Spotify Wants to Rival Facebook and Google in Advertising (Aug 17, 2017)
Based on observations of the new method in the wild, Marketing Land says Facebook appears to be testing showing people ads on Facebook based on the physical retail stores they have recently visited, leveraging location data from the Facebook app. If people already think that being retargeted on Facebook based on shopping on other sites is creepy, this is going to blow their minds, especially because many people may not realize that Facebook is even able to track their location when they’re not actively using the app. That background location tracking is used to power some services in the app, and in the iOS privacy settings, Facebook can be set only to use location while in the app, but there doesn’t seem to be a similar option on Android, where all I can see is a single on-off location toggle per app at an OS level. None of this should surprise us, however: the name of the game in advertising is targeting, and the more available the better as far as these companies are concerned. As long as there’s some disclosure somewhere of what’s being gathered and why, and consumers have an opt-out option, they’ll feel they’re covered. But between Snapchat’s recent moves in the opposite direction and this testing by Facebook, it feels like we may be about to wade into our first real set of privacy concerns around major social networks in several years, after companies pulled back significantly a few years back following something of a backlash. Users have been like the proverbial frogs in boiling water since, with the erosion of privacy so subtle and incremental as to never present a single step big enough to warrant objections, but I suspect that may be about to change.
via Marketing Land
Snap Inc reported earnings for Q2 2017 this afternoon, and it missed analyst consensus estimates pretty much across the board, with lower user growth, ARPU, and therefore revenue, as well as EPS, than expected. Snap’s user growth sequentially was 7 million, a little above its Q4 2016 number but below every other quarter’s growth for the last two years. Interestingly, in a reversal of the recent trend from Facebook, it saw better growth in North America, where its ARPU potential is much higher (currently 5x Europe and 7x Rest of World) but costs to serve are more or less the same than in its two other regions. But if user growth is going to remain slow, ARPU really has to grow rapidly, and it’s not yet seeing the kind of ramp it needs in that trajectory to justify rising expectations of its future performance. Though it saw 60% of its recent ad impressions generated through its self-serve and automated (API) platforms, the increased inventory made available through those platforms has generated lower prices per ad, so even though impressions went up quite a bit thanks to increased time spent and modest user growth, that offset it somewhat.
Management commentary on the call was mostly focused on the new creative tools being made available to users, which have historically driven increased engagement, as well as the evolving ad platform, which is the other major component to driving ARPU up. But the evidence from the Q2 reported numbers suggests neither of these is dramatically changing the trajectory from prior quarters. There is still tons of headroom in ARPU – Facebook’s global ad ARPU is over four times Snap’s, while its North American ARPU is roughly ten times as high – but Snap is a long way from reaching that level yet, with relatively modest increases in North America in the quarter and better growth overseas. My basic thesis on Snap remains the same: it’s a platform with a slow-growing and smallish (relative to the ad giants) base of highly-engaged users heavily skewed toward particular demographics. That will continue to be attractive to those looking to reach those demographics, but will continue to fall short of the appeal of the much bigger audiences and more sophisticated ad tools available at Google and Facebook. I don’t see any of that changing soon, which means Snap is best seen as its own animal, at similar scale to Twitter (though that scale is measured differently) and with some of the same problems. In other Snap news today, Mashable’s Kerry Flynn reports that it has apparently acquired selfie drone company Zero Zero Robotics. There was no mention of this on the call, but if I heard correctly management did mention roughly $200 million in acquisition costs in the quarter, which would gel with this reporting.
Right after both Business Insider and Mashable posted sourced stories about it launching tomorrow, Facebook appears to have decided to take the wraps off its new video tab today instead. That this was coming was widely reported, and now we just know a few more details – the new tab in Facebook is called Watch, and will showcase lots of different kinds of videos, although the focus appears to be on personality-driven stuff of the sort that dominates the more popular YouTube channels. In general, the model here feels very YouTube-like, with a subscription model, though Facebook’s apps for TV platforms in recent months have signaled the broad structure and interface, with a combination of videos recommended or liked by friends, things you’ve saved, things that are popular on the platform, and so on. What I don’t see much of in Facebook’s announcement today is the longer form, more produced stuff that’s supposed to be coming too, probably because it’s not ready yet. There will be some other content in there too including the live MLB coverage Facebook acquired rights to a while back starting next season, but in general this is a hub for all kinds of video on Facebook, from professionally produced stuff to the stuff your friends share. Simply calling out video into its own tab, though, is going to raise its profile and thereby push people to spend more time in videos, where they’ll see ads only every few minutes, as opposed to scrolling through the News Feed, where they’ll see ads every few seconds. I’m more and more convinced that’s a risky move for Facebook, because all the anecdotal evidence I’ve seen so far suggests people are really put off by interruptive ads in Facebook videos (I certainly am too), and this whole effort could end up backfiring. That’s something I’m hoping to write about soon. Update: Variety has a listing of additional shows from professional producers which wasn’t in Facebook’s blog post.
Facebook Readying First TV Pilots for August (Jul 26, 2017)
Business Insider reports that Google has been working with a number of big publishers to detect and combat a form of ad fraud known as spoofing, where ad inventory purporting to be available on a major site is in fact merely offering space on little visited sites spoofing those domains. It’s apparently found that there’s lots of this activity going on, and at the same time is pushing an industry standard called ads.txt which aims to get each publisher to host a text file listing the ad exchanges with which it’s working and thereby make it easier to establish which inventory is legitimate and which isn’t. Ad fraud in various forms is one of several big issues which threaten to undermine the online ad industry, along with viewability and measurement issues, ads showing up against the wrong content, and so on. Cutting down on spoofing would go some way to reducing at least this one form of ad fraud.
via Business Insider