Whart does industry consolidation mean?
Listen in to the conversations in any digital agency, and they will be around how to consolidate. While creative designers need to think about how to make one campaign work across different platforms, even different models within those platforms, planners need to find ways of segmenting audiences in meaningful ways.
So the recent consolidation in the mobile manufacturing base could be good news for agencies that want to reduce complexity. And ultimately, new ways of buying ads could sidestep the issue altogether.
Blackberry has just found that a name-change from RIM, plus a photo of a CEO holding two new devices aloft, was not sufficient to maintain it as an independent company, and is in the process of being acquired by Fairfax, a finance company that already owns 10% of the firm. In February 2011, Nokia announced it was abandoning its own operating system, Symbian, in favour of Windows. This was just a precursor to Microsoft's intention to buy Nokia wholesale, announced in September this year.
Meanwhile LG Electronics seeks differentiation through ultra high-resolution cameras with industry speculation over whether this is sufficient to secure its future. That's real life. But our mobile advertising data provides insight into just how pronounced the death of the long-tail has become, certainly when reaching mobile audiences is a key metric for the success of a manufacturer.
The long-tail is dying
When we took a recent dive into our data we saw that, across the past year, the long tail of mobile device manufacturers – that is, everyone other than Apple and Samsung – declined consistently. The long tail is dying.
When we looked at Blackberry's share of mobile ad impressions, we saw a brief resurgence in Q4 2012. Nokia also briefly grew stronger in Q1 2013. However, both manufacturers ended Q2 2013 significantly down, with Blackberry losing half its share of global mobile impressions (from 6% share in Q3 2012 to 3% share in Q2 2013), and Nokia losing three-quarters (from 8% to 2%).
Altogether, the long tail lost over half of all impressions, falling from 39% of total impressions in Q3 2012, to 36% in Q4 2012, then 29% in Q1 2013 and Q2 2013 saw the long tail collapse and account for just 17% of ad impressions.
What does this mean for agencies?
Well firstly, the designers might heave a sigh of relief. You see that steam slowly rising from the creative corner? That's the design team, running a production line at a furious pace, ensuring that their quality rich media ads engage while staying on-brief. There's a good degree of rich media interoperability between iOS and Android platforms already but, as the long tail dies, the good news for them is that they can forget about many formats altogether.
When we look at the inventory formats across our platform we see that two banner formats – 300x50 and 300x250 – can account for up to 70% of inventory. If we excise JAVA, Blackberry, WebOS, Windows and Symbian, we lose a chunk of formats that suddenly, designers don't have to worry about any more. Truly, consolidation of manufacturers means consolidation of creative efforts.
For media planners, there is going to be very little change in the immediate term. The vast majority of briefs want to target by platform, and inevitably that's iOS and Android. However, we are often asked to deploy campaigns 'everywhere' – and whereas we duly do, inevitably what comes back is Android and iOS, regardless of manufacturer.
But for those planners who really do want to target according to niches, the loss of manufacturers who account for that mid-point between a huge head and a very long tail could be problematic. Fewer devices means fewer opportunities to segment and, while arguably Nokia's acquisition means the two-horse Samsung/Apple race could become a three-horse race, Microsoft still has a lot of catching up to do.
Time to talk people not devices
However, targeting by manufacturer or device is quickly becoming old hat. Programmatic buying simply goes out and hunts for the right inventory, with Real-time Bidding (RTB) matching inventory to ads at the per-impression level by matching the data. So really, the questions around what devices or even where they're located, are soon to be changed to questions around how people behave. Marketers will at last be able to talk about people, platforms, and demographics rather than devices.
So while the death of the long-tail gives creatives a break and removes choice from planners, ultimately the way agencies buy ads will change so radically that they're essentially insulated from the turmoil of the hardware market. Over the next few months agency heads will sleep well at night, even if CEOs of hardware manufacturers will not.
Victor Malachard is chief executive of mobile media specialist Adfonic