Advertisers Tuning Out TV in Sign of Trouble for Media Companies

Lucas Shaw:

Television-advertising sales in the U.S. fell 7.8 percent to $61.8 billion last year, the steepest drop outside of a recession in at least 20 years, while sales at cable networks slumped for the first time in almost a decade. And there’s no sign of a pickup in 2018, excluding cyclical events like the Olympics and the midterm elections, according to data from Magna Global.

The decline in TV viewership is accelerating as online rivals Google and Facebook have increased their investments in video, capturing almost every new advertising dollar entering the marketplace. Television ad sales have fallen even as global advertising grows, leading research firms and analysts to predict that the business may never recover.

Sustainable Sources of Competitive Advantage

Morgan Housel:

David Paul Gregg invented the CD, which is amazing and changed history. But you’ve probably never heard of him because CDs aren’t difficult to make, and lost relevance over time.

Most things work this way. As soon as a smart product or business idea becomes popular, the urge to copy it and commoditize it is the strongest force economics can unleash. Jeff Bezos summed this up when he said “Your margin is my opportunity.”

The key to business and investing success isn’t finding an advantage. It’s having a sustainable advantage. Something that others either can’t or aren’t willing to copy once your idea is exposed and patents expire.

The effect of ad blocking on website traffic and quality

Benjamin Shiller, Joel Waldfogel and Johnny Ryan:

Ad blocking software allows Internet users to obtain information without generating ad revenue for site owners, potentially undermining investments in content. We explore the impact of site-level ad blocker usage on website quality, as inferred from traffic. We find that each additional percentage point of site visitors blocking ads reduces its traffic by 0.67% over 35 months. Impacted sites provide less content over time, providing corroboration for the mechanism. Effects on revenue are compounded; ad blocking reduces visits, and remaining visitors blocking ads do not generate revenue. We conclude that ad blocking poses a threat to the ad-supported web.

Less-cool Facebook losing youth at fast pace: survey

afp:

With mom, dad and grandma signing up in increasing numbers, Facebook is losing younger users in the United States at a faster pace than previously estimated, researchers said Monday.

A report by eMarketer said Snapchat is drawing youths away from Facebook at a quicker clip than Facebook-owned Instagram.

Facebook is still growing in the US market, according to research firm, mainly due to increases in usage by older age groups.

The report is the latest to highlight Facebook’s problem with attracting and keeping young people, who have long been a core user base for the world’s biggest social network.

The research firm said it expected the first-ever decline in the 18-24 age group in the US, a drop of 5.8 percent this year.

It also said that for the first time since its research began, less than half of the 12-17 age group in the United States would be on Facebook, with a 5.6 percent drop in that segment.

The under-12 age group meanwhile will see a decline of 9.3 percent this year, eMarketer said.

German court rules Facebook use of personal data illegal

Hans-Edzard Busemann, Nadine Schimroszik:

The verdict, from a Berlin regional court, comes as Big Tech faces increasing scrutiny in Germany over its handling of sensitive personal data that enables it to micro-target online advertising.
 
 The Federation of German Consumer Organisations (vzvb) said that Facebook’s default settings and some of its terms of service were in breach of consumer law, and that the court had found parts of the consent to data usage to be invalid.
 
 “Facebook hides default settings that are not privacy-friendly in its privacy center and does not provide sufficient information about it when users register,” said Heiko Duenkel, litigation policy officer at the vzvb.
 
 “This does not meet the requirement for informed consent.” The vzvb posted a copy of the ruling on its website. A court spokesperson confirmed that a judgment had been handed down but declined further comment.

Inside the Two Years that Shook Facebook—and the World

Nicholas Thompson:

In any case, Facebook’s move into news set off yet another explosion of ways that people could connect. Now Facebook was the place where publications could connect with their readers—and also where Macedonian teenagers could connect with voters in America, and operatives in Saint Petersburg could connect with audiences of their own choosing in a way that no one at the company had ever seen before.

III
In February of 2016, just as the Trending Topics fiasco was building up steam, Roger ­McNamee became one of the first Facebook insiders to notice strange things happening on the platform. McNamee was an early investor in Facebook who had mentored Zuckerberg through two crucial decisions: to turn down Yahoo’s offer of $1 billion to acquire Facebook in 2006; and to hire a Google executive named Sheryl Sandberg in 2008 to help find a business model. McNamee was no longer in touch with Zuckerberg much, but he was still an investor, and that month he started seeing things related to the Bernie Sanders campaign that worried him. “I’m observing memes ostensibly coming out of a Facebook group associated with the Sanders campaign that couldn’t possibly have been from the Sanders campaign,” he recalls, “and yet they were organized and spreading in such a way that suggested somebody had a budget. And I’m sitting there thinking, ‘That’s really weird. I mean, that’s not good.’ ”

But McNamee didn’t say anything to anyone at Facebook—at least not yet. And the company itself was not picking up on any such worrying signals, save for one blip on its radar: In early 2016, its security team noticed an uptick in Russian actors attempting to steal the credentials of journalists and public figures. Facebook reported this to the FBI. But the company says it never heard back from the government, and that was that.

The post text future

Farhad Manjoo:

THIS MULTIMEDIA INTERNET has been gaining on the text-based internet for years. But last year, the story accelerated sharply, and now audio and video are unstoppable. The most influential communicators online once worked on web pages and blogs. They’re now making podcasts, Netflix shows, propaganda memes, Instagram and YouTube channels, and apps like HQ Trivia.

Consider the most compelling digital innovations now emerging: the talking assistants that were the hit of the holidays, Apple’s face-reading phone, artificial intelligence to search photos or translate spoken language, and augmented reality — which inserts any digital image into a live view of your surroundings.

These advances are all about cameras, microphones, your voice, your ears and your eyes.

Together, they’re all sending us the same message: Welcome to the post-text future.

The number of people using Facebook daily in North America dropped for the first time

Matt Rosoff:

The number of people in the U.S. and Canada who check Facebook every day dropped between the third and fourth quarter of 2017, the first such quarterly drop in company history.
 
 Facebook usage in North America has been largely flat for the last several years, leaving international growth to pick up the slack. But the drop suggests that Facebook usage has reached a saturation point in its first and most lucrative market, and could foretell similar usage drops around the world.
 
 The drop could also be a result of a steady drumbeat of negative press about Facebook, including concern over foreign governments using Facebook posts to divide the U.S. electorate during the 2016 election season, and growing concern over violent and other inappropriate content on the site.
 
 If usage flattens, Facebook will have to pack more ads into the News Feed, charge advertisers more per impression, or figure out new and similarly profitable business areas to maintain long-term growth.

The Death of Clothing

Lindsey Rupp, Chloe Whiteaker, Matt Townsend and Kim Bhasin:

The apparel industry has a big problem. At a time when the economy is growing, unemployment is low, wages are rebounding and consumers are eager to buy, Americans are spending less and less on clothing.
 
 The woes of retailers are often blamed on Amazon.com Inc. and its vise grip on e-commerce shoppers. Consumers glued to their phones would rather browse online instead of venturing out to their local malls, and that’s crushed sales and hastened the bankruptcies of brick-and-mortar stalwarts from American Apparel to Wet Seal.
 
 But that’s not the whole story. The apparel industry seems to have no solution to the dwindling dollars Americans devote to their closets. Many upstarts promising to revolutionize the industry drift away with barely a whimper. Who needs fashion these days when you can express yourself through social media? Why buy that pricey new dress when you could fund a weekend getaway instead?
 
 Apparel has simply lost its appeal. And there doesn’t seem to be a savior in sight. As a result, more and more apparel companies—from big-name department stores to trendy online startups—are folding.

Tackling the Internet’s Central Villain: The Advertising Business

Farhad Manjoo:

Pretend you are the lead detective on a hit new show, “CSI: Terrible Stuff on the Internet.” In the first episode, you set up one of those crazy walls plastered with headlines and headshots, looking for hidden connections between everything awful that’s been happening online recently.
 
 There’s a lot of dark stuff. In one corner, you have the Russian campaign to influence the 2016 presidential election with digital propaganda. In another, a rash of repugnant videos on YouTube, with children being mock-abused, cartoon characters bizarrely committing suicide on the kids’ channel and a popular vlogger recording a body hanging from a tree.
 
 Then there’s tech “addiction,” the rising worry that adults and kids are getting hooked on smartphones and social networks despite our best efforts to resist the constant desire for a fix. And all over the internet, general fakery abounds — there are millions of fake followers on Twitter and Facebook, fake rehab centers being touted on Google and even fake review sites to sell you a mattress.
 
 So who is the central villain in this story, the driving force behind much of the chaos and disrepute online?

Publicis’ Tobaccowala: Advertising Will Decline 30% In Next 5 Years

Umair Haque:

Media’s in cataclysmic shape these days — publishers closing big and small, newspapers going out of business, consolidation and layoffs everywhere — and it’s easy to blame technology.
 
 There was a war that happened here — and media lost. Who won? Well, the truth is that no one did. The monopolies that Google and Facebook made money, sure — but now they face a steep backlash, social ridicule, oversight, and regulation. A pyrrhic victory, if you ask me.
 
 Who started this war for attention? What was at the heart of it? Who should have ended it? The truth is that the lion’s share of responsibility for a fatally broken media industry lies with advertising, not technology. Let us think about it one step at a time.
 
 Ad agencies had two roads before them, as the digital revolution dawned. One, go on selling the same old ads — nuisances, basically, that people had to put up with, in order to get to what they really valued — only in greater volume, because they would be cheaper. Two, innovate — and turn ads into things that people genuinely benefit from a little bit. Road one was an algorithmic, dehumanized road. Road two was the human, creative one.

Publicis’ Tobaccowala: Advertising Will Decline 30% In Next 5 Years

Joe Mandese:

At a time when it seems there are more opportunities to advertise than ever before, one of Madison Avenue’s most visionary futurists predicts the ability of advertising to actually reach consumers will decline “20% to 30%” over the next five years.
 
 “We will increasingly have less and less advertising,” Publicis Groupe’s Rishad Tobaccowala said during the opening session of CIMM’s Cross-Platform Media Measurement & Data Summit in New York City Thursday afternoon.
 
 That’s an ironic prediction for an ad executive whose title is chief growth officer, but Tobaccowala predicted it’s inevitable that the ability to reach people with ads will drop precipitously over the next several years because of a variety of factors, but especially because it’s simply not a good experience for most people.

The craft Life

Ryan Avent:

The craft distillery business is booming in the District of Columbia, as it is around the country. Within the context of industrialised economies as a whole, these businesses represent a drop in the sea. On one estimate, craft spirits account for roughly 2% of the American market. Yet they are part of a growing movement that is transforming the consumer economy in cities around the world. The District’s first winery opened not long ago, and the city’s bars inevitably carry several locally brewed beers on draught. There are craft-made pickles and craft-roasted coffee beans. There are craft, nose-to-tail butchers selling cuts of locally raised beef. There are potters and leatherworkers. There are traditional barbershops, which will cut your hair and trim your handlebar moustache, and tailors who will make an appropriately Victorian suit to go with it. There are – no joke – sellers of artisanal ice.

Google’s per click revenue continues to decline, TAC grows 33%

Jack Nicas:

RBC Capital Markets analyst Mark Mahaney attributed the earnings miss to higher expenses related to so-called traffic acquisition costs, or fees Alphabet pays to such partners as Apple Inc. to put its services front and center on their devices. Those fees rose 33% to $6.45bn from a year ago.

“The negative is expenses came in heavier than expected,” he said. “That raises a question: How much revenue is this company having to give away to maintain these growth rates?” Ms. Porat blamed the rise in traffic-acquisition costs on the company’s highest-growth areas—mobile search and so-called programmatic ads where Google places ads on partners’ content—which carry higher fees. Ms. Porat said some of these costs would ease after the first quarter.

Yet the amount of money Google rakes in for each ad click has fallen steadily in recent years. It earns less from mobile-search and YouTube ads, which are rapidly growing, than from traditional desktop search ads. Google said its revenue per click fell 14% in the quarter from a year ago, after an 18% decline in the third quarter.

It’s time to address the elephant in the room: Influencers don’t really influence anything or anyone!

Elinor Cohen:

Earlier this week a major shitstorm hit the Internet, when a boutique hotel owner posted a screenshot of an email he received from a travel blogger and “influencer”, asking for a free stay (in the period of Valentine’s day no less!) in return for “coverage” and promotion to her (80k) followers. He posted a very sarcastic and direct reply, rejecting the request. He did not name the blogger, and even hid her details from the screenshot, yet somehow, this blew out of proportions, with her getting “shamed” and “outed” (how, exactly? One has to wonder…) and posting a viral video that only made things worse.

I can go into many details about what is wrong in the way she approached the hotel, the mistakes both parties made, and about the things that are actually awesome about the parties’ behavior. In fact, to me it appears like a well-orchestrated “crisis” that benefits all from the virality of the matter. However, this is neither the time nor the place for an influencer outreach “how-to” post.

New York’s Hidden Home Buyer Closing Costs: Luxury Boxes and Mint Mojitos

Shane Goldmacher:

And New York home buyers picked up the tab, at least indirectly.

The extravagant evening was just one night of entertainment in the title insurance industry, an obscure corner of the real estate world that has spent tens of millions of dollars to win the favor and business of its clients at ballparks, Madison Square Garden luxury suites, exclusive country clubs, expensive steakhouses, even strip clubs.

All that spending has been baked into the title insurance rates that New Yorkers seldom scrutinize in the stressful rush to complete a closing, which state regulators say are hundreds, sometimes thousands of dollars higher than in neighboring states like Connecticut, Massachusetts and New Jerse

Google and Facebook are watching our every move online. It’s time to make them stop

Gabriel Weinberg:

To make any real progress in advancing data privacy this year, we have to start doing something about Google and Facebook. Not doing so would be like trying to lose weight without changing your diet. Simply ineffective.

The impact these two companies have on our privacy cannot be understated. You may know that hidden trackers lurk on most websites you visit, soaking up your personal information.

What you may not realize, though, is 76 percent of websites now contain hidden Google trackers, and 24 percent have hidden Facebook trackers, according to the Princeton Web Transparency & Accountability Project. The next highest is Twitter with 12 percent. It is likely that Google or Facebook are watching you on many sites you visit, in addition to tracking you when using their products.

Fannie Mae CEO reflects on housing 10 years after the financial crisis

Kai Ryssdal and Bridget Bodnar:

Look, I have no doubt that private capital ought to play the primary role of backing the housing finance system —
 
 Ryssdal: Say that again. Here’s a guy who runs Fannie Mae saying private capital ought to be doing it.
 
 Mayopoulos: Private capital ought to be the primary source of funding for the housing markets in the United States. And in fact, the innovations that we’ve been a big part of since conservatorship was imposed nine years ago have contributed to that. So if you think historically, Fannie Mae has this enormous balance sheet, we’re making all these loans, we have 18 million mortgage loans on our balance sheet. Historically, we would have held all of that credit risk for the life of those assets. Today we don’t do that. We now transfer a very significant part of that credit risk to private capital. In other words, we’re essentially getting reinsurance on what we have. So people have the impression that Fannie and Freddie are continuing to take all this risk. We still take some risk, but we are transferring a very very big part of that risk to private capital.

The Problem Isn’t Technology. It’s Us.

Bob Hoffman:

A few years ago we entered what might be termed the “technological” era of advertising. In this era, machines and software took a lot of the tasks that used to be done by people and started to do them quicker, and in some cases better.
 
 Recently, we have thought of ad technology mostly in terms of media. But technology has influenced the advertising business in many other ways including film production, computer design, data collection and analysis, etc.
 
 Technology, in fact, has influenced all aspects of the advertising business. In many instances for the better, in some, for the worse.
 
 The problem we have yet to come to terms with is that there is a difference between technology and science. We view our modern technological tools as giving us a scientific way of doing advertising. Before technology we were mostly guessing at what was working and what wasn’t. Today we believe that technology gives us a much truer picture of advertising reality.
 
 I am not convinced.
 

Tech Giants Brace for Europe’s New Data Privacy Rules

Sheera Frankel:

Over the past two months, Google has started letting people around the world choose what data they want to share with its various products, including Gmail and Google Docs.

Amazon recently began improving the data encryption on its cloud storage service and simplified an agreement with customers over how it processes their information.

How Amazon’s Ad Business Could Threaten Google and Facebook

Christopher Mims:

It’s easy to see how Amazon.com Inc. threatens the world’s retailers. But analysts, brands and advertising agencies are waking up to the fact that a growing piece of Amazon’s business impinges on turf now controlled by two other tech titans, Google and Facebook.

Amazon’s decade-old advertising business hasn’t generated much revenue or notice until recently. One sign of the turning point was last June, at the annual meeting of advertising giant WPP PLC. Calling the retailer “highly disruptive in many ways,” WPP Chief Executive…

Financial State of the Cities 2016

Truth in Accounting :
 

On January 24, Truth in Accounting released its second Financial State of the Cities report, a comprehensive analysis of the fiscal health of the nation’s most populous cities based on fiscal year 2016 comprehensive annual financial reports. This year, we have expanded our study to include the 75 most populated cities.
 
 This year, the study found that 64 cities do not have enough money to pay all of their bills, and in total, the cities have racked up $335.4 billion in unfunded municipal debt. The study ranks the cities according to their Taxpayer Burden or Surplus™, which is each taxpayer’s share of city bills after available assets have been tapped. Check out the data for your city at the State Data Lab.
 
 

Google Play hit record 19 billion+ downloads in Q4 2017, its highest quarter ever

Sarah Perez:

Smartphone adoption in emerging markets just delivered the highest number of app downloads Google Play has ever seen in a quarter. According to today’s report from App Annie, Google Play app downloads topped 19 billion in Q4 2017, a new record. That also makes Google Play’s download lead over iOS its largest ever, at 145 percent.
 
 Specifically, the downloads were driven by markets including India, Indonesia, and Brazil, which all contributed to Google Play’s 10 percent year-over-year growth in total download as well.
 
 India, notably, also surpassed the U.S. for combined iOS and Android downloads for the first time in Q4.

Something doesn’t ad up about America’s advertising market

The Economist:

Stockmarket investors are wrong to expect an enormous surge in advertising revenues

‘Never get high on your own supply’ – why social media bosses don’t use social media

Alex Hern:

Mark Zuckerberg doesn’t use Facebook like you or me. The 33-year-old chief executive has a team of 12 moderators dedicated to deleting comments and spam from his page, according to Bloomberg. He has a “handful” of employees who help him write his posts and speeches and a number of professional photographers who take perfectly stage-managed pictures of him meeting veterans in Kentucky, small-business owners in Missouri or cheesesteak vendors in Philadelphia.

Facebook’s locked-down nature means mere mortals can’t see the private posts on Zuckerberg’s timeline, but it is hard to imagine him getting into arguments about a racist relative’s post of an anti-immigration meme. And it is not just Zuckerberg. None of the company’s key executives has a “normal” Facebook presence. You can’t add them as friends, they rarely post publicly and they keep private some information that the platform suggests be made public by default, such as the number of friends they have.

Over at Twitter, the story is the same. Of the company’s nine most senior executives, only four tweet more than once a day on average. Ned Segal, its chief financial officer, has been on the site for more than six years and has sent fewer than two tweets a month. Co-founder Jack Dorsey, a relatively prolific tweeter, has sent about 23,000 since the site was launched, but that is a lot less than even halfway engaged users have sent over the same period. Dorsey rarely replies to strangers and avoids discussions or arguments on the site. He doesn’t live-tweet TV shows or sporting fixtures. In fact, he doesn’t really “use” Twitter; he just posts on it occasionally.

Google for the first time outspent every other company to influence Washington in 2017

Hamza Shaban:

Google for the first time spent more than any other company in 2017 to influence Washington, highlighting both the sprawling reach of the country’s thriving tech industry and the rising concern by regulators and lawmakers of its ascendance.

All told, the search giant broke its own record by allocating more than $18 million to lobby Congress, federal agencies and the White House on issues such as immigration, tax reform, and antitrust. It also spent money to weigh in on an effort by lawmakers and regulators to regulate online advertising, which is at the core of Google’s business, according to disclosures filed to the Senate Office of Public Records.

The nonpartisan Center for Responsive Politics said Tuesday no technology firm had ever claimed the top spot since it began tracking lobbying expenditures by individual companies in 1998.

If you’re using an Android phone, Google may be tracking every move you make

David Yanofsky:

Biking? Google probably knows you are. Up a mountain? It probably knows that, too.

The Alphabet subsidiary’s location-hungry tentacles are quietly lurking behind some of the most innovative features of its Android mobile operating system. Once those tentacles latch on, phones using Android begin silently transmitting data back to the servers of Google, including everything from GPS coordinates to nearby wifi networks, barometric pressure, and even a guess at the phone-holder’s current activity. Although the product behind those transmissions is opt-in, for Android users it can be hard to avoid and even harder to understand. Opting in is also required to use several of Android’s marquee features.

“This Is Serious”: Facebook Begins Its Downward Spiral

Nick Bilton:

Years ago, long before Mark Zuckerberg became Mark Zuckerberg, the young founder reached out to a friend of mine who had also started a company, albeit a considerably smaller one, in the social-media space, and suggested they get together. As Facebook has grown into a global colossus that connects about a third of the globe, Zuckerberg has subsequently assumed a reputation as an aloof megalomaniac deeply out of touch with the people who use his product. But back then, when he only had 100 million users on his platform, he wasn’t perceived that way. When he reached out to my friend, Zuckerberg was solicitous. He made overtures that suggested a possible acquisition—and once rebuffed, returned with the notion that perhaps Facebook could at least partner with my friend’s company. The chief of the little start-up was excited by the seemingly harmless, even humble, proposition from the growing hegemon. Zuckerberg suggested that the two guys take a walk.
 
 Taking a walk, it should be noted, was Zuckerberg’s thing. He regularly took [potential recruits and acquisition targets on long walks in the nearby woods to try to convince them to join his company. After the walk with my friend, Zuckerberg appeared to take the relationship to the next level. He initiated a series of conference calls with his underlings in Facebook’s product group. My friend’s small start-up shared their product road map with Facebook’s business-development team. It all seemed very collegial, and really exciting. And then, after some weeks passed, the C.E.O. of the little start-up saw the news break that Facebook had just launched a new product that competed with his own.

Physical retail is not dead. Boring retail is.

Steven Dennis:

There is some dispute over whether more stores opened during 2017 than were closed. IHL says yes. Fung Retail Tech says no. Mostly I say “who cares”?

Either way, it’s clear that the retail landscape is changing rapidly, causing some retailers to prune their store counts, shutter locations en masse or liquidate entirely. What’s unfortunate–and not the least bit useful–is the tendency to declare that physical retail is dying and that we are going through some sort of “retail apocalypse.” The facts clearly do not support this notion. Similarly devoid of substance and nuance is the proclamation that e-commerce is eating the world and that virtually all “traditional” retailers are falling victim to the “Amazon Effect.”

What IS occurring at the macro-level is three-fold. First, the irrational expansion of retail space during the past two decades is finally correcting itself. Second, as retailers better understand the physical requirements to support a world where online is a significant and growing sales channel, many are optimizing their footprints to better align space with demand. Third, and far more important, is that retail brands that failed to innovate and create a meaningfully relevant and remarkable value proposition are rapidly going the way of the horse-drawn carriage.

‘Don’t Be Evil’? Google Is Becoming A Police State

Robert Tracinski:

Back in the day, Google famously adopted the corporate motto, “Don’t be evil.” It hasn’t turned out so well.

The problem is that their motto didn’t define what constitutes evil, so it left an opening for narrow-minded zealots to commandeer company resources in a witch hunt against whatever they define as the forces of wickedness. That’s what has happened at Google, which has adopted a corporate culture of quasi-totalitarian ideological uniformity that it is now starting to impose on everyone who uses its services. Which is, let’s face it, pretty much everyone. For now.

Chinese App: “We’ll Make the World a More Beautiful Place”

Lars Silberbauer:

Meitu was number 17 on Time Magazine’s list of ”Best apps in 2017”. Since then, they have grown their user base not just in China, but also in the US. Most recently, they did the largest IPO on the Hong Kong stock exchange in the last 15 years, when they went public about a year ago.
 
 So what is Meitu and what unique value do they bring?
 I met with Peter Xu who’s Head of Branding at Meitu and his wording of the answer was:
 
 ”There’s an old Chinese saying that “Everyone has the heart of pursuing beautiful things & self-images!” The core essence of the Meitu company & its total portfolio has been consistently centered on “Beauty”.
 
 With its software/hardware, online/offline services, utility/social apps, Meitu aims to help various users become more beautiful from the digital to the real world, by leveraging beauty related technology (Visual A.I & A.R etc.) and cross-over partnership with beauty know-how.

iOS Economy, Updated

Horace Dediu:

In its latest update on the App Store Apple reported that iOS developers earned $26.5 billion in 2017. A year ago the figure was $20 billion. The growth rate is then about 33%. The cumulative payments to developers can be calculated as $86.5 billion. This amount was generated in a span of less than 10 years, with the first billion paid by June 2010.

Facebook’s Virtual Assistant M Is Dead. So Are Chatbots

Erin Griffith:

In some respects it’s impressive that Facebook kept M running as long as it did. Despite the hype, M, which lived in Facebook Messenger, was presented as an experiment. The free service was only offered to 10,000 people in the San Francisco area, who used it to do things like book restaurant reservations, change flights, send gifts, and wait on hold with customer service. For those that had access, M was a fantastic perk. But for Facebook, it was a cost center.

That’s because most of the tasks fulfilled by M required people. Facebook’s goal with M was to develop artificial-intelligence technology that could automate almost all of M’s tasks. But despite Facebook’s vast engineering resources, M fell short: One source familiar with the program estimates M never surpassed 30 percent automation. Last spring, M’s leaders admitted the problems they were trying to solve were more difficult than they’d initially realized.

Tech’s New Hotbeds: Cities With Fastest Growth In STEM Jobs Are Far From Silicon Valley

Joel Kotkin:

The third tech turning, now in its infancy, promises greater dispersion to other markets, some with strong tech backgrounds, some with far less. In the last two years, according to numbers for the country’s 53 largest metros compiled by Praxis Strategy Group’s Mark Schill based on federal data and EMSI’s fourth-quarter 2017 data set, the STEM growth leader has been Orlando, at 8%, three times the national average. Next are San Francisco and Charlotte (each at 7%); Grand Rapids, Michigan (6%); and then Salt Lake City, Tampa, Seattle, Raleigh, Miami and Las Vegas (5%).

On Google’s AMP

ampletter:

We are a community of individuals who have a significant interest in the development and health of the World Wide Web (“the Web”), and we are deeply concerned about Accelerated Mobile Pages (“AMP”), a Google project that purportedly seeks to improve the user experience of the Web.

In fact, AMP keeps users within Google’s domain and diverts traffic away from other websites for the benefit of Google. At a scale of billions of users, this has the effect of further reinforcing Google’s dominance of the Web.

$76B to “nudge” shoppers

Sarah Nassauer:

Most retailers still see digital advertising as a growing focus of their spending, and many continue to cut back on traditional print ads as well as mailers. But more are also experimenting with new ways to send out deals on paper, sometimes mining online behavior or databases of shopper trends to improve their so-called junk mail.

PebblePost, a New York City marketer, uses online browsing and buying data from retailers and brands to send relevant coupons and ads to homes within a few days. For example, it might send a printed offer for free shipping if a shopper browsed a site without buying, said Lewis Gersh, chief executive of the firm.

At Jet.com, the e-commerce site that Wal-Mart Stores Inc. bought in 2016, direct mail makes up 10% of the media budget and is the online retailer’s largest offline marketing expense. Jet sent around 35 million paper coupons and mailers last year, which are effective in reaching new and repeat shoppers as the company tries to attract more urban, affluent shoppers, said Emily Frankel, senior director of digital marketing.

Annual spending on newspaper circulars, coupons, direct mail and catalogs hit about $76 billion in 2017, slightly lower than the previous year but up 85% versus 2012, according to Borrell Associates, a media consulting firm. The firm expects spending on some forms of mailed ads to fall as the U.S. Postal Service raises rates in coming years, said Kip Cassino, executive vice president at Borrell.

Experiences First

BBC:

“Millennials would rather put their money into experiences than consumer goods,” she says.

“They’d rather spend their money on something that’s going to bring a memory – or a Snapchat photo – than a car, or a new couch.”

That theory is supported by Elijah. When he opened his present, his girlfriend said: “I know you like experiences more than material things.”

It’s also backed up by Asia Jones, a 20-year-old from Maryland.

Ad-tech firm Criteo likely to cut its 2018 revenue by more than a fifth after Apple blocked ‘pervasive’ tracking on web browser Safari

Alex Hern:

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Internet advertising firms are losing hundreds of millions of dollars following the introduction of a new privacy feature from Apple that prevents users from being tracked around the web.

Advertising technology firm Criteo, one of the largest in the industry, says that the Intelligent Tracking Prevention (ITP) feature for Safari, which holds 15% of the global browser market, is likely to cut its 2018 revenue by more than a fifth compared to projections made before ITP was announced.

With annual revenue in 2016 topping $730m, the overall cost of the privacy feature on just one company is likely to be in the hundreds of millions of dollars.

Is it possible to beat Google?

Mark Nuzzilo:

Not only is it possible, but it is becoming more and more likely to happen soon.

The reason it hasn’t happened yet is because nobody has applied the correct strategy yet. I do not think it would take heroic feats of execution, given the right strategy. In order to compete with Google’s strategy, or understand why it can be beaten in the first place, it is helpful to understand it:

Despite Google’s profits, talent, and maturity, the number of ways a user can possibly search for something is very limited. The way that Google Search presents results to the user, given an input query, is also out of the user’s hands. The user, no matter how savvy, cannot instruct Google to use a different kind of search algorithm. Nor can the user see the details of the algorithm that is chosen for them, as it is a highly guarded trade secret.

This is of course a deliberate choice on Google’s part. There are a few reasons, in my opinion, why Google’s strategy is successful:

Thousands of major sites are taking silent anti-ad-blocking measures

Devin Coldewey :

It’s no secret that ad blockers are putting a dent in advertising-based business models on the web. This has produced a range of reactions, from relatively polite whitelisting asks (TechCrunch does this) to dynamic redeployment of ads to avoid blocking. A new study finds that nearly a third of the top 10,000 sites on the web are taking ad blocking countermeasures, many silent and highly sophisticated.
 
 Seeing the uptick in anti-ad-blocking tech, University of Iowa and UC Riverside researchers decided to perform a closer scrutiny (PDF) of major sites than had previously been done. Earlier estimates, based largely on visible or obvious anti-ad-blocking means such as pop-ups or broken content, suggested that somewhere between 1 and 5 percent of popular sites were doing this — but the real number seems to be an order of magnitude higher.
 
 The researchers visited thousands of sites multiple times, with and without ad-blocking software added to the browser. By comparing the final rendered code of the page for blocking browsers versus non-blocking browsers, they could see when pages changed content or noted the presence of a blocker, even if they didn’t notify the user.

Wireless Substitution: Early Release of Estimates From the National Health Interview Survey, January–June 2017

Stephen J. Blumberg, Ph.D., and Julian V. Luke :

Preliminary results from the January–June 2017 National Health Interview Survey (NHIS) indicate that the number of American homes with only wireless telephones continues to grow. More than one-half of American homes (52.5%) had only wireless telephones (also known as cellular telephones, cell phones, or mobile phones) during the first half of 2017—an increase of 3.2 percentage points since the first half of 2016. Nearly three-quarters of all adults aged 25-34 were living in wireless-only households; more than two-thirds (70.7%) of adults renting their homes were living in wireless-only households. This report presents the most up-to-date estimates available from the federal government concerning the size and characteristics of this population.

The Digital Advertising Duopoly

Fred Wilson:

We have a digital advertising duopoly.
 
 The difference between second and third place is massive.
 
 I don’t want nor do I expect any governmental response to this market failure.
 
 I want to see the technology industry adopt new approaches to monetization, ideally not attention based models, to combat this.
 
 I don’t think subscriptions are the only answer here, as many do.
 
 We need models that support free consumption of media for many reasons.

Apple Wins 2017 Smartphone Holiday Season

Chris Klotzbach & Lali Kesiraju:

2017 was another marquee year for smartphone sales and innovation with the introduction and evolution of manufacturers’ flagship devices, such as Apple’s iPhone X, Google’s Pixel 2, and Samsung’s Galaxy S8. With more consumer options than ever before, Flurry took a look at the most gifted smartphones and tablets around the globe this holiday season, examining activations throughout the week leading up to Christmas day and the end of Chanukah. Flurry Analytics, part of Oath, is used by over 1M mobile apps and has insight into 2.1 billion devices worldwide.

The Beginning of a Big Tech Backlash?

David Dayen:

The Beginning of a Backlash
 
 “I think you do enormous good … but your power sometimes scares me,” said Republican Senator John Kennedy of Louisiana in October to the general counsels of Facebook, Google, and Twitter at the first major congressional hearing on Big Tech in years. The topic was Russian interference with the 2016 presidential election, but the testimony illuminated the platforms’ domination of large parts of American life, without any interest in managing that control. Malign actors could so easily penetrate platform defenses because there weren’t any. Facebook has five million advertisers at any one time; it couldn’t possibly vet them if it tried.
 
 Furthermore, tech firms have no incentive to interfere with the source of so much revenue. That’s why ProPublica could list discriminatory rental housing ads excluding races and ethnicities in 2016, and then again in 2017, after Facebook claimed to fix the problem. That’s why Google is purging videos and disabling comments on YouTube’s predatory, sexualized user content aimed at children, but not always removing the predators’ accounts. Allowing the narrowest possible targeting and the maximum possible targets has built the most lucrative ad mechanism in history, and it generates big bucks, even if the bill is paid in rubles.
 
 The hearings were important more for their explanatory power than for the technicalities of election integrity. “The end of the story is not Russia hacking the election, but that gross harm exists,” says Marshall Steinbaum, research director at the Roosevelt Institute. It filled out the picture on these platforms, whose operations we understand as much as the proverbial blind man feeling around an elephant. “We need to make sure that the public fully understands the scope of the problem we face, and how it could be dramatically worse, given the speed at which these companies are growing,” says Lina Khan, legal policy director at the Open Markets Institute.
 
 We don’t know how our data is handled. We don’t know how algorithms nudge us into certain apps or products. We don’t even have a confirmed figure of Amazon Prime memberships (recent estimates range between 52 million and 85 million households). There are nearly 270 million fake and duplicate accounts on Facebook, a number they quietly updated only in November.
 
 Platforms like Google have invested heavily in the academic research establishment. The search giant has funded around 100 public research papers since 2009, with up to $400,000 in seed money for each, according to data from The Wall Street Journal. Most of the research papers failed to disclose Google’s funding; Google even gives notes on the studies before they get published. This academic payola tilts the debate about how these businesses work, and in whose interest.

The All-American Aldi The no-frills grocery chain is a perfect example of spare, unfriendly German efficiency. The All-American Aldi The no-frills grocery chain is a perfect example of spare, unfriendly German efficiency.

Nora Battelle:

Aldi, a German company with outposts across Europe, has quietly become one one of the biggest grocery chains in the US. Since it first opened its doors in Iowa in 1976, it has established 1,600 locations across the nation. Over the next five years, it announced in June, that number will jump to 2,500, putting its reach alongside that of Walmart and Krogers. The grocer is throwing itself head first into the American Supermarket Wars, and cranking up its numbers in a bid for dominance. But the Aldi strategy also includes a $1.6 billion investment in the renovation of existing locations: the company, after forty years in this country, is giving up its staunch disinterest in US shopping norms.
 
 Existing locations will be updated with brightened lighting, wider aisles, and expanded perishables sections. These updates all mark basic standards in American retail; introducing them is the first major concession Aldi has made to the comfortably expansive, glitteringly bright megamarkets that surround it in the US. Existing stores, pre-renovation, feel more like German warehouses than American supermarkets; the dim lighting, narrow isles, and minimal perishables sections contribute to that feeling. But the entire Aldi system is in opposition to the more-is-more Walmart ethos.
 
 In New York City, the company’s only location (for now) is on 117th on the banks of the East River. It’s five long avenue blocks from the nearest subway stop—no open-armed welcome to curious passersby here. If you are at Aldi, it’s because you needed groceries and you went out to get them, not because you were tempted in by a cute box of chocolates, or a deal posted in the window, or the warm comfort of brightly lit Christmas displays on a cold afternoon.

Apple Changes Business of Selling Your Browsing Data

Stephen Wilmot:

Online advertising is under siege from an unlikely coalition of privacy campaigners: Apple and European regulators. The only long-term solution may be for websites to be more explicit about how they make money from customer data.
 
 Citing privacy concerns, Apple launched a feature on its Safari browser in September called Intelligent Tracking Prevention, which limited the use of cookies to track users’ browsing histories. These cookies are heavily used by ad-tech companies, which maximize the value of online ads by matching…

Is SEO Opportunity Growing or Shrinking?

Rand Fishkin:

The metric of “clicks / ten search queries” helps us avoid seasonality biases and look instead at the rate of queries that lead to traffic opportunity. Here, the reality is sobering.

• The high point was the first month of the graph, November 2015
• Since then, there have been two significant declines in organic clicks/query (12/2015 and 11/2016) and one significant decline in paid clicks/query (01/2016, though it’s now nearly recovered)

• The 5.41 clicks/10 queries in October, 2017 is 23% lower than the 6.97 clicks/10 queries we had back in November, 2015. That’s a lot of lost SEO opportunity

• I haven’t yet tried to tie the drops back to noted changes in the SERPs, but I suspect the growth in featured snippets, instant answers, and knowledge panels in the results are at least partially responsible

• The growth of search volume has made up for much of the lost click opportunities, but this is a tough trend chart to see as an SEO

• That said, SEO still gets ~20X more traffic than PPC, and it doesn’t cost anything close to as much, so there’s still a massive advantage to ranking organically.

The media today: Google starts its ad-blocking purge in February

Matthew Ingraham:

If you’re a publisher that relies on digital ad revenue—and the vast majority of news sites fall into that category—you will have a new problem to worry about in February: That’s when Google starts blocking ads by default for users of its Chrome browser.
 
 The fact that Google planned to make this move was first reported earlier this year by The Wall Street Journal, but the exact timing was unknown. On Tuesday, the web giant said in a blog post that it will start blocking sites on February 15.
 
 ICYMI: People are not happy with Twitter right now
 
 The company says this is an attempt to clean up the state of online advertising, which is awash in pop-ups, interstitials, auto-playing videos, and other clutter. And it says it will only block ads that fail to meet guidelines set by the Coalition for Better Ads (of which Google is a member).
 
 The blocking also comes with a nuclear option: If a site falls below a certain threshold for bad advertising for 30 days, Google will block all of the ads on the site until it takes action to fix whatever problems have been reported.

Can Facebook and Google Be Disrupted?

Ethan Chiel:

It’s very appealing, for the drama alone, to imagine some as-yet-unknown company driving Facebook into Myspace-like obscurity, or Alphabet being broken up, or whatever scenario for the demise of one of Silicon Valley’s five dominant companies you prefer to imagine. Not just appealing but natural to do so: We have in living memory at least a dozen examples of large and successful tech companies just failing, or becoming shadows of their former selves: Myspace is a ghost town owned by Time Inc. AltaVista and Friendster are long dead. Even Yahoo! and AOL, while still technically around, have become part of whatever Verizon-owned, centaurlike creation Oath can claim to be.

This recent history of “creative destruction” is important to Silicon Valley not just for its narrative neatness — Davids that become Goliaths, only to get toppled by new Davids — but for the protective shield it provides. Why be worried about Google’s power (or Facebook’s, or Amazon’s), when they’re each a bad decision against a more nimble competitor away from irrelevance? Surely Facebook can be Facebook’d, just as Myspace was? Surely Google will someday be disrupted?

Fake-Ad Operation Used to Steal From Publishers Is Uncovered

Lara O’Reilly:

An ad-tech firm says it has discovered a large and sophisticated advertising-fraud operation in which fake websites and infected computers were used to scam advertisers and publishers out of upward of hundreds of thousands of dollars a day.

Denmark-based Adform, identifier of the scheme, named it “Hyphbot” and estimates that it has been going on since at least August.

According to Adform, the fraudsters behind the Hyphbot scheme created more than 34,000 different domain names and more than a million different URLs, many designed to attempt to fool advertisers into thinking they were buying ad inventory from big-name publishers such as the Economist, the Financial Times, The Wall Street Journal and CNN. It is a tactic known in the industry as “domain spoofing.”