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GDPR is creating the first cracks in the GAFA(M) – Part 2

Read the 1st part here.

If you listened to Mr Zuckerberg’s US senate audition he cheekily said Facebook was “serving the masses” i.e. a paying model would only work for an affluent group and not for the entire population. He castigated Apple for charging so much for their products, neglecting to say that he is charging lots of money to advertisers within his online advertising duopoly with Google.

 

Serving the masses for free and making money out of it requires a high level of intellectual sophistication that the standard citizen does not always get. Multiple reasons for that such as education, readiness to listen, accepting a short-term drawback versus a more elusive longer-term benefit. But neither Mark Zuckerberg nor Larry Page and Serguei Brin are humanity’s benefactors, they are highly talented businessmen. They are amongst the richest US business leaders and are not operating for the good of humanity nor the citizens.

 

What, beyond the various scandals, will stop F and G from continuing to be the most powerful advertising agencies in the world? Two factors may.

 

1/ If their advertising clients start spending less with them.

There were interesting talks recently when the worldwide marketing director of Procter & Gamble (their largest client) complained publicly that a lot of the money was wasted on leads which were not properly qualified.

What are the implications behind this? If they satisfy their client (read more revenue for F. and G.) it will require a much deeper and more analytical access to your thoughts, be they commercial, private or emotional. Big Brother has not quite finished with you.

 

2/ The other factor is substitution/disruption by another operating model.

Very large advertisers may be tempted to go their own way (P&G could be one but Accor in Hotels is trying too…) but the portfolio would lack breadth and choice to appeal to the end-user.

Will the end-users move to another network? It could be extremely complicated and the switch would involve an enormous task to be able to offer equivalent levels of service. And how would that be funded? Advertising again? So what would be different?

Is the consumer ready to pay a monthly fee…the answer today is NO

Some elements show potential openings. Younger people do not want to go where their parents are, and they may want a network providing more affinity with their own peers, rather than with a huge mass of people i.e. where quality and trust would prevail over quantity. This will probably take some time before it emerges. And the question of the business model of such a disrupter remains open.

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This article was written on 03 Jul 2018, and is filled under Point of View.

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