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Digital trends from China are going mainstream

TikTok isn’t the only disruption in social media and e-commerce to come out of China in 2020.

Other trends from Chinese e-commerce are now going mainstream.

China, the land of online marketplaces, is already home to 3 of the top 5 highest-grossing marketplaces in the world.

In many ways, e-commerce in China is still starkly different than what we’re used to.

Everything in China is app-driven and centralised to a handful of platforms.

The centre of growth is shifting and Asia is expected to represent 56% of global consumer demand by 2030.

Global brands are already using China as a blueprint for developing their e-commerce strategies for the next decade.

The two biggest e-commerce trends to come out of China this year are:

  1. Live e-commerce
  2. Social e-commerce

Amazon ran Amazon Live in the US on Prime Day.

And Facebook introduced ‘Live Shopping’ for both Facebook and Instagram.

Now all major social media apps – Pinterest, Snap Chat, YouTube and TikTok – offer shoppable content or integration with your Shopify store.

Influencer-driven ecommerce and live-streaming are excelling in China.

You’ve may have seen this video – “Creepy Social Media Influencer School in China” – floating around lately:

During a live-stream, customers can interact with each other and the influencer, discuss the product, ask questions and place an order – all at the same time.

On Singles’ Day this year, JD made $15m in a 6-second live-streaming session.

Brands are embracing influencer-driven e-commerce with open arms.

Because it offers a combination of entertainment, engaging with brands and meeting your favourite influencers.

Consumers in Asia skipped the credit card altogether.

They went straight from cash to e-wallets instead.

And the same is now true for new business models.

Mobile banking, robo-advisory services, and wealth management tools have all enabled a shift towards mobile-first e-commerce.

Consumers in Asia aren’t only open to these new technologies but actively embracing them.

And this is giving rise to a new type of business model – the super app.

For consumers, super apps offer a single point of contact into a vast ecosystem of services.

And for businesses, it brings down the cost of marketing and sales – furthering the benefits of building digital value networks.

What does this mean for you?

There are differences in regulation, consumer maturity and consumer preferences with China.

And you shouldn’t chase advancement for the sake of advancement itself.

But you should be focusing on finding new ways to serve your customers.

Focus on building digitally-enabled value chains, collaborative ecosystems for e-commerce and innovative go-to-market solutions.

The blueprint already exists.

Now you just have to make the most of it.

How to win in the Attention Economy

Because we’re picky.

And the more choice we get the pickier we are.

We pay more attention to content when it’s coming from a source that we find:

  • trustworthy,
  • appropriate and
  • objective.

But just because someone notices you doesn’t mean they’re paying attention.

Given my interest in you reading my newsletter, I should be the last person to say this.

But written-text is so 1762.

And don’t get me wrong, I love reading!

Written-text is great for explaining things.

But for grabbing your attention?

Especially when you’re scrolling faster than you think?

A text wall is the last thing you need.

Because you process images 60 000x faster than text.

93% of all communication is visual.

Visual stimulation grabs your attention, affects your attitude and enhances your emotions.

Complex information is even easier for you to process if it’s visual.

You’ll also remember the important details better later on.

That’s why interactive content performs better.

Yet most content produced today is static.

But things are changing.

A recent benchmark report on ABM programs noted that 44% of marketers are already using interactive content that’s tailored to the industry or role of their prospects. 

And interactive content isn’t limited to online.

Data visualisations and infographics are just a start.

When it comes to getting – and holding – your attention, brands are pulling out all the stops offline.

Amazon delighted customers receiving deliveries around Halloween with an interactive AR pumpkin.

And Cadilac launched a virtual showroom for luxury car buyers.

But Fortnite is the undisputed king of attention.

Disney, Netflix and other streaming services see the game as their biggest threat.

Because Fortnite has the potential to captivate millions.

Their latest season finale had 3.4 million viewers on YouTube.

And a whopping 15.3 million participants.

As a comparison, the Game of Thrones season finale had 13.6 million viewers.

And all they could do was sit and watch.

The success of Fortnite reveals a fascinating truth.

Fortnite isn’t just a game.

It’s a destination.

With a myriad of immersive entertainment experiences and social interactions.

And in a world full of distractions, attention is the real currency.

The slow revival of TV Advertising from Netflix to Google

In half the time it took Netflix to become synonymous with binge-watching ad-free content, we have more streaming services than we know what to do with, and the industry is on the verge of another transformation.

In this newsletter, I will be using some industry jargon, so let’s get those definitions out of the way first.

1. Streaming Video On Demand (SVOD):

Services such as Netflix, Disney+ and Amazon Prime are known as Streaming Video on Demand (SVOD) services. These services offer ad-free streaming services and provide a collection of original and licensed content.

2. Ad-Supported Video on Demand (AVOD):

Services such as Hulu and Peacock (possibly HBO Max in 2021) that offer lower-tier subscription models in exchange for showing ads to the viewers are known as Ad-Supported Video on Demand.

3. Over the Top (OTT)

These are streaming services that users can access directly through the internet. Services such as Netflix, Amazon Prime, Hulu and others are known as OTT.

4. Connected TV (CTV):

Connected TV or CTV is any television that is connected to the internet and where users can stream content directly from the internet. Smart TVs that are connected to the internet or TVs that are connected to gaming consoles and other devices that enable streaming are called CTVs.

Now on to the exciting stuff

Netflix, Disney and Amazon

In the streaming business, keeping paying customers isn’t cheap, and most streaming services are struggling to keep subscribers past the first 6 months.

Source: Bloomberg

Here’s the understatement of the year: Maintaining an attractive streaming service in 2020 isn’t cheap.

Streaming services need to maintain a healthy mix of evergreen TV shows (think Friends, Seinfeld etc.) that are licensed from other producers to keep people paying month after month. But it’s the exclusive original content that attracts new subscribers.

And no one spends more on creating original content than Netflix. Last year Netflix spent $15 billion on creating original content compared to Amazon’s $6 billion.

Source: Reelgood

At the moment, Netflix, Disney+  and Amazon Prime are the three largest streaming services vying for a share of your wallet.

In addition to competing with each other, they also have to contend with an ever-increasing number of services offering cheaper ad-supported subscription plans.

Netflix, being the most expensive of the three, is already seeing their growth in the US plateau with analysts expecting an increase in subscriber churn in the near future as consumers struggle with more choice and limited budgets.

Churn isn’t a Netflix problem alone.

The tale of two business models

The streaming industry is at a crossroads. On the one hand, there’s the incredibly high upfront cost of producing original content and spending on marketing to retain subscribers to offset that investment in the long run.

On the other is the ad-supported model.

And the latter is increasing in popularity. Several surveys in the US and the UK already show that people prefer it to the more expensive streaming services.

But that’s not the only reason.

Other reasons include getting access to a much larger pool of content (think Hulu) and being able to find content that isn’t currently available on larger streaming services.

Things get even more interesting when you start accounting for hundreds of national and regional media producers, creating their own apps for ad-supported online streaming.

According to IHS Markit report, new AVOD services and improvement in adtech are driving increased interest in CTV advertising, and the market is expected to grow at CAGR of 11% between 2018 and 2023.

Would you like ads to go with that Netflix and Chill?

If you’re anything like me, you take pride in avoiding ads at all cost, and you’re unlikely to be convinced to watch any ads when streaming your favourite content willingly.

The whole promise of Netflix is the uninterrupted binge-watching bliss. I mean, many of us take offence to Netflix showing the ‘Are you still watching?’ notification. 

Of course, I am! Stop judging me and play the next episode, smart ass.

I digress.

The ad-supported model doesn’t work for Netflix, and that’s because they taught us that we shouldn’t have to watch ads when we subscribe to Netflix.

That doesn’t mean that Netflix hasn’t tried.

Perhaps you remember the 2018 A/B test when some viewers were shown non-skippable ads for Netflix’s own content in between episodes. You can probably guess how well that was received.

But just because Netflix has to look for other venues to continue its growth and contend with more aggressive competitors, doesn’t mean that ads don’t work for streaming services.

Advertising on CTV

A survey conducted by Unruly in the UK discovered that as many as 21% of respondents were willing to try out ad-supported streaming options. It turns out that people want to watch ads as long as AVOD services offer flexibility, control and personalisation.

That takes care of the viewers, so what about the advertisers.

For advertisers, the added benefit of advertising on CTV besides the cheaper cost, you can run large campaigns at a tenth of a cost of linear TV, is better memorability.

The same study found that people remembered the ad much better and had a much more positive experience when the ad matched their mood and the context of the content they were watching.

Hulu and other AVOD streaming services

 According to industry estimates, over half of Hulu’s (owned by Disney) users subscribe to the ad-supported model.

Source: eMarketer

According to another estimate, 20% of the Upfront budget in 2019 went to Amazon Fire TV and Roku, both of which offer advertising options. In 2020 that number jumped to 25% with Disney, NBC, Amazon and Roku bringing more advertising revenue to their AVOD services.

Comcast’s has also announced providing 10 different ad-formats including shoppable ads on Peacock and HBO Max is rumoured to introduce an ad-supported model next year.

Samsung Smart TVs to the rescue

 With online video blowing up as it is, a mere 5% increase YoY doesn’t sound like much of an improvement.

And it really isn’t but not without a good reason.

For advertisers, success in video advertising is about efficiency and scale

And the current fragmented landscape of CTV advertising isn’t built to deliver either. 

First, there are no standards on how ads are sold across different platforms, which leads to the second challenge of accurately measuring what content people are consuming as they hop between multiple services.

This is where Automatic Content Recognition or ACR comes in.

Think of ACR as facial recognition for content being displayed on a screen.

ACR takes pixels from the content being viewed on the TV screen and matches it with an existing library to determine whether a viewer is watching Star Trek or exploring the shores of England aboard a biking ship in AC Valhalla.

Samsung Ads – the advanced TV advertising arm of Samsung, is using ACR to gather this data from 50 million Samsung Smart TVs in the US. Samsung recently announced that it would also start selling its ad inventory across its smart TVs programmatically.

Besides Samsung ad-tech provider Zephyr is partnering with Iris TV to make CTV advertising more attractive and friendly for advertisers.

If you’ve come this far, you’re probably wondering that all this takes care of making linear TV more addressable and digital but what about the undisputed king of streaming video, YouTube?

Google and YouTube

Content views on CTV grew more than any other device for YouTube this year.

And now Google is setting the stage for attracting TV budgets to its streaming platform.

YouTube is already well-known for on-demand video content. There’s YouTube Originals and YouTube TV that offer content from other streaming services, channels, live sports events and unlimited DVR storage.

While Samsung Ads and others are sorting out the linear end of CTV transformation, Google wants to continue its dominion over the web.

But there’s a slight hiccup in its plans.

Advertisers still haven’t come around to viewing YouTube as a replacement for TV.

Can you really blame them, though?

For a long time, YouTube has been positioning itself as the solution to linear TVs troubles. While your investments in branded advertising and massive national campaigns on linear TV were difficult to measure, YouTube offered you measurable performance and addressability.

Brand safety has always been a bit of an issue online, but for the most part, advertisers haven’t been too bothered as long as the ads are shown next to content that’s not too inappropriate. 

Content on YouTube hasn’t really been on par with the production quality we’ve come to associate with TV. As a result, advertisers have been satisfied focusing on reaching audiences based on their interest.

Advertising on TV takes a bit more than that.

In addition to brand safety, advertisers also focus on brand suitability when advertising on TV. 

Brand suitability is finding the right inventory mix as well as the right shows that match the sentiment your brand is looking to establish. Unsurprisingly ensuring brand suitability is much easier when buying ad-inventory directly from a TV channel than with CTV at the moment.

New and improved ad-offering on YouTube

Attracting TV-style branded campaigns to YouTube is a must-win battle for Google for maintaining its market leadership in online advertising.

And YouTube is Google’s best bet at offering much more attractive cross-media advertising options for both branded and performance marketing campaigns spanning all formats and devices.

Amidst the recent brand safety concerns on YouTube, Google extended an olive branch to advertisers by offering Google Preferred inventory advertising program to include YouTube TV as well.

Going one step ahead, YouTube has been gathering aggregated data from brand lift surveys across YouTube TV, which it plans to share with advertisers in the form of Do’s and Don’ts of CTV advertising next year.

As CTV viewership grows, Google is also building the infrastructure around YouTube to position it as the strongest online video streaming service for CTV. Starting next year, Nielsen will include ads running on YouTube in its Digital Ads Rating system.

This is yet another step that will move YouTube higher up in the brand advertising food chain.

What did we learn from all of this?

There are three different types of business models that we need to pay attention to:

1. Born digital.
2. Born offline but transformed into digital.
3. Offline but augmented by digital.

Any changes across these three types have the power to shift industries and disrupt existing ways of getting things done. 

Linear TVs transformation from offline to online has been in the making for a long time, and now it’s reaching critical mass. 

To all the media planners, entrepreneurs and advertisers, keep your eyes peeled because this phase of TV’s transformation to digital is going to be an exciting one!


The battle for short-form video

I’ve been a little distracted by the political drama surrounding TikTok. 

But as entertaining as it is to see Trump’s antics and Microsoft rushing to meet the September 15th deadline, the bigger picture here isn’t just about the politics.

It’s about who will own short-form video – and with it the attention of today’s teens and twentysomethings.

As the experts put it, Gen Z’ers are not only trying to get their parents to buy them stuff, but mom and dad are listening to their opinions on what to buy for themselves. And these opinions are, in turn, influenced by YouTubers, Twitch streamers and TikTok creators.

The future of influencing is short-form video.

And everyone’s got their play.

Yesterday Facebook officially launched Reels in 50 countries.

Instagram’s Reels is TikTok in every way, except it only lets you make 15-second videos – so you know not exactly the same.

Facebook is no stranger to copying features from smaller apps. It’s not like they can buy them off, not with the antitrust authorities breathing down their necks.

Still, the timing of this launch couldn’t be perfect.

For a long time, nobody was quite sure what TikTok was all about. And just as advertisers were warming up to it, their troubles in the US started. 

Enter Instagram. It’s familiar, your fans are already there so, why not give Reels a go instead?

Instagram is quickly turning into Facebook’s super-clone-app. But I still like Instagram and as Sara Frier wrote in Bloomberg, Instagram has what Facebook does not, which makes it Zuckerberg’s best bet at staying relevant.

Snap Chat’s attempt at giving uncertain TikTok users a new home.

Last week Snap Chat introduced a new feature that, just like TikTok, allows users to add music to their snaps. 

I’m excited to say that they didn’t stop there. As TechCrunch reported, users will be able to swipe up to view the ‘album art’ and even listen to the whole song on their favourite streaming app.

See, Zuck, it’s really not that hard.

Before TikTok came along, Snap Chat was the app for teenagers. Although they have a large userbase outside the US, they reach more teenagers and twentysomethings in the US than Facebook, Messenger and Instagram combined.

“Snapchat says its music feature, however, will allow fans to form deeper connections with artists and music. It also spoke to its strength in being a tool for close friends, which gives it more influence — largely because of how its younger user base values friend-to-friend recommendations.” –  Sarah Perez, TechCrunch

Have you heard of Quibi?

There isn’t much to say about it since not much has happened since it’s launch earlier this year. Quibi is a short-form original content streaming app that offers original content in ‘10-minute or less’ chunks. 

It’s still early days and there’s some controversy around how successful its launch has been. 

You know, I do like the idea of original content that’s designed to entertain me in 10-minutes or less but I don’t know if I’ll pay for it. At the moment the future looks uncertain for an app designed for commuters and launched at the worst time possible for commuting.

And then there’s Microsoft

I know they don’t own TikTok yet but their play for its US business is worth mentioning.

While they do own Xbox, Bing and LinkedIn, for the most part, they’re a business-to-business company. And we all know how it turned the last time when they went into video streaming business.

To be honest, when I first read the news I was all ‘hold on a minute, they wanna do what now?’

But after reading Tim Peterson’s explanation, I think it might just be the right move for Microsoft.

This purchase is going to be costly and their expenses won’t end there. But TikTok will bring Microsoft closer to Gen Z and give it proper legs to stand on against the Facebook-Google duopoly.

Finally, an actual use case for AR

You probably weren’t expecting to read about luggage this summer. Neither was I.

Until I read about how an online retailer of bags, eBags, got 112% increase in mobile conversions AND a drop in customer returns all because of using AR (Augmented Reality).

Pokemon Go started the AR craze but the reality of it, so far, hasn’t quite lived up to the hype.

Many brands have been playing around with the tech but everyday use is still lacklustre.

In the meantime, it’s nice to see what we can expect from AR in e-commerce.

Google’s 3D ad-format is coming out of beta.

And it’ll be available to everyone.

Not to mention that the greater influence of Amazon in e-commerce isn’t leaving brands much choice other than to set up shop in the marketplace.

More Amazon, though, means smaller margins. Plus putting all your eggs in one basket isn’t strategic.

Creative solutions are how you can make your own ecommerce site attractive to customers.

And AR makes it easier for customers to experience the product in a more complete way – as they would in a physical store – which is never a bad idea.