ACCC Digital Platforms Inquiry

Monopolies, duopolies, oligopolies are all words which mean that the customer is unlikely to be receiving optimal value. These are words that we are well used to in Australia – a small population base, a vast country – four banks, two supermarkets, two airlines… the list goes on.

However, when Scott Morrison asked the ACCC to look at the impact global digital platforms are having on consumers (and consumers are at the heart of this debate) – it is in the context of understanding if in fact these social platforms are defined as media and, as such, should be treated differently. Namely to operate under the media laws of the land. Apparently this is a world first for reviewing the anti-competitive behaviour of primarily Facebook and Google.

Are they media businesses? Absolutely.

That is without question.

By definition, their reach and ability to influence consumers means that Google and Facebook are media. But whether they are demonstrating anti-competitive behaviour is another, and much more complex, question.

As I read the press reports this morning of the other media company submissions to the ACCC (Foxtel, Ten, Seven, News Corp etc) – I think there is a much greater conversation to have about the quality and accessibility of Australian media. For half a century the Murdoch, Packer and Fairfax names controlled the vast majority of print media… Have the tables merely turned, or was this disruption in media inevitable?

Probably.

“All value chains will be disrupted: defence, education, financial services, government services, media, healthcare, manufacturing, oil and gas, retail, telecommunications, and more.” McKinsey, Why digital transformation is now on the CEO’s shoulders.

The point is that the traditional media businesses did not, and have not, reinvented themselves to provide real value to customers and consumers. They are two-sided marketplaces. Needing both advertising dollars and engaged consumers to make the business model work.

I think of the classic marketer’s excuse ’50 per cent of our media spend worked – we just don’t know which half’. In an age of disruption this just simply isn’t good enough.

Watching ‘catch up’ TV the other night was simply an excruciating experience. In an ad break, one advertiser had the same ad run four times. Embarrassing for the network, and the advertiser. In my opinion, it damaged the advertiser’s brand (as the ad was not entertaining anyway) and to have it repeated 16 times in 47 minutes did more harm than good.

This is a technology investment issue. The media platforms, whether it be radio, TV or newspapers and magazines simply have not kept up with the level of sophistication advertisers are seeking. I want to know who is viewing my ad, how long they are viewing it for, what level of engagement they have with my brand and where they go afterwards. All these things are provided by digital platforms.

RedBalloon was founded before Google Adwords was launched… many know my story of how hard it was to attract audiences – and how as a fledgling advertiser I simply could not afford mass media (and we’d seen many dot-coms fail in the early part of the century as they tried to do this). I finally found a partner in ninemsn, still using old media rate cards as their financial model then. But at least I could identify who was visiting my site.

When Google Adwords launched I could not believe how much data I now had at my fingertips – and combined with Google analytics, I had insights into the customer journey that I had never experienced in my career as a marketer. That is now 15 years ago and I still do not have the same sophistication when it comes to the major media players.

However utopia did not last – in those early days I could attract a customer for around five cents. Fast forward to 2016 and that had gone up to $48. Not sustainable for any business —  I had to find a better way.

Disruption is about looking at what customers value – and the answer is primarily relationships (engaging with a brand the way they want to, where and when) and letting technology provide the systems and processes to support those relationships.

Artifical Intelligence as a digital marketing tool

We chose a digital marketing tool out of Tel Aviv called Albert AI. Albert AI connected to all our first-party data and learned from it – it then served those ads on the attached platforms. It looked at our product data, customer data, and connected to our Facebook, Adwords and Double Click accounts. It learns and serves holistically across all the channels, delivering 6500 new keywords on the day it was turned on. Albert also worked with a greater than usual quantity of creative elements – it tested them, some it discarded. In the first couple of months, it reduced the acquisition cost to find a customer by half – and it has since dropped to as low as $7. It only operates to KPIs and won’t serve ads if it can’t achieve it. This now means that our Return on Advertising Spend (ROAS) delivers $15 for every dollar spent. And it can serve ads and content at any place in the marketing funnel. (Look mum no hands!)*

What this has meant is that our people spend most of their time on creative, strategy, customer content and looking at the data to identify valuable insights. AI supports the human element that is paramount in creating real experience.

When our media agency came with our media schedule for Christmas last year, I asked them how could I connect the proposed media to Albert AI – so Albert could continue to learn across the full media spectrum. What about beacon technology for out of home (billboards) or in cinemas; what about digital radio being connected; or catch up TV? All giving me a view of the total customer journey. Alas, the technology from the big media players just was not there.

As the media companies bleat, ‘It’s not fair… those global platforms are uncompetitive’, it is also the customers voting with their eyeballs, and advertisers voting with their wallets. Because there is no boardroom in the country that is not demanding that ‘marketing’ be more accountable in demonstrating value.

I agree that the restrictions on media (and even the media licensing fees) do not make for a level playing field. However, if this inquiry recommends a shift in the regulation – any and every saving should be invested in our traditional media’s digital platforms to make sure they move into this century and deliver what both customer groups want most – an intimate, and accountable relationship.

Amazon spends $15 billion a year on innovation.

Whilst most other businesses are spending 75 per cent of their tech spend just maintaining legacy systems. There is a massive leap to be made.

I will watch with interest as this ACCC inquiry unfolds. I’d like to see a succinct list of exactly how much media companies are paying the government each year in licensing fees versus the global players. To be able to invest such amounts in their own digital platforms would be transformational. We will wait and see.

*Declared interest: please note that since completing the three-month trial – the Big Red Group obtained the exclusive distribution of Albert AI for Australia and NZ of which I have a financial interest. (Loved it so much bought the company, as they say).

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