Mobile Fix: Quad-play, ad avoiders and mobile
Simon Andrews, founder of Addictive!, looks at what’s going on right now for some of the biggest players in media.
The moves in the quad-play space we talked about last week continue, with rumours that Vodafone will take Blinkbox off Tesco’s hands to accelerate their move to video content. Blinkbox has had a lot of investment from Tesco when their management were focused in the potential threat from Amazon rather than the more urgent disruption from Aldi and such.
This could be a good deal, which when added to the content Vodafone already offers to mobile customers (Netflix, Spotify and Sky Movies), and with a set-top box, would catapult them into the battle with Sky, BT and TalkTalk.
There are also rumours of a much bigger move by Vodafone; a takeover of Virgin owner Liberty Global, which would give them a significant base of TV customers as well as their broadband network.
One area that will be impacted by these changes are the upcoming negotiations for the Premiership TV rights. BT changed the landscape by winning a chunk of games – surprising everyone – and used this to launch their TV offer and aggressively compete for broadband. If, as seems likely, they do end up with a mobile operator their appetite for football will increase. The same applies for Vodafone.
In our opinion it’s the mobile rights that are more interesting. News UK have the digital rights now having paid around £20 million. That was apparently an increase on the previous deal when Yahoo had the desktop rights and ESPN bought the mobile rights – which they struggled to monetise.
And it looks like it may have paid off for News UK. Digital subscribers to the Sun have doubled to 225,000, while The Times has reported profit for the first time since 2001, so the paywall seems to be working, but growth in subscribers is slowing. How much of this growth is driven by the football is debatable, but £7.99 a month for the Sun and footie seems reasonable value.
We have often suggested that GAFA could be bidders as Google and Apple look at their TV ambitions. As YouTube moves to a subscription model what better case study than the way Sky built their business on the back of the Premiership? And we still feel that content could become an Anchor for Apple – although they currently seem to prefer to retail other peoples rights in music, games and film.
The FT looks at the main rights and how the balance could shift between Sky and BT. This time around the mobile rights are going to be worth a lot more and we can forsee more bidders. But as News UK has shown, you need a subscription revenue model to get the real value – ad revenue is just a nice bonus.
Ad avoiders
Whilst a surprising number of people choose to use adblockers, most ad avoiding is less calculated. More and more content providers are choosing to offer ad-free services for subscribers – Spotify, Netflix, etc. And if you buy or rent content through iTunes or Amazon it is ad free. And YouTube is moving to an ad-free subscription model.
This opinion piece from betaworks summarises it well – the rich can avoid advertising through subscription, whilst the poor will just have to put up with ads. You can even imagine that Spotify source the worst ads to drive people to upgrade from their free service.
This article makes the point that we have made advertising so cheap it’s no longer that attractive for many publishers – especially when people also block ads too. But it makes the very good point that, whilst inventory is virtually infinite, people’s attention is fixed. And consequently, quite rare.
And that’s what all marketers really want to buy – the attention of the right people. There is a media issue here – being willing to pay the right price for the right amount of attention. And a creative one too; having just the right message to make the most of that attention.
App ads
Wall Street takes a real interest in advertising, given the number of adtech companies that have floated as well as GAFA dominating the market in terms of sheer size.
Barclays has released a fascinating report that looks at many of the big tech players and makes a good job of explaining the market – including the rise of programmatic, where they are bullish. Their conclusion is that the market will reward the biggest players and that Facebook and Google are likely to grow at the expense of the rest.
This supports our view that brands should be maximizing their investment with Facebook and Google and trying to understand how to make the most of these 2 huge opportunities.
Despite protestations, the key drivers of Facebook growth – and most of the rest – is still app download advertising, although both Google and Facebook are very focused on getting brands on board.
TechCrunch has a good look at the app download ad market and get into some detail on what Facebook, Twitter and Google are doing to improve their attractiveness to app developers. Fabric from Twitter and Parse from Facebook are really smart attempts to get closer to developers and bake themselves into the app landscape
Of course Google and Apple could change this market overnight were they ever to sort out their appstores. It is amazing that Google can’t use its unrivalled expertise in search to make Play easier for users to find things. And it’s equally amazing that Apple, with their obsession over user experience, leave users to stumble through long lists of apps, in seemingly random categories.
A smart VC, that used to be at Facebook, has a good look at how Facebook are using Parse and think it has huge potential.
There are huge revenues at stake in this area and anyone who can help improve performance can make a lot of friends
Mobile only
The data on Black Friday and Cyber Monday shows a huge increase in mobile usage. But it’s just not surprising anymore. More big brands are spending money on mobile – but that is only natural.
The surprise is that other brands seem to have missed the fact 35 million people in the UK are using a smartphone to rewire how they live their lives. Eric Schmidt makes this point well when he talks of the world moving from mobile-first to mobile-only.
Benedict Evans has a new blog post where he talks of the New Questions in Mobile. This is really interesting stuff and we’re excited about the future possibilities of cards, notifications and deep linking between apps. But the war is over and mobile has won – there are just too many brands acting like Japanese soldiers who didn’t get the memo and continue to fight the old battles.
For the first time in a long time brands can get real competitive advantage by being much much better at this new stuff than their rivals. Let the laggards focus on their big Christmas telly ad whilst you unlock the value of your data with smart advertising that delivers the right message at the right time to millions of your customers.
This is an edited and abridged version of Mobile Fix – click here to read the full article on Addictive!’s website
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