Month: December 2017

Germany’s top antitrust enforcer opened a new front against big tech firms when it said the way Facebook harvests user data constitutes an abuse of dominance.
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Plus, Facebook is expanding facial recognition across its products, Stitch Fix releases its first earnings report since going public, and the best seats on Broadway.

Republicans in the House and Senate approved a sweeping $1.5 trillion tax plan. Trump is expected to sign it within days. Andrew Ross Sorkin: “The tax bill soaks some … rich Americans — but it does not soak the richest.” [The New York Times]

Facebook knows when someone uploads your picture to Facebook — now it will alert you about the photo, even if you aren’t tagged in it.The company is improving privacy settings and expanding its use of facial-recognition technology “to prevent people from impersonating other people” on the service. Users will now be asked to grant Facebook permission to use facial recognition broadly across its products. [Kurt Wagner / Recode]

Stitch Fix released its first-ever earnings report, and its shares fell by 12 percent. The online personal styling service is spending more on advertising and attracting new customers that want more less-expensive clothing, so CEO Katrina Lake said the company will increase lower-price-point sales this year. [Jason Del Rey / Recode]

Bitcoin prices are moving around a lot. Because bitcoin. Something called Bitcoin Cash is way up. Plain old bitcoin fell dramatically and is climbing back up again.

Ziff Davis executives addressed their new employees at Mashable, who promptly leaked the comments to the press. Reasonable advice from Ziff Davis COO Steve Horowitz to the company, which he bought at a fire sale price: “You guys are a Coke brand. Never forget that. Let’s make sure that we’re doing everything we can to stay at that level and not get down into Tab village.” [David Uberti / Splinter]

Top stories from Recode

Bitcoin and other cryptocurrencies are just getting started, says Spark Capital’s Megan Quinn. An investor in the crypto trading platform Coinbase, Quinn says “the toothpaste is out of the tube,” on the latest episode of Recode Decode.

This is cool

The best seats on Broadway.

The Procter & Gamble toilet paper brand Charmin has opened a pop-up space near Times Square in New York City to offer 14 clean and free public bathrooms through Christmas Eve. Of course, this is a marketing stunt called an “out-of-home (OOH) activation,” a way to create a more personal touch with audiences as digital channels are dominating marketing strategies.

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2017 is the third-busiest year for companies reaching $1 billion valuation.

The unicorn club gets new members by the week. This year alone, 57 startups around the world attained unicorn status with a valuation of $1 billion or more, according to data from venture capital tracker PitchBook.

Seven companies that were once considered unicorns have seen their valuation dip below $1 billion so far this year, either through down rounds or down exits. Last year there were only three down rounds or exits. The Honest Company and Prosper both saw their valuation shrink below $1 billion in subsequent funding rounds, according to PitchBook. Down exits this year included Souq.com, which was acquired by Amazon for $650 million, and Shazam, which Apple purchased for $400 million.

Overall 2017 wasn’t the biggest year for unicorns — that award goes to 2015, which boasted 81 new unicorns — but it certainly has been busy.

Social platform Reddit, bitcoin marketplace Coinbase and ride-hail company Careem are among the notable entrants this year. Synthetic biology company Ginkgo Bioworks is the latest inductee into the group, thanks to a $275 million funding round last week.

Altogether there are now a total of 227 active unicorns, according to PitchBook.

Here’s a look at the companies that have attained unicorn status this year, by their valuation and how much venture capital they’ve raised. Revenue data is available from the few private companies that made that information public. Click on a company to see its industry category.

A few notable stats from this year’s unicorns:

• Content recommendation platform Toutiao had the highest valuation, VC raised and revenue of all the unicorns this year.
• Four startups — Outcome Health, SenseTime, VIPKid and Mobike — had at least one female founder.
• About half of this year’s startups focus primarily on information technology and software.

The PitchBook data included goes through Dec. 14.

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AdExchanger |

The May deadline to comply with Europe’s General Data Protection Regulation (GDPR) is swiftly approaching, and ad tech and security startups are forming a new industry: privacy tech. Companies like PageFair, Evidon, Prifender, Tealium and Segment hope to capitalize with GDPR compliance solutions for brands, publishers and even other ad tech vendors. The International Association… Continue reading »

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As the e-commerce world readies itself for the last push of 2017, in-house teams and agency partners alike will be finishing up their final rounds of Cyber Weekend number crunching.

With figures now emerging, everything points towards 2017 being another bumper year. Black Friday sales up. Cyber Monday sales up. People are both buying and spending more, and, perhaps most encouragingly for our sector, an increasing proportion are doing so online.

While it’s clear that the four-day period is now a critical part of any online retailers’ success, it has equally grown to become a key indicator of how a business will perform over the Christmas period. Consequently, marketers now operate under the dual stress of trying to ensure their brand is ahead of the Cyber Weekend curve, with the additional weight of knowing that results will also forecast their festive bottom line, and they can’t afford to get it wrong.

Preparing for 2018

Challenging questions will already be starting to form in preparation for 2018. With more retailers than ever participating in some element of promotional activity, how do you address the competition and maximize revenue from your budgets without overspending? And what insights can be gleaned from 2017 to ensure you can almost guarantee the same level of performance in the years beyond, without cutting deeper into your margins?

We can’t give you all the answers; every business is different, as are the initiatives that will work best. But what we can offer is fresh a perspective on how to tackle these problems by showing you three ways in which we addressed them with our clients.

Study your audience closely

Any strong marketing strategy relies on a solid understanding of the audience your product or service attracts, as well as the levers that drive them.

While Cyber Weekend will attract your core audience, you also need to pay attention to how the gifting season influences the make-up of your customer base.

Last year, we noticed a shift in the demographics of converting users for one of our sports retail clients. The audience became more female in its breakdown (Fig. 1.1), and also swung towards older generations (Fig. 1.2) – not the characteristics typically expected when it comes to sports merchandise.

Looking at additional data, we also noticed a greater proportion of sales coming from people in a relationship or two person households (Figs. 1.3 & 1.4).

By putting all these pieces together, it became clear that women buying gifts for their partners was a significant customer segment to focus on. From these learnings, we created a campaign with tailored messaging and bidding strategies for the 2017 Cyber Weekend and Christmas period.

The next step is to look at how much a conversion costs you from each consumer group. While the bulk of your revenue may be coming from a certain demographic (perceived to be your core audience), this may be because most of your advertising is directed at this audience.  

For example, when we look at the consumer age range for a fashion retail client of ours, the majority of their revenue came from 18-34 year olds. As a result, its brand and messaging was geared towards these age groups, as were its rather expensively assembled paid search campaigns.  

When we took over their accounts, however, we learnt that over the course of the year the most cost-effective age groups to target were the ‘middle-aged’ brackets (Fig. 2.1). Bid multipliers were applied across our activity, which greatly improved results.

Nevertheless, once we entered Cyber Weekend, an interesting shift occurred. First we witnessed a significant improvement in revenue-per-click performance from 18-24 year olds, along with an uplift for 65+ users (Fig. 2.2).

Fig. 2.3 highlights the scale of this change. Rather than sticking with the same bid multipliers, we needed to respond quickly to reflect the behavioural changes. As a result, the negative bid multipliers placed on 18-24 year olds were reduced, and the positive multipliers were increased even higher for the 65+ audience. 

Understanding your audience is key, and when it comes to promotional periods, always keep a close eye on two things: how the breakdown of your audience changes, and how this impacts the way in which you should spend your money.

Pick the moments to push

It’s Thursday evening. Campaigns have been prepared, budgets have been allocated and digital marketing managers across the land can rest easy until it’s time for those Tuesday morning reports.

Unfortunately, we all know it doesn’t quite work like that. It instead involves keeping a close eye on how much money those preciously apportioned pounds/dollars are earning you.

Even during this most promotional of promotional periods, there are still moments to pull back on advertising. Spending as much as you can (as evenly as you can) over the entire four days is a one-way street to overspending, under-delivering and sleepless nights.

So rather than sitting there fretting, why not monitor your purchasing trends to see when the best times would be to maximize spending?

A trend that we’ve really seen come to the surface in 2017 is what we have called the ‘pyjama panic buy’. As you can see in Fig. 3.1, at 11pm each night, we witnessed a spike in return on advertising spend from our campaigns. Unaware of when offers end, consumers have a tendency to purchase late at night (around 11pm) in the fear that the discount will have vanished by the time they wake up.

With retailers extending promotions across the weekend and beyond, the process repeats itself each evening. What’s more, by this point in the day a portion of your competition will have undoubtedly reached their daily spend caps too.  

Save your pennies in the morning, and push them later when it really matters.

Being the best at the bottom

With Cyber Weekend becoming an ever more permanent part of our collective consciousness, the number of people directly seeking out offers (rather than waiting for them to magically appear) continues to grow.

 Analysing Google Trend data from 2017 in comparison to 2016, Fig. 4.1 demonstrates the year-on-year growth of Black Friday related search terms. Not only did we see a general uplift over the four day weekend itself, but we also saw growth in interest in the weeks leading up to 24 November. 

What this tells us is that consumers are more proactively researching which brands will be offering discounts, and what those discounts look like – all before Cyber Weekend kicks off. We can therefore make the solid assumption that more and more people are entering the period with a pre-conceived idea of what they’re in market for.

Pull channels as a result become even more of a race to the bottom. While branding during the research phases is clearly an important exercise, advertisers should be questioning more than ever how they can get in front of the user at that final point of purchase.

One way in which we managed this was by capitalising on the uplift in volumes around Black Friday based terms. Our proprietary Google Shopping technology gives us the ability to target keywords of interest through our performance-based model. In doing so, we ensured our client dominated the space at this crucial stage. This could come in the form of specific products they stocked, or even brands that they resold (Fig. 4.2).

Every single day our platform dynamically pulled out the key terms based on recent data, and adapted campaign structures to prioritise the products that drove best performance. 

When assessing the development of Cyber Weekend as a force within the online world, it’s clear that its claws are firmly planted within our promotional calendars.

What comes with this mass awareness is mass competition, with businesses of every shape and size entering the market in an attempt to take advantage of the buying frenzy.

For digital marketers, the path to success is becoming ever more complex. Which channels do I use? What offers do I push? Which products will become best sellers? How do I keep an eye on margins?

The answer is to narrow your focus; ignore the dizzying lights of all that volume, and focus on the detail. From there, your efforts can grow.

Get your hands dirty. Get creative. Get granular. 

Alex Haynes is senior partnerships manager at international digital agency NMPi.

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Harford and Uber CEO Dara Khosrowshahi worked closely together at Expedia.

Uber is filling another key role in its executive ranks just as the year turns. The ride-hail company has hired former Orbitz CEO Barney Harford to be its first-ever chief operating officer.

Harford, who has been learning the ropes at Uber as an adviser since October, worked closely with Uber CEO Dara Khosrowshahi at Expedia. Before becoming CEO of Orbitz — which Expedia later acquired — Harford led Expedia’s push into Asia while Khosrowshahi was CEO. He begin his official work as COO on Jan. 2.

His appointment comes as Uber embarks on an important year. Coming off a year wracked with public scandal, Khosrowshahi is under a great deal of pressure to turn the company around in 2018. Adding to that, the long-time travel executive has his sights set on taking the company public in 2019.

Harford joins a growing C-suite. In October, Khosrowshahi appointed former Pepsi executive Tony West to be Uber’s chief legal officer. The next priority for the company is to fill the CFO role.

“I have never met a stronger operator or a more thoughtful strategist than Barney,” Khosrowshahi wrote. “He is able to go deep on key aspects of a business while never losing sight of the big strategic picture. He loves engaging with operations, marketing, product, and engineering teams around hard problems, and is passionate about using technology to transform the world.”

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This ain’t your grandpa’s Walmart.

When Walmart paid $3 billion for Jet.com and its founder Marc Lore, the promise was that the entrepreneur would help the retailer appeal to new types of customers.

Here’s the next step in that evolution.

A new Walmart subsidiary, called Code Eight, has recently started testing a personal shopping service for “busy NYC moms,” according to multiple sources, with the goal of letting them get product recommendations and make purchases simply through text messaging.

The target customer of Code Eight is described in an online job listing as a “high net worth urban consumer” — translation: A rich city dweller — certainly not the historical sweet spot for Walmart’s main business.

Household items are delivered for free within 24 hours; other purchases are delivered within two business days. Returns are picked up for free at a customer’s apartment building or house.

Walmart’s startup incubator, Store No. 8, is also working on another under-the-radar project, dubbed Project Kepler. This effort aims to reimagine the in-store shopping experience with the help of technologies like computer vision.

Multiple people familiar with the project tell Recode that one goal of the initiative is the creation of physical stores that would operate without checkout lines or cashiers — in a similar fashion to Amazon’s futuristic Amazon Go store, which was announced a year ago but has yet to open to the public.

A Walmart spokesperson declined to comment.

Taken together, these Walmart initiatives mark a major leap in the vision for the type of businesses Walmart will operate, and customers it will serve, five or 10 years down the line. But since both business strategies are in early stages, there is no guarantee that either will develop into a long-term business or launch widely.

Walmart had previously announced that Rent the Runway co-founder Jennifer Fleiss is heading up Code Eight, but has revealed little to no details about the startup.

Recode has learned that Code Eight plans to eventually charge a membership fee, but current testers are using it for free. The personal-shopping service is currently focused on items in “health & beauty, household essentials and apparel/accessories” categories, according to a job listing. It’s not clear if the startup is sourcing this inventory from Walmart and its subsidiaries, or from outside retailers.

Code Eight has told early users that they can order products simply by texting a photo of it. They can also message with a general request for a type of product they need, and leave it up to the service to pick the specific item for them; customers fill out a survey upon joining that is supposed to help personalize their experience.

One source says that the Code Eight product has the appearance of an automated bot, but seems like a human is actually the one communicating on the other end of the message. That may change over time.

“[W]e set our sights on taking the lead in conversational commerce by leveraging machine learning, NLP, and personalization algorithms,” a Code Eight job listing reads. NLP refers to natural language processing — essentially, how a computer turns a human’s spoken or written request into instructions it can process.

The Project Kepler project focused on the future of in-store shopping is being led by Mike Hanrahan, the co-founder and former chief technology officer for Jet.com, multiple sources tell Recode. It is located in Hoboken, N.J., where Jet is based.

A Project Kepler job listing for a “computer vision engineer” says that the role will involve creating a “best-in-class consumer experience in the physical retail space.”

Amazon’s Go concept uses a combination of sensors and cameras to track what each store shopper takes off of shelves so it can automatically bill them for their purchase without their having to stop to pay on the way out. The store’s launch has been severely delayed, however, with reports that the technology did not work well when the store was crowded.

Walmart is envisioning a similar system that would potentially eliminate the need for cashiers in stores outfitted with the technology. Walmart has more than two million employees worldwide, many of whom work at checkout.

But it’s possible that the Project Kepler technology would be used in new types of store formats, rather than be retrofitted for existing stores. This project is just one of several across Walmart focused on what the retail store of the future should look like, according to a source.

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AdExchanger |

“Data-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media. Today’s column is written by Trey Stephens, director of audience monetization at Acxiom. As 2017 comes to a close, it’s a great time for brands to assess ways to improve marketing strategy and better capitalize… Continue reading »

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Consultancies aren’t just parking their yachts off the French Riviera at Cannes. They’re setting their sights on major marketing budgets, and 2018 will be the year they start their conquest to remake the industry.

The CMO budget is the last line item on the balance sheet that companies like Accenture, IBM, and Deloitte haven’t touched. In the agency world, many are shrugging off consultancies’ maneuvering as irrelevant to their business and clients. While market inertia may slow down consultancies in the near term, they are playing a much different game than agencies — and the largest agencies should be particularly worried. Consultancies are integrating the entire digital marketing environment, of which paid media is just one facet, to tell a broader story about ROI — and they have the data to prove it. They aren’t simply selling ads, they’re helping the brand sell products and services with holistic solutions that cover the entire value chain.

Traditionally, Accenture, IBM and other consultancies have been system integrators and technical infrastructure companies. They implement large scale IT solutions and operate data centers for corporations — about as far from advertising creativity as a company can get. But as their core services expanded — and there was a clear need from the market — they bridged into marketing-related activities, such as building interactive and e-commerce websites. Now, they’re consolidating their role in marketing and design, with the CMO budget being the last untapped pot of money. This shift is predominantly driven at the CEO or CFO level, while ad agencies typically connect with CMOs at brands.

These companies have adopted a standard playbook as they remake advertising in their own image: acquire new capabilities, or enter client accounts through audits. Accenture recently purchased the French digital commerce agency Altima, the company’s 17th acquisition since 2013 as it expands its move into marketing and advertising. Altima joined Accenture’s roster of previous acquisitions, including US-based marketing and design agencies Wire Stone and Matter. They’re also acquiring people: Accenture recently hired OMD‘s EMEA president Nikki Mendonça to be the global president of intelligent marketing operations. Rigorous audits will also win consultancies the CMO budget: they’ll look for a pain point within a brand’s marketing strategy, provide a deep analysis of why that’s a problem, and offer a technical solution that integrates a number of third party solutions. The consultancies’ deep experience in building complex solutions out of many building blocks provided by independent vendors is the key enabler for these complex, transformational projects.

Market forces are pushing businesses to become more digitally-integrated. Brands must go all in to digitize themselves if they want to survive this tidal shift — they’ll be called on to better connect with consumers online, tell a broader story about the digital buying journey, and measure the impact of their marketing efforts. For example, lightweight direct-to-consumer CPG brands are upending the beauty industry with influencer-led marketing and slashed prices due to a lack of overhead. As major advertisers go digital, they’ll also face significant challenges in bringing all facets of their business into compliance with data privacy regulations around the globe. Consultancies are demonstrably better positioned here — for example, IBM recently showcased its capabilities to help brands weather the General Data Protection Regulation (GDPR) in the EU.

Traditional ad agencies don’t currently have the staff, expertise, or infrastructure to build out and support this deep digital integration — and they face a considerable amount of resistance from their brand clients as they wage a cold war over marketing data. As a result, they’ll continue to lose market share to consultancies that can build systems and integrations for advertisers, and offer both efficiency and tighter control over their data.

In 2018, consultancies will test the waters in the advertising space by auditing major brand marketing budgets — and it will likely be a bloodbath. Consultancies will come for high-value targets like brand and creative strategy first, and if agencies can’t prove their value, they’ll be left out in the cold. Major agencies are right to be worried — consultancies will likely move fully into the space in 2019 and 2020, once they’ve hammered out the details of adapting their business model to the marketing industry.

There is a silver lining for agencies, though — for the moment, these consultancies will likely steer clear of the execution layer, and leave media buying to agencies. Instead, they’ll continue to expand their creative efforts: building interactive experiences, setting up e-commerce sites, and optimizing and integrating technical solutions. Media buying requires a heavy investment in working capital with a comparably low rate of return to what consultancies are used to. In fact, this will likely prove to be a major boon to small shops and medium-sized agencies — following an audit of a major brand’s marketing budget, independent agencies will be on an even playing field with major agencies. If they can integrate with the consultancies’ technical solutions, and make the right pitch, they could win unprecedented budgets. But is there a motivation for consultancies to move into media buying? Yes — and they will move into media buying aggressively once they’ve isolated a vastly different media buying model than the traditional paradigm.

For the CMOs of major brands, the future of their marketing spend will depend on the outcome of a mandated consultancy audit. Long-time agencies of record could fall by the wayside — unless agencies and brands agree to a mutually beneficial, more transparent deal. Barring this, consultancies will help CMOs manage their budgets, soliciting bids from creative shops, media agencies, tech vendors, and platforms on the CMO’s behalf — and building the technical solution that integrates all the pieces.

To defend against consultancies, agencies must provide greater value, get leaner, and become more transparent. Smarter agencies — such as WPP — are already building out or buying IT infrastructure to integrate their digital marketing capabilities. But as these holding companies move from a verticalized to a horizontal approach, there’s still a challenge in connecting the disparate pieces for clients at scale — when each client wants a bespoke solution — while receiving fair compensation for their work.

Moving into 2018, agencies should lean on their bona fides: relationships, creative expertise, and organizational DNA that consultancies can’t easily access. The competition from consultancies should also be seen as an opportunity for agencies: to tell a holistic marketing story, built on deep ROI, across the nonlinear consumer journey.

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NFL ratings are down this season, but in-game ad revenue continues to grow year-over-year this season, according to new data from Standard Media Index. This season’s NFL revenue, from September to the end of November, is up 2 percent among all networks. There was one additional nationally aired linear TV game than in the same…
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