Unpacked for Friday September 23rd

Facebook Overestimates Video Consumption – Ben Bajarin
In an interesting twist to the Facebook narrative, a report came out that Facebook is letting advertising partners know they overestimated the metric for time spent watching videos on their platform.

A number of Wall St. notes I saw late last night warned of investor concern that this could have a negative impact on ad spend budgets as advertisers cut back on their ads due to this blunder. As much of a tactical error as this is, I don’t believe this will have much impact on Facebook’s advertising prospects.

Going back to the early days of Facebook ads, numerous times in discussions with big companies or advertising companies running campaigns with Facebook, I heard the dissatisfaction in the ROI in working with Facebook. This was one of the main reasons Facebook took as long as they did to truly be relevant to advertisers. What these interactions told me was how advertisers were scrutinizing and measuring the ROI with digital ads more than they were with analog ones. It was almost as though they trusted analog ads work since they have for so long, while they were skeptical of digital ads’ ROI and, therefore, they tracked it more closely.

Through the years, Facebook’s strong gains in ad budgets can only be supported by the fact these ads are working. Advertisers are finding it worth the increased ad spend they are giving Facebook. And this could possibly be with an overestimation of video metrics. I stand by my thesis on Facebook — few companies are better positioned to benefit from the shift of offline ads to online ads over the next five years and beyond. This could certainly spur the embracing of third party metrics for Facebook as there are with other digital mediums, like TV, but advertisers can’t afford to not continue to embrace Facebook and their assets in a major way given how much time consumers spend in the Facebook family of apps.

Google’s Allo Makes a Strange Coming-out Party for the Google Assistant – Jan Dawson

At Google’s I/O developer conference in May, it announced the Google Assistant as well as a couple of communication apps, among other things. Duo, the video calling app, debuted a few weeks ago, and Allo, the messaging app, debuted this week. But Allo is also the coming-out party for the Google assistant, Google’s first attempt to brand and provide an identity for its AI, which has been evident in subtle ways through Google Now and other products in the past.

Allo is a strange way for the Google assistant to be launched into the world though. For one thing, it’s a messaging app, ostensibly about communicating with other people and not an AI. And yet, it also seems doomed to have very few users, making it fairly useless for its core purpose. It’s almost as if Google wasn’t sure quite what to do with the assistant functionality and decided to put it into a messaging app as an afterthought. The debut of the Google Home hardware device, akin to Amazon’s Echo (likely to be announced in a couple of weeks), is a much more logical place for the assistant to make its bow, so this is a doubly odd decision. Perhaps Google felt pressure to rush Allo out on literally the last day of summer in order to meet its planned launch timeframe.

The app itself is nicely designed, though I’ve found it to be fairly buggy. I had issues getting it to use my personal Gmail account rather than my work Google Apps account and subsequently found that even using its suggested canned responses often generated weird replies from the AI. Literally, no one else I know is using the app right now, so it’s useless as a communication channel, not least of which because we’ve all already made investments in competing apps.

I’ve also been uneasy from the moment of the first demo at I/O about the idea of an AI cooking up responses for me in what’s supposed to be a personal communication app. That feels like a supremely Google-y idea but it’s not a very appealing one. It makes communication more efficient but also less personal. Some of the suggestions feel positively robotic and not at all what a real person would say.

I’m much more hopeful about the Home device and I’m a big believer that the Google assistant has promise that might well eclipse Amazon’s Echo and Alexa. This just feels like a very odd way to debut the functionality. The assistant would also make a lot more sense in settings like Gmail, where Google already has a billion users, or even as a core function on Android. I’m sure we’ll see it arrive there eventually and I think, at that point, it’s much more likely to fulfill its promise.

Rumored Pixel and Pixel XL signal a change in Google and HTC strategy by Carolina Milanesi

At the upcoming Google event on October 4th, the company is rumored to be unveiling Home – the Echo like product introduced at Google I/O – as well as two new phones: Pixel and Pixel XL.

The phones are rumored to be a departure from the Nexus program Google has been running for the past few years. While still aimed at showcasing the best of what Android has to offer, it seems Google is trying to put things more into its own hands by commissioning the products from HTC but then bringing them to market itself.

Adopting the Pixel name that so far has been used for their Chromebooks would signal a change in strategy for Google who has not really benefitted from the Nexus line in the past. That said, a change in name without a change in distribution would not necessarily deliver different results. In order to make a considerable impact on getting the most up to date OS flavor into the hands of consumers, Google would have to sell these devices through a broader channel than the Play Store. While fragmentation driven by vendor differentiation might be less a problem today as vendors like Motorola, HTC, and LG opt for a purer version of Android, fragmentation in software versions is still very much a reality. Making sure these Pixel device have the broadest addressable market would help change that and really have a greater set of consumers experience the latest and greatest of the operating system.

Rumors also has it HTC will be the vendor manufacturing the two Pixel devices but consumers might never know that from looking at the phones as the brand will not be present. This will regress HTC back to how they started in the market: being a whitebox. HTC has been struggling over the past couple of years to get back some of the traction they lost in the phone market while they embarked in other areas like wearables and cameras but only their VR headset Vive created any excitement in the market. Having HTC move back to a whitebox business in phones might be the beginning of the end for their brand in the smartphone market. While long term that might turn out to be fine, the timing might be a little premature as Vive is still a long way from becoming mass market. However, playing between white-labeling phones and re-establishing the brand as a leading name will not work in my opinion. White-labeling, of course, works for many vendors out there and HTC could use that business to sustain its VR endeavor.

We will know in a couple of weeks if the rumors were right and, if they turn out to be, we could then start speculating what will happen to Android next.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

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