Chatbots to help sort thur the zettabytes of data...

There was an interesting article about ChatBots this week. Bots can augment human interaction, create greater business efficiencies, and remove friction from customer interactions. The bot market is about a $24b market. Industry leaders from IBM and Facebook are encouraging developers to create new bots that enable more personalized customer interactions. The real question comes down to what can we do with the tons of data we now have; well ecommerce can take advantage of bots to automate these new data sets. Natural language processing can be a driver in analysis “the ability for users to instantly interact with data via a bot interface. One can immediately see the practical value of this with larger data sets that would take a longer time to process — the efficiency of the bot architecture combined with the underlying power of big data analytics can deliver significant value in a short period of time”.

Bots can also be used to automate data collection, they can “automatically add to the knowledge about a customer by progressively asking for more information during interactions with your application or website”.

There are some downsides to bots; they still require human reviews throughout the process and they are subject to the human biases of the programmer.

Facebook looking to cut out the middlemen...

Audience Direct is a new Facebook tool being tested to help media companies sell video advertising on their own websites, apps, and other digital properties. Marketer can log on to the system purchase ad space from specific publishers (self service). This has the potential of cutting out the middleman and streamlining the process.

Additionally, marketers can also specify which type of users they would like to reach, based on Facebook’s data. You can target specific demographics with your ads using this tool.

Video publishers, Hearst, A+E Networks and Scripps Networks Interactive; are currently trialing the system with their advertising clients, according to Facebook. The terms of these agreements are still a work in progress, but it is likely Facebook will take a piece of the action (revenue) from the transactions it helps facilitate. This has the potential to become profitable depending on how many ads it can put in your news feeds.

Facebooks advertising is evolving; it is looking to license sporting rights to feature videos separate from users’ feeds, and it is also introducing mid-roll advertising within video across its platform. The slice Facebook gets from these strategies are TBD, but it was a $10b market last year. These tools come at the same time Facebook is reconciling the questionable content ads sometimes windup beside.

Creepy Data...Always for Sale

Interesting article in today’s WSJ regarding data collection and it nefarious uses. It starts off telling the story of an anonymous woman who had her ex use social media against her. Posting her personal information (address and physical attributes) on dating sites and other more secretive sites; men we are propositioning her at her home (harassment).The article further explains that data can be weaponized. Geoffrey Folwer explains further that “Meanwhile, data aggregators send their bots to collect anything and everything they can about you: addresses, browsing habits, even estimated net worth. Then they glue it all together, facts and wild guesses alike, into dossiers. That’s the legal side of data collection. Things get scarier when your tax accountant, credit-card company or email provider gets hacked”. The article touches on so points I have made earlier in my Blog about the prevalence of AI. There is an entire industry making billions of dollars mining you and it has tripled in size in the last 5 years. The FCC has rolled back restrictions on the data your internet service provider can collect. It’s about self-determination. “If people don’t have the ability to control or understand how their data is being used, it can lead to severe difficulties,” says Julie Brill, a former FTC commissioner and current partner at the law firm Hogan Lovells, who helped lead a big investigation of data collectors. Ms. Brill goes on to point out the current laws only protect your health and financial data (which are very important indeed), but still not enough. Fowler for the column took a half dozen volunteers and submitted them to a study to see how much “creepy data” he could find on his subjects in an hour; he managed to “shock everyone”. He sorted the searches into 3 levels; “level one was calling up what’s out there and totally public. Lots of people have googled themselves, but fewer are familiar with “people search engines” like FamilyTreeNow.com and Spokeo, which pull together and cross-reference public data, such as property records and court reports, into one place. Anyone can use them to look for birth dates, current and former addresses, phone numbers, gobs of relatives—even ex-lovers and roommates. Although FamilyTree and Spokeo have their legitimate uses they are the go to source for online harassers and impersonators. Level two Folwer used Google Maps, Maps TimeLine which demonstrates how “Google is gathering a dossier about you that would make a spy jealous. Depending on how much you use Google products, there could be an hour-by-hour map of everywhere you’ve ever visited. Yes, everywhere. On Google’s My Activity site, you can see everything else they’re cataloging: searches, websites you visit in Chrome, YouTube videos you watch, even recordings of your voice to Google’s Assistant”. This article/study further demonstrate what I think most of us who follow this technology and data analytics, realize already, there is no such thing as privacy anymore. If you look at media your average citizen can become a star or be destroyed depending on if someone records you and if it goes viral or not. These are extraordinary times where everyone in connected and mostly anything Is for sale (data). My hope is that the FCC starts to develop common sense legislation to assist people who are having their lives destroyed, or have the possibility of having their lives destroyed. Fowler plans to expand next week further on this topic and I will look to follow-up on this discussion.

Facebook's EU problem

In the news today the EU's antitrust watchdog group is going to fine Facebook for providing misleading information to investigations who were trying to authorize the purchase of WhatApp in 2014. There is likely to be a significant fine imposed on Facebook, to make them an example for other companies looking to have mergers approved.
The lie Facebook is caught in is it informed investigators it was unable to reliable match user accounts between Facebook and WhatsApp; something it did shortly after the merger was approved. This comes as the second fine by the EU this week; the other was by French authority's alleging its privacy policy violates French Law.
It is interesting; my earlier blog post commended Facebook for its ability to be proactive and elsewhere in the world it is up to unethical behavior.

When it comes to Online...what's old is new again

I found an interesting article in the WSJ that stated that Web based retailer are moving toward brick and mortar retail stores after they have reached a certain degree of success. The example they give is Casper the online mattress company partnering with Target stores. The strategy for Casper was initially to target millennials online with smart video ads and traditional advertising and in of all places, subways.

A similar strategy was employed by Warby Parker their co-founder Dave Gilboa said “E-commerce is taking share but it’s doing so more slowly than I think we thought when we launched,” Mr. Gilboa said “If we were just to focus on online at this time, we’d only be able to address about 3% of the overall eyewear market.”

With higher than expected online ad spending, brick-and-mortar retail looks more appealing than before, despite the added costs that come with it. Ben Lerer, an early-stage investor in numerous retailers including Casper and Warby Parker, said “that three to five years ago there was a gold rush of direct-to-consumer companies that bought cheap online ads, largely through Facebook. Now it’s gotten harder”. On Google, he said “a rush of new competitors and imitators have pushed up the cost of an ad that appears alongside the result of a search for mattresses”

I myself am somewhat surprised that the online market place is getting so expensive and competitive that physical space is become attractive again.

Facebook does the right thing...and admits it's not perfect

In yesterday’s WSJ article Facebook explained yesterday it will be issuing refunds to some advertisers after discovering an issue in its system that led it to overstate the number of clicks on marketers’ websites, an omission that comes as ad firms are demanding better and more transparent measurement from the social networks.

In their blog post published Tuesday, the social network said “the discrepancy was minor. It occurred when users visited the site on mobile browsers—not in the Facebook app or on desktops—and clicked on its “video carousel” ad formats to expand them in size. Those clicks were inadvertently registered as website clicks. The carousels allow advertisers to place multiple images, videos and text within one ad unit, which users can swipe across to view”. Facebook says “the bug affected advertisers specifically paying for ads that resulted in clicks to their websites. Over the period Facebook was monitoring, 0.04% of all impressions on the social network were impacted”. Carolyn Everson, Facebook’s vice president of global marketing solutions, said “the bug was uncovered as part of a recently introduced review process and the company is committed to transparency with its partners”.

Facebook’s disclosure comes during this week’s annual U.S. television “upfront” season,” when the biggest TV networks throw glitzy events and parties showcasing their programming in the hopes of securing billions of dollars in advertising commitments from marketers. It will play into the narrative among media executives that TV offers a safer and more predictable environment for marketers than digital platforms. Facebook has now acknowledged on five separate occasions since September that it has either overstated or understated the metrics advertisers and publishers use to get a sense of the effectiveness of their posts and ads on the platform”. Until now, there have been no instances of billing credits based on publicly confirmed metrics. Facebook in the past has issued some refunds to individual advertisers in the past for reported bugs. Unilever PLC, the consumer packaged-goods giant that owns brands such as Dove and Hellmann’s, was one of the advertisers affected by the latest error and is receiving a full, but small, refund, they also reported their company will be reducing advertising by 30% in the future. . Keith Weed, Unilever’s chief marketing and communications officer, said “Facebook had been proactive to address the bug as quickly as possible, but that it nonetheless highlights the need for more transparency and third-party verification in the digital space to track both advertising effectiveness and whether advertising transactions are working as agreed”. Mr. Weed added: “It highlights once again that while there has been progress, there is still further improvement needed.”

Facebook in November launched a blog to provide updates on errors and bugs it comes across, as part of its commitment to transparency.  The company also announced a measurement council, “consisting of marketers and ad agency executives who provide feedback on how it is performing on the metrics front”. In addition, Facebook has brought on board several new independent measurement partners since making the disclosures about the mistakes in its metrics. This past February, Facebook committed to an independent audit by the Media Rating Council, “an industry body that oversees measurement standards”.

It’s reassuring to see Facebook is taking significant steps to be transparent about errors, and has actively resolved overbilling promptly. I wish this was the tact other media and technology companies would take. Usually these issues are revealed after consumer complaints, and a government regulatory body gets involved. Facebook has spent resources wisely in my opinion to be proactive about this metric system’s accountability.

The "Social" Tech Bubble?

In my last post, I reiterated a lot of what the ADWEEK article laid out for Snapchat’s analytics. The hope is that they can use these tools to generate revenue; revenue however is not the same as profitability and Return of Investment (ROI) Is another situation entirely.

The data tools, if used properly, can allow Snap’s outside advisers to guide it to new customers; unfortunately, Snap is looking to invest in the UK and US markets. The ROI component comes from (usually) emerging markets. It will remain to be seen if not going truly global will be detrimental to the future of Snap Inc.

When dealing with these tech companies that are so reliant on ad revenues for their existence it is hard to see how a photo app and camera sales equate to an 18 multiple on valuation Facebook was a 9 (multiple) to put it in perspective. The investors who deviled heavily into this companies IOPs are going to need to see Snap generate somewhere around $20b in the next 3 years; it’s likely those consumer dollars are not currently in the market at least not for a company reliant on mainly on Western sales. These overvaluations and poor returns are lost investors equity, and its fund managers and pensions gambling with everyday people’s money, that’s the bubble I’m afraid of.

How Snapchat uses data...hopefully it pays off

In my earlier post I was speaking about the IPO of Snapchat and what I believed was an over valuation. I wanted to give an overview of the current Snap Inc Strategy and then breakdown the measurement tools Snap is using to analyze their data. Snap Inc., has largely ignored less-developed countries in favor of North America and Europe, where the big advertising dollars are and where Snapchat gained 75% of its 161 million daily users.

The company is managed by its founders and they rejected suggestions that it branch out. They turned down employee proposals to make a lightweight version of its app for regions with slow internet. It also has prioritized the version of its app running on Apple Inc.’s ios system over Google’s Android versions, which is popular in emerging markets. Snap is going after the low-hanging fruit,” says Cathy Boyle, analyst at emarketer. “There’s more money being spent on mobile advertising in those markets. It doesn’t mean the money will be spent on Snap, but it gives Snap a bigger marketplace to compete in.” More than 60% of Snap’s daily users are concentrated in the top 10 ad markets.

As far as Snap’s data analytics there was a very interesting and insightful ADWEEK article that broke their tools down beautifully. Snap is using the agency Fetch to run their mobile ad campaign. They will be using interest-level targeting that serves ads to people based on what types of videos they have watched. “Such sophisticated targeting wasn’t available to marketers a year ago and reflects the mobile-messaging company’s aggressive moves into the world of ad tech and measurement while hoping to compete with Facebook, Twitter, Pinterest and others”.

“Since revealing its API (application programming interface) last summer, Snapchat has expanded from 10 to 15 measurement partners that help marketers analyze metrics like views, brand awareness and conversions”. Additionally last week, Snap signed on with the measurement firm Moat to create a data-based score to show its ads meet watchdog Media Rating Council’s guidelines for viewable impressions. Thirdly, in the same week, the app debuted a self-serve ad buying platform that includes a dashboard with a multitude of stats. “Still, there remains a gap, in terms of comparing Snapchat ads to other types of media, especially with the app’s goal of cutting into big TV budgets”.

Here is a look at Snapchat’s five types of measurement tools as explained by the ADWEEK article:

1. Views and impressions

“With advertisers increasingly demanding platforms like Snapchat, Google and Facebook undergo full-blown MRC audits; Snapchat is beginning to work with Moat and the MRC to create a “viewability score” to assess if consumers see vertical ads.

“That’s probably where we can compare them to Facebook, Pinterest, Twitter,” explained Torrey Taralli, head of U.S. paid social at Fetch.

Snapchat has similar arrangements with a handful of other measurement firms to track clicks and impression data. “Our campaigns need to have a solid foundation. We need confirmation that our ads are viewable and being seen by our target audience first and foremost,” added Whiting of digitaslbi.”

2. Audience targeting

“Snapchat offers 60 audience groups—dubbed Lifestyle Categories—that lets advertisers zero in on specific people based on what content they look at from its publishers section, Discover, and Live Stories. For example, a sports retailer could target millennial guys who watch ESPN or The Bleacher Report’s Discover channel.

“Here, they’re stepping up and partnering with people to do this sophisticated demo targeting that folks expect,” said Sigel of WPP-owned Essence.”

3. Purchase intent & brand awareness

“Snapchat leans on Nielsen and Millward Brown Digital to run surveys  for advertisers that measure stats like brand lift, brand favorability and ad recall.

Snapchat cites recent fourth-quarter research from Millward Brown Digital to back up its measurement efforts. Snap Ads generated 1.6 times better purchase intent and brand favorability than the research firm’s averages. In brand awareness, Snap beat Millward Brown Digital’s average by 1.3 times.

Essence’s Sigel said that the agency created its own feedback tool that cuts the turnaround time for survey results by half, but added, “The more data, the better.””

4. Conversions

“While film studios and entertainment brands were early testers of Snap Ads as a way to grab the attention of cord-cutting millennials, Snap needs solid data to prove that its ads work for big, sales-minded retailers and packaged-goods brands.

So, it has a deal with Oracle Data Cloud, which matches offline data that retailers collect about consumers’ shopping products—for example, a supermarket loyalty card—with relevant Snapchat advertisements.

Snap also tracks how many people went to a location after seeing an ad on their phone through a program called Snap to Store that Fetch’s Taralli finds particularly intriguing. “Snapchat’s in a really unique place with filters,” he said. “We can do things with some of our ecommerce clients and brick-and-mortar stores [to] show ads and then offer geofilters around that client’s stores. [We can] see if a user is actually visiting these stores and if they’re opening Snapchat in the store.””

5. App-install performance data

“Snapchat is taking a page from Facebook’s playbook by investing in app-install ads that have made the latter a fortune in mobile revenue.

App-install campaigns are priced on a cost-per-thousand-impressions (CPM) basis, with auction-style bidding that uses machine learning and audience segmenting to determine which people are most likely to interact with ads. Fetch’s Taralli buys a lot of app-install ads and explained that he can use a third-party tracking tool to see if a consumer buys something from an app installed thanks to a Snapchat ad campaign.

“Snapchat is now integrated with most mobile attribution tracking partners out there, so [that’s] a lot of data,” Taralli said. “When it comes to doing [direct response], people showing up to stores, app installs, these tools are 100 percent necessary.””

Snap's the new Twitter...now how do we make money

Ahead of Snap Inc.’s first earning report this morning, I wanted to make a prediction. As with every other heavily invested IPO that is solely tech i.e. Facebook, Twitter, GoPro the earnings from ad revenue and revenue generating operations is likely to be lackluster and odds are the Snap investors are going to be disappointed. Later in the blog I want to discuss these tech IPOs with the build up to where we are at today with Snap. I also want to discuss briefly the social tech bubble that has been looming the last 5 years.

Snap’s shares have gained 6% over the past few weeks, but that will likely not reconcile with the first quarter results we are expecting in the report  later today. Revenue decreased to $158m a bit lower than last quarters yet $165.7m. The March IPO’s was valued at $27b which was based on an obscene 18 multiple; a risky and lofty expectation for any investment. The company current strategic future and direction rests not with investors but with the tech startups founders; which is likely to bring future tensions. Snap plans to become an advertising and promotion juggernaut, yet only has 1% of the global digital adverting market.

Cutting Out the Middle Man... and other not so great ideas

The cutting out of the middle man (digital marketer) was a topic I brought up in an earlier post. Which so much interest and literal dollars being spent on AI (artificial intelligence) it would seem that data analytics, is not as relevant or useful. Especially when you can get real time data from sales and reach your targeted audience directly.

Stephanie Christie (again this week) touches on and explains interesting enough on  this very notion. That incredible resources are being devoted right now in the area of AI. It's to almost say the study and knowledge of data might not be as useful as it once was. Let me know what you think on this concept, I would like to hear some views on data analytics current health with respect to AI being all the rage right now.

The New Echo Look...is well looking at you...

Last week’s WSJ article explains Amazon’s newest product the Echo Look, which was introduced last Wednesday.

Amazon’s new version of its artificial-intelligence powered speakers now includes a camera. The company said the “$200 device, which is only available via an invitation for now, will enable consumers to take videos and photos of their outfits and compare them via algorithms”.

The experts in the community of AI and analytics say Amazon’s plans are likely much broader than offering fashion advice. Potential applications range from becoming a virtual fashion adviser, to a communications and security system for companies.

When the original Echo was first released in 2014, it was marketed as a “glorified MP3 player,” said Werner Goertz, an analyst at technology research firm Gartner Inc. Still, consumers may have privacy concerns due to having a video camera in the home. Amazon’s commercial shows the device in the bedroom as women try on outfits for a critique.

“I think there would be some concerns to a large piece of the public” regarding an always-on device that could be recording video, said Mark Elfenbein, chief revenue officer at artificial intelligence firm Sentient Technologies.

Amazon is working the same as other tech firms, to create and install digital assistants in everything from cars to homes, including Alphabet Inc.’s Google and Apple Inc.’s Siri. Consumers can already use their voices to control lights, thermostats, garage doors and to order online everything from household products, and food.

Amazon has also been looking to grab a bigger piece of the apparel market, creating its own private label brands and making inroads into fashion at the expense of department stores and some specialty retailers.

Initially, the Echo Look could help Amazon make a bigger splash on social media as consumers share photos of themselves, said Mr. Elfenbein. But eventually, it could lead to automating some aspects of online shopping, allowing Amazon to recommend clothing to purchase or virtually try on. “This is where shopping is certainly moving to: [artificial intelligence] being able to recommend complete outfits,” he said.

The device could have more value to companies for uses like building security or conference room calls, said Mr. Goertz, the analyst, adding it will likely be able to use Amazon’s recently introduced a video conferencing service Chime.

For now, Amazon says that its device—which appears largely targeted at female consumers—can “help you look your best.” Consumers can use it to take full-length photos or 360-degree videos via voice command, creating look books and allowing for image sharing. They can also submit side-by-side outfit choices to Amazon’s new “Style Check” function, which uses a combination of machine-learning algorithms and advice from fashion specialists to offer a verdict on a look. The Echo Look incorporates a depth-sensing camera and LED lighting.

My view on the new Echo Look is it is just another way for companies to influence the buying of consumers. Unfortunately, this product is being introduced under the guise of “helping you look your best” it will very easily be converted for nefarious reasons. This is the tricky tight rope you walk when introducing 24/7 cameras and listening devices into private citizen’s homes.

For the past four weeks, I have been writing in this blog about big data and its uses, however the more I have been reading and learning about the subject it has me wondering. Are we still deciphering how to successfully use big data and at the same time introducing these AI products without fully understanding the positive potentials for either? We are living in extraordinary times, with so much data; I just hope we know what we are doing with it.

From Cloud based to AI, Big Data's big challenges

Big data is one thing… but it looks like AI is the new medium; Amazon last week introduced the Echo Look. The company did offer one hint that the new Echo will continue to evolve. “Alexa is built in the cloud and always getting smarter, and so will Echo Look,” the company video says.

Amazon is always looking at all ways to more deeply integrate the company into consumers’ lives. The design of the Echo Look “opens it up too many more use cases beyond just fashion and apparel sales,” he adds. An Amazon spokeswoman declined to comment on potential other uses for the device. Amazon clear has a head start, thanks in part to the early launch of its Echo speaker device, which is powered by artificial intelligence assistant Alexa.

Morgan Stanley estimates the company sold more than 11 million devices through late last year. The Echo Look would be a natural next step for the evolution of Amazon’s devices, experts said. In addition, the company has been using its massive cloud business, Amazon Web Services, to make available several algorithms to customers that may help its digital assistant learn faster. That includes Amazon Rekognition, which uses technology to detect objects, scenes, faces and identify inappropriate content in images.

Google's New Tact on Fake News...

Yesterday’s WSJ article speaks about Google retooling it powerful search engine to prevent fake news, hoaxes, and conspiracy theories from appearing in their top results. They will be using algorithms and training their search evaluators to weed out what would be considered “low quality sites”.

This change comes as Facebook took criticism this past election season from doing little to block content. These measures will prevent fake news sites from generating revenue through ad selling services. Ben Gomes VP of engineering at Google sais .25% of daily search queries return “ offensive or misleading” content.

Earlier in April Google added a "Fact Check" tag to some results showing whether or not they were true or not. Google is relying in part on its users to flag unexpected or inaccurate or offensive results that show up in autocompleted searches.

My own view on this is, a concern that certain parody or satire sites could be affected. Also where does the argument of free speech come into play? I don’t agree with these misleading sites or conspiracy theorists, but isn’t it their right to speak and have the same access to the public as anyone else would. Shouldn’t it be up to internet users to determine what is true and what is not?

Earlier today Stephanie Christie wrote an interesting piece somewhat related to the past election and the new effect media and data are having on the world of politics.

Chrome is Demanding more...let's hope it doesn't cost anything

A possible resurgence of ads that inspire and are touching; it’s a bit of a leap to speculate that there could be a renaissance if the largest internet content players were to start to expect more from ad firms. Such a move could have repercussions for ad-supported websites and services, advertising technology companies, and advertisers themselves, depending what the final advertising filter looks like for Chrome.


Some publishing executives and media companies the move could have upside and downside, they say. "If this is something that takes concrete steps to clean up the most offensive stuff on the internet, then I think that’s very good news for us,” said Neil Vogel, chief executive at IAC ’s About.com Group. “People install ad blockers because low-end publishers violate their trust. If Google can stop egregious ads that make people want to block ads in the first place, that will be a good thing.” Another concern is Google already has almost total control over adverting on the internet. In addition to producing web browsers, Google also operates a mammoth online ad business complete with its own set of interests. "The risk here is this could concentrate a lot of power in the hands of one organization that is not neutral and has vested interests in all sides of this,” Mr. Vogel said. Publishers and ad firms are often reluctant to speak publicly about Google because of the power they feel the ad giant already has over them. Many content producers depend on Google to drive traffic to their sites and to help them sell advertising. “From the beginning, we have avoided the kinds of ads cited as the target of the Chrome ad-blocker concept—pop-ups, pre-roll ads etc.…. It’s clear there are a lot of very onerous experiences out there that have led to the understandable rise of ad-blocking,” said Jay Lauf, president and publisher of online news site Quartz, in an emailed statement. "We can’t comment on Google’s approach given what has been revealed thus far, but I think a more surgical approach is needed—deploying a sledgehammer approach to the ad ecosystem could have harmful implications,” Mr. Lauf added.


The WSJ interviewed Jason Kint, CEO of online publishing trade body Digital Content Next. His group is “committed to the Coalition for Better Ads as the forum for addressing consumer concerns around online ad experiences”, and said “Google’s potential ad filters appear to focus on enforcing those standards” He also stated “The world of ad blocking is as murky as they come. Friends and enemies can easily be confused, good and evil often mistaken and interests aren’t always as they appear”.
The Interactive Advertising Bureau, a trade group is looking to protect its constituents, their CEO Randall Rothenberg says, “Ad blocking is a war against diversity and freedom of expression”. The Coalition for Better Ads is a IAB member. Google is a member of both the IAB and the Coalition for Better Ads, alongside companies such as Facebook, AppNexus and other online publishers and advertising technology companies.


My view on all of this is, Google in a way, created this environment we currently have. If they look to charge a premium to consumers to improve their experience, it just seems unprincipled and hollow. Why not create a better service and environment for all consumers without charging for it? While the plans are still in their infancy and it remains to be seen if there will be a consumer cost associated, most media producers, for now, are reserving judgments. Which brings me to my next point how did we allow Alphabet to get so large that now no one is willing to speak out against it for fear of loss of business. I thought there were laws preventing monopolies from garnering this much influence and control? While I fully support, as I think most people do, that pop-ups, pre-roll ads are not useful and an annoyance; an internet experience free of them once and for all for all users should be free of charge and possible.

The War on Web Ads...well what did you expect?

 
Publishers must soon weigh the pros and cons of Google Chrome adding an ad blocking feature to customer accounts as written in the WSJ article this week. The feature would limit, if not eliminate, the ads that irritate consumers.

The pros are it would eventually eliminate the types of ads that annoy and alienate consumers. The cons are it would give more power to an entity that already controls most if not all internet non-social media advertising. This would cause advertisers to further compete against each other. So, I would argue it may also force a rebirth of creative advertising that is positive and thought provoking.

On the ladder point I would to touch on what I see as the laziness of current advertisers and point out a few of the Internet ads that went viral and some that haven’t caught fire yet, but that have gained my consideration and attention.

If advertisers should start focusing more on producing ads that are genuine instead of focused on page views and impressions it could be a rebirth of a new age of advertising.  I will expand in my later posts on what advertisers and publisher think of this.

IBM Should Bank on Cognitive Computing, whatever that is...

IBM's quarterly earnings have dropped and it suffered narrower profits across all its business units. It looks as though IBM may have to consider shedding some of the dead weight of some of its more unprofitable segments. The cloud computing and AI operations units suffered slimmer profits as well, which is interesting because you would see those divisions as a real money makers. The only division that reported improvement was cognitive solutions. This is interesting; the data analytics segment is the main performer in such a large force like IBM.

IBM states cognitive computing is “understand the meaning hidden within that data. Cognitive computing is able to unlock the potential in all data - internal, external, structured, unstructured, voice, and visual - and make it work together. Enterprises can make better operational decisions, understand customer wants and needs, communicate in real time, and optimize business processes – infused with the cognitive ability to understand, reason, and learn”.

IBMs legacy business of selling hardware and software is shrinking as customers embrace big-data analytics. It seems like these are the signs of things to come, IBM needs to be able to communicate it strengths in big data and shift its organizational resources effectively toward cognitive computing if it wants to remain competitive.

https://www.wsj.com/articles/ibm-profit-falls-13-despite-gains-from-cloud-services-watson-1492547508

https://www-935.ibm.com/services/us/gbs/cognitive/

How do you Monetize Facebook and Snap Chat, the experts aren't sure...

Expanding a bit of what the marketing outlook is for a firm like WPP, Martin Sorrelll CEO was interviewed by CNBC last month. The key concept for what he sees as the future of data and marketing is “Amazon is the biggest threat to Google in search” and “Snapchat could be the third force in the digital ad market behind Alphabet and Facebook”

The amount spent on Google ads compared to other search tools show how effective a platform it is to advertise on. That aside Google through its analytic tools makes it a highly useful resource to study the market and monetize your message.

Sorrell goes on to explain that he sees Amazon as posing a real challenge to Google, as far as driving actual sales. It is the search on Amazon that poses the greatest threat, “Amazons tentacles are spreading rapidly into all areas”.  

Not only is Amazon a force to be reckoned with in the area of search and sales; its Echo product has complete changed the world of marketing. It takes consumers comparison shopping out of the equation. Buying is driven by prior purchase history and brand preference mostly.

Now consumer goods producers will just need to find new way for their products to be suggested by Alexa and the brand relationship will be set.

Sorrell said Google and Facebook represent 75 percent of spending on digital; and he hopes this changes to more of a balance; these two sites do not represent the silver bullet marketers and companies should rely on. Last year on behalf of their clients WPP spent just under $5 billion on Google advertising in 2016, an increase of $2 billion from the year before.

To give you a sense of what WPP spent on other media; it spent $1.7 billion on Facebook and $90 million on Snapchat. Sorrell said he believed ad spend for Google this year could reach $6 billionand Facebook could reach 2.5 billion.

Sorrell sees the threat to Facebook to be from Snapchat, he believes the spending is currently “relatively insignificant” but could become a strong third force to be reckoned with.

The problem with WPP spending (possibly) $2.5 billion in 2017 in ads on behalf of clients, is the results are not always as clear. That is the weakness in using a platform that reaches the masses but has little analytics behind it. Facebook is simply not built that way. Google has analytic tools and technology (obviously) and Amazon has their own data driven by sales of products. The frustrating thing for admen like Sorrell, I would surmise is the frustration with clients constantly looking to use Facebook as the preferred avenue of ad spend, with little knowledge of its success to be gleamed.

Sorrell goes on to point out the reason Google has been a success, is “the results are very clear”. Facebook is more effective (according to him) as a brand mechanism; as a way of building brands rather than driving sales. Which I would image is advantageous for social ideas and campaigns but not as a successful funnel for consumers.

My own opinion as it relates to social media channels the likes of Snap, Instagram, Facebook, Twitter, and Sorrell makes this point as well, you must be able to eventually demonstrate return on investment. Which has been the sticking point in the various finance classes I have attended; colleagues analyze new tech firms, such as Twitter, Instagram, Uber; the same issue constantly comes up, they are not profitable in the beginning, the breakeven point is five years into the future, the IPOs are priced outlandishly and likely by the time the firm gets to year five their attritions are in the gutter and they are yesterday’s news. The same can’t be said for Amazon or Alphabet.

Source:

http://www.cnbc.com/2017/03/01/amazon-is-the-biggest-threat-to-google-in-advertising-snap-facebook-thraet-martin-sorrell-wpp-ceo-says.html

Marketers on the defensive...

Interesting article in WSJ from last week, it states that there can be a lot learned and gleamed from pursing a lean and acquisitive operating model like Kraft Heinz. Which is to say companies in the consumer goods industry should not be solely focused on using advertising powerhouses like WPP and Omnicom. Investors and shareholder activist or not like to see that companies can boost their profitability without the help of outside ad agencies. Ad agencies are facing digital disruption; Google and Facebook are increasingly dominant if not completely necessary at this point. The article goes on to point out that “virtually all incremental ad spending in the US” was on Google and Facebook. This threatens the core competences of traditional ad agencies. There are still problems with automated advertising; something I mentioned in my previous blog post (regarding YouTube ads popping up in unlikely places). Unilever will cut ad spend by 30% and WPP is one of their top accounts (something mentioned in my previous post). Marketers, your traditional big 5 ad firms, will likely need to consider restructuring talent and money spent to make sense of the changing market and technology. I plan to expand on this concept more completely later this week.

YouTube settles the trouble with delayed gratification..kind of....

YouTube is finally changing their ad policy and viewer like me are rejoicing; however smaller channels are likely to lawyer up…

YouTube is instituting new rules for video creators, this is said to protect advertisers from having their content winding up on video channels they might consider unsafe. The new watermark is to have at least 10K views. When a channel reaches this benchmark “YouTube will review the creator’s activity to make sure it’s in line with its policies and safe for advertisers”. In the past advertisers have had their materials stolen and put on terrorist videos and racist biased channels.

 It’s a change in a policy from a few years ago; a policy that made it possible for anyone to make money from ads. It is meant to block channels that steal others’ content for revenue.

Unilever one of the largest ad producers announced it would produce 30% fewer ads and reduce the agencies it works with by half. Unilever says it produces more ads than consumers even see. Going forward Unilever will focus more on quality (time) over quantity.

I am sure that many viewers, myself, included are looking forward to getting to watch their favorite clips and how-to videos without having to watch a 30 second Tide commercial.

China's Leading Payday Lender uses AI and it's likely to catch fire

To make decisions on potential borrowers the leading payday app in China, Yongqianbao collects more than 1200 data points. The Wall Street Journal article states they are using artificial technology AI to analyze data and behavior.  To put this in context let’s look at some of the more interesting AI methods Yongquianao uses in making business decisions for potential borrowers. “iPhone users tend to have lower late-payment rates than Android phone users, and people who don’t answer calls or whose outgoing calls go unanswered represent a higher default and fraud risk”. Other red flags include making many changes when filling in the application, letting batteries run down and changing phones frequently. “Multiple applications from a single Wi-Fi hot spot is a danger sign”. Also, users who borrow in one city but spend in another are considered lower risks.

AI aside the alternate data being used by a competition loan service companies or Fintech companies analyzes mobile usage and online shopping tends to assess credit risk. The conventional data we are accustomed to such as credit score, loans outstanding, criminal history, previous account defaults are “old school” methods of making loan decisions.

The Chinese market for online loans last year accounts for roughly 1.2 trillion yuan or $174 billion. About 80% of its borrowers are younger than 30 and the most interesting point was that loans past the 60-day due date stood at 2.8% in February; which is not bad considering they approved 1.2 loans worth 1.8 billion yuan ($270m). Yongqianbao, whose approval rate for first-time applicants is 20% to 30%, is run by engineers. Fintech competitors say, “the power of artificial intelligence is bringing default rates down by finding correlations between smartphone behavior and risk and using them to create tools that can analyze creditworthiness in an instant”.

There are certain ethical considerations to all of this…

First financial tech companies without AI technology already have wealth of data to draw from when making loans decisions. Are those traditional data points not enough already? The use of AI to know instantly where you are typically every day, to know how much charge is in your phone, if you made any changes while filling out a loan application; certain seems like an invasion of privacy to me. Loan companies and payday lenders already hedge their bets with fees and interest, now with AI they can guarantee they will (97% of their time) get their money back. With limited or almost no risk, then you would think fee and interest would come down? Well the article does not expand on this point but my guess is fees and interest will not come down.

My concern is that just because China is currently using these technologies and methods does not mean that soon the US lenders like PayPal won’t. Given the history and current conditions of our financial services industry; I see little downside and huge upside. Especially if we consider a company like Wells Fargo opened thousands of accounts for customers without authorization; who is to say banks won’t implement these technologies in the backend or house these operations overseas far from the purview of the CFPB and FCC. It is a mighty slippery slope and it feels like and step to far into one’s personal life.

If these big data technologies were to find their way in to US loan decisions (eventually), I fear it will only come to light after an investigation or whistleblower reveals it. Financial tech firms and lending institutions have a history of skirting the law and concealing data analytics to their

China's payday loan companies can read your mind and cheat you blind, and YouTube stands to alienate almost every marketer...finally

There are two very interesting articles in this morning in the Wall Street Journal's tech. section. One involves Artificial Intelligence and Payday loans made to Chinese young adults here. The other article speaks about YouTube's change in policy requiring at least 10K views in order for ads to be present before and/or during a video here . The first article notes some of the analytics and algorithms companies are using behind making sound loan decisions; using what some would consider "creepy" data. The latter article stands to cut off 88% of YouTube's current channels, posing a potential negative impact on their bottom line; by addressing what has long been a compliant of their current viewers.


I plan on expanding on both of these subject with more of a focus on the Payday loans and Big Data, mostly because it a subject near and dear to my heart as a former chapter leader of a political research group's consumer protection segment. Big Data and AI can be used for positive influences and altruistic effect, but all to often they are used to expand negative influence on society and youth. What are the societal benefits and is there a possibility of an added positive influence on users?