Tag: Amazon

12 Big Trends Shaping the Future of Digital Advertising

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Mary Meeker presented the most anticipated Powerpoint deck of the year at the annual Recode Code Conference last Wednesday. Below are the big trends she highlighted that will shape the future of digital advertising.

  1. Mobile Growth May Have Peaked
    2017 was the first year in which smartphone unit shipments didn’t grow at all. As more of the world become smartphone owners, growth has been harder and harder to come by. The same goes for internet user growth, which rose 7 percent in 2017, down from 12 percent the year before.
  2. Digital Time Spent is Increasing
    People, however, are still increasing the amount of time they spend online. U.S. adults spent 5.9 hours per day on digital media in 2017, up from 5.6 hours the year before. Time spent on mobile has reached 3.3 hours a day, which is more than double from 1.6 hours in 2012.
  3. Search is Evolving
    49 percent of product searches now start at Amazon—36 percent start on a search engine. What’s more, Amazon is better poised to capitalize on those searches with features like one-click purchasing, which encourage consumers to use Amazon to fulfill orders that result from those searches. Search engines and content sites do a better job of inspiring consumers to want things.
  4. The Lines are Blurring Between Ads, Products, Content & Transactions
    Online browsing is evolving into buying, fueled by social media. Facebook leads the way with 78 percent of survey respondents saying they have discovered products on the platform, followed by Instagram and Pinterest with 59 percent, Twitter with 34 percent and Snap with 22 percent. What’s more, 55 percent of respondents said they have purchased a product online after a social media discovery.
  5. Google is Shifting to E-commerce as Amazon Shifts to Search
    Google is expanding from an ads platform to a commerce platform via Google Home Ordering. Meanwhile, e-commerce giant Amazon is moving into advertising.
  6. Voice is Going Mainstream
    Voice-controlled products like Amazon Echo are taking off. The Echo’s installed base in the U.S. grew from 20 million in the third quarter of 2017 to more than 30 million in the fourth quarter.
  7. E-Commerce Growth is Accelerating
    E-commerce sales growth is continuing to accelerate. It grew 16 percent in the U.S. in 2017, up from 14 percent in 2016. Amazon is taking a bigger share of those sales at 28 percent last year. Conversely, physical retail sales are continuing to decline.
  8. Subscription Services Continue to Grow
    They’re seeing massive adoption, with Netflix up 25%, The New York Times up 43%, and Spotify up 48% year-over-year in 2017. A free tier helps to accelerate conversion rates.
  9. Data Driven Experiences Create a Privacy Paradox
    Advertising and usability improvements driven by data create what Meeker calls a privacy paradox: Advertising and services are made better thanks to user data, users engagement and value is increased, and regulators want to ensure user data is not used improperly. Technology-driven trends are changing so rapidly that it’s rare when one side fully understands the other, setting the stage for reactions that can have unintended consequences
  10. Print Media Continues to Decline
    Since 2011, the share of U.S. media consumption that happens in print has dropped about 40 percent. But the share of American ad dollars that go to print has dropped more than 60 percent.
  11. Disruption is Accelerating
    The speed of technological disruption is accelerating. It took about 80 years for Americans to adopt the dishwasher. The consumer internet became commonplace in less than a decade.
  12. Ai Will Continue to Evolve
    Internet leaders like Google and Amazon will offer more artificial intelligence service platforms as AI becomes a bigger part of enterprise and advertising spending.

Here are the slides:

Original Programming, The New Internet Video Land Grab

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This week, Hulu announced a slate of 10 exclusive shows coming to its platform this summer—one of the most aggressive moves yet in a land grab that is taking place among the pioneers of Internet video. Netflix has now green-lighted five premium series, and earlier this month, Amazon unveiled Amazon Studios, its first foray into original video. At YouTube, Google is plowing $100 million into launching 100 channels, with the goal of creating more content than there are hours in the day to watch.

In the hypercompetitive community of TV creation, where fortunes are made and programs are killed without mercy, online is where the action is. “The phrase that I keep hearing a lot is that it’s the Wild West,” says J.D. Walsh, the showrunner behind the original Hulu series, Battleground. “And I think that it is the Wild West. What that connotes to me is that nobody really knows what the rules are, what’s going to be stable, or who is going to [emerge as] the leaders. But even within the Wild West, you did have some major cities—and that’s what you’re seeing with these platforms.”

Hulu, Netflix, Amazon, and YouTube are all taking a unique approach to original programming on the Web. Their differing bets—on such questions as quantity, polish, advertising versus subscriptions, nudity, and more—provide a hint of what the future of “television” will resemble.

Hulu, which is jointly owned by the legacy television networks, is coming to resemble a broad-interest network with catholic tastes. Of the 10 series announced this week, three are wholly original to Hulu, and they run the gamut: there’s Spoilers, a kind of movie club hosted by Kevin Smith (Clerks); Up to Speed, a travelogue by Richard Linklater (Dazed and Confused); and We Got Next, a “bro-mantic comedy” about a pickup basketball clique. The other seven titles, for which Hulu bought exclusive streaming rights, involve everything from teen pregnancy to the British clergy to a faux-gritty mockumentary set on an elementary-school playground.

Andy Forssell, the executive in charge of content—and a $500 million annual budget—says he has no idea how many titles Hulu will come to produce in the coming years. “We’re quality-gated,” he said in a recent interview. “There’s no quota that I want to go hit. We don’t have a set number of hours to fill, like a lot of traditional networks do—that’s actually an advantage I want to jealously guard.”

“A year ago, it was difficult to have people audition for our show because they just thought, ‘Oh, it’s just going to be on the Internet.’ Now we don’t have that problem anymore.”

Jason Kilar, the chief executive officer of U.S. online video content provider Hulu. (Kyodo / Landov)

One thing Hulu’s original titles will never depict, though, is nudity. That’s in part because a significant portion of the company’s revenue comes from advertising.

That provides an easy point of comparison with Netflix, which has sought to reposition itself as the HBO of the Internet, home to premium dramas and comedies that viewers are used to finding on pay-tier cable channels. That includes the promise of gore—horror auteur Eli Roth is developing a werewolf series titled Hemlock Grove—and, when appropriate, boobs. In April, at an event in Las Vegas that offered a first look at Netflix’s original programs, much was made of the shower scenes to come in Orange Is the New Black, a comedy set in a women’s prison.

The first Netflix series, Lilyhammer, premiered in the United States in February, and four more will come in 2013, including the $100 million drama House of Cards, with a pilot directed by David Fincher (The Social Network) and Kevin Spacey in the lead role. While Hulu plans to release episodes of its programs week by week, as the broadcast and cable networks do, Netflix will make whole seasons available to stream at once, a competitive advantage in courting the most artistically demanding writers and directors.

Amazon is far behind Hulu and Netflix’s leads, having only just unveiled its Amazon Studios division in early May. But its model is intriguingly disruptive, and of a piece with the company’s dotcom and retail roots. While Hulu and Netflix are hobnobbing with Morgan Spurlock and Jenji Kohan, Amazon is crowd-sourcing its production process, soliciting pilot scripts from the general public.

After a 45-day option period, Amazon will offer chosen artists $10,000; if the series makes it to the Amazon Instant Video service, creators get $55,000 and up to 5 percent of the proceeds from toy and T-shirt sales. And for now, Amazon is taking the opposite of Hulu’s kitchen-sink approach to genre, asking for pitches specifically in comedy and children’s programming.

Then there’s YouTube, with the deep pockets of Google and a deeper commitment to the messy, anything-goes world of user-generated Web video. Its 100 subsidized channels will feature sports talk, family fare, self-help, and virtually everything else users expect of the YouTube jungle. These episodes will be Web-sized—a couple of minutes each, instead of the familiar 22-minute blocks that will be found on Amazon—and creators will get a cut of Google’s advertising.

Why are these online video giants all rushing into original content? A number of factors play a role. With more homes gaining access to broadband Internet—and higher quality feeds—the audience for streaming is reaching a critical mass. Viewers have more choices about where to watch video, too—Friday Night Lights is available on Amazon Instant, Netflix, Hulu, Apple’s iTunes, and other services. As these libraries get more similar, the streaming companies have only two options for differentiating themselves: either pay through the nose for exclusive deals, or put that money toward great original programming.

The talent is ready. “A year ago, it was difficult to have people audition for our show because they just thought, ‘Oh, it’s just going to be on the Internet,’” says Battleground’s Walsh. “Now we don’t have that problem anymore.”