Company / division: Industry
Some Online Publishers Increase Revenue by Reducing Ads (Jul 13, 2017)
The Wall Street Journal has a nice bit of reporting here on several websites which are reducing the number and toning down the nature of ads, and seeing positive results in terms of ad revenue as a result. Reading the article, it’s hard to avoid asking “You mean you dramatically improved the user experience and more people spent more time on your site?” The changes being described here seem so obvious that it’s easy to forget that the received wisdom in online advertising (as in TV advertising, arguably) has been that the best way to generate more ad revenue is to show more ads and make them harder to ignore, at the expense of the user experience. The backlash against advertising online (manifested in both use of ad blockers and refusing to visit sites with obnoxious ads) and on TV (manifested through ad-skipping DVRs and the rise of ad-free properties like Netflix, Hulu, and HBO) is now finally forcing a reckoning among those that have swallowed that line of thinking. And the results should surprise no-one: prioritizing anything over the user experience is always going to worsen the experience and therefore usage, while prioritizing the user experience will improve it and usage, and in the process may well improve revenues too. This isn’t a panacea for online display ads, many of which will be blocked anyway even if not obnoxious, and whose value compared to native and search ads continues to erode, but it’s better than continuing down the road most online publishers have been on. The solution for TV advertising, on the other hand, isn’t nearly so simple, given the broader declines in viewership.
A study from MediaRadar, reported here by Adweek, suggests that the number of advertisers buying programmatic ads dropped by 12% year on year, while the number spending on native ads rose 74% year on year. The latter is very much in line with a longer-term trend towards native advertising, which looks more like the content in or between which it is embedded, but the former is more newsworthy. The most likely reason appears to be the worries over automatically-placed ads showing up next to undesirable content on YouTube and through Google’s AdSense earlier this year. I said at the time the YouTube boycott began that, although the backlash was publicly aimed at Google’s properties, it was likely to affect programmatic buying generally as brands became more concerned about a lack of control over which content their ads would show up next to, and this is a bit of evidence that confirms that hunch. The two formats discussed here – native and programmatic – needn’t, of course, be mutually exclusive, and as an example Google’s recently introduced mobile ad formats could potentially be bought programmatically while being designed to appear as native ads on various sites. But programmatic buying itself, while Google has explicitly called out as one of a small number of major factors driving its ad performance in recent quarters, looks to be heading for a bit of a setback as at least some brands re-evaluate whether to use it.
BuzzAngle, a company which tracks the North American music industry, has released a first-half 2017 report, with lots of numbers on music consumption patterns in the US over the past six months, and Variety here has a summary of some of the key findings. One of the most striking numbers to me is that subscription streams accounted for nearly 80% of total streaming audio plays in the first half, with ad-based streaming only driving 21% of listens. That was slightly surprising to me, because the number of ad-based streaming music users is much higher than the number of paid subscribers, so I went back and checked some earlier data from BuzzAngle in this year-end 2016 report. It appears that this balance began to shift dramatically starting in the middle of 2015, which is not coincidentally when Apple Music launched. Importantly, BuzzAngle treats streaming video plays of music (e.g. music videos on YouTube) as a separate category, so the split mentioned above only accounts for pure audio streaming such as Spotify’s free and paid tiers and their equivalents. But it’s still striking that the balance has gone from roughly 50/50 between subscription and free audio streaming at the beginning of 2015 to 80/20 in Q2 of this year. And in Q2, subscription audio streaming actually eclipsed combined ad-based audio and video streams for the first time, so it’s now the largest category even when video plays are included. It’s worth remembering that this is US data, and the US has shifted dramatically from being a streaming laggard to being a leader over the last few years, so this certainly isn’t reflective of global behavior. But it is worth noting that subscription music streaming not only provides the vast majority of revenue and profits in the US, but now also a majority of actual plays as well.
This article dropped on Friday evening as I was logging off for the week, so I’m only getting to it now. But this article was something of a bombshell, detailing not just the scale of harassment, assault, and other misbehavior by men against women in venture capital, but also naming specific names including some who hadn’t been accused previously. There really seems to have been a tipping point in the last few weeks on this topic, where far more women are now willing to speak out about their bad experiences and name their abusers and harassers. That, in turn, has suddenly exposed many man within venture capital and their past bad actions. This was a much needed change, and although the venture capital world and companies like Uber remain single small pockets in which the real state of things is finally being revealed, I can easily see this movement spreading and penetrating much of the rest of the tech industry. Justice Brandeis’ famous quote about sunlight (publicity) being the best disinfectant seems apt here: the more of these cases come to light, the more some of the perpetrators (like Justin Caldbeck and Dave McClure) will be moved out of roles or dumped by their employers altogether. None of this represents an overnight change, but it does feel like things are finally moving in the right direction, and those who have been protected out of a combination of fear on the part of would-be accusers and collusion on the part of colleagues are finally being exposed to some real consequences. There’s clearly a long way still to go, but breaking the wall of silence feels like a big step forward. Increasing diversity still feels like one of the most obvious ways to prevent this issue in future – at many companies, the overwhelming gender dominance of men is clearly a big part of the cultural problem, even though women seem to have protected some of those accused as well, either covering up bad behavior or dealing with it too quietly (as in the case of 500 Startups). Update: on Monday, per Axios, Dave McClure was asked to resign completely from 500 Startups, and did so, a step which should arguably have taken rather sooner.
IDC Forecasts Strong Growth for AR and VR Headsets, with VR and Commercial AR Biggest (Jun 19, 2017)
This is a great counterpart to the FuboTV piece I posted earlier, because it illustrates the state of the current over-the-top streaming TV landscape. The survey quoted here from IBB Consulting suggests that nearly half of US broadband customers have at least one streaming TV service, with over half of those in turn subscribing to several. Moreover, nearly two thirds of those subscribing to these over-the-top services also still subscribe to traditional TV. That paints a picture in which subscription VOD (SVOD) services are both complements and substitutes to traditional pay TV, and even then largely fail to meet all of consumers’ needs for video. This is still a very fragmented marketplace, in which even the best providers are only partially meeting people’s needs. That creates both a near-term opportunity for someone to do better at meeting those needs, but also a long-term threat of consolidation as consumers balk at having to pay for and manage multiple subscriptions and long for someone to bring it all together. Given all the assets and relationships held by the major legacy pay TV companies, they’ve certainly in a strong position to aggregate some of this fragmentation on the part of consumers, while platform companies like Apple and Amazon are also positioning themselves in different ways as subscription aggregators, presenting another possible way forward. Regardless, as today’s FuboTV fundraising news suggests, there’s lots of activity still to come here.
Weekly Narrative Video – Maturing Smartphone Market (Jun 3, 2017)
This week’s Narrative Video is on the Maturing Smartphone Market narrative, which has been in the news a couple of different ways this week, with the announcement of Andy Rubin’s Essential Phone, and IDC’s updated smartphone forecasts. The reality is that the smartphone market is maturing in a couple of important ways: both in terms of mature market penetration, which is reaching the top part of the S-curve, and in terms of technology, which is now at the point that smartphones are very good and innovation is becoming more incremental than dramatic. The video talks through these and other trends, and subscribers can see it on the narrative page.
IDC Adjusts Forecast PC and Tablet Growth Downward (May 26, 2017)
IDC has adjusted its combined PC and tablet forecast downwards by several percent, with the overall picture one of shrinkage through next year followed by modest growth from 2019 to 2021. Within that broad category, desktops and standalone tablets are forecast to decline strongly, while laptops will grow slightly and “detachable” tablets (those made to be used with keyboards) will grow the fastest. IDC says it’s revising its forecast downward because those detachables aren’t growing as fast as it had thought. It’s also worth noting that any growth that exists right now in the market is entirely in the commercial market, while the consumer PC market (even including tablets) continues to shrink). It’s also worth noting that even in 2021, IDC forecasts that those detachable tablets will only be 11% of the total market. We’re continuing to see a diversification of the PC market across these various categories as both vendors and consumers try to figure out which combinations of tablet and laptop form factors and features work best, with much of the action so far at the premium end of the market. Things could get interesting (and move off IDC’s forecast trajectory) if we start to see some meaningful competition in that detachable space from vendors targeting the mid market, but there’s little sign of that happening yet.
Mid-Tier TV Networks Dial Back Spending on Original Content (May 25, 2017)
The CDC runs a twice-yearly study to determine how many households use landlines and how many use mobile phones only. That might seem like a strange thing for a government department responsible for studying disease to look into, but it first began doing so to determine whether its surveys needed to start including mobile respondents, as landline-based surveys were going to become less representative of the overall population over time. Well, those landline households are now less than half the overall population, while mobile-only households are now the majority, which has significant implications for polling and especially political polling, where automated dialing often hits only landline households. But the new numbers (and the trend over the last many years) are also a great illustration of how even technology that was once ubiquitous and considered essential can be displaced by something else, even something that on the face of it seems inferior in several respects (in this case, call quality, expense, the need to charge a battery, and so on, though all these things have improved over time). That’s worth remembering when looking at today’s dominant technologies and companies – there’s no reason to believe they’ll stick around forever either.
Report Shows Unfair Treatment a Major Reason for Tech Departures Among Underrepresented Groups (Apr 28, 2017)
A new report out studies the reasons why people choose to leave jobs in the tech industry, and concludes that unfair behavior or treatment was a factor for many employees, and underrepresented groups reported it was a factor at higher rates than white and male respondents. The findings are disheartening if not surprising given the prevailing narrative about diversity in tech. Women, people of color, and LGBT respondents were all likelier to report unfair treatment and to have left jobs because of it. If the industry is going to keep treating employees from these groups in this way, it’s going to continue to lose them, which is going to make increasing diversity even slower. It’s particularly striking because many employees within the industry don’t seem to think there’s a problem at all. It’s well worth reading the piece linked below for the full details of the survey.
via USA Today
Important update for Tech Narratives RSS feed users (Apr 10, 2017)
An important update for those of you using the Tech Narratives RSS feed:
From launch in January, I’ve said that the site was eventually going to have a paywall which would put much of its content into a subscription service, and as of this week that process has now begun. From today onwards, the RSS feed will only carry the few articles each day which will be freely available, and others will be behind the paywall. The subscription is $10/month and there is a 30-day free trial, so you can try it out before spending any money. You can sign up here, and as part of the subscription you will have access to a private RSS feed which will allow you to keep receiving posts in your feed reader as long as you remain a subscriber. You’ll need to update your RSS reader to reflect that new link if you choose to subscribe.
P&G Chief Brand Officer Renews Calls for Advertising Platforms to Grow Up – New York Times (Apr 10, 2017)
I won’t cover this in depth again here – I covered Marc Pritchard’s remarks in January at the time, and his line hasn’t changed much. But given all that’s happened in the interim it’s worth reiterating that Pritchard remains a prominent voice advocating for change in the digital advertising platforms on behalf of big brands. Specifically, he’s arguing for more transparency in what can be a very opaque value chain from start to finish. None of these issues are going away soon, though it’s arguable that what the brands really want here is more leverage, so I would guess that they’ll keep beating the drum while slowly getting more and more of what they want. The crisis of sorts around ads showing up against undesirable content is likely to blow over soon enough, but the ongoing tension between advertisers and these platforms won’t go away any time soon.
There’s some good analysis here from the FT around a couple of different metrics relating to the performance of larger and smaller companies in the US tech industry. Specifically, the FT suggests larger companies’ shares have performed better, and that they vastly outspend smaller companies on R&D, something that makes it extremely tough for smaller companies to compete on a level playing field. This absolutely rings true: over the last few years, not only scale but also broad scope have become extremely important as competitive differentiators as companies increasingly build not just individual products and services but interconnected ecosystems. Those companies also regularly acquire smaller companies that develop interesting new technology, using M&A as another form of R&D on top of the billions they already spend organically. All of that makes it extremely difficult for smaller companies not only to compete but to grow to any decent size. Snap is one of the few big consumer tech companies to get large enough to reach IPO stage in recent years, and only because it has explicitly rebuffed acquisition offers along the way. Even then, it’s still a tiny fraction of the size of the big players in terms of revenue or user base. Companies that make it this far have always been the exceptions, but that’s only going to become more extreme going forward.
via Financial Times
In tech, the wage gender gap worsens for women over time, and it’s worst for black women – TechCrunch (Apr 5, 2017)
I covered a similar story a while back, but this one has more detail, and focuses more on gender in addition to racial disparities in tech salaries. It turns out that being a member both of an underrepresented gender and race increases your odds of being underpaid significantly, such that black and Latina women earn 79 cents for every dollar equivalently qualified men do. In part, as with that earlier study, this is because women often ask for lower salaries than men, though apparently only after their first few years in a career (in their first four years, they actually tend to ask for more). That, in turn, may reflect both conditioning in terms of what to expect and lower previous salaries. Regardless of the reasons, this is yet another sign of systemic problems in the tech industry when it comes to hiring women and racial minorities and paying them at the same rates as white men.