A WHOPPER OF A MARKETING STUNT:  Not sure if you heard about or saw this one last night.  It’s a pretty amazing example of how to use the reach of TV to unlock the power of voice in the connected device world we now live in.  Yesterday Burger King announced they would run a :15 ad during both the Jimmy Fallon and Jimmy Kimmel shows which would include the line “OK, Google, what is the Whopper burger?”.  This, of course, would activate any Google Home devices within earshot of the TV to begin reading the Wikipedia entry for the Whopper.  BK’s mid-day announcement set into motion a pretty remarkable chain of events, including rigging the Wikipedia definition for a Whopper, Google’s disabling their Home devices from acting on the command, and BK’s ability to work around the Google block to still pull off the stunt.  Whether you agree with BK’s tactics or not, you have to give them credit for using cutting edge voice technology to create an impactful if not utterly intrusive marketing moment.

UGLY DAY AT SLACKER:  Yesterday the audio streamer Slacker laid off either 25% or 50% (conflicting numbers were reported) of its employees in a pretty rough way.  While layoffs can happen from time to time, cutting that much of any company’s workforce brings the question of whether or not the company can continue to exist.  Instead expressing empathy or remorse for the RIF’d employees, Slacker’s CEO defended the layoffs as a financial necessity to move the company into profitability.  While you never expect news like this to be well-received, the responses this is drawing by both terminated and remaining Slacker employees speaks for how poorly this was handled.

SALES LESSONS FROM THE VOICE:  Finally, I’d like to end the week with a hilarious but oh-so-accurate comparison of the judges’ sales styles on NBC’s The Voice.  I know what you’re thinking – The Voice is a singing talent show not a sales pitch.  But during the opening rounds if multiple judges press their buttons to pick a singer the tables (and literally the chairs) are suddenly turned.  Then it becomes a pitch-off between Blake/Alicia/Gwen/Adam to see which judge the singer selects.  This is where the selling really comes into play.   The attached LinkedIn post explains the different approaches for the four judges.  Blake, Alicia, and Gwen are pretty straightforward – they all express how they will help the singer in their own way.  But Adam consistently fails here, because he asks singers to pick him so that he can win the show.  What?  This is the ultimate no-no in selling.  Never try to convince someone by explaining why closing the deal helps the seller.  Always explain the benefit to the customer . . . because if they see no benefit for themselves you have no sale.  C’mon Adam!

Have a great Friday (and weekend) guys!

TAG CERTIFICATION BECOMING TABLE STAKES IN DIGITAL MEDIA?:  A few months ago P&G’s Marc Pritchard was the first client to publicly state the goal of working with only TAG-certified digital publishers.  TAG stands for Trustworthy Accountability Group, and it’s an advertising trade group set up to verify the authenticity of audiences and ad products for clients and agencies.  (Sort of think of them as a client side MRC.)  It appears that Publishers, Networks, and AdTech companies are serious about getting their certification, with over 200 companies worldwide either already having received TAG certification or are in the middle of the audit process.  I’m guessing this will become a normal must have for digital media within the next few years, as more companies will require their digital vendors to have TAG certification before transacting.

BIG MACHINE BECOMES ITS OWN PUBLISHER:  While Big Machine Label Group in Nashville isn’t considered one of the three “Majors”, it’s widely lauded as one of the most creative and innovative labels in the industry.  Any label whose first artist signing was a 15 year old Taylor Swift, and whose CEO Scott Borchetta regularly appeared as a judge on American Idol, must be doing something special.  That’s why yesterday’s announcement that Big Machine is launching its own content platform called “Big Machine TV” is so eye-catching.  The idea is simple but potentially powerful . . . hub your artist’s content in one place and make it cross-platform with video and audio.  This can include normal songs and videos as well as exclusive custom content.  Logic says if your artists are strong enough to pull an audience you can capture and monetize your own traffic instead of just licensing it out to other broadcasters/publishers.  It’ll be interesting to see how this does and if other labels follow Big Machine’s lead.

iHEART EXIT SCENARIOS: If you’ve worked in or followed broadcast radio for any period of time you’ll eventually ask yourself this question . . . how can industry leader iHeart stay in business with a $20.5B debt burden and an average interest rate of 7-8%.  Seems impossible to run a company when the first $1.5B of net profit is used to pay interest (and not even pay down the debt itself), while the entire radio industry only bills $17B in annual revenue.  Yet they seem to walk the tight rope, kicking the financial can down the road quarter after quarter.  Now there’s a growing chorus of industry experts who believe iHeart’s day of reckoning is coming within the next 12-24 months.  The obvious next question is then what happens?  The following LinkedIn post from Court Stroud, a former media executive and bona fide industry expert, gets into the gory details of how iHeart could be broken up in order to move forward.  This posting is six weeks old, but I think it’s relevant and insightful about what could happen to radio’s largest player.

Have a great Thursday guys!

UNPACKING RETAIL’S TRUE CHALLENGES:  First up today is a deep (and I mean deep) dive into the underlying structural challenges with the US Retail Industry.  In the past month you’ve probably seen dire predictions about the coming “Retail-apocalypse”, as B&M merchants are laid to waste by eCommerce rivals.  But there’s way more nuance to this story, as outlined in the following Altantic article.  Obviously online (and now mobile) sales are a contributing factor to the decline of the traditional retailer.  However, other factors like the over-malling of America from 1970 to 2015, and the cultural reprioritization from possessions (aka things you buy in stores) to experiences (aka social activities/travel/entertainment), are also taking their toll.  If you work at or call on a retail account this may not be the most enjoyable article you’ll ever read, but it’s important to understand the macro challenges impacting the space in order to compete in retail’s new world order.

TIME SPENT IN-APP ON THE RISE:  eMarketer is out with some insightful data on in-app media consumption.  According to their research consumers now spend 2:25 per day on in-app activities, which is 20% of all time spent with media, and 85% of time spent on the internet (with web direct making up the other 15%).  The five activities users spend the most in-app time with are (in order) listening to digital audio, social networking, gaming, watching videos, and messaging.  It makes sense that listening to music would lead time spent in-app, since it’s one of the very few long-form activities consumers do on their mobile devices.  Since time spent with consumers is a proxy for engagement, these stats provide great quantitative evidence about the power of music apps to engage and truly connect with listeners.

JAY-Z DROPS STREAMERS:  Over the weekend Jay-Z announced that he was pulling all music from his 12 studio albums off Spotify and Apple.  Then on Monday he allowed his music back on Apple, but not Spotify.  So what’s happening here?  On the surface the rationale for removing his music from both services seems simple – Jay-Z is the primary owner of Tidal, so why help the competition?  But there could also be a more subtle unintended consequence related to Spotify’s new royalties agreement with UMG, which allows artist/labels to limit access of certain songs on Spotify’s free non-subscription side.  The theory is that Spotify has let the horse out of the barn on exclusions from the free side, so more and more big name artists who control their own music will take their material off the platform.  Besides Jay-Z’s music there’s also speculation Beyonce could be removed from Spotify next.  Her latest album “Lemonade” was already withheld, so could the rest of Beyonce’s catalog be next?  Add these artists to other big names like Taylor Swift, Adele and Jason Aldean, who have already taken some or all of their music off Spotify, and you suddenly have the makings of a significant product issue for the streamer.

Have a great Wednesday guys!

TESLA BECOMES THE MOST VALUABLE US AUTO MANUFACTURER (NOT A TYPO):  In a sign of the times, at exactly 9:35a est yesterday morning Tesla surpassed GM to become the top US Auto manufacturer, in terms of company value.  The magic number Tesla passed was $51B in valuation (which is calculated by the share price multiplied by the number of outstanding shares).  The fact that investors now place more total value on Tesla is astounding, especially considering the earnings forecasts of the top US OEMs.  Former #1 GM is expected to earn $9B in 2017, and former #2 Ford is predicting a profit of $6.3B.  By comparison Tesla is expected to lose almost $1B in 2017, as they continue to invest in product development and manufacturing infrastructure.  What’s telling about their valuation number is that investors see Tesla as the tomorrow of the auto industry, while traditional EOMs are in today mode.  Maybe that also explains why the GMs and Fords of the world are in a mad dash to diversify into something besides car manufacturing.  Wouldn’t it be interesting to peek into a crystal ball to see what the US Auto Industry will look like in 20 years?

UNILEVER GOING ON A DIET:  Yesterday Unilever also made news with the announcement that it planned to trim $8.2B from its worldwide marketing budget during the next fiscal year.  This is being caused by two reasons.  First is a reaction to the recent acquisition attempt by Kraft Heinz, whose business model is to absorb bloated CPGs and make money through operational costs savings via a process called “Zero-Based Budgeting”.  Unilever successfully rebutted Kraft Heinz’s takeover bid, but now is under shareholder pressure to cut expenses.  The second issue is the overall state of CPG.  The entire sector is only growing by 2-3% per year which is primarily due to market saturation.  Besides the overall state of Unilever and the CPG category, I thought the attached Bloomberg article was interesting because it shows the % of revenue coming from the major product categories for the four holding companies plus Havas.  I’ve never seen agency revenue broken out this way.  Given how important CPG is to these agency portfolios, any spending cutback in this category could have a ripple effect across the entire media industry.

STREAMING TAKES OVER THE MUSIC INDUSTRY . . . BY THE NUMBERS:  Over the past few weeks there have been a ton of numbers floating around about the continuing surge of audio streaming and the effect it’s having on the US Music Industry.  The research firm BuzzAngle has aggregated the Q1’17 numbers across the different distribution channels to show the relative scale of each. I’ve highlighted the three numbers that really matter in the chart below.  During Q1’17 there were 36.2M albums sold, 161.2M songs purchased via download and 83.6B songs streamed.  Or to put it another way . . . for every song downloaded there were 518 songs streamed, and for every album sold there were 2,309 songs streamed.  While referencing these numbers during their Q1 Music Report, even always-pro-radio Nielsen was quoted as saying “It’s clear that streaming is taking over.”  I’d say that’s the understatement of the year!

Have a great Tuesday guys!

YOU’RE NOT SELLING MEDIA, YOU’RE SELLING DATA:  If you’ve ever referred to being in the “data business” instead of media this first article is for you.  AdAge is featuring a research piece on the growing importance of audience data within media buys.  Gone are open ended run of site campaigns.  Even simple demo-based audience data only accounted for a quarter of the digital data ingested into buys during 2016.  Now it’s psychographic, lifestyle, affinity, and of course retargeting data that’s become a must have on most digital campaigns these days.  The top vertical for data utilization is Financial Services – not surprising when you think of all the purchase and income data floating around these days.  Auto and CPG are also data hogs, and Retail is catching up fast.  Good overview article to get the brain going on a Monday morning.

mCOMMERCE GOING MAINSTREAM:  Over the last several years we’ve started to see smart phones creep into the in-store purchase process.  Whether it be app-based payments where you preload credit to a particulate retailer through their app and then swipe your phone at checkout, or Near Field Communication (NFC) technology driven by Apple or Google, mCommerce options are now plentiful.  But is being able to pay by phone swipe necessarily that much easier than pulling a $20 out of your pocket or swiping your credit card?  The author of this MediaPost article argues we may have hit the pay-by-mobile inflection point for two reasons.  First is that interminable 3-4 second wait for a chip to process the transaction once you insert your card – doesn’t that just feel like forever?  The second reason is the chance for retailers to add-on benefits to the mobile purchase process like order ahead and line skipping.  I’m guessing the latter will eventually drive mainstream adoption of smart phones into the purchase process and change the way we check out forever.

VERY LITTLE SNAP IN THOSE ADS:  Recently Snapchat has come under scrutiny over its efficacy (or lack thereof) as an advertising vehicle.  To get a snapshot (see what I did there?) of ad interaction on the platform eMarketer has surveyed Snapchat users.  The results in the graph below don’t paint a very pretty picture.  Half of users never interact with a branded filter or lense, and 70% never swipe/watch an ad.  Part of the reason these numbers look so bad is the demo being surveyed – 18+.  Snapchat’s heaviest and most engaged users are teenagers who think it’s fun to frame a picture of their buddy in crazy sunglasses.  Typical time-poor adults who are more worried about taken care of their families and/or keeping up with job demands, goofing around with these ad units just isn’t that important.  I’m guessing this lack of ad engagement amongst adults will eventually become a business challenge for Snapchat.

Have a great Monday everyone!

THE DIGITAL DEMOCRACY SPEAKS:  The consulting firm Deloitte just published its annual Digital Democracy research study.  It’s a fascinating snapshot of our society’s digital consumption and trends.  The biggest takeaways from this year’s edition are: 1) The fragmentation of traditional TV, 2) The rise of skippable/blocking functionality for consumers of digital media, and 3) The growing power of social influencers on the purchase funnel.  There’s a ton in here, so I’ll just let you read it for yourself.  Warning though, it’s a fairly long piece.  So maybe save it for when you have a quiet 15 minutes.  I’ve downloaded the pdf for you here.   Deloitte Digital Democracy 11

SPOTIFY CONSIDERING A DIRECT LISTING?:  On Tuesday I mentioned the IPO dilemma Spotify could be in if/when they attempt to go public later this year.  With a VC-based valuation north of $10B it’s hard to imagine many investment banks jumping on that stock in the pre-buy period.  As a workaround rumors have started swirl about Spotify going the direct listing route instead – meaning they would just start selling stock on their own without doing a true IPO.  This is a creative way to go public without having to true up a real valuation number.  However by doing this they won’t be able to raise any new capital, since there will be no upfront institutional stock purchase.  Admittedly I’m a little out of my depth on Wall Street intricacies like this, so I can’t speak to the pros/cons of a direct listing in this situation.  But it feels like a little bit of a financial shell game to avoid crushing some of their initial VC investors.

THINGS ARE ABOUT TO GET WEIRD IN TECH:  Finally I’d like to give you something deep to noodle on over the weekend.  Imagine a day, within the next 10 years, when smart phones are no longer the primary tool for communication.  If the predictions in the attached Business Insider article are accurate, a handsetless world could be in our near future.  We’re already starting to see the beginnings of this through the Internet Of Things.  Voice is replacing touch as the primary input method for many new connected devices. Wearables (on the wrist, in the ear, etc.) are supplanting screens to create a full-sensory experience.  And perhaps what’s most startling of all is the idea of “neural lacing” technology, which is a computer webbing which would be surgically laid across the brain to physiologically connect computer and human together.  (Pause for a moment . . . reread that last sentence.)  Instead of worrying about having enough money for the new iPhone 13 a few years from now, you could be going to some sort of tech doctor’s office to be brain-fitted with your own embedded computing device.  Crazy to think of, right?  Those of us who can remember living in a world with no internet at all (Al Gore hadn’t invented it yet), understand that the march of technology is constantly moving forward, constantly speeding up.  So who’s ready to go full Terminator and get fitted for their neural lacing with me?!?

Have a great Friday (and weekend) guys!

AMAZON LANDS NFL LIVE STREAMING . . . BUT AT A PRICE:  Last Tuesday I featured a blog post about the increased competition among digital publishers to carry live sports as exclusive content.  In 2016 Twitter blazed a trail by live streaming select NFL games at a licensing cost of $1M/game.  This year several major publishers bid on the NFL’s streaming rights and Amazon came out on top.  For a $50M price tag they’ll have exclusive streaming rights to the 10 Thursday night games – which is 5x the rate Twitter paid last year.  On the surface this looks like an impossible monetization equation for Amazon.  Given the limited inventory they’ll have to sell, and the usually craptastic games which run on Thursdays, it’s hard to envision a profitable ROI.  But Amazon is probably thinking about a larger play here.  By adding NFL games to the list of content available with an Amazon Prime subscription they can keep driving their overall subscriber base up.  So it feels more like an investment spend towards a longer term content-based strategy.

TOTAL MARKETING DEBUNKED:  If you work on the Multicultural (especially Hispanic) side of our industry you’re familiar with the raging debate over a concept called Totally Marketing.  The underpinnings of the TM strategy is the belief that US Hispanics have begun to assimilate into American culture and are now speaking more English than ever.  So marketers no longer need to run a separate Spanish language marketing campaigns to reach this audience. Instead they can run a one size fits all “total market” campaign, which conveniently saves money because they’re only running one campaign instead of two.  There have been dozens of research pieces put out over the years disproving the TM theory.  The attached Forbes article is one of the better ones I’ve seen on the topic because it brings hard stats to the importance of language and cultural relevancy within Hispanic marketing.  It’s an important piece which may help turn the tide against Total Marketing.

WILL BROADCASTERS HAVE TO START PAYING TO PLAY?:  As previously mentioned, the RIAA has begun fanning the flames around the idea of radio stations paying performance royalties for music broadcast on their terrestrial transmitters just as they do on the streaming side.  Yesterday the talk started to turn into action when California Congressman Darrell Issa introduced a piece of legislation which would give artists the ability to opt out of having their songs played on radio if broadcasters don’t pay royalties.  And the artists could make this decision on a song by song basis.  This framework would test radio’s argument that their promotion of new music is essential to the discovery process, which is why they’ve been exempt from paying royalties in the first place.  So this legislation would effectively call the bluff on both sides of the argument.  Because if artists really need radio to break new songs they’ll voluntarily wave their royalties claim.  On the other hand if a song can be successfully promoted without using radio then broadcasters will have to pay royalties just like everyone else.  It’ll be very interesting to watch this one play out in DC.

Have a great Thursday guys!

IS UPFRONT-MEGGADON UPON US?:  Next month the top global ad spenders and their agencies will gather in NYC for the annual TV Upfronts.  While the presentations themselves will be the normal song-and-dance of new shows and content integration opportunities, there are two larger issues which may overshadow the networks’ pitches.  The first is the steady decline of traditional TV viewership.  As noted in the attached Business Insider article and in the graphic below, TV viewership is basically being propped up by 65+ consumers (not exactly an in-demand advertising demo), while anyone 49 yo or younger is fleeing the medium.  That’s a long term problem for the networks.  On the other side of the coin is the recent brand safety dilemma plaguing digital publishers and their video products.  With so many brands boycotting OLV you can bet they’ll look to place more weight in the safety of traditional TV.  What’s the bottom line to all of this?  With less ratings inventory than ever before and newfound demand from OLV pullbacks expect to see some pretty aggressive price spikes.  So fasten your seat belts for a very interesting Upfront season!

SPOTIFY INKS UMG LICENSING DEAL:  Spotify finally had a breakthrough with one of the major labels (UMG) on a long-term streaming royalties deal.  They found a fairly creative work-around to the issue of listeners free-riding on the “freemium” side, by agreeing to restrict some new releases to just the paid side for an exclusive window.  This is an attempt to incentive listeners to buy a subscription, and also allow labels limit which new music is accessed on the free side.  I would expect the other two major labels to sign similar agreements moving forward, as they all seem to move in a pack on these things.  Then it will be IPO judgment day for Spotify.  Industry analysts expect them to attempt an IPO in the back half of 2017, once the label deals are solidified.  But their last round of VC funding was valued at almost $12B, which seems way high compared to similar valuations in the industry.  So will they price the IPO at a loss and leave their recent investors high and dry, or stay private?

MAKING WAVES IN THE “SAFE HARBOR”:  Despite streaming royalties growth for the US Music Industry during 2016, there’s still one thorn in RIAA’s side.  It’s the issue of YouTube’s “Safe Harbor” royalties loophole which allows any user uploaded content platform to pay much less than the pay-per-play streamers.  Music Ally goes in depth with two articles on this issue.  The first link explains how Safe Harbor royalties work, and the second link covers the RIAA’s estimation that Google is short-paying the music industry approximately $1B a year in royalties.  The basis for the number comes from a non-profit research group called the Phoenix Center, but details on the group itself and how the study was funded are a little murky.  Regardless, it’s good quantitative headline for the music industry to throw around as they try to eliminate the Safe Harbor loophole.

Have a great Wednesday guys!

APPLE AND NBCUNIVERSAL GETTNG IN BED TOGETHER:  Since Apple shuttered iAd in Jan’16 you probably haven’t thought much about them as a media platform.  Well that’s about to change with their announced partnership with NBCUniversal.  Under this new arrangement NBCU will have the ability to broker currently unsold “white space” inventory on the Apple News portal.  The partnership also gives NBCU the ability to retarget proprietary segs across Apple’s audience and implement 3^rd party measurement tagging, which is a first for Apple.  During the iAd days Apple was considered a “walled garden”, but given recent transparency demands in the industry they appear to be more accommodating now.  This deal is a coup for NBCU who gets some new and exclusive real estate to sell in the upfronts.  It’s also smart for Apple who gets to monetize dormant inventory without having to do it themselves.  This is key given Apple’s ineptness at selling media, which they’re proven over the years.

VERIZON TAKES IT’S OATH:  Late yesterday Verizon announced it was merging two tech pioneers it will now own, AOL and Yahoo, into one new entity called Oath.  For those keeping score Verizon acquired AOL two years ago, and in July will be closing on the Yahoo purchase.  While everyone expected the two operations to be combined, nobody knew what the exact strategy or branding would be.  For anyone who’s been in Digital media for a while its weird to think of an industry where the names AOL and Yahoo no longer exist.  Two brands which defined early commercialization of the internet now retired into history.

YOUTUBE FINDING IT’S SOLUTION?:  In an update to the ongoing boycott over brand safety on YouTube, Google is beginning to articulate it’s solution.  The tentative plan is for 3^rd party measurement vendors like IAS and DoubleVerify to use some sort of brand safety tool – guessing it’ll be a pre-fetch verification to confirm it’s ok to run the ad.  This will need to be automated since 400 hours of video content are uploaded to YouTube by users every single minute, 24 hours a day – no way to manually police all of that.  But how would a computer algorithm determine the difference between a normal video of someone duck hunting with a riffle vs. a jihadi terrorist holding up a riffle in a video.  To demonstrate my point check out the two screen grabs below.  I’m sure it will have something to do with video sourcing and search language used, but it’s hard to imagine a 100% full-proof automated solution.  (And yes, I actually did a jihadi-related search to prove this out.  Just hoping I don’t get a visit from the FBI.)

Have a great Tuesday guys!

SITE TRIMMING TO BECOME A TREND?:  As a follow up to the story I first reported on Friday, check out the industry’s reaction to Chase’s disclosure about trimming their advertising footprint from 400,000 to 5,000 websites.  The real benefit to trimming is that it gives brands the ability to handcraft a “Run On” list of websites and apps, which will effectively black list any site which doesn’t make the list.  While the point about no increase in cost for the Chase experiment is very attractive, this disclosure could unintentionally create a price spike.  Because if many clients rush to the top quality sites at once demand will skyrocket on a fixed inventory supply . . . and you know what happens to pricing in that situation.  I’m sure the premium publishers would enjoy testing the laws of supply and demand if site trimming becomes a real movement.  🙂

TARGET TO GET IT’S EDLP ON:  In what’s setting up to be a Retail clash of the titans, Target is considering challenging Walmart’s low price leader position.  This is in reaction to Target’s lackluster Q4 earnings, and subsequent 15% decline in its stock price.  Here’s the back story . . . Walmart, which has always run its business on the principle of Every Day Low Price (EDLP), is starting to see its eCommerce investments in Jet and Modcloth start to pay off, because they now have a robust omnichannel footprint in mass merch and grocery.  Walmart has done this to compete toe-to-toe with Amazon, who continues to grow at the expense of traditional B&M retailers.  This has created a two-horse race between Walmart and Amazon, while leaving everyone below them further behind.  As a consequence of this Target is now faced with a really complex set of market dynamics and potential strategies to pursue.  I’ve flipped the commentary article from chainstorage.com into a pdf so that you don’t have to sign up for an account.  And no, I didn’t spend my weekend reading chainstorage’s website.  That honor goes to Pandora’s Dave Soller for digging this one up!  Target-Walmart Price War

IT’S OFFICIAL . . . STREAMING IS KING:  Finally today, streaming’s ascension to the pinnacle of the music world is now official.  On Friday the RIAA released it’s full-year 2016 revenue stats for the US Music Industry.  Streaming revenue now compromises 51% of total label revenue after jumping an astounding 17 points in just the past year.  Streaming’s growth propelled total music industry revenue +11.4% over 2015, which is the largest single year increase since the CD’s heyday in the early 1990s.  Interestingly most of the streaming growth is coming from the on-demand side.  Keep in mind the US’s the lead royalty payer Pandora began diverting some of its payments from Sound Exchange to the labels directly in the Fall, so expect that trend to continue.  The two charts below paint a pretty picture indeed for the streamers and the music industry alike!

Have a great Monday guys!