Thursday, January 23, 2014

Releasing Performance Display Advertising for mobile apps

Today we released our Performance Display advertising solution for mobile apps. My fantastic Product and R&D team at Criteo has been working on this for almost a year now, so I'm really excited that we have been able to deliver this and go public about it. I'm also delighted to see the impact of the team from Ad-X Tracking, which was instrumental in delivering a fully functioning solution.

There is a great article at the FT providing a lot of context, but you will need to register. It is also covered at Adweek and elsewhere. (Update: also at AdExchanger)

I'm particularly pleased because a lot of people said to me that the sort of individually personalized performance advertising that Criteo historically delivered on the desktop couldn't work on mobile. I guess I never like being told something isn't possible, and it seems neither does anyone I work with...

I think this whole area of mobile commerce and advertising is particularly interesting, because we are seeing a big platform shift right now. In many ways this is the end of a long period of stability - it is 20 years ago now that Netscape was founded, and the Internet since then has been about a browser sitting on top of a Windows-Intel dominated PC. All the great e-commerce and website/advertising businesses that we think of were built on this combination of browser and desktop: Amazon, Ebay, Google, Yahoo and even Facebook. It is less than 7 years since the first iphone was launched, and only a couple of years since smartphones became broadly adopted but we have moved to a new era, where mobile is very rapidly becoming the dominant platform. And on this platform, while the browser remains important, the majority of a user's time is being spent in mobile apps. As a result there is a great deal of disruption going on.

We all know there are a huge number of users on smartphones now, but the most dramatic shift has been the recent growth in transactions on these devices, and the advertising that follows from this. I discussed this earlier this month when looking back at 2013's megatrends, and in particular the fact that 25% of all US Thanksgiving sales were on mobile devices, and half of Facebook's revenue was also on mobile devices.

Until now the mobile advertising business has been almost entirely focused on app instals, and heavily focused on games. Inevitably, the cost of new user acquisition has been rising and the focus starting to shift towards ensuring that all this money spent on acquiring customers ends up being profitable. That means ensuring that users continue to engage with the app after it's installed, and figuring out how to increase conversions.

Monday, January 13, 2014

My megatrends of 2013

Note: These trends are written in a personal capacity, and are based on publicly available information.

With 2013 over, I thought it would be interesting to list the 5 biggest trends in the ecommerce and online advertising industry. Everyone is likely to have a slightly different list, but here is mine:

1. Mobile commerce happened while you weren't looking. Do you remember all those articles in past years explaining that Japan was unique because they used mobile feature-phones to buy things? This is the year everyone became like Japan. Mobile sales were over 25% of all sales in the US during thanksgiving according to IBM

2. Mobile advertising works just fine. Facebook went from being pilloried for no mobile strategy to being lauded for doing half its revenue on mobile. Of course total global mobile advertising revenue is still small, but 2013 proved that most of the technical issues are now solved and that this is now mainly about adoption.

3. The Online “Pivot to Asia” is dramatic. The global centre of gravity for online commerce and therefore advertising has been steadily shifting to Asia. For a long time Japan, Korea and Australia have been highly penetrated online markets. However the growth in emerging markets and particularly China continues to astound. This was made concrete in 2013 by Alibaba’s announcement that on one day its sales reached almost $6Bn
This is driven by two trends that have continued strongly in 2013. Since 2008 GDP in developed countries has been basically flat due to the crisis; in China it has increased 50%. This graph from the Economist says it all:

Alongside this the second trend is the stupendous switch online in China . In 2013, China had 38 million new online shoppers, more than the population of Canada, according to BCG . As a result the total Chinese ecommerce market was $145Bn  in 2013.

4. Android wins big. In 2012 we were all told only Apple monetized for developers, and so Apple would be the winner of the apps war, and therefore the mobile war. Today we read articles claiming that Google’s Android may be to mobile what Microsoft Windows was to the PC. The monetization gap still exists but it was closing fast in 2013: Google’s app revenue was only 42% of Apple in June, but had grown to 59% by November . Meanwhile the scale of new Android devices in 2013 continued to dwarf everything else, three times as many as Apple shipped. This isn't to say 2013 showed Google winning this race - but it definitely became a race. Those people who said Google was a one-trick pony (with a good trick), and that big companies can’t innovate, need to look closely at this. In fact Google’s overall performance in 2013 was tremendous.

5. Digital continues to eat analog advertising. Finally, the trend that’s so obvious we tend not to discuss it. In developed markets where GDP has been almost flat, online advertising has continued to grow at a tremendous rate. In the US alone, it grew by 15% Year on Year. While online at 22% of US spend is still below TV, it continues to grow much faster. The growth of online advertising continues to be a megatrend that has driven a lot of the innovation of 2013, and funds the web giants outside of Amazon and Apple. 

Those are my 5 megatrends of 2013. Two trends almost made the list: video, and Google's performance. On video, I would argue that 2013 was actually a bit disappointing when you look at the size of the TV market, and the fact that 88% of digital video advertising was on Youtube. Google's online performance almost made it though, with both Android and Youtube making huge strides in 2013. According to Goldman Sachs, 2% of all advertising moves online each year and Google will take half of this. 

My overall conclusion is simple: we are seeing a very high level of change online compared to 5 years ago (and we thought things were moving fast then!). How different will my trends for 2014 be?