The money is talking at last
Marketers don’t come out of the Google video debacle very well, writes Bob Wootton – and their shareholders should be asking about the governance that led to such biblical waste and exposure
Let’s talk about online – everybody else is and it’s not pretty.
Now the biggest media channel, it’s dominated by Google and Facebook. Whether or not you think they’re good for branding, they’re simply the biggest game in town for marketers.
Google gained its extraordinary foothold through search, the “crack cocaine of marketing”. It diverted the large and established classified advertising market in under a decade.
Instantaneous and global, search transformed most markets, whether B2C, B2B or – crucially – P2P, monetising the ‘long tail’.
Google cleverly traded keywords through an exchange, pitting buyers against each other. It’s democratic for any advertiser however big or small and it’s fairly transparent.
The money just pours in – many now spend as much on search as on advertising.
Google started acquiring things, the most significant from an advertising point of view being YouTube, now a de facto platform for audiovisual material, including ads.
Then there’s Facebook, whose edge is that all users must log in. This gives it great user data across devices and a truly single-source pitch. It now boasts almost two billion active users.
Google and Facebook:
– produce no content of their own, so have no attendant costs
– have (much) better margins so can pay to attract many of the top commercial people
– can segment their audiences much better than their customers, so can tell them all a thing or two
– like other multinationals, especially in tech, have a ‘modern’ approach to societal responsibilities from paying appropriate levels of tax to the content they carry
– are American publicly-quoted corporates at heart who use well-chosen language to present an attractive face, but admit to nothing until it’s proven against them. And then only yield in minute increments as pressures demand.
Recently they’ve been hit by:
– challenges to the self-administered audience metrics on which they sell, exacerbated by their aloofness towards industry-agreed currencies
– continued questions around whether what they sell is viewable, and if so what proportion is viewed
– grave and mounting advertiser concerns over the safety they offer their ads appearing around unacceptable content.
It’s the latter which has really done for them.
Many commentators – including me – have been raising these issues regularly and frequently for years.
Yet it’s taken a concerted exposé by The Times (whose lunch Google and Facebook have been eating) finally to make marketers reflect.
Marketers don’t come out of this too well. Shareholders should be asking about the governance and husbandry processes that have led to such biblical waste and exposure.
Now the issue has blown back to the US and everybody is weighing in. The money is at last talking and the questions are coming thick and fast:
– What exactly am I committing money to?
– What are the metrics and are they independently verified/validated?
– Can you guarantee my brand’s safety?
Many media agencies come out of this really badly too – so much for any protestations of ‘duty of care’ towards their clients. Some, notably WPP, have quickly morphed their public tune, but will that be enough?
And last comes grudging contrition from the media themselves. First up, Google’s UK VP Ronan Harris, who “…hears what’s being said…”, which in my experience means “…and I’m going to take fuck all notice of it.”
Then the escalation as EMEA president Matt Brittin apologised at Ad Week Europe – characteristically too little too late. Meanwhile, Facebook’s senior executives still seem preoccupied with diversity and shiny stuff.
Like all industries, ours is subject to cycles. We’re seeing a big cycle – the rise of online – peaking. Other media are sure to jump in and capitalise and we shouldn’t blame them for one second.
Call me Cassandra, but I still don’t get the valuation of tech stocks. I’m buoyed by being in the excellent company of the venerable Brian Weiser of Pivotal Research.
Snapchat parent Snap closed its first day’s trading at ~$24 1/2 share, valuing the company at $28.3 billion and making yet another coterie of young (mostly) men instant squillionaires. The next day it surged to almost $29 before falling back to about $21, still some way above its initial offer price of $17.
All this fantasy for a(nother) company that’s never turned a profit.
Facebook launched at $38 a share in May 2012, peaked at $38.23 on the day before falling consistently to a low of $20 on August 20. By December 2013, it had rallied to $55 and rose to $68 in February 2014 on announcement of its acquisition of WhatsApp.
So Snap shareholders can look forward to losses for the foreseeable – Weiser has set a target price of $10.
Can it recover like Facebook, which had a lot more to sell back then than Snapchat does right now (and faced none of the resurgent challenges above)?
Meanwhile, investors are losing patience as the well-established Twitter continues to struggle to reach profit.
What unites these companies is that they are almost pure advertising businesses, so their future is truly in our hands.
Ad Week Europe
Another thing I don’t really understand. I managed not to attend a single session this year but I’m told it was the usual – lots of quite intermediate people and of course its famous queues for all but platinum delegates.
I didn’t miss out as everything was reported, tweeted and/or streamed almost in real time.
But I remain perplexed as to why many companies sink very serious money into an event where they meet the same folk as every other day. OK, there are some advertisers, but not many.
The huge organising committee reads like a who’s who (mostly of sales), so maybe it’s FOMO.
Organiser Matt Scheckner and his substantial team work very hard and do very well out of the event (though he clearly has little sense of irony as he signs emails using a British title once bought for him for fun).
Talking of irony, to his rather obvious and clumsy threat that he might take Ad Week elsewhere after Brexit…good luck with that one, Matt.