upfront for the media. Try asking Google if you can purchase $1MM of SEM, in advance. You can’t, because the value isn’t fixed. That $1MM in spend could equal 1MM clicks, it could also equal 2MM clicks or zero clicks. Because you on only pay on a click and your ads are only shown if you win the auction, there is no way to lock in a rate. It’s no different than buying stock.
  2. The concept of buying power. Whether you buy that keyword directly or use a company, the cost per click is still going to be a variable rate. There is no savings that comes, because you spend 10X more than the competition.

Search Engine Marketing was the first true biddable marketplace for digital advertising. But, today, most everything in digital marketing is biddable / represented in a dynamic marketplace. You have programmatic display, video, social, etc. All of them offer some type of biddable buying option. This is a big deal, when you consider that, today, more than 50% of marketing dollars are in digital, not traditional advertising mediums.

Does “buying power” exist, when everyone can purchase the same thing, at the same cost? Of course not. To be clear, this doesn’t mean you shouldn’t work with a media agency. However, it does mean, if buying power is the biggest reason you’re choosing to work with an agency, you’re thinking about it the wrong way.

2017 SXSW Recap – A Marketer’s Point of View

SXSW March 10 - 19, 2017. Credit SXSW.com

Earlier this month, the annual SXSW Interactive Festival, took place in Austin, TX. I attended, along with my colleague. We divided and conquered the massive amount of content, sessions, trade floors and vendors, over 5-days. The following is a recap of key themes and implications.

SXSW @ Macro Level

  1. SXSW was once the place for major announcement and releases. For example, foursquare was launched at SXSW is 2009 and twitter in 2007. This year’s SXSW followed a theme from the past 5 years or so: it’s less about major launches, more about iterative improvements. You could see this on the trade floor, where magic mirrors are no longer large, heavy and expensive, but smaller, lighter, thinner and nearing a price point for the average consumer.
  2. SXSW was founded on the idea of bringing people closer to “tech.” 10 years ago, brands/non-tech companied realized there was value in descending on SXSW to connect with tech companies. 5 years ago, brands started to have a sizable presence. It was only 2 years ago that McDonald’s spent more than $10MM+ to “own” SXSW and connect with millennials. This year, there was a notable shift. There were very few brand activations. Filling their spots were media, entertainment and marketing platforms.
  3. The “main stage” and the official conference schedule were once the big draws. This year, there were certainly some major headliners. Former VP, Joe Biden discussed fighting cancer and Cheryl Boone Isaacs, the President of the Academy of Motion Picture Arts and Sciences, tackled, among many things, diversity and inclusion. As important as the main stage was, this year was all about the rise of the small stage. Seemingly every tech and media company hosted their own 1 to 2 day event of content. For example, my colleague and I, took in a great day of content, hosted by our partner, Bazaar Voice. The day ended with a panel featuring Ja Rule. Yes, that Ja Rule. He owns a media company now and is disintermediating the business of connecting artists with brands. Basically, you don’t need a SXSW pass to get great content.

Connected Consumer and Retail

  1. Wearables are moving from bracelets and watches that track things, to “fabric” that connects you to the world. After initially being announced at Google I/O, summit attendees could try on the Levi’s/Google smart jacket. There were smart socks, smart shirts and smart sunglasses. Wareable.com has a great recap on all things wearable at SXSW 2017. Also, this session did a great job of saying what must be said; consumers now expect their tech to be fashionable. If it’s not, they won’t wear it.
  2. Last mile delivery is killing every industry. At least that was the prevailing theme from restaurants, clothing retailers and big box stores. I watched more than one panel express the fact that business models like GrubHub are simply not sustainable. Restaurants are paying GrubHub 30% on the value of the order, potentially eating the delivery cost and then losing ~18% on each order. Traditional Brick and Mortar retailers are feeling the same squeeze. The name on everyone’s lips was Amazon. And how could it not be when you could check out their delivery drones?
  3. Politics aside, the clear universally agreed to pro of the new White House, was the focus on deregulation. As a SXSW attendee, we saw the problems of over regulation, up close. Uber and Lyft, both pulled out of Austin due to increased regulation. Austin is a city with virtually no public transportation and a limited taxi service. When you have 100K+ people ascend on your city, transportation is a big deal. With Uber and Lyft gone, several new startups came in to fill the void. Under normal demand, they’ve done just fine. But, the increased demand of SXSW crushed them and exposed several weaknesses. I suspect we’ll see Uber and Lyft back. It’s not just ride-sharing where deregulation was prominent. The business of legalized recreational or medicinal marijuana was everywhere. There were sessions devoted to everything from supply chain to its positive benefits on pro sports athletes. If there’s a supply chain rife for disruption and innovation, this is it.

Losing Steam

  1. Snapchat: every panel lambasted the platform and indicated it was an example of a new bubble.
  2. VR: as the head of ecommerce for a major retailer and brand said, “I want to make real money, not virtual money.”
  3. Wearables: as mentioned above, there’s less interest in the traditional wearable, which looks like a watch, bracelet, wristband, etc.

Health, Beauty and Bots

  1. Health topics were at the forefront of panels, sessions. Even the interactive badges promoted health thanks to the sponsorship by Austin-based tele-health startup, Medici who had street teams around town promoting the ability to text with a doctor services in their app. The overall theme is something we’ve known for years, technology and health go hand in hand. From AI capturing data to predict early signs of disease or health problems to blood tests that will identify the foods that work best for your body, there is no shortage of improved ways of monitoring consumer health.
  2. Decoded Fashion hosted the best beauty panels for brands and influencers outside of the main conference sessions. Panelists stressed the importance of using data to tell the story. This allows brands to understand the needs and patterns of the customer to provide the best beauty recommendations and experience. The use of the influencer can help the success of the brand but it’s important to note that this doesn’t have to be the person with millions of followers. E.L.F. Cosmetics is taking the approach of engaging their best customers on Instagram as “micro-influencers.” These influencers who have a thousand or less followers on Instagram have an 8% engagement rate compared to the 1.7% on average when the base grows to a million followers. Beyond panels, the expo floor showcased the updated technology for the beauty customer. The Hi-Mirror scanned your face to alert you of any current issues or upcoming risks like sun spots or wrinkles and provide recommendations of the best products for your skin.
  3. Rise of the bots was not only the name of one of the many panels but it seemed to be the catchphrase of SXSW. Many sessions made some mention of using chatbots as a means for intelligent conversation with a customer. When considering a chatbot implementation, there should be a clear use case for a problem you are trying to solve for the customer. To avoid falling into the trap of the latest gimmick, companies need to keep the conversation simple and know the audience. As the usage of the bot grows, so does the intelligence making it more predictive and better for customers. SXSW introduced their own chatbot Abby who answered over 56,000 questions during the conference. The top users of the bot became more active each day which alludes to the stickiness of bot. Even though chatbots took over SXSW, it was still to be determined if consumers will be as receptive.

Other Good Recaps to Read

  1. Bazaar Voice has 2 great recaps. Check out this one and this one.
  2. HuffPo discusses retail, women in power and the hype around VR/AR.
  3. Fortune talks empathy and AI.
  4. Mobile Business Insights covers everything from autonomous cars to health tech.

If you made it this far, thank you. We know it’s a lot to digest. Please pass on feedback and/or questions.

Is The Internet Of Things Making Us Dumber?

J.A.R.V.I.S

What isn’t connected to the internet, these days? Toasters? Yep. Thermostats? Check! Lights? You bet. But, what about crockpots? Oh, most definitely. Just about anything that could be connected to the internet, is in fact already connected or will be. That is, by definition, the internet of things. We were promised, the “smart home.” The idea being that with our devices connected to the internet, they would become more intelligent and that new found intelligence would create efficiency, save money, reduce friction and bring about joy.

“Machine learning” and “automation” aren’t consumer facing terms, but they are the underlying reasons why a smart home, could be, just that. Your Nest Thermostat learns your preferences. It knows when you’re home, when you’re gone and when you’re sleeping. It adjusts the temperature to align with those factors and to save you money. That’s the very definition of “smart.”

The past few years were focused on making all of our devices smarter. On some level, they’ve succeeded. Today, the focus is on the combination of internet connected things, machine learning and automation coming together to bring you some form of artificial intelligence. That sounds exciting. After all, who wouldn’t want their very own version of Iron Man’s J.A.R.V.I.S? Amazon has Alexa. Google has Home. Apple has Siri (though not in a device beyond your laptop, phone or tablet). There are more. They’re coming.

I have booth a Google Home and an Amazon Alexa. Considering my own usage and what I’ve observed from other owners, I am convinced, that these devices, in their current format, are making us dumber.

Go back 20 years and imagine a debate in a bar, during a basketball game about whether Michael Jordan had 6 MVPS or 5. That debate would rage on. You would ask other patrons. In doing so, you’d interact with them. You might engage the bartender to answer this question. At some point, you might go to the library or use your computer, after you’ve left the bar, to find the answer and thus, settle the debate. The smart phone came along and it changed that experience, forever. We had answers in a handful of taps. On one hand we were more informed, with limitless knowledge at our fingertips. On the other hand, we became people incapable of making eye contact with one another for more than 10 seconds.

“Personal Assistants” like Alexa and Home are a natural extension of the phone, right? Instead of typing, “how many MVPs does Michael Jordan have?”, I can now just say, “ok google, how many how many MVPs does Michael Jordan have?” For the record, he has 5. He was robbed of a 6th, because writers felt bad that no one else was winning MVPs. So, one year, they gave it to Karl Malone. I digress. Back to the topic at hand; so, why do I think these devices are making us dumber?

  1. Erosion of People/Social Skills: as explained above, we’re losing the ability to carry conversations. While, yes, there will be more and more technology in our lives, I don’t foresee a world, where we never work with, nor have to interact with people.
  2. The Dumbing Down of Language: to get the most out of Alexa, Siri, Home and others, you speak a broken down version of your natural language. Our “English”, if you will, has become laughable. Because we’re being trained to issue commands that are understood by the software, we omit words or convert the proper spoken word into something so basic, it resembles a toddler first learning to speak.
  3. The Elimination of Context: Part of why you’re taught “why” in math instead of how to “ask” a calculator for the answer, is so that we have foundational knowledge. Why? Because, that added context will help us learn how and when to apply the foundational knowledge in real world situations. Geometry teaches us to play pool better. Seriously. Answers, without context, are not just lazy, they undermine our thirst for knowledge. Information, is not, knowledge.

The future is going to be digitally driven and internet connected. There is no doubt. But, if the starting point for what my kids, Cora (age 9) and John (age 7) learn, is a broken down form of language, that teaches them to conform to the norms of an algorithm over traditional social skills and that they shouldn’t have to learn about the underlying context to an answer, aren’t we just raising robots?

Recapping CES 2017

CES 2017; Photo Credit NetworkingVegas.com

Last week, 200,000 people from across the world descended on Las Vegas for the Consumer Electronics Show. The modern day version of CES is a little over 10 years old. What was originally, a must see conference for major technology companies to announce new products, has now become the place for technology, marketing and devices to converge.

I joined the other 199,999 attendees, along with our agency partners. We spent 3 solid days meeting with potential partners, existing partners and partners reinventing themselves for the future. In addition to roughly a dozen meetings, we also walked the trade floor, soaked up knowledge via panels and keynotes and spoke with leaders at companies ranging from QSR, telecom, fashion and everything in between.

To say, we absorbed a lot, would be an understatement. There’s already a lot of great CES recaps out there. I encourage you to checkout the hubs from The Verge and TechCrunch. They both did a great job of organizing the key themes, best innovations and biggest flops.

While The Verge and TechCrunch are covering everything, I’m going to focus on the themes and findings that resonated with me and that I’m taking into the office.

  1. CES 2017 was more evolution than revolution. During a panel with Dennis Crowley, the Chairman of Foursquare, it was stated: “2015 was the year of VR, 2016 was the year of VR and 2017 is the year of VR.” The point being that in 2015 it was VR for early adopters. In 2016 it was VR for developers. And in 2017 it’s 2017 for consumers. That continued iteration of a trend was present across just about every area of technology. For example, we are seeing more and more internet of things devices. They are becoming more mainstream. Though, just because it’s becoming more mainstream, doesn’t mean it’s becoming more practical or useful. For example, how many of you always wanted a wifi trash can or a hairbrush that acts like a pedometer to help you improve your hair quality?
  2. With that continued evolution of internet connecting devices, there are now more ways than ever before for people to consume content. This is a gift and a curse for marketers. Yes, there are more ways to provide value, but there are also more ways to interrupt the consumer. Additionally, the marketing landscape becomes increasingly more fragmented, making it even more challenging to measure impact and return.
  3. A major topic across the conference was security, privacy and data sharing. All those connected devices are becoming smarter. For example your Nest Thermostat learns your heating and cooling habits, eliminating the need for you to set the temperature. This removes friction. But, how does that happen? It happens, because people are sharing and providing those devices more and more personal information (even if they don’t realize it). There are edge cases, already that are pushing the limits of what devices know about you and how valuable that information is. For example, data from a consumer’s Amazon’s Alexa account is being subpoenaed as part of a murder investigation. In the health category, companies like FitBit, Qualcomm and United Healthcare are striking partnerships that bring about major cash incentives for sharing your data.
  4. If there was a major buzzword from CES 2017, it was “immersive” – This is a catch all term for Virtual Reality, voice input (e.g. Alexa and Google Home), Augmented Reality (e.g. Pokémon Go) and smart accessories/clothing (e.g. Snapchat spectacles). This is all about technology finally becoming something that enhances your daily life without the need to use your phone, necessarily. One could argue “immersive” is just a fancy way to say, “customer experience.” The customer experience is not linear and it’s not single device driven; it us however a convergence of the real world and technology.
  5. For the first time in recent years, mobile was not being seen as the future or an enhancer. If anything, there was more discussion about mobile phones holding back the future. If 5 years ago, the question was, “what’s your app strategy?” and 2 years ago it was “are you a mobile first company?”, this year it was, “how are you thinking about mobility?” To that end, there was even an entire track of presentations and panels on this topic. A truly mobile 1st organization does not think in siloed roadmaps or experiences. It does not differentiate between digital and the in-store aisle. A mobile 1st organization recognizes that it’s the experience that’s mobile, not the device. Said another way, when product, marketing, design and data come together you are not bound by any one device or screen. The near-term mobility battleground is the car. While we’re years, if not decades from mass autonomous vehicle adoption, we are already in a world, where our cars are the most technology advanced mobile device in our household.

Those are the major takeaways I had. Yes, there were robots and drones and cameras. But, there wasn’t anything from those categories that was revolutionary and ready for mainstream.

Additionally, while Amazon did not have a booth, did not demo a product, did not host an event, they are the most present and talked about company. If you were releasing a new IOT product, you were touting an Alexa integration. If you were talking about streaming, content and publishing you were talking about Amazon Fire and Amazon Originals. The former Walmart digital executive really nailed it when he said, “if you’re a retailer focused on retail and not on becoming a platform, you’ll be Sears in 10 years.”

Lastly, CES left me with 2 big questions, that I don’t have answers to, but certainly make me think about the future of marketing.

  1. The debate on cord cutting is over. It’s happened. Amazon, HBO, Netflix and others commanding your time and dollars. None of them have commercials. None of them have advertising package for companies like us to purchase. Every hour we spend in Netflix and not in traditional TV, increases the pressure for other advertising options to work better.
  2. In a world where content is dynamically created and programmatically distributed, what harm are we doing to “brand”, as we chase efficiency. A marketer at Clorox shared, on a panel, that she can’t avoid selling through Amazon. The upside to Amazon is auto-reorder, which eliminates competition at shelf. But, it also reduces the impact of all the effort put into building a brand. Clorox, if you will, becomes a commodity.

Much thanks for reading through all of this. Trust me, this was the short version.

Things That Will Happen In 2017

Nostradamus

Here’s a recap of how I did with my 2016 predictions. The TL;DR for 2016 would be, not very good. But, a new year brings about new hope and opportunity to be more right than wrong. For reference, these are the rules I’ve used for the past several years; they govern how I approach predictions.

  1. My predictions generally cover the marketing, advertising and technology industry. On occasion, I veer into pop culture.
  2. I try to avoid softballs. Mashable is so good at it, there’s no sense in serving them up.
  3. Predictions are made with no insider info. They’re based only on what I think will happen.
  4. What I think will happen and what I want to happen, are, in fact, 2 completely different things.
  5. At the end of the year, I grade myself on how I did. Each prediction is analyzed and either 1 point (completely right), a .5 point (partially correct) or 0 points (totally missed) are awarded.

In 2016, I took a high volume approach and provided 15 predictions. This year, I’m going to pare back the list to 10, but divide the 10 into 3 categories:

  1. Clear Cut / Binary: For example X company’s stock will grow 10% YoY. Assessing if this happened or didn’t, will be easy. There will be 5 of these.
  2. Hail Mary / Swinging for the Fences: I’m anticipating getting only one of these right. There will be 3 of these.
  3. Gray areas / Open for Interpretation: Through one lens, it could could like I nailed it, but through another, not so much. There will be 2 of these.

With that out of the way, on to the show!

Clear Cut / Binary

  1. “Voice” will be the new battleground and by the end of the year, we will see Amazon, via Alexa as the clear cut #1, in the category. As part of this, Apple will release a Siri home product, but it will not succeed in besting Amazon or Google.
  2. The prevailing theory is that the iPhone 8 will be a revolutionary step forward for phones in the way the original iPhone was. It won’t be, as measured through new hardware and software features. Despite that, the iPhone 8 will outpace iPhone 7 sales, globally.
  3. In a similar way to how vinyl is propping up music sales, we will see a renaissance in real books. Yes, books, the kind with actual paper, will see growth. Since this is supposed to be the “clear cut” section, I believe as a %, books will outpace the sales growth of digital/ebooks.
  4. The term “predictive analytics” will displace “big data” as the buzzword du jour for marketers. This will happen as companies realize they already have lots of data, but they need to start using it in a way that isn’t about looking back. We will measure this with Google Trends.
  5. The Verizon-Yahoo merger will continue as planned. It will be the 1st of 3 large such mergers that will be announced or close in 2017. Consolidation is the only path forward, when 99% of the digital ad growth is split between Facebook and Google.

Hail Mary / Swinging for the Fences

  1. We will see a significant decrease in social media sharing, but not necessarily usage. There will be more consuming of “content” than there will be in sharing that content. This drop in sharing will be fueled by 3 reasons. First, with the continued rise of “gotcha journalism” and social justice warriors, people will think before they tweet, so to speak. The fear of retribution for posting something, initially thought of as innocuous, will decrease the willingness to share. Second, the rise in the combination of “pay wall” type approaches to content with “fake news” will make people less inclined to want to share. Third and last, as Facebook and others becomes more and more of media/content creators, the walled garden approach to building networks will stunt cross platform and network sharing.
  2. Facebook will see the wrath of the new administration. In a similar way to how Microsoft was seen as monopolistic and anti-competitive, Facebook will be targeted for the same reason, in addition to being targeted for their perceived control over how what media is consumed. The attempts by Facebook to curb “fake news” will backfire.
  3. In 2016 we saw a handful “startups” get acquired by the legacy companies they compete against. For example, Dollar Shave Club’s purchase to Unilever and Jet.com’s purchase to Walmart. In 2017 we are not only going to see more of this, but we’re going to see it happen in unique and unexpected ways. For example Whole Foods acquiring Instacart or Target purchasing Refinery29.

Gray Areas / Open for Interpretation

  1. Twitter will sell to an unlikely buyer. For example, Bezos (not Amazon) will buy it and then bolt it on to WaPo. Another unlikely buyer would be someone like Microsoft, who would then integrate it into things like LinkedIn and Yammer! An example of a likely buyer would be Google.
  2. I’m bringing forward a prediction from 2016. I think I was spot on, but a year early. Snapchat will IPO, but the IPO will flop.

That’s a lot for a year. Can’t wait to see what happens!

How I Did With My 2016 Predictions

With only 2 weeks left in 2016, I’m at a point where I can fairly assess, how I did with my 2016 predictions. As I do every year, I look at each prediction and score it as an accurate prognostication, a miss or somewhere in the middle. An accurate prediction nets 1 point, there are no points for a miss and a 1/2 point for something in the middle. I try to be a tough grader; accountability is important.

F Report Card - Credit IndieWire.com

For a recap of my 2015 predictions, click here; you’ll see I scored a 6.5/10. Not bad, but not great. It was certainly not as great as my 2012 predictions which were 90% right or my 2014 predictions, which had an 80% success rate, but certainly better than my 2013 predictions, which was a laughable 60% hit rate.

With all that said and out of the way, let the judging begin! Note, the original prediction is listed first, with the analysis and scoring in bold font, after.

  1. VR, be it Oculus Rift, Cardboard or whatever, will fail in a manner only bested by Google glass. The price point will be too high, the platform too closed and the novelty too limited. I’m taking this as a win. There’s some clear diagnostics. For example it’s not a holiday must have / best seller. Let’s then add in the fact James Cameron (yes, that James Cameron), thinks VR is laughable. And, then of course, you have actual sales figures that paint a dismal situation.
  2. FourSquare will be purchased for less than 60% of it’s high point valuation. It will sell, not to Microsoft or Yahoo!, but to a platform like Yelp!, FitBit or OpenTable. Basically, it will sell to something unexpected. Complete miss. I’m shocked. If there was one thing I was sure of, it was this.
  3. Marissa Mayer, will choose to pursue other opportunities and the board will thank her for her efforts and service. I was close on this. Being practical about it, she’s just about gone. You have activist investors looking to replace the entire board and they announced a sale to Verizon. I can’t imagine her staying on when that deal closes, to work for Tim Armstrong. I’ll take a 1/2 point here. The spirit of what I was forecasting has come true.
  4. There will be a major hack of either “connected” cars or the connected home. You will see a major exploit of something like HomeKit, Weave or BMW’s connected service. This happened. It was big. But, it wasn’t as much a hack of specific platform or product as much as a hack of the “web” powering them. I’ll take a 1/2 point.
  5. A major sport will adopt digital technology in a way that changed their game and starts to make humans obsolete. For example, we’ll see a chip put in footballs and in the pylons to determine if a touchdown is a touchdown. There were a lot of small things throughout the year, but it took until last week for this article about Major League Baseball and wearables to give me a full point. Nothing like making it close!
  6. Tesla will start or continue, depending on your point of view, it’s long, slow, death spiral. I hit this one, but not quite out of the park. The stock is down 30 points from the start of the year. You also have the autopilot issues. Then of course there’s their inability to hit production forecasts. Tesla may not die, but my prediction was good.
  7. Chip credit cards will bring retail to such a slow crawl for checkout, that NFC forms for payment (eg Apple Pay), will become promoted by retailers, thus doubling, if not tripling, NFC transactions. Close, but not quite a cigar. Chips were a huge problem (leading to a lawsuit), but NFC didn’t take off. 1/2 a point.
  8. Tied to #7, walled garden payment systems, like Walmart Pay, will fail miserably. Nailed it, not much more to add.
  9. Social media will influence the election in a way that will bring about changes to how elections are run. For example, it’s well known that when you tell a population X candidate is winning by Y%, voter turnout suffers. Yes, social media influenced things in a major way, but too early to tell if future elections will change. 1/2 a point.
  10. When Donald Trump wins the election we will see a re-writing of how the role that the media plays, in general. This will be the tipping point for the decline of mainstream / traditional media and the rise of platforms (particularly, social media) as more important than TV and companies like CNN. This was a home run, grand slam, slam dunk and whatever way you want to describe it. Not only did Trump win, but it was his counter approach to mainstream media that sealed the deal.
  11. Snapchat will look to go public. It’s IPO will flop. Didn’t happen. When it does, I’ll be right.
  12. Twitter will rebound and regain 25% – 30% of its previous stock, high point of $69. Major miss. Not even close.
  13. Cell phones will reverse trend and get smaller, not bigger. With the launch of the Apple iPhone SE, I was on trend. There were other manufacturers who produced smaller phones, but we didn’t see a complete trend reversal. 1/2 a point.
  14. Drone delivery will happen. Amazon will be first, followed by Taco Bell. Amazon did complete a drone delivery. There were not first. Depending on who you ask, you may get a different answer on who was, but I think it’s clear, Dominos was ahead of Taco Bell. All in all, a miss.
  15. Uber will face a period of growth flattening, due to democratic/blue states siding with unions to restrict growth. This will force Uber to seek new avenues for growth, beyond its core transportation delivery business or via other markets. This happened in a variety of ways. Let’s start with the Didi deal. Then you have the subscription service. You have the exit from Austin, a very blue city. And, we’ll finish with the overall growth slowing. Basically, yeah, I was right.

Wow, that was a lot. So let’s tally it up. The clear misses: 2, 11,12 and 14. The clear wins: 1, 5, 6, 8, 10 and 15. The half right predictions: 3, 4, 7, 9 and 13. All of that makes for a total of 8.5/15 or 56.7%, bringing my year tally to 70% (35/50).

Not the best year, but like I said upfront, I’m a tough grader. Some of those 1/2 points, other might view as a full point. 60% is an F, there’s no way to sugarcoat it. Maybe, next year, I’ll be better.

On The Election

I pretty much avoid political commentary and discussion, on this site and in social media. There’s very little upside. That said, post election, there have been a ridiculous number of “hot takes” on what happened and why. Again, not going to give a point a view on that. I do, however, like to read a lot. I enjoy reading from a broad cross-section of opinions. The different points of view are helpful. The more you learn about another person’s point of view the better you can understand and empathize.

72andSunny Quote

The one article I read, that was actually worth sharing, analyzing and weighing in on, was from The Wall Street Journal and was titled, “Trump’s Win Has Ad Agencies Rethink How They Collect Data, Recruit staff.” In my opinion, the benefits from reading this thought provoking piece are not limited to marketers and data geeks.

Talk about a market correction!? From data, big data, modeling, predictive analytics…to…let’s go back to talking to people. As with most situations, we tend to over-correct. If you have a players coach and the team does bad, you hire the strict disciplinary coach. After you’ve focused so much on cost savings, that you’ve cut into the bone, there’s announcement about an unprecedented investment in the same area you’ve cut, for so long.

I don’t think a complete pendulum swing is needed, but I do think there’s a lot to be gleaned from the quotes. In particular, there were 3 things that really jumped out to me:

  1. The importance of the human element. It can’t just be about 1s and 0s. Ethnographic research is more critical than ever.
  2. Diversity is more than what is typically considered diversity. Socioeconomic and geography can’t be overlooked.
  3. What defines and makes up “aspiration” isn’t what we always think.

Data isn’t going away. But, what we do with the data, how we interpret that day and who is interpreting that data, may need a bit of a reboot.

Data Is Driving Accountability…Sorta

The hope and promise of digital marketing has always been, “you can measure it better than traditional media.” I got into digital marketing in 1997. Back then, decision makers were skeptical that the internet could be a business driver. The advertising options were basically limited to banners and paid search ads. Candidly, when you consider what digital marketing was up against, with those options, it’s easy to understand why marketers weren’t bullish.

Data Is The New Oil

However, the one thing that kep marketers coming back was the data. Digital was to be, the holy grail, of marketing measurement. Instead of wondering if something works, you’d know. Instead of debating if you were truly wasting 50% of your ad spend, you’d know. Were we making money from our efforts? Now, you’d have an answer.

Digital has always been held to a higher standard than traditional marketing, because of that promise. Few question the “viewability” of ads on TV, but everyone wants to question the merits of did real people see an ad, on the internet. Data and measurement, in so many ways are why:

  • Google remains one of the most trusted sources in advertising
  • Facebook has a marketing and advertising offering, that you simply can’t ignore
  • Uber, AirBnB and the rest of on-demand companies are skyrocketing

It’s almost 2017, we should be at a point where we don’t have to demand data. Data drives accountability and should be non-negotiable.

I was struck by this article from DigiDay, about Snapchat and their lack of data, accountability and transparency. This passage, is equal parts poetic and frightening.

Multiple brand execs have told Digiday that the hardest thing to swallow about Snapchat currently is that in a marketing landscape obsessed, ostensibly, with measurement and transparency, Snapchat worries them because it doesn’t provide the kind of metrics platforms like Facebook and Google do.

Why, on Earth, then, would you invest a $1? How could Snapchat be worth $25B, if it can’t tell companies, that their investment is driving business results? The answer lies in this passage, from the same DigiDay article:

Ultimately, the reason marketers don’t want to acknowledge that Snapchat may not work for them is because nobody wants to be “that” marketer who pooh-poohed it — only to find that it completely blows up later, said one marketer.

There were marketers, 1000s of them who pooh-poohed social media, in general. Invest a dollar into Facebook, that’s crazy, they said? Missing the boat on something like Facebook, meant you paid a significant amount to play catch-up. You also had to answer the question of why we/they/that company, missed such an “obvious” boat.

It’s been said that “data is the new oil.” For those of you think oil is an energy source of declining value, I’m willing to concede oil for the next best energy source (solar, electricity, etc.) and say, “data is the new solar.” But, the point is, you wouldn’t invest in an energy source that’s completely theoretical and in essence, vapor. To me, that’s what’s happening with Snapchat.

We can not, as marketers, demand viewability, attribution, etc. and then prop up Snapchat or any ad-tech offering, lacking end-to-end data transparency, as the future. It’s hypocritical.

We’re getting better as an industry. The detailed reporting from the ANA and the subsequent response from the marketing, regarding transparency, was long overdue and proportional to the warts that were uncovered. But, if we want to deliver on the promise of digital marketing, we need to evolve from accepting accountability…sorta to full accountability. We must be vigilant or risk a reset back to 1997.

5 Reasons To Not Be Bullish On Snapchat

Snapchat

I like taking the contrarian point of view. I’ve yet to meet a better champion of the Devil’s Advocate. As Patton perfectly stated, “If everyone is thinking alike, then somebody isn’t thinking.” I have found that there are 2 types of Devil’s Advocate players. The first, simply likes to disagree. They will always take the opposing point of view, just to feel the thrill that comes from a spirited debate. I know that person well. On more than a handful of occasions, I’ve seen that guy, staring right back at me, in the mirror. Now, the other type of Devil’s Advocate, is one who brings some type of data and insights to the discussion to back an opposing view. That’s the version I’m going to play today as I outline reasons you shouldn’t be bullish on Snapchat.

Before I get started, I think it’s important to get on the table that I’m saying Snapchat is a bad investment. I’m not saying don’t put your money there. I’m not saying, it will fail. There’s great value in playing the role of the Devil’s Advocate. As the CIA (yes, that CIA) states (pdf) in their training, The Devil’s Advocate’s “primary value is to serve as a check on a dominant mind-set that can develop over time among even the best analysts who have followed an issue and formed strong consensus that there is only one way of looking at their issue.” With seemingly a new “Snapchat is killing [insert competitor]” article, popping up every day, I thought this was a great time to introduce the Devil’s Advocate tool to provide some opposing views.

Bad Data For Advertisers

When Snapchat first launched, it required only an email address and a password. The core base of Snapchat’s power users were people who bought into the idea that anonymity and a self-destructing (as we saw from the repeated data breaches, not true) approach to content, created a safe space for them express themselves, without pressure. All you needed was an email address and a password to join. Realizing how bad of an idea this was from a future business potential standpoint, some time later, Snapchat started requiring a first name, last name, birthdate, username and a cell phone number. Better, but compare the rich data trove Facebook offers advertisers. It’s the equivalent of Snapchat bringing a paperclip to a gun fight. Beyond the core data in the registration flow, Snapchat can also track location. All of this, in theory, is pretty good, but not great. Data drives accountability and validation. You don’t necessarily need all the data in the world. Sometimes, you just need the right data.For example, Google, with their core paid search offering can track intent all the way through to direct purchase, despite not knowing your name, email address or birthdate. Today, the Snapchat is rudimentary, at best. They know that. It’s why they continue to increase the investment in their data stack. But, the more they ask of their users, the more the alienate the base…who bought in to Snapchat, for an ad-free and anonymous way to share.

The Fickle Nature Of Youth

Snapchat has a user base that 70%, under the age of 22. Their growth is from kids. The last thing kids want to do is be where their parents are. It’s a truth. As adults start joining Snapchat, kids will move to the next “it” platform. This is a cat and mouse games, kids have played with their parents, since the dawn of time. Snapchat needs the older audience to join. Need, I say. Why? Older people have actual money. They’re a more valuable marketing segment, because they’re also more trackable. They have credit cards, loyalty cards, etc. Those are important elements for matching ad impression data to purchase, to determine the value and impact of an advertiser’s dollars. Without that matchability, an ad campaign on Snapchat is the equivalent of taking a bunch of money, lighting it on fire and wondering if it drove sales. The blow back from the original customer base (aka young kids) is already happening in full force.

Kids don’t want to hang out with their parents; it’s simple as that. Balancing the need for adults and their money, while keeping the experience genuine for the core/original user base, is a difficult balance to maintain. When you consider that millennials use more apps and spend more time in apps, than any other consumer segment, there’s always another app vying for their interest. And, just as the youth was the first to MySpace, Facebook, Instagram and yes, Snapchat, they’re also the first to abandon that platform in the search for the next breakout platform…especially, when they’re parents start crowding their space.

Chasing Cheddar Ruins The Experience

Snapchat, at the end of the day, is a business. They have investors. They have employees. They need money to pay back investors and to keep paying employees. This is basic economics. So, how do you make money for an app that’s free? Well, that’s easy. The oldest rule in monetization for apps/platforms has always been, if you’re not paying for it, you are the product. That’s right, they make money, just like Facebook and every other social network, but selling information about its users to advertisers, who then pay Snapchat money to advertise. Again, not a new concept. But, here’s what happens, when you’re core group of customers (remember the young, under 22 year olds, who joined an add free app) start seeing ads.

Snapchat Users Hate Ads

Granted, every social platform goes through this cycle. The launch. They grow by focusing on the product. All the while, they’re harvesting user data and building an ad platform. Said platform is ready and they introduce ads. As they introduce ads, users say, they’ll leave. Most don’t. But, here’s the rub. Millennials “aren’t influenced at all by advertising. Only 1% of millennials surveyed said that a compelling advertisement would make them trust a brand more. Millennials believe that advertising is all spin and not authentic. That’s why they use Tivo to skip commercials regularly and avoid banner advertisements on Facebook and various news websites.” – That’s a big problem, if you’re a Snapchat advertiser.

A Quickly Eroding Premium

To me though, what offers the most pause for being bullish is how quickly the Snapchat ad product went from being an insanely priced premium offering to being reduced, reduced and reduced again. The drop, inside of 2 years, from $750,000 to $100,000, is staggering. Glass half full people will say that the cost was reduced as the platform has scaled and now moved to an API offering, which means you can use a 3rd party platform or DSP to purchase media. Ok, let’s go with that. I will accept that. However, the minute Snapchat moves to a biddable inventory world, two things will happen. First, my point about lack of great data will become more apparent. When you can buy on age, gender, interest, device and an infinite set of options on Facebook (as an example) and can only buy on a limited set of targeting criteria in Snapchat, the data disparity becomes crystal clear. Second, DSPs are all about performance. That’s the reason you use them. DSPs also typically scale across platforms. For example, Brand Networks, one of the approved Snapchat DSPs, can also buy media across Facebook, Twitter, Instagram, Pinterest and others. That means, as a marketer, you’ll have comparative data for performance. Said, differently, when someone asks where you should spend your next $1, the data will be even clearer.

Voodoo Math And A Lack Of Standards

As discussed above you need clean data as a baseline. Part of clean data is standardization. For example, if I asked you, do you weigh more than me? An easy way to determine the answer would be for both us to get weighed on a scale. But, if you used one type of scale and I used a different scale, we would have far too big of a variable, to trust the answer. But, if we both used the same scale, we’ve eliminated a critical variable. When marketers buy ads, it’s no different. The IAB, love them or hate them, has standards for every type of ad format out there. For example, how to measure an impression, what a click is and what counts as a video view. Really, I’m serious. Go check it out (pdf). Now, the IAB is pretty clear about what a video view is. They say, “a video ad is viewable when at least 50 percent of the ad’s pixels are visible on a screen for at least two consecutive seconds.” That’s pretty clear, right? Now, if you want to exceed the benchmark, more power to you. For example, YouTube counts a video view as being 30 seconds. Yes, 30. That’s 15X above the standard. Facebook and Instagram use a 3 second threshold. That’s 50% more than the IAB’s guidance. Why is this important? Think about your own mobile habits. How many times have you accidentally clicked an ad or started a video? More than you can recall, right? Well, those mistakes, shouldn’t count as a view. With Snapchat, they charge, on a $0.XX per view. When you market $0.03 per view, that sounds cheap, right? But, to get to scale (say 10 million users), where you want each person to see something 3X, that’s a $900,000 investment. Not chump change. But, if you’re a Snapchat user, you know how easily it is to click on something accidentally, you also know how quickly you can skip through snaps. By not even hitting the IAB standard of 2 seconds, you can’t compare apples to apples, let alone apples to oranges. Standards, matter.

I have no idea if any of the above means, Snapchat won’t be successful. But, part of evaluating any new partner, technology (eg Virtual Reality) or tool, is playing the role of the Devil’s Advocate. Taking the time to do that, is what helps ensure you don’t fall victim to Shiny Object Syndrome.

Something that’s really hard to do, especially if you have a passion for innovation, is to balance what might great for the business with makes a platform really cool for the user. The business might want more ads and more targeting, but doing so impacts the user experience. That’s the tight rope any company walks as they look for ways to drive revenue.

The other thing that’s far too easy to do is to point at the faults, without recognizing the upside. The sunk cost in failing can often times be more beneficial than waiting for everyone else to have learned, experimented and optimized from day 1.

That said, if you’re in the driver’s seat, in your organization, you have a responsibility to ask the tough questions, poke holes, understand the risks, generate agreement in why you’re going to do something and then drive accountability.

My Take On Mary Meeker’s 2016 Internet Trends Report

Christmas is in December, you say? On the 25th? Well, perhaps it is for society at large. But, for nerdy marketers like myself, Christmas is whatever day Mary Meeker releases her Internet Trends Report. It’s generally considered the official, “State of the Internet.” I like it because it takes a macro look at how global trends are shaping micro moments and decisions. With that said, here’s the report:

It’s always a great read. So much to think about. So much to unpack. It usually takes me a good month or so to form opinions that have implications to the work I do and who I do that work for. That said, we live a world of “now”, and to that end, I look for some immediate take-aways that make me go hmmm.

  1. Voice will overtake typing. I see it happening every day. My daughter loves to ask Siri questions. For her, it’s equal parts more fun and simpler. I struggle with it, right now. But, that’s because my expectations are too high and I want specific and precise answers. The core of voice is still the basic data structure and taxonomy foundation that makes traditional search work. It’s the non-sexy, but significantly important work around SEO, data integrity and APIs that allow voice to be beneficial. Companies who have invested in sound SEO principles, clean data and great content will excel in shifting from typing to voice.
  2. With more people than ever on the web and more options competing for their time, it’s no wonder inflation in digital media is so high. Earlier in the year, I forecasted that 2017 would see a digital media inflation of 12% – 20%. This report seems to substantiate and validate that range.
  3. Apps need to do more than one thing well, to be sticky. Slide 80, does a great job of hitting this point. I’d also add, if you want your app to do just 1 thing well, you might need multiple apps. This is exactly what leaders in mobile, like Facebook, have done. They unbundled the app and are reaping the benefits.
  4. Keep in mind, messaging is still in it’s early days. We’re just now being given the ability to leverage those platforms as a business/brand. But, considering the pace that things move at, just because it’s early days, doesn’t mean you can’t/shouldn’t be experimenting with how to find your place in this channel shift.
  5. Slide 45 is a big time moment for marketers who believe in digital (yes, there are those who still don’t). This is the first time, since the report has been coming out, that advertising spend in digital equaled or surpassed usage. That’s a big tipping point. But, wow, look how underspent mobile is.
  6. Walgreens was founded in the 1900s. Look how many retailers born after us are on life support or defunct. I feel that our longevity is a testament to the innovative spirit and the focus on the customer, that we’ve always had.
  7. Slide 78 is the one area where I’d pick a LARGE bone with Ms. Meeker. The data is very misleading. On the surface it looks like Snapchat outperforms Facebook. But, when you consider that Facebook measures a video view using the IAB standard or equivalent, but Snapchat counts a view, the minute you tap, this chart means is not fairly representative of reality.
  8. There are limited reasons today to outsource your media buying and optimization. In an ad/marketing-tech world, so long as you have the horses in your stable, you’re more efficient going direct, in digital. The toughest part, of course, is getting those horses. It’s difficult to get an unfair share of high talent, out there, today.

Those were my immediate takeaways. Anything you disagree with? What would you add? I look forward to all the dissecting that different people, companies and publishers will do.