Notice anything about the above image? It looks like a Facebook feed and five of the nine content pieces (only three are fully visible), are videos. The image is a screen capture from Goldman Sachs’ homepage – part of a modernization/ outreach effort under new Goldman CEO David Solomon.
Below we highlight several examples of companies that imaginatively use content. We focused on Websites as opposed to social media pages as many companies view their Website experience as an afterthought and doing so carries significant opportunity cost. Websites typically have less than 10 seconds to make an impression before users move on.
1.) Goldman Sachs: the company uses content to tell a story and to provide direct access to CEO David Solomon. Congrats to a company in an unsexy space deploying engaging content to its benefit.
2.) Red Bull: perhaps the best pound-for-pound content delivery company. RB homepage is video-driven, tells stories and mimics a social media feed while optimized for the mobile experience. https://www.redbull.com/us-en/
3.) GoPro: visually engaging and easy to navigate retail-centric Website. https://gopro.com/
Key takeaways:
Engage visually – especially with video. Important both in terms of capturing viewers’ attention and also in terms of providing access to senior management. It’s up to you what video content you want to post publicly, although the world is becoming increasingly transparent. As CEO why wouldn’t you want to make time for regular, short-form video content that keeps employees (most important), customers (2nd most important), the Board, the community and investors informed about your current thinking?
I believe 100% that companies which communicate regularly with employees in a transparent manner are going to win the war for talent. Video is ideal for communicating in a scalable, global fashion. You should assume that video messages created for intracompany consumption will find their way outside of your company. Therefore, construct your message with this in mind. One transparent message for consumption by all is the best way to ensure consistency across audience cohorts.
Young users want to watch a short video, swipe right or left and engage through voice.
Google, Microsoft and Amazon have open-sourced their core machine-learning layers as well as basic AI-services, so it’s easy to deploy AI-powered voice assistants and to capture those front-end customer interactions in your machine learning layer.
Bundle Pricing Negotiations Are Preferable to Product Pricing Negotiations Vendors have far more leverage with customers when negotiating pricing for a bundle/platform of products and services as opposed to an a la carte negotiation. There’s a reason why cable providers sold content bundles for years – it was the optimal revenue and profit model -…
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The iPhone Is A High-Priced Commodity The iPhone is little more than a high-priced commodity at this juncture. There is little differentiation between it and lower cost alternatives (OnePlus for example) both from a design and feature functionality standpoint. However, with 2 billion-plus devices in circulation, Apple’s future does not rest exclusively with new device…
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Things Will Get Worse for Facebook Before They Get Better. A Second Act Is Required. Our thesis is simple. User growth has slowed and in the recent June quarter declined. We expect this trend to continue in the near-term as the following factors negatively impact Facebook’s business. Declines in User Trust and Engagement: The Cambridge…
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Disintermediation Defined Disintermediation is when one party inserts itself between an interested party and its customers (see below table of “disintermediators” and “disintermediatees”). Ironically, parties that suffer disintermediation often invite it upon themselves. Google Disintermediates Yelp and OpenTable For the past several years Yelp restaurant reviews appeared on Google business listings (this appears to have…
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SaaS Companies and Subscription Revenue Models Every company can learn from SaaS (“Software-as-a-Service”), companies. My first exposure to SaaS companies was the first self-proclaimed “SaaS” company – Salesforce.com. This was early in my banking career around the time of Salesforce’s 2004 IPO. Today, Salesforce is a $110 Billion-plus market cap behemoth. Every company – regardless…
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Content Is King Content is King to quote Sumner Redstone. At CEORater we spend a fair amount of time thinking about content. Over the past 24 months we have considered the following for our platform: 1.) video streaming of earnings calls with associated analytics 2.) employee video reviews 3.) business news (original and third-party) and…
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The Facebook uproar – wow! I’m shocked that people are shocked. We put our lives online for the world to see – the temptation for nefarious actors to act is there. We can’t be surprised at the result.
What happened?Facebook and UK-based Cambridge Analytica (“CA”) are at the eye of the storm. What occurred was NOT a data breach. It was NOT a cyber-attack. It was a case of poor supervision on the part of Facebook with regard to how a 3rd party developer accessed and used Facebook member data.
Who is Cambridge Analytica? Other than dead in the water, CA is a data mining/data analytics firm. There are thousands of companies like CA that aggregate and analyze data for various purposes.
What did CA do wrong? CA’s sin was that the firm misrepresented itself and how it would access and use Facebook member data. CA positioned itself as a personality survey application. Approximately 300,000 Facebook members downloaded the app. CA designed the app to capture your data and that of your Facebook friends. So for every person that downloaded the application, CA captured data not only on the 300,000 people that downloaded the app, but also on an additional 166 people for every one person – or 50 million people in total. While you may have provided consent, your Facebook friends did not. That’s strike one against CA.
Second, CA used this data to inform the Trump campaign’s political targeting effort. The Facebook members who gave their consent did so never knowing that their data would be used for a political campaign, much less their friends whom never consented to anything.
By the way, the Obama campaign did something similar. It too created an app for political purposes. It too captured Facebook data not only for those members who provided consent, but also for Facebook members who were friends of those who consented but never provided content themselves. So CA and the Obama campaign had strike one in common.
What should Facebook do? I believe Facebook should create a sandbox environment where 3rd party applications are tested to see how they would behave on FB’s platform – a proving ground of sorts – where Facebook could compare 3rd party application behavior to Facebook’s usage terms. However, this won’t happen as Facebook is not commercially motivated to provide this type of expensive preventative measure. It would be a waste of time and taxpayer dollars for the Federal Government to mandate this type of measure as it would be ill-equipped to audit such a process.
A more practical approach for Facebook would be to make it easier for members to provision their personal data in terms of visibility and sharing with 3rd party developers. Second, Facebook should pursue legal action against developers who abuse Facebook’s Terms of Use. Do so loudly and with maximum visibility to deter would be bad actors.
What should you do? There is nothing you can do to remove your digital footprint from the world. At the extreme, delete your social media accounts after you have purged your data from the respective platforms. A more practical approach would be to set your privacy provisions to “closed” or “private” across all applications and Websites that you use. Don’t volunteer to share your personal data and that of your contacts when you download apps.
This Facebook CA scandal is hardly news. Guess who else knows much about who you are? Your bank. Visa. Amex. MasterCard. Your local supermarket. Your doctor. Other companies that know or can infer much of what makes you “you” are many. Here are a few:
Google: Google scans your email and knows what you store in the cloud. It knows your browsing history. Your search history.
Amazon: Your Amazon order history. Your Amazon search history. Your credit cards stored with Amazon. Amazon provides auto insurance in the UK. Amazon will soon provide healthcare in conjunction with JP Morgan and Berkshire. AmazonGo grocery stores.
LinkedIn/Microsoft: MSFT’s LinkedIn has your career history and professional network.
Twitter: TWTR knows your personal and professional interests and who/what you’re connected to.
Oracle: Oracle owns LiveRamp and other MarTech businesses that infer or know bits and pieces about who you are through deterministic and/or probabilistic analysis. Drawbridge also plays in this space. Acxiom. Experian. There are hundreds of these Analytics firms.
Apple: Apple knows much about who you are based upon how you use your phone – particularly if your privacy settings are set to “open”.
Travel & Hospitality: various airlines and airline reservation systems, hotel and restaurant reservation systems, rental car providers – all store personal data elements and preferences.
Amazon’sCore Services Portfolio drives the company’s macro strategy. AMZN’s more recent product and service offerings (both organic and acquired offerings) are covered in the “2nd Ring” and “3rd Ring” sections and serve to strengthen the Core portfolio.
Amazon Revenue Breakdown: Full Year 2015, 2016, 2017
Amazon.com: Amazon’s crown jewel. The world’s broadest and deepest ecommerce platform.
Amazon Web Services (AWS): The dominant cloud services platform. 2017 revenue of $17.5 billion, a 43% Y-O-Y increase. AWS is a sleeping CyberSecurity giant. The AMZN business unit had 62% market share as of Q4’17 and likely has a similar if not greater share of the technology startup community as customers. Thus, if tomorrow’s tech giants are built on top of AWS, it stands to reason that AWS ought to be well positioned to lead the CyberSecurity effort in instances where it owns the customer relationship. If one company is to become the dominant CyberSecurity vendor over the next decade we expect it to be AWS. Amazon’s more recent initiatives (Amazon Key, Amazon Ring, its AI effort, original video content production and music to name a few) all feed the cloud, creating new hooks into it while enhancing its utility and value.
Amazon Prime: a multi-billion dollar recurring revenue stream that provides long-term visibility and helps the company place long-term multi-decade strategic bets.Consumers were originally lured to prime via shipping discounts. Amazon has since extended those benefits to include various forms of digital content, its August 2017 Whole Foods acquisition and may be offered as an incentive to any Amazon service. Prime’s year-over-year subscriber growth and modest price increases helped contribute to Amazon’s subscription services revenue of $9.7 billion – 52% growth over 2016 revenue of $6.4 Billion. The takeaway here is that as AMZN’s recurring revenue base continues to scale and become a greater percentage of the revenue pie, it enables Amazon to outflank competitors across various industries. For this reason we would expect Amazon to win the day in the original content business when the dust settles. Not Netflix or Disney (too small in both cases), not YouTube/Google (not sure of where they want to play in terms of original content), not Apple (too slow, thanks in part to a CEO who made his chops in the supply chain, not as an entrepreneur) and not Facebook (too green in the Enterprise arena).
Amazon Alexa (AI): Google and Amazon lead the global machine-learning (“ML”)/ Artificial Intelligence (“AI”) effort in that order. Apple’s Siri is a clear laggard from a speed and accuracy standpoint (what matters). Alexa-powered Echo devices are market leaders. This is important as the more Echo devices, presumably the more Alexa-based queries. The greater the number of voice queries, the smarter Alexa becomes. We believe that Amazon’s integrated retail portfolio will help the company solidify a smart-speaker leadership position. By integrated we are referring to the fact that an entire transaction may occur on Amazon’s supply chain beginning with Alexa-powered devices to the Amazon goods and services available for sale to the Amazon warehouse where they are stored to potentially the Amazon truck (autonomous?) or drone that will deliver orders. Google on the other hand has a similar front-end experience but begins to differ on the purchase side. Google doesn’t have its own global warehouse/ inventory management/distribution system and instead partners with Wal-Mart and other retailers in what is known as Google Express. Amazon has essentially become the defacto product search engine, taking share from Google in search. The ancillary effect is that this search traffic makes Amazon’s search algorithms and Alexa smarter.
Amazon’s 2nd Ring
Amazon’s 2nd Ring
Amazon’s 2nd Ring consists of products and services that strengthen Amazon’s core product and services portfolio. This is largely achieved by removing friction from both ecommerce and brick-and-mortar transactions. Further, 2nd Ring products and services create “hooks” that enhance customer loyalty and drive additional purchases.
Amazon Echo: We touched on Echo in the 1st Ring section. The important item to note is that the more products and services that Amazon attaches to Alexa, the greater the probability that Alexa’s usage will increase. The more Alexa is used, the smarter it becomes. This is important as we expect for AI to be as commonplace as electricity in the not too distant future. At present Google is the undisputed ML and AI leader as a result of it being the dominant search provider. However, cracks have appeared in Google’s armour. Amazon has become the default “product” search destination and social media platforms such as Facebook, Instagram, Quora and Twitter have carved out their own search niches around friend reviews, photo search, expert opinions and news. Further, Alexa-based queries are stored in Amazon’s cloud which helps Amazon become smarter about you and your family’s behaviour and shopping preferences – predicting demand before you hit the re-order button or voice command. What will it be sir, Minority Report or 1984?
Amazon Go: Amazon Go is another add-on service that removes friction from the retail experience. The intellectual property deployed in Amazon Go stores allows for a cashierless retail experience as “purchased” items are accounted for the moment customers remove them from shelves. We do not expect for Amazon to license this technology but rather to keep in-house as a sustainable competitive advantage. Over time we expect for this technology to be rolled out widely across Whole Foods and any other “brick and mortar” retail operations that Amazon may acquire.
Amazon Key & Ring: launched in October 2017 for Prime members, AMZN Key is a service that allows couriers and other individuals whom you permission (friends and family members for example) to unlock your door and access the home. Amazon cameras record visitors while they are in the home (more intelligent data for the cloud). Amazon’s acquisition of Ring last week is another piece to the home delivery/ home security ecosystem. Key and Ring help close the retail circuit by extending AMZN’s footprint into the last mile of the retail transaction – home delivery.
Amazon Video: Amazon is investing both in original content production, live sports (NFL, UFC) and offering “channels” in conjunction with networks such as HBO. Prime members enjoy exclusive content for “free”. The company is expected to invest approximately $5 billion during 2018 in video content. We believe that in the end whomever owns Disney and its content libraries will be the clear global content leader. We advocate a position where Amazon, Apple, Facebook, Google and Microsoft all make a run at Disney. Apple has the edge in our view given that Disney CEO Bob Iger has a history with Apple that dates back to his friendship with the late great Steve Jobs.
Whole Foods (acquired)/AmazonFresh:Amazon recently announced that it is merging its PrimeNow and AmazonFresh services. The Whole Foods acquisition will provide Amazon with a treasure trove of offline customer point-of-sale data. Further, expect Amazon to leverage Whole Foods to attract more Prime subscribers while putting the hurt to the grocery food store industry. From an operational standpoint Amazon is already leveraging some of the inventory management expertise it has developed over the years in its warehouse operations.
Amazon’s 3rd Ring (click to expand).
Amazon’s 3rd Ring
The opportunity here is for AMZN to deliver goods and services to the home/consumer with increasing efficiency. “Efficiency” means at lower cost (drones/ Amazon Prime Air and self-service via Amazon Lockers) while increasing the number of customer touch points (Amazon Key couriers may leave Ads/coupons etc.). In terms of what may come – an Amazon rideshare service could make sense given Amazon’s entrenched customer relationships, built-in trust factor and focus on delivery. When autonomous vehicles are not deployed on deliveries they may be deployed in the field moving passengers from point A to B. Until then, Amazon will continue to swallow industries – until its inevitable break-up.
