Volume 69: Sky falling, heads exploding, Apple car building.

1. Abrdn schmabrdeen. What’s all the fuss about?

tl;dr: Branding stands out in commodified market. Sky falls.

Back when I worked at Wolff Olins, we used to quite enjoy an outraged response to our work, reveling in the negative comments over at places like Brand New and taking it as a mark of our success when people felt inclined to hate on something we’d done. We viewed it as a natural consequence of our responsibility to push branding forward, which meant that by definition, our work would offend those with a narrow and backward-looking sensibility toward acceptable taste.

So, it’s nice to see Wolff Olins getting its mojo back on the outrage front with abdrn.

In 2017, Standard Life and Aberdeen Asset Management merged to form Standard Life Aberdeen. Unfortunately, life as a merged entity has been more bed of thorns than bed of roses as the entirely predictable happened, and the cut-and-thrust culture of upstart asset manager Aberdeen never sat well with the decidedly more boring underwriters over at Standard Life.

After a series of moves to clarify and focus the business and the complete divestment of all insurance activities, Standard Life Aberdeen is rebranding to…abrdn. And, if the business and branding press are to be believed, the sky is now falling on all of our heads.

But, let me ask you a question. When was the last time you paid attention, or even noticed, an asset manager?

And this is an important question to ask for a very simple reason. There are over 120,00 mutual funds available globally, across markets that are incredibly commodified, and where standing out and being noticed as a smaller player really, really matters. And for anyone losing their mind over the vowel elimination within the name, I’d like to point you toward SPDR, which hasn’t exactly been a failure (granted, SPDR is an acronym, but it’s pronounced “spider,” and they use a spider in their logo, so.)

Now, if you think branding has been going backward because of the utterly boring, unimaginative, and competitive advantage destroying Helvetica in Pastels movement, which has fundamentally confused “well designed” with “good branding,” to the point where it’s now being parodied in The Onion, then you can’t also look at abrdn and go, “oh my God, that’s terrible.” You have to pick a lane.

You can’t look at something that’s got an entirely sound logic behind it, isn’t unbearably ugly or stultifyingly boring, is being noticed and gaining attention, and then hate on the fact that it lost all its vowels, but one.

Instead, you have to look at the attention it’s getting in a commodified and competitive market and say. “Well, I probably wouldn’t have thought to do that, but bravo. Good play.” Because standing out in a market like they’re in is hard.

So, for the folks over at Wolff Olins, please revel in the outrage and use it to push you forward; I’m delighted that you’re back. And for the folks over at abrdn. Nice play. But now the hard work really begins because the most noticeable question inherent in your rebrand is that for all the talk of modernity and suchlike, you don’t seem to be offering anything particularly, well, new.

2. Settings > Privacy > Tracking > Allow Apps to Request to Track > No.

tl;dr: Those popping sounds you hear are ad-tech heads exploding.

So, Apple finally did it. They gave us mere plebs the ability to decide whether or not we want to allow apps to surveil us. You know, so they can offer a “better advertising experience” that are more “personalized to our interests.”

Which, of course, is and always has been complete horseshit. The real reason THE FACEBOOK and others want to surveil us has nothing to do with our experience and everything to do with their ability to sell targeted advertising inventory to advertisers at a premium compared to non-targeted. A premium that “do not track” will eliminate to a sum estimated to be as high as $25bn to FB & Google.

Having done some work in the ad-tech space, what I find fascinating is the attitude of advertisers. Rather than look at the premiums being charged for targeted, tracked, and data-enabled inventory (in other words, surveillance) as offering poor value for money compared to advertising on quality properties in a more contextually driven fashion, they instead view it as providing efficiency. Mostly, it represents data that can easily be plugged into their attribution models, allowing them to justify spending to the finance teams they report to.

What’s especially strange about this disconnect is that Apple is quite right when they say that advertising worked long before we had to surveil people to do it, and there’s increasingly a wall of evidence to suggest that targeted advertising is nowhere near as cost-effective as the platforms and ad-tech industrial complex would have us believe.

The other competitive impact this will have is to level the publisher playing field. Suddenly, the advantage of FB in selling highly targeted ads to data-hungry advertisers, which their surveillance business model drives, begins to be eroded, meaning that non-FB publishers will start to look equally appealing if they attract quality audiences. At least, in theory, something that should see advertisers begin looking more broadly at other media outside of the FB walled garden.

Beyond the platforms themselves, this will also deal something of a blow to the incredibly sleazy world of data brokers. Those businesses that collect and connect vast amounts of data based on what we do and say online so that they can sell us to marketers and identity thieves (they don’t seem to care which). Notorious for their lack of transparency and inaccuracy, I’m not sure any of us should lose any sleep over them.

In an ideal world, this will put pressure on Google’s Android OS to do the same, which would lead to a true shakeup, and perhaps put more pressure on governments to put anti-surveillance legislation in place that actually has some teeth. It’s an old joke that the best minds in tech have spent the past ten years figuring out how to get us to click on ads, but that isn’t entirely true. The best minds in tech first had to figure out how to surveil and record our every thought, movement, and action. While it’s sad that our regulatory environment is so lax that we need one monopolistic giant to (arguably) abuse its market power to put the crimp on the worst excesses of another, it’s a good start.

3. Big tech crushes every previous record. What’s next?

tl;dr: Off the charts financial performance for FAAMG stocks.

This was earnings week for tech stocks, and wow, they literally blew the doors off over at Facebook, Apple, Amazon, Microsoft, and Google. It’s literally unheard of to see the world’s most valuable corporation growing quarterly revenue by 50% against the same quarter the previous year.

It’s clear based on this data that Apple’s actual strategy is not the often stated focus on services. Yes, services revenues are growing, but what’s most impressive is that so is every element of their product mix. This isn’t a services-dependent strategy, this is a full product strategy, with iPhone, iPad, Mac, and device sales all on an upward growth trajectory as well as services. And with the new M1-based Macs, Apple has taken a significant battery and processor performance lead relative to their Intel-based PC competition. I’m writing this on one and it’s undoubtedly the best computer I’ve ever used, bar none.

As an aside, it’s delightful to see Apple bringing color back to their line of iMacs. I’m old enough to remember the original, and although the marketing scientists over in Australia would like us to think this was a distinctive rather than a differentiated product, in the real world that’s a distinction without a difference. As far as the consumer was concerned, the iMac was a completely different computer compared to its beige brethren. It’s perhaps a testament to how weak PC differentiation remains that by releasing the new iMac in 7 delightfully optimistic colors 25 years later, Apple again looks entirely different.

On a more serious note, the question now is how these businesses can continue these incredible growth numbers as pandemic-driven sales begin to wane? The challenge of operating at such scale is that you have to start playing in larger and larger markets just to make a difference. For example, Apple sells more watches than the entire Swiss watch industry, but those sales barely dent its $2trn market capitalization because the watch industry simply isn’t big enough to matter.

This is why we see Amazon entering the healthcare business, Amazon, Google, and Microsoft competing for government defense contracts, and FB attempting to create a market for VR. These are massive markets that have the potential to make a significant contribution to their market capitalization. So far, Apple hasn’t made any particular moves into a big new market, but it’s highly likely to enter the automotive industry soon. An industry where EVs are predicted to be worth $1,212.1 billion in global sales by 2027.

The why is simple. What is required to build the car of the future overlaps significantly with Apple’s core competencies: Batteries, processors, AI, cellular antennae’s, sensors, software, design, user experience, brand strength, distribution, and capital. The only thing missing from the list are things like motors and regenerative brakes, and Apple has the capital to easily buy or build these capabilities.

Up until recently, the Apple automotive conversation was centered around partnership and supply to others, which would have been a low-risk approach, but more recently it’s looking more and more likely that they’ll build their own car. Why? In a single word, Tesla. Tesla’s market capitalization has grown to $713bn off the back of the EV opportunity, which makes becoming an automotive company incredibly attractive to Apple. My guess is they’re betting that if Apple were to launch a new car tomorrow, the result would be something in the order of a 20-30% shift of Tesla’s valuation immediately toward Apple. And $200bn+ is nothing to sniff at, even to a $2trn company.

So, there we have it. Big tech blew the doors off, now the question is where they’ll look next. While others duke it out over defense, Apple is almost certainly getting into the car business.