10 min read

Welcome To The App Store Cold War

Could this week's political actions undermine the internet as we know it?
Welcome To The App Store Cold War

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If I were describing the current state of the United States’ economy, “stable” does not come to mind.

Citing national security concerns, this week President Trump signed two executive orders which take effect in 45 days, banning business transactions with the owners of two prominent social media apps with strong ties to the Chinese government - ByteDance (owner of TikTok) & Tencent (owner of WeChat). While these orders will likely be challenged in court, we are undoubtedly moving toward uncharted territory. And the ramifications could extend well beyond our phones. We may be on the brink of an App Store Cold War. And that, of course, means even more instability to online retailers.

Retaliatory Measures

Most experts think this aggressive move will be met with an in-kind action. Historically, China typically meets economic sanctions with sanctions of their own. We may likely see the digital equivalent of retaliatory sanctions in response to President Trump’s order, which effectively forces Chinese owners to sell their stake in these popular apps if they wish for their apps to remain available to Americans. Depending on the nature of retaliatory steps, retailers could see even more limited access to Chinese buyers.

The Economy

Before we dive into the economic impact, we need to talk about FAANG stocks. If you are not familiar with the term already, I suspect you will be soon. FAANG is an acronym for Facebook, Amazon, Apple, Netflix, and Google (now Alphabet). In short, it is the major US tech stocks. And when I say ‘major,’ I mean it.

As of the start of 2020, FAANG stocks represented $4.1 trillion in market cap, roughly 15% of the S&P 500. They are behemoth companies whose growth has driven the U.S. economy for the last decade.

Big tech companies are all about scale. And while not all of these companies have a presence behind China’s Great Firewall, several do. And the Chinese market represents a big portion of their global business. If there is a retaliatory response, it would likely begin a domino effect that begins to divide the world wide web into many smaller pieces.

This segmentation means trouble for the big tech companies who have primarily serviced the global customer base on one unified tech stack. If suddenly Facebook (for example) has to modify its product for each country to accommodate localized legislation, it would be the antithesis of scale, and it would subsequently undermine the company’s current value.

Keep in mind; we are not just talking about China. India and Pakistan have already banned TikTok. Australia and Japan announced this week they too are exploring a possible ban. Suddenly, the eyes of the world have been opened to the power (and potential danger) of a foreign company collecting user data on millions of citizens. And no one collects user data like Silicon Valley.

Notably, when growth declines, social media products seldom get better. Instead, they degrade their products in the name of maintaining growth and/or ad revenue. That could mean trouble for both users and advertisers.

Collateral damage

While the primary focus of these executive orders has been on TikTok, it may also be the easiest to solve. Microsoft is rumored to be negotiating a purchase that would essentially defuse that bomb.

On the other hand, Tencent is an entirely different story. Not only does Tencent own WeChat, but they also have an investment stake in many other high-profile companies, such as Tesla, Snapchat, Reddit, Spotify, Activision Blizzard, and Epic Games.

If U.S. companies are prohibited from transacting with Tencent, the fallout could be significant. And for online retailers, Snap & Reddit are two of the most promising up-and-coming ad networks. If these orders stifle competition among the ad markets, advertisers could be stuck with four more years of Facebook.

Conclusion

We live and work in a complex, global economy where every action has dozens of unintended consequences. While the data privacy threat posed by ByteDance and Tencent may be genuine, a response to it may also have a complex, global impact. This comes, of course, at the same time Facebook’s social media monopoly is under its greatest pressure yet and many think the U.S. Government will attempt to break up the social behemoth.

It is safe to say, the future of online advertising has never looked so uncertain.


Automatically update Customer Match lists with Zapier - Google Ads Help

Whether it’s creating a new customer relationship or enhancing existing ones with custom messaging, using first-party data in your marketing campaigns helps you show up for your best customers. With Customer Match, you can use your online and offline lists to re-engage these customers and find new ones just like them across Search, Shopping, Gmail, YouTube, and Display.

Your relationship with your customers is constantly changing, and it’s important to keep your Customer Match lists up-to-date to reflect that. However, list maintenance can be a manual and time-consuming process. That is why we’ve collaborated with Zapier to make it easier to work with your Customer Match lists. With Zapier, you no longer need to manually upload, sort, or remove contacts from a list - it will automatically upload contact details from your customer relationship management system, marketing automation, or ecommerce tool to Google Ads.

A nice way to level up your automation and minimize your irrelevant ad spend due to old data.

Showcase Shopping ads see a meaningful bump:

Google Asking Searchers How Fast A Site Loads

Google first asks her if she wants to give feedback on the above result (right below the snippet). And when she said yes, it asked her "how fast did this site load?" The responses are fast, average, slow or didn't notice.



Site speed has been a factor in organic ranking for some time, but this is the first time website visitors have been a direct factor in that calculation.

Side note: Shouldn’t Google already know how fast your site loads? ¯_(ツ)_/¯

Run audio ads easily with new tools in Display & Video 360

In 2020, U.S. adults are projected to listen to digital audio more than radio for the first time ever. As the audio landscape continues to shift more heavily to digital, marketers have more opportunities to reach their audiences and get their attention using a long-proven format. Google continues to help marketers embrace this shift with new and improved audio product offerings.

We’re introducing new audio capabilities in Display & Video 360 to simplify the ad creation process, make it easier to find the right audio inventory for your brand, and improve measurement.

Initially only available to 360 customers, this gives some insight into a potential new growth vertical for Google.

🗣 Social

Instagram Reels launches globally in over 50 countries, including US | TechCrunch

Instagram Reels, the company’s significant effort in challenging TikTok on short-form creative content, is launching globally, starting today. The feature is being made available across 50 countries, including the U.S.

Messenger launches a new chat plugin for business websites to reach non-Facebook customers | TechCrunch

The prior version of the plugin may have worked for smaller businesses that couldn’t afford a more robust live chat service, but it also limited customers’ ability to interact. Customers who didn’t use Facebook couldn’t remember their password, or who were visiting the website from a different device than their own, for example, wouldn’t have been able to chat with the business.

Other customers may have simply wanted to submit their queries more anonymously — perhaps worried that the business would continue to bother them later in their Messenger app, even if they weren’t ready for such a direct relationship.

The updated plugin will now allow customers to talk to businesses without being logged in, Facebook says. Instead, a “continue as guest” option will be available. However, on the business’s side, they’ll still be able to use all their same tools to manage their conversations with these online users, whether logged in or not.

This is a nice update. As a result, I have actually added the Messenger plugin to my own site. I will let you know how it goes.

Is Facebook Boost a Waste of Money? Or is Ads Manager Better?

Test Results Comparing Facebook Boosted Posts vs Facebook Ads Manager

The ads run via Facebook Ads Manager outperformed boosted posts on all three categories:
  • 17.28% more clicks
  • 64.26% higher Reach
  • 18.42% lower CPC

Facebook raises concerns that iOS 14 could harm its ad business - 9to5Mac

Facebook Chief Financial Officer David Wehner told CNBC today that the company fears that iOS 14 will have a negative impact on how Facebook operates its advertisements. As the company’s revenue comes in large part from advertisements, any attempt to hinder such practice will hurt Facebook’s business.
We’re still trying to understand what these changes will look like and how they will impact us and the rest of the industry, but at the very least, it’s going to make it harder for app developers and others to grow using ads on Facebook and elsewhere.
Wehner refers to a new option included with iOS 14 that allows users to disable tracking between apps. Developers use trackers to identify each user in different apps and websites so they can target advertisements based on what you access on your device. Even if users leave this option enabled, third-party apps will have to ask permission for tracking and collecting your personal data.

The pendulum continues to swing towards user privacy. As a user, I am thankful. But as an advertiser, I will have to live with the consequences.

The currency of influence continues to manifest itself on Facebook.

📈 Reporting & Revenue

Journal of Consumer Research study shows people buy less when they're being watched

The paper, published in the Journal of Consumer Research by Yonat Zwebner, an assistant professor of marketing at the Arison School of Business at the Interdisciplinary Center, a university in Herzliya, Israel, and Rom Y. Schrift, an associate professor of marketing at the Kelley School of Business at Indiana University, reviews the findings of eight studies that concluded that when consumers know they’re being monitored while they decide whether or not to buy something, they really don’t like it. In fact, they hate it so much, they stop trying to figure out what to buy at all, and they either walk away from the point of sale or choose the easiest, default option to buy.

At least one part of the study—the tracking component—has been playing out online for years via sites’ use of cookies, little pieces of data that identify your computer and keep track of your in-browser activity. Sites are generally required to ask for a user’s consent to track cookies; however, what that actually looks like—and whether sites actually do—is a mixed bag. (Only 11% of sites comply with consent notice regulations in the U.K.; the regulations are even more lax in the United States.) Companies do all this to figure out if you’re interested in buying something and to increase sales, but this study suggests the practice could have the opposite effect.

Consumer spending dropped significantly when subjects knew they were being watched, according to the study conducted by Zwebner, which found that 41% of participants walked away without making a purchase, compared with 20% of those who were only watched while making their final choices or weren’t watched at all.

🛍 Marketplace

We have discussed the impact of CCPA at length, including how most CMS’s have not yet updated to support the new legislation. This week, we got some news on the timeline for Shopify adding CCPA support:

🏬 Brick & Mortar

‘There are too many unknowns’: How landlords are giving retailers more lease options | Modern Retail

Everything is now negotiable. That means some retailers are able to get an unprecedented amount of concessions from retailers, like a couple months of free rent, and a laundry list of clauses that will allow them to terminate leases early. Landlords, whose biggest priority is to ensure they have tenants, are now willing to take a cut of store sales instead of asking retailers to pay the same amount of rent each month.

“If you were to put an average number on it, I would say we are seeing somewhere in the vicinity of 20% discount for the time being,” said Jason Richter, CEO Capricorn Asset Management. Richter’s firm has represented both landlords and retailers, including Brookfield and Outdoor Voices, in lease negotiations and asset management.

More than 6,000 store closures have been announced so far in 2020, compared to 9,300 in all of 2019, as tracked by Business Insider. In some previously pricey Manhattan shopping neighborhoods, like along Prince Street and in Upper Madison avenue, the average asking rents have dropped 37.5% and 15.5% year-over-year respectively, according to commercial real estate CBRE.

“No one knows what the world is going to look like a year from now. There are too many unknowns for retailers to lock themselves into a long-term commitment,” said Michael Jerbich, president at B. Riley Real Estate, a real estate turnaround firm that was recently tapped by JC Penney to sell off some of its store locations.

Retailers’ ability to negotiate is ultimately limited by the financial health of the landlord. A so-called “mom-and-pop” landlord that owns one development and has no debt, may be more willing to offer concessions, than say, a publicly-traded mall owner. But real estate experts said that one of the most common concessions that they have seen retailers increasingly push for since the onset of the coronavirus pandemic is to sign variable, rather than fixed leases.

If you have experienced leniency from your landlord, I want to hear about it. What kind of flexibility have you seen in your area? Reply and let me know.

📦 Distribution

Weekly Time-in-Transit Shipping Carrier Data

Standard supply chains have been turned inside out. All shipping carriers are seeing more volume every day compared to the holiday peak volume from last year. Some carriers are adjusting well, some are struggling, and everybody is adapting at different speeds to keep up with demand.

That is exactly why we’re providing you, the brand builders, the creators, the operators, with insight into what we’re seeing with the shipping carriers that ShipBob leverages within our fulfillment network across the United States like UPS, USPS, FedEx, and DHL.

We all know there have been carrier delays during the COVID-19 pandemic, but we want to present you with some real time data to highlight this.

👋 Holla!

Questions, comments, inquiries? I’d love to hear from you! Email newsletter@robbettis.com.