This wasn’t the internet we envisaged

The debate over privacy on Facebook got me thinking about the internet we envisaged. Reading media commentary on Tim Cook’s recent address at Duke University prodded me into action.

What do I mean by we? I mean the people who:

  • Wrote about the internet from the mid-1990s onwards
  • Developed services during web 1.0 and web 2.0 times

I’ve played my own small part in it.

At the time there was a confluence of innovation. Telecoms deregulation and the move to digital had reduced the cost of data and voice calls. Cable and satellite television was starting to change how we viewed the world. CNN led the way in bringing the news into homes. For many at the time interactive TV seemed like the future of media.

Max Headroom

Starship Troopers

The Running Man

Second generation cellular democratised mobile phone ownership. The internet was becoming a useful consumer service. My first email address was a number@site.corning.com format email address back in 1994. I used it for work, apart from an unintended spam email sent to colleagues to offload some vouchers I’d been given.

My college email later that year was on a similar format of address; on a different domain. I ended up using my pager more than my email to stay in touch with other students. At college I signed up for a Yahoo! web email. I had realised that an address post-University would be useful. Yahoo! was were I saw my first online ads. They reminded me of garish versions of ads in newspapers.

I used to go to Liverpool at least once a week to go to an internet cafe and check my email account. I found out that I had my first agency job down in London when I was called on my cell phone whilst driving. The internet was as much as an idea as anything else and the future of us netizens came alive for me in the pages of Wired and Byte. Both were American magazines. Byte was a magazine that delved deeper into technology than Ars Technica or Anandtech. Wired probed the outer limits of technology, culture and design. At the time each issue was a work of art. They pushed typography and graphic design to the limits. Neon and metallic inks, discordant fonts and an early attempt at offline to online integration. It seemed to be the perfect accompanyment to the cyberpunk science fiction I had been reading. The future was bright: literally.

Hacking didn’t have consumers as victims but was the province of large (usually bad) mega corps.

I moved down to London just in time to be involved in the telecoms boom that mirrored the dot com boom. I helped telecoms companies market their data networks and VoIP services. I helped technology companies sell to the telecoms companies. The agency I worked for had a dedicated 1Mb line. This was much faster than anything I’d used before. It provided amazing access to information and content. Video was ropey. Silicon.com and Real Media featured glitchy postage stamp sized clips. My company hosted the first live broadcast of Victoria’s Secret fashion show online. It was crap in reality, but a great proof of concept for the future.

I managed to get access to recordings of DJ sets by my Chicago heroes. Most of whom I’d only read about over the years in the likes of Mixmag.

All of this pointed to a bright future, sure there were some dangers along the way. But I never worried too much about the privacy threat (at least from technology companies). If there was any ‘enemy’ it was ‘the man’.

In the cold war and its immediate aftermath governments had gone after:

  • Organised labour (the UK miners strike)
  • Cultural movements (Rave culture in the UK)
  • Socio-political groups (environmentalists and the nuclear disarmament movement)

I had grown up close to the infamous Capenhurst microwave phone tap tower. Whilst it was secret, there were private discussions about its purpose. Phil Zimmerman’s PGP cryptography offered privacy, if you had the technical skills. In 1998, the European Parliament posted a report on ECHELON. A global government owned telecoms surveillance network. ECHELON was a forerunner of the kind of surveillance Edwards Snowden disclosed a decade and a half later.

One may legitimately feel scandalised that this espionage, which has gone on over several years, has not given rise to official protests. For the European Union, essential interests are at stake. On the one hand, it seems to have been established that there have been violations of the fundamental rights of its citizens, on the other, economic espionage may have had disastrous consequences, on employment for example. – Nicole Fontaine, president of the european parliament (2000)

I advised clients on the ‘social’ web since before social media had a ‘name’. And I worked at the company formerly known as Yahoo!. This was during a brief period when it tried to innovate in social and data. At no time did I think that the companies powering the web would:

  • Rebuild the walled gardens of the early ‘net (AOL, CompuServe, Prodigy)
  • Build oligopolies, since the web at that time promised a near perfect market due to it increasing access to market information. Disintermediation would have enabled suppliers and consumers to have a direct relationship, instead Amazon has become the equivalent of the Sears Roebuck catalogue
  • Become a serious privacy issue. Though we did realise by 2001 thanks to X10 wireless cameras that ads could be very annoying. I was naive enough to think of technology and technologists as being a disruptive source of cultural change. The reason for this was the likes of Phil Zimmerman on crypto. Craig Newmark over at Craigslist, the community of The Well and the Electronic Frontier Foundation. The likes of Peter Thiel is a comparatively recent phenomenon in Silicon Valley

We had the first inkling about privacy when online ad companies (NebuAd and Phorm) partnered with internet service providers. They used ‘deep packet inspection’ data to analyse a users behaviour, and then serve ‘relevant ads.

Tim Cook fits into the ‘we’ quite neatly. He is a late ‘baby boomer’ who came into adulthood right at the beginning of the PC revolution. He had a front row seat as PCs, nascent data networks and globalisation changed the modern world. He worked at IBM and Compaq during this time.

Cook moved to Apple at an interesting time. Jobs had returned with the Next acquisition. The modern macOS was near ready and there was a clear roadmap for developers. The iMac was going into production and would be launched in August.

Many emphasise the move to USB connectors, or the design which brought the Mac Classic format up to date. The key feature was a built in modem and simple way to get online once you turned the machine on. Apple bundled ethernet and a modem in the machine. It also came with everything you needed preloaded to up an account with an ISP. No uploading software, no drivers, no DLL conflicts. It just worked. Apple took care selecting ISPs that it partnered with, which also helped.

By this time China was well on its way to taking its place in global supply chains. China would later join the World Trade Organisation in 2001.

The start of Tim Cook’s career at Apple coincided with with the internet the way we knew it. And the company benefited from the more counter culture aspects of the technology industry:

  • Open source software (KDE Conqueror, BSD, Mach)
  • Open standards (UNIX, SyncML)
  • Open internet standards (IMAP, WebCAL, WebDav)

By the time that Facebook was founded. Open source and globalisation where facts of life in the technology sector. They do open source because that’s the rules of business now. It is noticeable that Facebook’s businesses don’t help grow the commons like Flickr did.

Businesses like Flickr, delicious and others built in a simple process to export your data. Facebook and similar businesses have a lot less progressive attitudes to user control over data.

Cook is also old enough to value privacy, having grown up in a less connected and less progressive age.  It was only in 2014 that Cook became the first publicly gay CEO of a Fortune 100 company. It is understandable why Cook would be reticent about his sexuality.

He is only a generation younger than the participants in the riots at the Stonewall Inn.

By comparison, for Zuckerberg and his peers:

  • The 1960s and counterculture were a distant memory
  • The cold war has been won and just a memory of what it was like for Eastern Europeans to live under a surveillance state
  • Wall Street and Microsoft was their heroes. Being rich was more important than the intrinsic quality of the product
  • Ayn Rand was more of a guiding star than Ram Dass

They didn’t think about what kind of dark underbelly that platforms could have and older generations of technologists generally thought too well of others to envisage the effects. You have to had a pretty dim view of fellow human beings.

More information
Tim Cook brought his pro-privacy views to his Duke commencement speech today | Recode
Bugging ring around Ireland | Duncan Campbell (1999) PDF document
The ECHELON Affair The EP and the global interception system 1998 – 2002 (European Parliament History Series) by Franco Piodi and Iolanda Mombelli for the European Parliament Research Unit – PDF document
Memex In Action: Watch DARPA Artificial Intelligence Search For Crime On The ‘Dark Web’| Forbes
X10 ads are useless – Geek.com
Disintermediation – Wikipedia

Marvel’s Korean Infinity Wars Problem

The Korean screenings of Infinity War (part one) went horribly wrong. The film did really well in the Korean box office, partly due to a huge amount of pre-sold tickets. But the subtitles were so poorly done that criticism has outshadowed other aspects of the film within the country.

Asian Boss did a good straw poll of Korean citizens on it.

ICYMI | 万一你错过了| 당신이 그것을 놓친 경우

Flickr Takes Another Sad Turn, Gets Bought by Something Called SmugMug | Gizmodo – thankful it hasn’t been shut down but pensive. That’s pretty much me done as an Oath customer then

Do Chinese Luxury Consumers Care About British Heritage? | Jing DailyIn the West, we buy into lifestyle brands—we like brands that can sell us everything. But the Chinese consumer likes to go to a specialist for each item. They like to buy their knitwear from one place and their shoes from another. They value quality and are willing to pay for it. – which is where premium streetwear gets in the door

CLOT Magazine | COLDCUT, a journey through cut and paste and audiovisual innovation – great overview of Coldcult’s creative efforts and an interview with them

Facebook – Bipedal voting | Radio Free Mobile – interesting analysis

EX-99.1 Amazon letter to shareholders – quite a scary document via our Matt

Agency Layoffs Or Agency Calibration? | Forrester Research – examine the characteristics of the players winning creative assignments for digital experiences. Tech consultancies like Accenture Interactive, Deloitte Digital, IBMiX and PwC are successful with system integration and digital experiences. Their combination of data, strategy, implementation and creative is a potent offering for marketers. Yet, their ability to capture the essence of the brand is still developing. For agencies – large or small, public or independent – brand creativity is differentiating

A Renewed Vision For WPP | Forrester Research – I don’t think that a technology leader would get creative businesses and you’d end up with yet another ad tech business with the rest of the value withering away but interesting reading

The Battle for the Gayborhood Has Become A Passive-Aggressive Turf War – I was reading this and thinking about the way Canal Street in Manchester became invaded by hen parties from across the UK from the late 1990s onwards

The advertising industry post (prompted by WPP’s 2017 financial results)

Sometimes the most straightforward posts take the longest to write. When I started on this one last week the big question in the minds of people who watch the big advertising conglomerates is are WPP numbers a company problem or an industry problem?

Fortune Global Forum 2013

WPP is looking to simplify its structure with a view to becoming a more agile and transparent business from a client perspective.

Or as it was put in the New York Times

WPP plans to accelerate a programme to simplify the business by aligning digital systems, platforms and capabilities to provide bespoke teams for its clients as opposed to the different agencies that currently compete with each other to win contracts.

Other conglomerates, notably Publicis had already started on this path when it started realigning the group under the ‘Power of One’ vision. WPP is bigger with a fuller offering and wider range of specialisms than many of its peers, no one can be under the illusion about the size of this undertaking.

Let’s talk about the tectonic plates shifting around beneath the feet of ALL  the large advertising and marketing combines:

  • Interpublic Group (IPG)
  • Omnicom
  • Havas
  • Publicis
  • WPP
  • Dentsu

The tectonic plates are:

  • The Four
  • Amazon
  • The decline of brand marketing
  • The new competition
The Four

The Four is a label that Professor Scott Galloway put on Apple, Amazon, Google and Facebook. All of whom he considered to be monopolists that created value for their shareholders by putting the ‘real world economy through a shredder.

In this case I would swap out Amazon and Apple for Alibaba and Tencent, but the allusion to a quartet of horsemen portending a digital apocalypse is a useful allegory for the advertising and marketing sector.  Amazon deserves a section of its own later.

Galloway’s predictions of their destructive power led to an accurate prediction of WPP’s share price tumble this week. (see the video below)

Correlation does not prove causality however — it doesn’t mean that he got the right numbers for the right reasons.

Depending whom you believe Facebook and Google are responsible for 90 percent of online advertising growth outside of China. This represents a massive concentration of media power. It has implications for the creative and planning functions of an agency. Google and Facebook also run much of the advertising technology that purchase are made on. This has decimated much of the advertising technology sector and made it harder to differentiate media planning and buying based on the technology stack.

1707 - ad industry

L2 came up with this research last year based on Google and Facebook revenue targets. If they hit their numbers they would be treating around 14,193 jobs. But it would mean that the corresponding projected number of jobs lost in the advertising industry would be roughly the equivalent of every man and woman around the world employed at vehicle maker Nissan. And that’s just 2017.

L2’s calculations don’t take into account China where the advertising industry has been digitising at a much faster rate than in the west with the bulk of growth going to companies controlled by Tencent or Alibaba.

Given that most of the agencies within WPP and its peers operate on a billable hour model; this represents a considerable potential loss of value. Since the number of people directly equates to revenue.

The consolidation of online media also means that many clients will look to take back control of their media planning and buying process. The argument goes something along the lines of ‘a consolidated media landscape allows for consolidated buying by a global media trading desk due to the inherent simplicity in suppliers. The data comes from the inhouse data management platform and the media vendor (Facebook, Google, Tencent or Alibaba)‘.

The always on creative needed to fuel this process is also being increasing done in inhouse studios, in partnership with their creative agencies as a kind of hybrid model.

This is what Marc Pritchard meant when he talked about taking back control of Procter & Gamble’s marketing as part of a process to save $1.2bn by 2021.  In the latest financial results, WPP claimed that their media buying margins had not suffered – only creative had.

Amazon

At the time of written Jeff Bezos is worth about 112 billion dollars, or just under double the annual defence budget of the UK for 2018. Amazon impacts the advertising and marketing industry in multiple ways.

It is starting to become a big player in online advertising in its own right. I think it would be fair to say that this competition to Google is welcome for the marketing conglomerates judging by Sir Martin Sorrell’s commentary on the likes of CNBC.

Amazon has decimated the high street. Toys R Us, Borders Group, Tower Records, Radio Shack, Maplins are just some of the names which have disappeared. It took a good number of years for people to realise that retailers are locked in a zero sum game when Amazon competes against them. Amazon has unique access to exceptionally cheap capital via its shareholders. There have been companies who have beaten it back like Alibaba’s Taobao and TMall in China. But the company has built up a huge amount of retail power and decimated brands that would have been advertising agency clients.

Amazon has become the default search engine for buying things. This has already displaced up to 20 percent of Google searches depending on whom you believe. It also means that they can place imitation goods and private label goods against branded products.

Amazon has got great data. Amazon has data at the centre of its business what consumers like, what they don’t like, what sells well on marketplace resellers. This has driven a number of the product decisions:

  • Increasing customer basket sizes
  • Expanding into new areas by screwing over marketplace resellers
  • Focusing their efforts on private label products which directly impacts branded products across categories. Amazon Basics is the most obvious private label to consumers, but there are many more where the link isn’t so obvious

Depending on your brand category the answer may be:

  • Owning your own retail chain like Apple or LVMH’s DFS Group
  • Direct sales and subscription services have piqued the interest of FMCG brands like Dollar Shave Club

All of this impacts the advertising sector. For more information on the power of Amazon, I can recommend Scott Galloway’s The Four.

The decline of brand marketing

The relative decline of brand marketing has been driven by a number of factors, some of these factors are good and some aren’t.

Let’s talk about the good reasons first of all.

  • ‘Performance marketing’ driving customers directly to a sale has been transformed by the rise of modern online advertising techniques including search advertising and retargeting. Retailers can zero in on intent to a much greater degree than shopping television or direct response print adverts ever could. Google and social media have turned into reputation platforms which then displayed below-the-line spend from the likes of public relations agencies. This was happening at a time when journalist employed by publications have declined; implying a natural progression
  • At least some consumers can’t be reached through traditional media channels with sufficient frequency for brand advertising. Social media, online video and banner ads make sense as part of an omnichannel approach

The bad reasons:

  • The focus on ROI rather than profits has meant that a balance longer term brand building and shorter term sales has fallen out of kilter. Marketing then becomes a reductive process. To use a farming analogy; its like moving from arable farming with crop rotation to slash and burn. This is particularly noticeable in the way private equity management has affected fast moving consumer brands under its control. Zero-based budgeting is seen as a source of cost cutting rather than ensuring the efficient and effective use of marketing resources
  • Digital first strategies – for many marketers this has meant a move from media-neutral, let the communications problem define the channels used to a digital dogma. I make my living with digital media, but I recognise the flexibility required in thinking to deliver an effective strategy

It isn’t about one approach over another but finding balance that works for sales now and in the future.

The new competition

The rise of digital advertising has seen business services expand ways that we couldn’t predict. Advertising agencies like Ogilvy understood the potential for digital early on. Consultancies were focused on systems integration and the use of technologies to change business functions. As they became interconnected internally and externally; the progression into marketing made sense.

A reduction in creative budgets caused marketing agencies to move into areas like service design. Consultancies have looked to inject creativity into their values and skills set by mirroring the kind of acquisition strategy that built the marketing conglomerates.

In the meantime technology companies, notably Adobe have treated marketing like any other business function with a sale conducted at the c-suite level just like Oracle or similar. In many respects this move is understandable as companies use a data management platform (DMP) to derive audience insights and improve their digital marketing. This isn’t vastly different from historic data warehousing and data mining applications.

The enterprise software companies allow large companies to do internally what they have previously asked media agencies to do.

More information

WPP raises spectre of adland stagnation – Breakingviews (paywall)
WPP Vows to Do Better After Weak Results, Nervous Outlook Send Shares Plunging – The New York Times (paywall)
I Cannes – L2 Research
P&G brand chief vows to ‘take back control’ from agencies | FT (paywall)
Sorrell admits creative is hurting more than media as WPP shares plunge | CampaignLive (paywall)
Amazon is threatening Google’s ad space monopoly, Martin Sorrell says | CNBC

Black flag operation Facebook advertising?

In the wake of Brexit and the election of Donald Trump there is an increased focus on Facebook advertising. I would have thought that the one I was served the other day would have been the equivalent of a three-alarm fire for the advertising team?

Black flag advertising

I didn’t have the presence of mind to look at why I was targeted, my priority was to take a screen shot.