More strong evidence that the media landscape has changed forever, especially the marketers need for flexibility and inclination for performance marketing. The continued growth of DTC with self serve tools helping SMB’s. Agencies continue to struggle. Seeing sequential month over month revenue growth throughout. The potential sale of TikTok and iOS 14 looming, not to mention the presidential election and the Covid vaccine makes Q3/Q4 outlook virtually impossible.
My Thoughts on the Quarter
• Flexibility for advertisers is paramount, especially the ability to swap out creative and pause campaigns in minutes, not days
• Stream or die, DTC is the only way media companies survive long term, the companies that went CTV earlier are seeing real gains
• Snapchat with an impressively strong quarter, they are doing something right over there
• DotDosh a strong performer as well, intent based content works
• AT&T is not looking good, they need a new strategy and probably a spin off of the Warner Media assets
• Self-serve tools with pixels for verification continue to drive the advertising business, this has been clear for the past 3-5 years
• For the most part CPM’s continue to decline as impressions rise, Facebook saw the total number of ad impressions served across the services increase 40% and the average price per ad decreased 21% and Roku monetized video ad impressions grew roughly 50% Y/Y in Q2
• Print, Radio and TV got killed across the board, not sure Print and Radio can come back as we know them
• TV really missed live sports
• Performance marketing continues to grow
• Facebook and Google went in different revenue directions, was not expecting to ever see that pre-Covid
• The Google search monopoly had a down quarter, first time ever
• Pinterest with amazing July numbers, a safe Facebook alternative perhaps?
• Twitter continues to disappoint again and again from a revenue perspective
• Agencies continue their steady decline, when does it stop?
• Amazon advertising growth is remarkable as the smallest leg of the triopoly
• Sequential monthly improvements throughout the industry after April lows
• Amazing that Facebook has over 9 Million advertisers, I assume Google has fewer?
• TV was able to reduce ad loads as advertiser demand went down -- nice to see them care about the user/viewer experience for once and not push 18+ minutes of ads per hour
• Luxury, Auto, Entertainment and Travel advertisers declined the most in Q2 and will probably be the same in Q3
• What will become of TikTok? I still think they can compete with the triopoly if all the cards fall in place and Microsoft acquires the company and then uses the LinkedIn ad machine for monetization
• Like GDPR, iOS14 is looming over the industry
• Time to take out costs when applicable, cost reductions are real and probably long overdue across the industry
Economic Overview -- Comments From the Earnings Calls
• The marketplace remains volatile as the virus and consumer behavior evolve
• There is still much uncertainty about the economic environment as reopening has stalled in a number of geographies and the status of government support programs remains unclear
• Seeing businesses accelerate the digitization of every part of their operations from manufacturing to sales and customer service
• Re-imagine how they meet customer needs from curbside pickup and contactless shopping in retail to telemedicine and healthcare
• The future of business will be more digital
• The future of work will be more collaborative.
• Virtual collaboration is critical in order to adapt and succeed in the changing global landscape.
• These are certainly complex times, and there are few who have not been touched in some manner.
• The coronavirus has irrevocably changed businesses
• Businesses in expediting pre-existing digital trends, in challenging established practices and in prompting necessary introspection about work habits and the workplace itself
• We believe this reflects economic optimism for a gradual recovery
• These continue to be challenging times for our world
• The impact of the pandemic on people's lives, our communities, businesses and way of life has been devastating
• The majority of businesses worldwide have experienced unprecedented disruption as a result of the pandemic
• We have emerged from our industry’s darkest of dates
• We are now beginning to see improvements in travel patterns, consumer behavior and economic activity in varying degrees
• While we would have all hoped that by now, we have a clear line of sight to the end of the pandemic, hope is not a strategy, and it’s my job to ensure that we are well prepared for any scenario
• I think that we pivoted in a big way
• We took some tough actions as it relates to costs.
• We said goodbye to some near and dear colleagues of ours, but we have secured the path forward.
• Proactively manage through the pandemic, taking significant steps to strengthen our business, preserve the value of our assets, increase our financial flexibility and further reduce costs.
Media Overview -- Comments from the Earnings Calls
• Rapidly accelerated streaming business
• Streaming is the most powerful force shaping television today. It is unleashing innovation and bringing greater choice, value and control to consumers.
• We are also seeing that the ongoing COVID-19 pandemic is accelerating the macro trends that will define the screaming decade.
• Certain industries like CPG, gaming, streaming services, and e-commerce have benefited from some of the COVID-related changes in consumer behavior
• Need long tail of advertisers to thrive
• Marketers demand flexibility
• TikTok’s growth is astounding, showing the fluidity of internet entertainment
• Many advertisers paused spending for periods of time during the quarter in order to swap out their ad creative for messaging that was more appropriate for the given moment
• As the world slowly re-opens, our main business priority is to restart our productions safely and in a manner consistent with local health and safety standards to ensure that our members can enjoy a diverse range of high quality new content.
• So perhaps the most important area where I have seen a unified front from advertisers in the last few months is in their approach to user-generated content. I use the term UGC deliberately, rather than social media platforms or video platforms like YouTube, because in my discussion with advertisers, it’s the nature of the content rather than the platform that’s the problem.
• I’m still not convinced that Google, in the end, will get rid of third-party cookies. And even if they do, cookies will be replaced with something else that enables targeted advertising.
• I do not believe that Google will have the ability to turn off targeted advertising for everyone but them.
• Advertisers feel Pinterest is brand safe relative to other platforms.
• In a moment where there is a lot of hostile political conversation happening on social media, advertisers are looking for new places to put their dollars.
• The importance of a stringent cost strategy
• We have launched a genuinely meaningful shared service program that we believe will transform the company by centralizing many of our functions.
• As economic pressures caused advertisers to further re-evaluate how much and where to invest media dollars
• According to Magna Global, Q2 US TV advertising spend is expected to decline 24% Y/Y and US digital advertising spend is expected to decline 5% Y/Y
• We have accelerated long-term plans to drive permanent cost reductions that will enable us to increase margins, profits and cash flow over time and invest in growth initiatives
• Streamlining our operations
• We provided new tools for local businesses to connect with our consumers, allowing them to post custom messages to update their service offerings to include virtual options and to list health and safety measures.
• We have responded with resiliency, speed and urgency and have continued toward a digitally focused enterprise
• The top three performing ad sectors in Q3 to date our technology, home and garden, and health/fitness.
• The lowest performing sectors in Q2 are travel, retail and automotive
• All businesses are adjusting to work-from-home with no exceptions
Q2 Revenue by Company/Product Sorted From Best to Worst
• Roku reported platform revenue growth of 46% Y/Y to $244M. First time Roku ad clients were up 40% Y/Y in the quarter. From 1H 2019 to 1H 2020, our retention rate among advertisers that spent $1 million or more in 1H 2019 was a resilient 92%. Our performance advertising business, a newer category catering to direct response advertisers, grew 346% Y/Y, aided in part by marketers reevaluating their social media spending
• Amazon’s other category, which mostly covers the advertising business was up 41% Y/Y
• TTD CTV spend grew about 40% Y/Y and we anticipate that the CTV spend growth rate will more than double Q2. We believe the COVID pandemic has permanently accelerated the growth of connected television, changing the TV landscape forever. And no company is better positioned to grab share in CTV than The Trade Desk
• Netflix revenue up 25% Y/Y
• LiveRamp revenue was $99 million, up 21% Y/Y
• Dotdash revenue increased 18% Y/Y, 13th consecutive quarter of double-digit revenue; revenue increased due to 107% higher Performance Marketing revenue, partially offset by 8% lower Display Advertising revenue
• SNAP revenue up 17% Y/Y with direct response business continues to drive meaningful return on investment at scale. Seen that certain industries like CPG, gaming, streaming services, and e-commerce have benefited. Since completing the transition to our self-serve ad platform, we have been able to reliably translate improvements in relevance, optimization, and measurement into revenue growth by delivering increased ROI. More and more e-commerce businesses are adopting our Snap pixel to optimize for down-funnel purchase objectives
• Facebook ad revenue for Q2 was $18.3B, which is up 10% Y/Y. Growth was primarily driven by small and medium sized businesses around the world who leveraged our advertising platforms to connect with customers. As a result, we continue to see increased diversification among our advertiser base. In Q2, our top 100 advertisers represented 16% of our ad revenue, which is a lower percentage than a year ago
• J2 Media Business grew revenue 7% Y/Y to $164M, The ad business has little local, travel, food, and auto exposure. Our display business is about 40% health care, which continues to show great strength. Everyday Health display revenues grew 35% in the quarter. We're also advantaged by our performance marketing businesses, which exhibited a meaningful recovery in the middle of the quarter.
• YouTube Advertising revenues were $3.8 billion, up 6% Y/Y driven by ongoing substantial growth in direct response offset by a continued decline in brand advertising, which then moderated toward the end of the quarter
• Pinterest Q2 revenue grew 4% Y/Y, In July, a sharp acceleration in revenue to about 50% Y/Y growth, through July 29
• Even with the pandemic impact, digital advertising at Dow Jones (News Corp) was 4% higher Y/Y
• HBO Subscriber revenue was down 5% Y/Y
• Publicis US organic growth was down 7% Y/Y
• News Corp In contrast to most COVID affected media sites, digital advertising was down only 7% Y/Y in the quarter
• Google Search and other advertising revenues down 10% Y/Y in the aggregate with improvement as the quarter progressed.
• Google Network advertising revenues (Doubleclick) were $4.7B, down 10% Y/Y with trends improving somewhat toward the end of the quarter as advertisers spend began to return
• IPG net revenue organic change was a down 10% Y/Y
• TTD ended Q2 with a negative 13% Y/Y revenue decline, since April, we saw spend on our platform increase every month and nearly every consecutive week.
• Criteo revenue declined 18% Y/Y, impacted large clients using marketing solutions, in particular, travel, classifieds and of course, the brick and mortar retail where some clients temporarily paused or even reduced their campaigns during the quarter
• Spotify Advertising was down 21% Y/Y, overall podcast advertising outperformed in the quarter with momentum continuing into July
• Omnicom organic revenue declined 23% Y/Y
• Twitter down 19% with ad revenue down 23% Y/Y saw a gradual, moderate recovery relative to March levels throughout most of Q2, with the exception of late May to mid-June, when many brands slowed or paused spend in reaction to US civil unrest. During the last three weeks of June, advertising revenue declined 15% Y/Y. Demand gradually improved once brands returned after the protests subsided.
• Verizon Media Group total revenue declined 25% Y/Y and 19% Y/Y in June, with advertising rebounding faster than search; Verizon Media has continued to drive increased customer engagement on its owned and operated properties
• Viacom Advertising Revenue declined 27% Y/Y in the quarter, overwhelmingly due to COVID, we continue to expect Q2 to be the bottom in terms of Y/Y decline.
• NBC Advertising Revenue with a 28% Y/Y decline
• NYT Digital Advertising declined approximately 32% Y/Y; Total advertising revenues in the third quarter of 2020 are expected to decline approximately 35 percent to 40 percent compared with the third quarter of 2019, with digital advertising revenue expected to decrease approximately 20 percent, largely due to the impact from the COVID-19 pandemic
• Meredith Advertising was $260 million, down 35% Y/Y
• Magnite (Telaria/Rubicon) on a pro forma basis, Q2 2020 revenue for mobile declined 32% Y/Y, desktop declined 26% and CTV grew 12%. Revenue mix for Q2 2020 was 19% CTV, 45% mobile and 36% desktop.
• Turner Ad Sales Revenue down 37% Y/Y from delayed sports programming and a slow economy
• Spectrum Reach (Charter) advertising revenue declined by 37% Y/Y
• Univision recording a 40% advertising decline Y/Y
• Tribune Publishing dvertising declined 48% Y/Y with retail advertising taking the biggest decline
• NYT Print Advertising declined approximately 55% Y/Y as the COVID-19 pandemic further accelerated secular trends, largely impacting the entertainment, luxury, and technology categories
• iHeart Broadcast Radio Business was most hard hit with COVID, with Y/Y revenue down 57%, seen sequential improvement in the rate of revenue declines of each month since April, the low point, all the way through July. And Q3 pacing is showing meaningful improvement over Q2.
• Total ESPN Advertising revenue was down significantly Y/Y in the third quarter due to the impact of COVID-19 and the absence of the NBA and other significant live sports programming