Why is Everyone Afraid of Amazon?

Compared to some of the other tech giants, Amazon is still a relatively small player in the advertising world. Google’s total ad revenues in their most recent quarterly financial results were ten times larger than Amazon’s ($2.5 billion). While Amazon is included in pretty much every acronym used to group the multinational tech companies; FAANG, GAFA, FATBANG and the like, it is still not afforded the same status as the ‘duopoly’ of Google and Facebook.

But for many, Amazon is the ‘sleeping giant’ of the advertising industry, and represents Silicon Valley’s biggest challenge to the media industry. Ex-WPP CEO Martin Sorrell has said that of all the threats facing ad agencies, Amazon is the one that keeps him up at night. Scott Galloway, who explored the growth of Amazon, Google, Facebook and Apple in his book ‘The Four’, last week said at the Brandemonium conference that Amazon should be feared by the rest of the four.

With each of these companies continuing to grow revenues at an extraordinary rate, it’s easy to forget why some consider Amazon in particular to be the most threatening. Below, we’ve broken down the key areas Amazon is operating in, and why it may be poised to knock the duopoly off their advertising pedestal.

Amazon Advertising

Amazon’s advertising business is far from best-in-class today. As a recent Digiday report claimed, some advertisers are frustrated with what they describe as clunky dashboards and limited functionality.

But the company has been taking steps to simplify its ad offering, bringing its four separate marketing divisions together earlier this year under the ‘Amazon Advertising’ banner.

Amazon runs sponsored ads, which promote an advertisers’ product within search listings, as well as display and video ads. While sponsored ads only appear on Amazon, display and video ads are run across Amazon’s properties (which include the likes of IMDb and Twitch), as well as other sites partnered with Amazon. These ads can only be bought through Amazon’s owned and operated DSP.

Obviously the key appeal here is Amazon’s user data, and its ability to serve ads to users who are primed to buy – in the case of ads served on Amazon.com, the user is actively looking to make a purchase. Amazon’s DSP allows marketers to target audience segments based on buying behaviour – for example, an advertiser can target users currently in market for their product, or who are habitual buyers of their product, and can retarget on third party sites those who’ve previously searched for the product.

“Advertisers know the Amazon audience is huge and primed to buy, and that Amazon’s platform will allow them to target based on real shopping and buying data—not just demographics and interests,” said an eMarketer report released earlier this year.

These benefits seem to be overriding concerns about clunky interfaces. A report released by Advertising Perceptions last week claimed that Amazon’s DSP is now the most-used by advertisers (in terms of the percentage of marketers using it), jumping ahead of Google Marketing Platform (formerly Doubleclick Bid Manager or DBM).

And ad revenue is soaring as Amazon ramps up the ad business. The company’s ad revenues sat at around $600 million in 2013, while at their current pace Amazon are pulling in $10 billion per year and rising.

Eroding the Agency Model

Amazon’s increased focus on advertising at a glance looks like good news for agencies, offering them an attractive new avenue to funnel their clients’ ad spend into.

But many fear that increased advertising on Amazon could reduce the need for agencies. as marketers look to cut out the middleman and plan their campaigns directly with Amazon. Reports surfaced earlier this year that Amazon has begun working with brands including Lego and HP directly.

“Amazon are creating products, similar to Facebook and Google, which are exceptionally easy to operate plus they already have direct to brand conversations as they have major brands selling through the platform,” said Wayne Blodwell, CEO of the Programmatic Advisory.

Blodwell says it’s unlikely that Amazon will cut out agencies completely. “If you bring those two together it’s clear that agencies could easily be disintermediated, but much like Facebook and Google I think advertisers need specialisms to help navigate wider marketing options and to best understand where to deploy budget, as well as the operational excellence in operating the platforms themselves. It’s like anyone can learn to drive, but very few become Lewis Hamilton.”

We have also seen specialist Amazon agencies emerge designed to provide an end-to-end for all of Amazon’s ad products. But while not all brands will work with Amazon directly, any loss of business during what is already a precarious time for agencies is bad news.

Voice Search

One of the notable themes at this year’s CES was the battle between Google and Amazon connected home devices, an important component of which is these devices’ voice search capabilities.

Opinion is split on if and when voice search will overtake typing – CSS Insight analyst Ben Wood believes voice will be the primary search input by 2021, though this prediction is seen as wildly optimistic by some.

If voice search does take off though, Amazon could be well placed to soften Google’s iron grip over search ad revenues. Amazon’s smart speakers currently make up 75 percent of the UK market, compared to 16 percent for Google. Google’s shareholders have begun to question how Google will fare as voice search grows.

Amazon is continuing to invest at a frightening pace too. Scott Galloway claims that “Amazon has more job openings in their voice group than Google has in the entire company right now.”

Voice search at the moment remains much harder to monetise than typed search, since audio ads are more intrusive than ads on a screen. This means fewer can be delivered in any given search without destroying the user experience.

But this is a much bigger problem for Google than it is for Amazon. Google has much more search ad revenue to lose, and Amazon leads users straight from voice searches into purchases via its ecommerce platform.

If Amazon establishes a firm lead in voice search, this data would act as an invaluable enhancement to Amazon’s DSP. Amazon’s shopping data already makes its DSP very attractive to advertisers – adding a bank of wider search data to rival Google’s would make it even more formidable.

Premium Video and UGC

At the moment Amazon’s primary video platform, Amazon Prime Video, is built to hook customers into Prime membership and onto the ecommerce platform, rather than generate money itself.

While this means it isn’t currently competing for TV ad dollars, it is competing for eyeballs, and has the sheer spending power necessary to fund a huge library of premium content.

One of the clearest examples of this is Amazon’s move into sports broadcasting. Live sports has been viewed as something of a crutch for linear television, and if Amazon snatches away expensive broadcasting rights it would be very bad news for the likes of Sky and BT.

When it comes to spending power, there’s no competition – Amazon’s market cap currently sits at $803 billion, while BT’s is $32 billion. In the most recent auction for Premier League broadcasting rights Amazon dipped its toes in the water for the first time, seen by many as a precursor to a bid for a much larger package later down the line.

The growth of subscription video services like Amazon Prime Video is already squeezing revenues for traditional broadcasters, with Ofcom finding earlier this year that subscriptions to Netflix, Amazon and NOW TV in the UK have overtaken subscriptions to pay TV services.

This pressure could ramp up further if Amazon makes a long anticipated move into ad-funded premium video. The Information reported earlier this year that the company is working on an ad-supported video service for Fire TV device owners, which would have a reach of around 48 million.

While Amazon is using Prime to target the premium video market, its simultaneously hoping its live-streaming platform Twitch can knock YouTube off its perch in the user-generated content market.

read more here: videoadnews.com

Pay-TV execs expect increased competition

The global findings of the 2018 Pay-TV Innovation Forum, produced by content protection and multiscreen television solutions provider NAGRA in partnership with international research and strategy consultancy MTM, highlight that 84 per cent of pay-TV executives expect competition for paid-for video services to increase dramatically over the next five years.

The programme seeks to identify how innovation is driving opportunities for content owners and service providers around the world as they face a disrupted market. The findings are based on extensive regional research conducted in Europe, North America, with a special focus on the United States, Asia-Pacific and Latin America.

While participants are optimistic they can continue to appeal to paying consumers, an increasing number – 90 per cent of executives – believe that pay-TV providers will have to innovate strongly to remain competitive and relevant, up from 85 per cent in 2017.

The research highlights how the pay-TV industry is converging towards a platform-agnostic model, and as a result is transitioning into a paid-for-video market, spanning a variety of offerings including standalone OTT and direct-to-consumer services. This shift is another reason why 77 per cent of pay-TV executives consider innovation to be one of the top three strategic priorities for the industry.

Content piracy remains a concern, with executives agreeing that the industry is experiencing a significant threat to the long-term sustainability of pay-TV and OTT businesses. Forty-seven per cent of 2018 respondents believe that piracy will lead to greater pressures on the industry over the next five years, in line with 2017 findings.

While challenges remain, this year’s research brings into focus the six key innovation areas in the industry:

– Continued investment in next-generation pay-TV services: Most pay-TV providers (65 per cent) have improved their portfolios in the last 12 months, primarily focusing on the core pay-TV proposition as they deploy next-generation set-top boxes that support advanced functionalities such as third-party apps, personalised content recommendations, and 4K.

– More diverse multiscreen pay-TV propositions: 77 per cent of executives surveyed believe that pay-TV bundles will evolve substantially over the next five years, catering to the needs of different customer groups, and 89 per cent agree that delivering a seamless and personal consumer experience will be key.

– The next wave of aggregation – super aggregators: This model, where companies offer a range of content and services via a single subscription, is seen as a way of simplifying a fragmented marketplace for consumers, while also offering additional growth opportunities for well-established operators.

– Converging pay-TV / OTT offerings: Most traditional pay-TV providers are now looking to offer converged pay-TV/OTT services. As a result, the pay-TV market is transitioning into a paid-for-video market.
– Moving beyond the set-top box: Many industry executives believe that network infrastructure and billing relationships – rather than proprietary set-top boxes – are now the gateway to the customer.

– Growing focus on diversification, particularly connectivity: Fixed and mobile broadband services are expected to grow in importance in future as providers pursue bundling strategies to deliver better value and improve stickiness.

“Change is the one constant in the global pay-TV industry, driven by numerous pressures from competitors, pirates and subscribers, making it challenging for service providers and content owners to maintain revenue growth,” said Simon Trudelle, Senior Director, Product Marketing, NAGRA. “It has never been more important to understand new consumer expectations, anticipate future needs and innovate, and this report reflects the way pay-TV service providers around the world are taking the necessary steps to strengthen and grow their product and service portfolios.”

read more here: advanced-television.com

Disney Reveals Fresh Details of Netflix Killer

Disney’s chairman and CEO Bob Iger has revealed fresh details around the media giant’s upcoming streaming service, touted to be a competitor to the likes of Netflix and Amazon Prime. Iger, speaking on a conference call after Disney’s Q3 financial results, spoke of the “tremendous potential” he sees in Disney’s direct-to-consumer services, particularly following the company’s acquisition of 21st Century Fox.

Disney’s earnings themselves were slightly disappointing, with quarterly revenue of $15.2 billion falling short of analysts’ $15.4 billion expectations. Investors on the subsequent earnings call however were much more interested to hear further information about the company’s in-development streaming service, which Iger said is “on track for a late 2019 launch”, and described as the company’s “biggest priority of the 2019 calendar year”.

Iger said he believes the addition of Fox’s portfolio of content will help make Disney’s streaming service “even more compelling for consumers”. The company already had quite a formidable content catalogue before the acquisition, bolstered by the takeover of studios including Pixar, Marvel and Lucasfilm. The Fox purchase will bring brands such as Searchlight, FX, National Geographic and 20th Century Fox Film under Disney’s roof, adding more variety to content that could be available in Disney’s streaming service.

Iger emphasised that integration of Fox properties into Disney’s direct-to-consumer strategy won’t come at the expense of the movie theatre experience. “We’re obviously very excited to leverage the Fox assets to enhance and accelerate our DTC strategy, but I want to be clear that we remain incredibly supportive and enthusiastic about the movie theatre experience,” he said.

In the Q&A section of the call, investors and analysts were hungry for more specific detail about what Disney’s strategy for its streaming service will be, with Iger giving fresh insight into the company’s plans for the service..

When asked about Disney’s decision to split content over multiple streaming platforms, Iger said the company prefers to offer narrower packages of content at a cheaper price, as opposed to a more Netflix-like model which offers a very wide library of films and TV shows. Disney’s acquisition of Fox will grant it a 60 percent stake in Hulu, and the launch of ‘Disneyflix’ alongside the existing ESPN app will mean content is spread across three different services, but Iger believes this reflects consumers’ desire to pick and choose which content they have access to.

“Rather than one, let’s call it, gigantic aggregated play, we’re going to bring to the market what we’ve already brought to market, sports play,” said Iger. “I’ll call it Disney Play, which is more family-oriented. And then, of course, there’s Hulu. And they will basically be designed to attract different tastes and different segment or audience demographics.”

Iger also shed light on how the company plans to handle issues around existing licensing deals for some of its content. As Sanford Bernstein analyst Todd Juenger pointed out, popular film franchises like Star Wars and the Marvel Cinematic Universe are already tied into distribution deals with other streaming services.

Iger confirmed that some content produced by Disney-owned studios won’t be available on Disney’s streaming service, at least initially, with Star Wars: The Force Awakens for example being unavailable due to an existing distribution deal. He said however that in some of these deals, there will be opportunities down the road to put those films on Disney’s service, and that any content produced from 2019 and beyond will be unencumbered by any such deals. “What we have been doing is making sure that since the time that we made the decision to bring the service out, we’ve not done anything that further encumbers any of our product,” he said.

read more here: videoadnews.com

Three Strategies to fight Netflix

In just a few years’ time, the way we consume entertainment has changed drastically. Netflix and other video streaming services have taken the industry by storm, encouraging consumers to cut the cord and enjoy their content on demand. In fact, last year Netflix users collectively watched 1 billion hours of content each week, and more than 22 million U.S. adults were expected to drop cable services, up 33% from the previous year — a major blow to cable companies.

With streaming on the rise, how can cable outlets keep their current customer base coming back?

Stay Transparent

Open communication is key to maintaining a healthy customer relationship. When it comes to set-up fees, service upgrades or any extra charges, cable providers should be up front about a customer’s tab.

Unexplained price increases are a common cable customer gripe, and with monthly charges up an average of 53% in just a decade, according to S&P Global Intelligence figures cited by the Associated Press, customers are turning to alternate options. Nobody likes seeing an unexpected uptick in their monthly bill — be prepared to explain why things may be changing, and it’ll go a long way toward maintaining customers’ trust.

Tap New Revenue Streams

Who doesn’t like a healthy bottom line? By offering a valuable benefit like customized consumer electronics warranty products for TVs, gaming systems, laptops and more, cable companies can give current customers another reason to stay on board. Include this protection in a customer’s overall package, and you become much more than just a cable provider — you’re a one-stop shop for devices, service and coverage. Plus, you’ll be adding another line of revenue.

Don’t Be a Robot

While consistency in messaging is important when communicating with your customers, train your service reps to avoid being robotic in delivery. Sure, everyone has a script to read, but a simple gesture like asking the customer how their day is going can make a tremendous difference in the tone of a service call.

That interaction can have effects beyond one call as well. Angry customers aren’t hesitant to post bad reviews or recorded conversations online, potentially affecting your reputation. Take Comcast for example, where $300 million was pledged toward an updated customer service strategy. After multiple complaints, the cable giant promised customers incentives like $20 if a representative is late to an appointment, and a redesigned monthly bill to better answer customer questions.

read more here: www.multichannel.com

Will Snapchat’s Data Play Fend Off Competition?

Wall Street investors seem undecided about whether Snapchat is indeed the wave of the future or just a flash in the pan.

But one month after its IPO, the messaging app’s execs are doggedly focused on broadening Snapchat’s appeal to brands—notably direct response-minded companies.

“Snapchat has a perfect opportunity to become a direct response powerhouse, especially for location-based marketing to millennials,” said David Deal, digital marketing consultant. “Though Snapchat needs to mine data about millennials more effectively to beat Facebook and Instagram.”

To that end, effective April 3, millennial marketers will be able to zero in on Snapchat users who are most likely to download their brand’s app, targeting slivers or swaths of the platform’s 160 million users who have shown interest in either the brand or the functionality it’s offering. These app-install ads allow the marketer to set cost-per-download goals in a measure that’s designed to get app marketers of all budgets into Snapchat’s business client pool.

Snapchat, part of Snap Inc., has ramped up its machine-learning and audience-segmenting capabilities for app installs since its beta product went live in October—to date, it had offered only rudimentary targeting tools to a select number of brands. The new system charges ad buyers on a cost-per-thousand-impressions scale that’s based on auction-style, competitive bidding. “[It’s a] cost-efficient way to drive app installs right from Snapchat,” explained Peter Sellis, Snap’s director of monetization product.

Also today, brands can serve follow-up ads (re-marketing, in industry parlance) to those who have interacted with Snapchat’s sponsored lenses, geofilters or videos. Such behavioral data can be employed to reel in everything from a fitness app download, to a test-drive appointment for an automaker to a shoe purchase via ecommerce. The company believes advertisers will want to take aim at consumers in what direct response practitioners call the “consideration stage.”

“We’ve been listening closely to direct response advertisers,” Sellis revealed.

He’s listening for good reason: eMarketer’s latest figures for 2016 had the U.S. app-install advertising space valued at $5.7 billion. Facebook has reportedly, at times, seen up to 20 percent of its ad revenue, which totaled nearly $26.9 billion last year, from app installs. Google is increasingly a huge app-install contender, and Pinterest just last week rolled out its own app-install ads system. So, Snapchat’s competition is fierce.

“Right now, Snapchat doesn’t move users outside its own environment, so we would expect a longer time for user behavior to adapt,” remarked Emmy Spahr, media director at SapientRazorfish. “Pinterest, on the other hand, actively works across other websites and shopping experiences, so users are already engaging with the platform and websites—adding app downloads here would be seen as a value add.”

read more here:

http://www.adweek.com/digital/will-snapchats-data-play-help-fend-off-competition-from-facebook-and-instagram/