Mobile Fix: Chinese IPOs, first party data and iPhone 6

In his latest Mobile Fix, Simon Andrews, founder of Addictive!, looks at the Chinese companies preparing to float in New York, the use of first party data and increasing speculation over the launch of Apple’s next iPhone…

Last week the focus of Wall Street was on GAFA – now it’s the turn of BAT (Baidu, Alibaba, Tencent) as Alibaba prepares to IPO in New York.

We have talked before about how the vertical stack model we apply to GAFA also works on the Chinese BAT. Baidu, Alibaba and Tencent all compete ferociously across virtually all online sectors.

Analysts estimate that the IPO will value Alibaba at between $136 billion and $245 billion – which sounds a lot until you consider their sales in 2013 were $248 billion. And look at how many western firms you would have to combine to match Alibaba, Amazon, eBay, Twitter, PayPal, Uber, Spotify and more.

A major beneficiary of the IPO is Yahoo, which owns 22% and is expected to sell off $10 billion of shares, which prompts the question: what will they buy with that cash? Almost certainly something mobile.

“When I got to Yahoo, mobile was everyone’s hobby. It was no one’s job,” said CEO Marissa Mayer.

Speaking about the new focus on mobile, she talks of serendipity – the idea that people go to the desktop site to check their emails and end up reading Yahoo news. In their apps you will be able to easily switch between emails, news and weather. Hasn’t she heard of the trend for unbundling?

Given how hard it is to get an app onto the home screen, we think that this type of cross pollination has more legs than the unbundling.

First party data

In the era of the PC, digital advertising built its infrastructure on top of the third-party cookie, a reliable workhorse that wasn’t exactly controversy-free, but at least remained non-proprietary. In our post-PC world, however, it appears that the infrastructure we need will be provided by large and proprietary first parties.

This quote is from a good piece by a smart US agency head, pointing out the power of Facebook and Twitter in mobile advertising. As we have stated, the new ad world is divided between those with rich data – essentially first party data, like GAFA and Twitter – and the rest who use their adtech to add value to raw inventory through third party data.

Given the scale that GAFA and Twitter can deliver we wonder whether brands will continue to take the trouble to go buy others’ cheap inventory in the hope of turning the lead into gold. Which is a worry for the main suppliers of this other inventory – traditional media owners.

Spend any time on a newspaper mobile site and the quality of advertising is terrible; poorly designed banners that often click through to non-optimised sites and a surfeit of house ads. Yet they have something that could be almost as valuable as first party data: context.

Once upon a time the environment delivered by media owners was a key factor in the decision to advertise and the price paid. Of course you can now reach New York Times readers on eBay and Guardian readers on the Trainline app – but is it the same as reaching them in the right context? And could context be helpful in the debate around viewability in digital – and the continuing scandal of fake traffic. This NYT article looks into the problems around online video and we suspect many of the same issues plague display on mobile and desktop.

Despite great tech and robust research in digital, every time these problems get aired, conservative brands have another reason to maintain their investment in traditional media. How do we get a sense of the value of context?

One brand that monetises its context well is the FT – this is a great insight into their digital strategy. Of course their subscriber base gives them some first party data too.

A key issue for Yahoo is how to revive their first party data – once they had millions of people logging in for Yahoo mail, etc, and that has virtually disappeared.

iPhone 6

Despite no announcements and no leaks there is a huge amount of speculation around the next iPhone – googling it gets 2.5 million results.

One thing that is commonly accepted is that the new device will be bigger. One issue this throws up is getting apps optimised for the new devices – could this be a way for Apple to reboot the app store?

Finding anything in the appstore is a nightmare – it’s a digital jumble sale with a million apps piled up under vague categories. Solving this is a problem that Apple has not really focused on. But if we have a new device with a different ratio screen, there could be a way Apple get to reboot the app store.

Clearly with a new device and new OS, smart developers will be quick to optimise their apps; but lots won’t – and all those zombie apps that never get downloaded are unlikely to be updated.

So stealing an idea from the Google PlayStore, Apple could segment the app store based on apps that are compatible with (or optimised for) your device. All the key apps are there and discovery should be much more manageable.

More idle speculation over the next few weeks.

This is an edited and abridged version of Mobile Fix – click here to read the full article on Addictive!’s website