Good morning. It was only yesterday that I was riffing about how Amazon’s new cashier-free “Go” store could be a disruptive force for retail. The absence of long lines could draw in passing foot traffic! Think of the convenience! So the theory goes. Check out (I couldn’t resist) this photo tweeted by Ryan Petersen, CEO of freight startup Flexport, which shows…a rather long line of people waiting to get into the store. Well, if it works for hipster restaurants…
Hey Big Spender
It turns out someone let Netflix on to the secret that spending on marketing is an investment, rather than a cost. As CMO Today’s Alex Bruell reports, the streaming giant said during its fourth-quarter earnings presentation it plans to raise its marketing spendby 54% to $2 billion this year, with CFO David Wells noting that marketing “amplifies the value of our content.” Where’s Netflix planning to splash the cash? It might well be lining the pockets of the competition. Netflix’s letter to investors lists Facebook and YouTube as big forces in the market for entertainment time, “as well as a great advertising vehicle for Netflix.” While some people in the media industry have speculated Netflix may eventually have to branch out into offering advertising on its own platform to balance out its huge spending on content, Mr. Hastings said the commercial-free path is a “core differentiator” and “that’s what our brand is about.”
—By the Numbers—
Lest we forget what a force Netflix has become in entertainment, let’s recap some key figures from the earnings report: Netflix landed a record 8.3 million customers in the quarter, bringing its total paying subscribers to more than 110 million. To keep drawing more customers, the streaming service plans to spend up to $8 billion on content this year. The results pushed Netflix’s market capitalization above $100 billion for the first time. One wrinkle: a $39 million noncash charge “related to the societal reset around sexual harassment.” (Read: Kevin Spacey content it isn’t releasing.)
Love and Marriage Go Together Like a Horse and Carriage
Facebook is on a trust mission, as evidenced by its recent news feed tweaks. Now Rupert Murdoch, executive chairman of WSJ parent News Corp, a company that is no stranger to taking on the duopoly, is telling Facebook to put its money where its mouth is. Mr. Murdoch’s proposal is that Facebook should pay trusted publishers for their content, similar to how cable- and satellite-TV providers pay fees to carry cable channels and offer them to customers. Barn doors and bolting horses might spring to mind. After all, Facebook was a free and important traffic booster to publishers’ sites for many years. Could the idea actually work? Mr. Murdoch says such payments would have a “minor” impact on Facebook’s profits, but would be a big boost for publishers. Facebook already pays some publishers for their video programming—would it be that much of a leap to extend that program to articles? For a company that doesn’t want to be seen as a media entity, Facebook may feel uncomfortable coughing up cash on the basis of trust.
—The Sky’s the Limit—
While we’re on the subject of Murdoch-owned businesses, the U.K.’s antitrust regulator has provisionally concluded that 21st Century Fox’s planned takeover of the 61% of Sky it doesn’t own isn’t in the public interest, on media plurality grounds. The regulator said the proposed acquisition would give the Murdoch family too much influence in British media, but if Disney’s move to acquire Fox’s assets is approved, that would “significantly weaken” the link. Fox said it was “disappointed” by the provisional findings. The regulator’s final report is due in May, and it is down to the U.K.’s culture secretary to approve the deal.
Advertising agency holding companies spent decades scaling their businesses by acquiring specialist and local agencies so they could cover every client’s niche or geographical need. Now the trend is toward building super agencies: consolidating those brands into one-stop shops so clients don’t need myriad brands and gatekeepers to get access to services and talent. So goes the thinking behind the latest consolidation. As CMO Today reports, Superunion is the combination of five of WPP’s branding agencies. The name borrows from Brand Union, one of the five agencies involved in the merger, but it is also designed to reflect collaboration and ambition, Superunion’s global CEO, Jim Prior, tells me. Mr. Prior said it’s not about massively cutting costs but adding value—there won’t be a reduction in head count and all senior management are staying on in new roles. Becoming a bigger entity will also help the five agencies, most of which originated in the U.K., have more clout when competing for big international contracts.
Champagne has a marketing problem. Over the years we’ve been conditioned to associate the pop of the cork with a celebration. That means most consumers don’t really consider champagne a “real” wine and reserve it for aperitifs or special occasions, before moving on to their reds and whites with dinner, reports Fortune. Jay-Z’s champagne brand, Armand de Brignac, is hoping that by encouraging its bubbly to be served in a white wine glass, drinkers will be more inclined to “explore the notes and characters the way they would with a still wine,” according to Bernadette Knight, the company’s CMO. Other producers are going down the experiential route by offering tasting sessions that pair champagne with meals, from low-key picnics to high-end Michelin-star dinners. And as prosecco continues to grow in popularity, it makes sense for champagne marketers to expand the drink’s consumption occasions to set it apart from the rest of the fizzy set.
Best of the rest
Uber’s rider display marketing lead, Bennett Rosenblatt, writes in a column that “major [ad] exchanges are not taking their duty to advertisers seriously.” Uber is pulling spend on multiple exchanges over transparency concerns. [AdExchanger]
Publicis Groupe has hired R/GA’s Nick Law as the holding company’s global chief creative officer and president of Publicis Communications. [Adweek]
Also exiting R/GA is its executive director of brand and marketing strategy, Tim Maleeny, who has joined Havas as chief strategy officer for North America. Mr. Maleeny had previously served as Havas’ chief strategy officer, before leaving in 2016. [Adweek]
Just three networks submitted formal bids for the NFL’s “Thursday Night Football” package: CBS, Fox and NBC. [Sports Business Daily]
A trailer for “Friends the movie” has gone viral on Facebook, with tens of millions of views. No such movie exists, of course, but it does show how Facebook still has a fake news issue. [Business Insider]
Hulu’s live offering reportedly has 450,000 paying subscribers, and the $35-a-month YouTube TV has just over 300,000 subscribers. [CNBC]
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Write to Lara O’Reilly at firstname.lastname@example.org