Feb 052015
 
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Coca-Cola are now selling milk as their markets move away from consuming sugary drinks, how much of this is due to the baby boomer era coming to an end?

Following yesterday’s post on McDonalds and the franchising model, it’s worthwhile considering how other businesses are being affected by today’s changing society.

Certainly the fast food industry is one of the most deeply affected as KFC owner Yum Food starts experimenting with a modernised layouts and menus to counter the drift in consumer tastes.

KFC are not alone in struggling with this as McDonalds experiments with own changes in response to the demographic and market shifts.

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McDonalds’, KFC’s and most particularly Coca-Cola’s Twentieth Century success is largely due to the post war baby boom, as the children born during and after World War II reached adolescence – the Jagger generation as described by Irish economist David McWilliams – they indulged themselves in their newfound wealth and personal freedoms that were unthinkable for their parents who struggled through two world wars and a depression.

Coca-Cola was the emblem of that freedom and wealth which made up the twentieth century American dram that the world envied, adopted and copied. Today the world still looks to the United States but its a different America they see.

As the Jagger generation retires and sugary drinks are no longer their first priority their kids and grandkids are looking to different beverages; coffee, energy drinks, bottled water and, possibly, milk which are more in line with their lifestyles.

The task of Coca-Cola, and all the other brands that represented post War American affluence, the task now is to adapt to a very different generation and a society with priorities very different to that of the previous century.

Feb 012015
 
apple-iPhone5s-5Up_Features_iOS8_PRINT

Last week Google and Facebook announced their quarterly results with the search engine giant continuing its worrying slowing of advertising revenue. The respective changes of the two online services show how online advertising is changing.

While Google slows, Facebook is showing accelerating growth for its advertising, driven mainly by mobile users, illustrating the shift in internet usage from desktops to smartphones.

In its 2014 New Digital Consumer report, market research company Nielsen observed that US consumers in 2013 were spending more time accessing the internet on their smartphones than on personal computers; PC use had fallen seven percent to 27 hours a week while mobile use had surged 40% in 2013 to 34 hours.

Television still remained dominant with the combination of live and time shifted TV viewing making up 144 hours of the average American’s week, although it did fall slightly.

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Those figures are a year out of date and there’s no doubt the numbers have accelerated since then. One of Tim Cook’s triumphs at Apple has been the release of the iPhone 6 and the larger form factors in the current generation of smartphones is a response to consumers’ demand to watch video on their devices.

Bigger Android, Windows and Apple smartphones will only seen even more people using their mobiles to watch video and surf the web.

Which puts Google’s predicament in sharp focus; we are definitely in the post-PC world yet their revenue still overwhelmingly comes in from desktop users while Facebook’s is increasingly coming from mobile consumers.

A strength Google has is that its revenues still dwarf the social media upstart’s – Google’s income is currently six times greater and its gross profit margin doubles that of Facebook’s – giving it plenty of leeway to change.

The question is where do the new revenues come from? Probably the biggest opportunity Google missed was in replacing the Yellow Pages franchises with their own local small business listings with Google Your Business (aka Google Place and Google Plus for Business) being lost in a confused and bureaucratic corporate strategy.

Compounding the problem for Google in the small business space is Apple’s entry and while Apple Maps is no contender against Google’s far superior product, an integration with Apple Pay would give Apple far more rich data to enhance listings with – not to mention more of an incentive for merchants to sign up.

With the changing web, Google are going to have to change as well. If advertising is going to remain the mainstay of their business then the company needs to find a way to capture smartphone users.

It could be worse however, a report from consulting firm Strategy Analytics estimates print media’s share of advertising revenue fell another seven percent this year. Time is running out for newspapers.

strategy-analytics-share-of-advertising-revenue

While print is ailing, the advertising battleground is mobile digital although TV still dwarfs the market. How this evolves in the next five years will define the next generation of media tycoons.

Jan 312015
 
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The one factor that saw Microsoft become the biggest computer software company was the rise of the personal computer, similarly the decline of the PC has seen Microsoft stagnate.

One of the companies that benefited from the forces that pushed Microsoft into stagnation was Google and now it appears they could be suffering the same fate.

Yesterday Google released their quarterly results which showed the rate of growth in online advertising is slowing, which is a worry for the company as internet marketing accounts for 90% of the firm’s income.

Like Microsoft, Google has to diversify. Whether it’s the internet of things, smartphones, apps, driverless cars or something else remains to be seen but the pressure is building. Should the shift to mobile or other advertising mediums accelerate, Google could be looking at a declining market and the same problems as Microsoft.

Oct 192014
 
social media services like facebook have fan pages

The story of Whisper and the betrayal of its users continues to roll on, but the real problem is the way social media services are desperately trying to recreate the dead business model of print advertising.

Whisper’s problems with The Guardian continue as the company tries to salvage its reputation but the irony for the service is that it was trying to shoehorn its business to fit the print publishing model that the internet started to erode twenty years ago.

It’s not just Whisper; almost every social media business from Facebook to Twitter wants to be an advertiser funded publishing company, just like the newspapers of thirty years ago.

A few weeks ago I wrote about LinkedIn’s pretensions of becoming a publishing platform and this week Forbes tells of Pinterest’s adventures at the Cannes advertising festival as it sells its marketing services.

Every social media service has some sort of angle that harks back to the golden age of newspaper publishing where print advertising was a deep river of gold. Most of them want to become publishers themselves.

It would be hard to think of a service less suited to being a media company than Whisper; but then there’s Yelp whose main business of reviewing eating houses and bars seems to be totally at odds with newspapers of yore.

On the Salesforce PayPal Media panel last week, Yelp! Founder Jeremy Stoppelman was asked if he saw the restaurant review site as being a media company, his response was “sure, it’s a blogging platform.”

So we have new media aping the old media business models where these platforms try to lock users into information silos; in the same way that a London Times reader would never buy the Sun.

The problem with that is the internet broke down the geographic barriers and today a Sun reader in London can just easily find celebrity gossip on TMZ and the broadsheet reader might find more thoughtful analysis in the New York Times.

Certainly someone browsing the web for restaurant reviews might find a better site than Yelp while a bride researching wedding dresses could just as easily find ideas on Facebook as much as Pinterest.

In reality, social media sites have nothing of the stickiness of the old fashioned newspapers in the days before the internet.

Of the social media services it might be that Facebook is the best placed to succeed as an old media publishing service with its advertising smarts pushing messages to its diverse and deep user base but that isn’t certain given the widespread user dissatisfaction with its news feed.

For the social media services much of the problem – -particularly for Facebook – lies in their contradictory aims; they are trying to be identity services, buying platforms, publishing services and advertisers.

For publishers that balance between content and advertising was always a delicate one; and one that shifted over time. For online services that balance is far more complex and the future far less certain.

One thing that is clear Is those contradictory aims aren’t going to be easy to reconcile and the quandary may prove to be insurmountable.

What’s clear though are the advertising models of the future are still waiting for a David Sarnoff moment.

Oct 132014
 
apple-iPhone-6-product-shots

One of the saddest things in life is the company that bleats ‘but we thought of it first’ when overtaken by a smarter or more credible competitor.

Since the release of the iPhone 6, the knives are out for Apple with Samsung, HTC and even Sony poking fun at the new product pointing out the features already in their products.

The problem for Apple’s competitors is the market isn’t listening to the attack ads. In China alone a million iPhones were sold in first hour they went on sale.

For companies competing with Apple they have to find a compelling product, not be sniping at the market leader. For Samsung in particular with its falling revenues it needs to be generating some excitement in the market, not depressing its customers.

Here’s the Samsung ad; while it’s pointing in the wrong direction it’s good in that it holds the critics to account but it makes not a spit of different to the marketplace.

Oct 122014
 
cctv-camera-and-surveillance-risks

A  cute little story appeared on the BBC website today about the Teatreneu club, a comedy venue in Barcelona using facial recognition technology to charge for laughs.

In a related story, the Wall Street Journal reports on how marketers are scanning online pictures to identify the people engaging with their brands and the context they’re being used.

With the advances in recognition technology and deeper, faster analytics it’s now becoming feasible that anything you do that’s posted online or being monitored by things like CCTV is now quite possibly recognise you, the products your using and the place you’re using them in.

Throw all of the data gathered by these technologies into the stew of information that marketers, companies and governments are already collecting and there a myriad of  good and bad applications which could be used.

What both stories show is that technology is moving fast, certainly faster than regulatory agencies and the bulk of the public realise. This is going to present challenges in the near future, not least with privacy issues.

For the Teatreneu club, the experiment should be interesting given rich people tend to laugh less; they may find the folk who laugh the most are the people least able to pay 3o Euro cents a giggle.