As ad dollars erode, tech investments point the way forward for networks

There’s no doubt that linear advertising revenues are going to decline in the coming years for big networks.

Squeezed by Facebook and Google on one side, and impossible consumer expectations created by Netflix, Amazon and other streaming services on the other, the idea of an ad-supported entertainment business is under siege.

This chart from the analyst firm Moffet Nathanson shows just how grim the situation is for companies not named Google or Facebook.

But in a wide-ranging conversation at the Code Media conference in Huntington Beach, Calif., the top executives of Turner and A+E Networks elaborated on how their app businesses and investments in startups are driving new growth.

While it’s not a revelation that apps are a great way to make money and build a deeper relationship with consumers, and that technology is the future for networks (frankly the tech companies that have overrun Hollywood in the past few years are a stark example of this new reality), the success of Turner’s Boomerang service and the investments that A+E have made in companies like Atlas Obscura and Vice highlight alternative ways to make money (I’m also looking at you, Vox and Recode).

Turner launched Boomerang last year as a subscription service for cartoons in a joint venture between Cartoon Network and Warner Brothers. The app now counts roughly 150,000 subscribers, according to Turner chief executive John Martin. Martin also said the company was seeing success with its Filmstruck service, which leverages the Turner Classic Movies brand to offer a curated slate of movies to watch.

Martin said Filmstruck “provides a learning experience into what the future of this business is going to be which is tapping into fandom.” 

For Martin, the idea of curation is going to be increasingly important as the amount of available distractions and stories explodes across different media properties. If the future of Turner is, as Martin says, “being responsible for controlling the consumer experience from start to finish,” then guiding people to apps where Turner can control that experience just makes sense.

Meanwhile, A+E has leveraged its investments in Atlas Obscura and Vice to provide new types of marketing dollars and open the network to an entirely new audience, according to chief executive Nancy Dubuc.

Dubuc pointed to the company’s investment in Atlas Obscura as being a great way to move its audience from television at the History Channel, through Atlas Obscura to experiential marketing campaigns for a credit card company like American Express that would give benefits to new applicants.

Dubuc also said that Vice Media has been a success for the company. “Vice came to be around converting a channel so that you can reach a millennial audience,” Dubuc said of the A+E decision to convert its H2 channel over to Viceland.

“They have the second most upscale audience to Bravo,” Dubuc says of the Viceland channel. While the channel hasn’t seen tremendous subscriber growth, it’s reaching an audience of 18-34-year-old males with household incomes over $60,000, she said.

Those numbers will appeal to any marketer.

Nor are the two networks alone in looking to technology for returns. According to people with knowledge of the situation, that’s one of the reasons why Fox bought TrueX four years ago — to improve the experience for consumers watching ads online.

“Putting aside the investments in other companies, it’s about having deep relationships with consumers however you get there,” says one technology exec at a major studio. “Having an app on somebody’s phone is perhaps the best way to get there… There’s a fundamental thesis there. In today’s world you not only have to think about being broad you have to think about being deep too.”

Featured Image: kentoh/Shutterstock (IMAGE HAS BEEN MODIFIED)

German antitrust office starts asking questions online ad platform giants

Germany’s national competition regulator has announced it’s looking into market conditions in the online advertising sector, responding to to concerns among advertisers that a lack of transparency could be skewing market conditions.

It says it could open up a full sector enquiry depending on results of its initial probe.

The antitrust office says it will start by looking into the effects of technical developments on the market structure and market opportunities of the various players involved. It also specifies it will investigate whether large ad platforms like Google and Facebook are operating as “walled gardens”, and consider potential impact on competition.

Together the two tech giants accounted for more than 60 per cent of US online ad spending in 2017, according to eMarketer.

“Due to the great economic importance of this sector for advertisers and content providers active on the Internet and in view of discussions about the difficult competitive environment in this market, we have decided to examine this sector,” said Andreas Mundt, president of the Bundeskartellamt, in a statement.

“The issue of access to and the processing of data is also highly relevant from a competition point of view,” he added, saying “large single companies with considerable market relevance like Google or Facebook have emerged which, in the view of some market players, have been able to set up closed systems, so-called ‘walled gardens'”.

The global turnover of online advertising is estimated at more than $200BN last year, according to eMarketer data, cited in a report by the Federal Cartel Office. Of that €5.5BN is generated in Germany — accounting for around 30 per cent of the overall ad spend in the country.

As a first step, the Bundeskartellamt says it intends to hold discussions with industry players to gather viewpoints and aim to narrow down the scope of its probe.

Questionnaires will be sent out to market participants this spring, it added.

After that it could move on to conduct a full sector inquiry — saying this could be triggered “if specific circumstances suggest the competition in a sector may be restricted or distorted”.

We’ve reached out to Google and Facebook for comment but at the time of writing neither company had responded.

The Bundeskartellamt has also published a paper on online advertising, which sets out some of the issues of concern and contention.

Among the concerns it lists is how Google’s launch of accelerated mobile pages (AMP) — ostensibly for supporting faster load speeds of mobile web pages — could “lead to advertisers being tied to Google” on account of AMP-enabled delivery of sites being via Google’s servers.

Google expanded the AMP project by adding an AMP for Ads program, in July 2016, encouraging marketers to create similarly optimized ads. (Facebook, meanwhile, has its own mobile accelerated format, called Instant Articles, though it added support for Google’s AMP format in May last year.)

The antitrust office points out that improved load times for AMP-enabled sites also means they will end up with a better Google ranking, and critically flags “the fact that AMP also impacts SEO”, before discussing other technical developments which Google is driving that could also impact a site’s Google’s ranking.

“Google is also currently rolling out a new mobile-first index,” it writes. “In future, preferentially the content of the mobile version of a website, rather than that of the desktop version, will be added to databases used to generate search results. This development, which will directly affect Google searches, could have a considerable impact on SEO and thus on a key aspect of online advertising, critics claim.”

The report also discusses the advertiser criticism of big ad platforms for operating as walled gardens — saying the complaint is that a lack transparency makes it more difficult for advertisers to independently measure coverage or impact.

Walled garden platforms are also accused of prioritising their own inventory on their own platforms — a claim the report points out is “hard to make out given that the platforms are closed to third parties”.

A lack of transparency is also cited as a potential contributing factor for fueling ad fraud — combined with the growth in programmatic advertising (the latter is also flagged as a brand safety issue, as a result of programmatic systems automatically placing ads — something caused problems for YouTube last year).

On the issue of access to data, the report says the concern is big platforms have “huge market advantages” on account of combining their reach with data depth. And it points to concerns raised previously by the Monopolies Commission over how a concentration of ad-relevant data in individual companies could create competition problems.

“Where the quality and quantity of data increasingly become a fact which is critical for the success of placing targeted advertising, concentration in this field could have considerable competitive feedback effects on the online advertising market,” it writes. “This in particular applies where individual companies have exclusive access to particularly relevant data volumes, for instance on account of interacting directly with users.

“Network effects could also have a role to play here.”

Google expands controls to let you mute those annoying ads that follow you on every site

You know those ads that seem to follow you to every website? You went to one site one time to check out a thing and bam! that site’s ads now pop up on every site you go. Well, now Google will let you mute them.

At first, it may seem an odd move. Google makes money on its ads business and giving advertisers free reign to stalk you on every site seems really good for companies hoping to remind you of that thing you checked out one time. But the search giant wrote in a blog post out today that it wants to give you, the consumer, more transparency and control.

It’s also good for business. Barraging you with reminder ads for the thing you are no longer interested in is not useful for you and is a waste for the business hoping to get you to come back.

Google uses the example of someone looking for snow boots so we’ll go with that. You look up Snow Boots Co. for some research but decide to go with another type of snow boot not on that site or just decide you’re no longer interested. That site might still be sending you ads, even though you’re not into them anymore. It’s very annoying to keep seeing the thing you don’t want everywhere. But now you can shut it all down by muting that advertiser.

You could already mute ads and adjust ad settings these past few years but now Google is offering a way for you to mute those pesky reminder ads in a new control in Ad Settings.

It will also mute the ad across devices. So if you mute it on your smartphone, Google will also mute that ad on your laptop.

It also plans to roll out the new controls on more platforms in the future like Youtube, Search and Gmail.

On top of all that, Google is also expanding controls for another unwanted ads feature it implemented in 2012 that allows you to mute ads you don’t want to see anymore.

“Millions of people use Mute this Ad on a daily basis, and in 2017, we received more than 5 billion pieces of feedback telling us that you mute ads that aren’t relevant,” Jon Krafcik wrote on the Google post explaining the updates. “We incorporated that feedback by removing 1 million ads from our ad network based on your comments.”

Of course, these updates only affect ads rolled out within Google so you may still see reminder ads from other places. It also can’t get rid of the annoying barrage of ads from your Facebook and Instagram feeds.

The good news is all you have to do to shut down those annoying reminder ads now is to go to Google’s Ad Settings to see the ads currently targeting you and hit mute.

Featured Image: Getty Images

Apple’s augmented reality tool kit can now detect walls and 2D images in beta

Apple is rolling out an upgrade to its augmented reality toolbox, ARKit, to developers in a beta version today. ARKit 1.5 adds a few marquee features including one big one: wall detection.

Up until this point, ARKit has been focused on offering horizontal plane detection, allowing developers to know where the ‘floor’ is that it can then use to orient or place objects in 3D space. This left the picture well short of allowing for full 3D spatial recognition of a given field, though, as that horizontal plane would essentially go on forever, ignoring walls or other vertical surfaces.

With this update, ARKit can now recognize vertical surfaces and place objects onto those surfaces. It can now define those surfaces in conjunction with horizontal surfaces as well. Imagine a game that allows you to throw darts at a wall, with the target mounted to an actual wall, rather than floating in space.

When ARKit was introduced, I asked around about how hard it would be to get vertical plane detection done without an ‘active’ sensor of some sort. The consensus was that it was theoretically possible, just a lot harder because vertical planes like walls typically have less defining features that allow for easy plotting by a planar detection system. Basically, if it’s a smooth white wall, it’s hard for the camera to tell it’s a solid object.

Google’s ARCore has supported some wall detection previously. Apple’s version of wall detection will detect planes that are vertical or just off vertical but not heavily angled initially.

In addition, ARKit gets an update to horizontal plotting to allow for better recognition of irregularly shaped objects like circular tables or chairs, and line detection. The overall tracking has been improved in speed and accuracy as well.

ARKit will now also display the ‘real world’ at a full 1080p, an upgrade over previous versions which shipped the video components out to users at 720p, making the “real” parts of the scene look worse than the “fake” parts. So that’s a nice bump.

Another upgrade that seems fairly minor at first but could get very, very interesting later on is computer vision-based image recognition. If there are 2D images in the scene, say a poster or piece of art on a wall, ARKit can now parse the images and allow developers to map their physical position in a space and on a surface. This would allow for placement of related objects nearby, floating text, audio triggers — you name it.

The immediate applications are fairly clear. You walk into a museum, point your camera at a painting and the painter appears in front of it to talk about the artwork or even to show you how they painted it. If it’s a poster of a rocket launch, the rocket appears on the floor in front and you get a recreation of the launch.

The implications down the road are even more exciting. What happens, for instance, when you can slap a sticker on a wall which can act as a marker that ARKit can recognize without external libraries? It can then project out objects or scenes based on that marker. And some of the the back end systems that I know other developers are working on rely on computer vision to create a persistent spatial map that can be used to ‘re-place’ objects or scenes very precisely between AR sessions or between different people at different times. This will help with those.

Lots of possibilities from these new additions and this isn’t even a full version release, just a point update. I know that a lot of fuss has been made that there are only about 2,000 apps that are using ARKit at the moment, but I’m not convinced that there will ever be a valid need for ARKit to be implemented in the majority of apps. Or rather, or the big spatial components of it as it’s also becoming a nice computer vision toolbox. Frankly many existing AR enabled apps are pretty crap.

With AR, instead of ‘many apps’ I think we’re going to see ‘many experiences’. There will be enabling apps or tools, but the experiences themselves will be universal. But I also think that this won’t become apparent to most commentators (or customers) for a while. For now, a nice iteration on the initial release of ARKit.

Google and Salesforce unveil first elements of partnership

Last fall at Dreamforce, Google and Salesforce announced a partnership. Today, the two companies unveiled the first pieces of that agreement.

For starters, Google Analytics 360 users can now import data from the Salesforce CRM tool such as leads and opportunities, among other pieces. This could allow marketers to have a more complete view of the customer journey from first contact to sale and build a better understanding of how that fits together for a successful outcome. Of course, Salesforce has its own marketing data from Marketing Cloud and it has its own analytics products including Salesforce Wave and Einstein Analytics.

What this does is allow companies using Google’s analytics products to mix and match data between the two systems. Customers tend to use multiple products and that’s why these kinds of partnerships develop — to make it easier to get a big picture view across product sets.

The companies are taking it one step with further with this initial piece of the partnership by also providing connectors from Salesforce data to Google BigQuery, Google’s data warehouse service, where users can combine this data with other enterprise datasets.

Finally, the companies are building a connection between Salesforce and Google’s ad pipeline to connect the best prospects with the right ad at the right time to push the sale to completion. In the company blog post announcing the partnership details, Google had this to say about the advertising link:

“Marketers can use the tools in AdWords and DoubleClick Search to optimize their bidding on search ads based on the goal of actual sales (offline conversions tracked in Salesforce) rather than just basic website leads. Or they can create an audience list in Analytics 360 of qualified leads from Sales Cloud and use AdWords or DoubleClick Bid Manager so their display ads reach people with similar characteristics.”

This is a case where combining the two types of information across sources could provide insights and abilities that wouldn’t have been possible from either source alone. It also enables each company to compete with its rivals in this space, says Ray Wang, founder and principal analyst at Constellation Research.

“This partnership offering gives customers another choice in the market and is targeted towards the traditional Adobe – Microsoft buyer,” he said. Adobe has been a big player in this space with its analytics, advertising and marketing tools. Microsoft bought LinkedIn in 2016 for $26.2 billion, which gives it access to a wealth of data to share with its CRM tools.

“The goal is to bring online and offline interactions together with the power of cloud analytics so that [marketing] campaigns can be executed without the integration and manual gaps most marketers face today,” Wang explained.

This is just the first step in a much broader partnership between the two companies and they promise much deeper integration over the coming year including bringing in product specific data, lead conversion likelihood and lifetime customer value.

Featured Image: Andy Ryan/Getty Images

FabFitFun expands its empire with a new app for Apple TV and Amazon Fire

FabFitFun, the women’s lifestyle subscription service and media company that’s become a household name among influencers of a certain generation, is expanding its empire with the launch of a new video app for Apple TV and Amazon Fire.

The Los Angeles company founded by Daniel and Michael Broukhim has become one of the darlings of the tech scene in Southern California by virtue of its success in the subscription box business and its reach with the instafamous (cf. the company was recently name-dropped in a New Yorker article; a couple caught canoodling at its latest event made headlines in Page Six; and it created a bespoke box for MTV’s Video Music Awards).

A common (somewhat envious) refrain among startup founders in LA is: “The Broukhims are printing money.”

While the brothers Broukhim are mum about the revenue from their retail business, the reach is undeniable, and video is a key component for growth, according to co-founder and co-chief executive Daniel Broukhim.

It’s also a return to the company’s media roots as an online magazine in 2010. “Brands would send us products for editorial review and provide us with VIP gift bags at media events,” Daniel told us back when the company raised its first (and only) outside cash in 2015. “Nobody was replicating that experience — of getting to try all these amazing products — for public consumption. We thought we could deliver that experience for our audience.”

Now the Broukhims (and co-founder Katie Rosen Kitchens — the company’s editor-in-chief) are following the rest of the media industry with a “pivot to video.” But unlike other properties, they’re bolstered by a subscription retail business that’s generating significant revenues (I’ve heard well north of $100 million) and a website that reaches more than 3 million visitors per month.

“We are able to marry content, commerce and community in ways that [subscribers] can’t get anywhere else,” Broukhim told me.

The evolution of FabFitFun in some ways mirrors the symbiotic evolution of content and commerce online. Influencers, who are integral to how the company markets itself and creates its content, are also now their own brands, much as FabFitFun went from a media property to a retail channel — and also a brand of its own with its own lines of makeup (ISH — in partnership with Joey Maalouf) and clothing and accessories (Summer & Rose).

The TV app is yet another way to leverage the work the company does across multiple channels with influencers. The boxes inform the videos, which have lived on the company’s website since March. It also complements the company’s iPhone app, which launched earlier this year with an augmented reality experience built around FabFitFun’s subscription boxes.

The new app will put the company’s videos on Apple TV and Amazon Fire, significantly expanding the footprint beyond its current 400,000 video viewership.

Most of the content on the app is exclusive to members, but during January a selection of cooking and fitness tips and tricks will be available for free.

Chefs Silvia Baldini, winner of Food Network’s “Chopped” series, and Pamela Salzman, an LA-based cookbook writer, will offer lessons from the kitchen while new fitness videos will be made available daily on the app and through Facebook Live workouts with popular influencers.

For instance, Rachel Brathen will be offering yoga classes; oneOeight Fitness Prevail Boxing will be offering boxing lessons; Exhale Spa, is pitching fusion classes of pilates, ballet and yoga; and The Barre Code is offering… well… barre.

The company also is incorporating its own products into the video content with Burn 60, which uses the FabFitFunTV fitness ball (coming in the company’s next subscription box).

To help helm this new content voyage, FabFitFun has enlisted Carter Baldwin as the company’s new vice president of content. On the job since August, Baldwin was the former head of his own video shop that worked with brands like JustFab before going in-house at Ipsy to help Michelle Phan grow her beauty empire.

At FabFitFun, Baldwin will help manage the company’s content creation from the new video production studio space it just set up in its offices.

“Content is part of FabFitFun’s DNA,” said Baldwin in statement. “We’re excited to build on the momentum of our FabFitFunTV launch earlier this year with the opening of FabFitFun Studios at our newly-expanded headquarters. We expect the space to be a hub for collaboration with our influencer and brand partners to create original content exclusively for our community.”

New studio space and an app for over the top video distribution are just laying the groundwork for what looks to be a busy year for FabFitFun. According to Daniel Broukhim, there are plans in place for a men’s membership box “down the road” and the company will continue to roll out more brands with its growing stable of influencers.

“We think the opportunity is to keep launching brands like ISH with influencers as part of our platform,” Broukhim said. “The reason we launched the contour kit is because Joey wanted to do it and our customers wanted it.”

Giving online retailers a physical returns location nets HappyReturns $8 million

As online retailers continue to seek out ways to bridge the digital divide between themselves and their customers, Happy Returns, which provides physical locations for online shoppers to return and refund unwanted purchases, has raised $8 million to help.

The Santa Monica, Calif.-based company, raised its new money from U.S. Venture Partners along with previous investors Upfront Ventures and TrunkClub founder Brian Spaly.

“The market is really turning toward this idea of buy online and return in person,” says Happy Returns chief executive, David Sobie. “For a long time it was okay for returns to be this friction point in e-commerce… it’s no longer okay.”

In the intervening months since the company’s last financing in May, Happy Returns has added 50 locations in 14 cities to its network of return locations and added additional retailers.

For vendors, the Happy Returns value proposition is to take some of the cost and overhead sting out of managing their own returns. And with online sales, returns are a huge cost center and an obstacle to higher sales. Online apparel stores typically see return rates of 30% to 40%, according to Sobie.

According to a Forrester retail analyst report provided by the company, 85% of online shoppers are more likely to shop from stores that offer free, in-person returns with immediate refunds.

As Amazon expands its network of physical locations through the Whole Foods acquisition and its smattering of bookstores around the country, Sobie says its a validation of the thesis that he’s had for years.

With the new cash, Sobie said Happy Returns would begin experimenting with different types of redistribution — either sending items to liquidators, or to refill demand in existing stores, as well as adding refurbishing features to resell at outlets.

The company’s plan is also to expand the number of return locations it offers from 50 this year to 200 by the end of 2018.

Locations vary from the concierge stand at higher end malls to owner-operated boutiques. For malls and stores, the Happy Returns locations offer the benefit of additional foot traffic with a consumer that is primed to buy (since they just received a refund on their last purchase).

“We believe this is a uniquely qualified team capitalizing on market trends, and we are impressed with how efficiently they have scaled the business,” said Rick Lewis, Partner at USVP in a statement.