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What I Saw Happen -- Q3 2019
Overall -- Big Tech May Have Peaked, Consolidation Happening and Internet TV Wars Continue
Will Google, Facebook, Amazon and Apple one day become the Kodak, Blockbuster, Sears, Aol, Yahoo!, Excite of the future -- it is not inconceivable
Towards the end of the quarter, I’ve heard many people talk about the need to build IP - Is IP the new buzzword of the ecosystem?
There is more TV to watch than ever, though the TV manufactures have lost all power/leverage in this market, when do Google and Amazon start making TV’s?
Facebook owns awareness. Google owns intent. Amazon owns the purchase. The purchase is probably most important long term.
Media is more fragmented than ever before and the need for a single source of truth is more critical today than ever, can the TV and cable networks start to self report like Google and Facebook do and remove the need for Nielsen?
To be successful, the platforms need self-serve buying modules and then self-report ROAS for advertisers
Vice/Refinery29, Vox/NY Media, Taboola/Outbrain -- all trying to create more scale for advertisers, though publisher and ad tech consolidation will not be easy
The beginning of the big tech breakup has started, it will take many years to fully evolve -- AWS or YouTube will be first
Time to start to hack the Internet television services. NO need to have all of these services at the same time. Too much content to pay for all these simultaneously unless there is a show like Game of Thrones that captures the zeitgeist. In a nutshell, just subscribe to one at a time.
For me personally, the only advertising that works is Google and Facebook/Instagram, live sports, subway/outdoor ads and YouTube video ads
We need to start to think of a world with no TV ads, how do marketers reach a mass audience?
Apple continues to hate ads -- though that may change in the next few years as the ability to target a mass audience via TV declines and Apple looks for new revenue streams
Browsers, smartphones and smart speakers are basically surveillance software for their respective parent companies
Salesforce sucks, we desperately need a number two CRM in the ecosystem
Text, Chat then Buy -- this is the future of non-Amazon ecommerce
We all carry supercomputers in our pocket, a remote control for your life
Google’s advertising business has begun losing market share in the US, with competition from Amazon and Facebook
Unlimited choice causes anxiety and confusion therefore curation will always be needed
The US tech Giants are doing their jobs building tremendous companies with significant revenue and size, now the government needs to do its job regulating appropriately, though regulation may not be breaking them up maybe enforce data portability is a better idea (e.g., allow me to bring my Amazon purchase history to Wal-Mart or bring my facebook behaviors to a new social platform)
A Wireless industry survey shows huge yearly increase in mobile data usage -- no duh!!!
Political ad spend predicted to reach $10B+ for the 2020 Election with most of the advertising going to Facebook and local TV
Facebook creative ad formats are better than the IAB formats, hands down. Why are publishers still running 300x250s and 320x50’s?
Every company needs to spend much more time developing roles/responsibilities and job descriptions
For the first time, I spent a significant amount of time in Q3 using Google sheets not excel
Hire more Analysts and then hire even more Analysts -- data driven organizations WIN
IAB -- Still Not Relevant, Need to Remove Amazon, Facebook and Google from the Organization
Saying this again, since no changes have occurred since my last quarterly update
Many colleagues have told me they loved my IAB POV, they have told me everyone thinks this about the IAB but no one says anything
Seriously, as a next step, I would love to be invited to the IAB and have a thoughtful conversation. That seems fair and would be a fun exercise. Overall, I have one goal and that is to help create a more fair digital advertising ecosystem and have the IAB push this agenda
Most importantly, the IAB needs to immediately kick out Google, Facebook and Amazon and focus on helping all companies better compete against the digital advertising triopoly
If you’re paying dues to the IAB, stop and repurpose the money to something more valuable
Click here for my initial thoughts on making the IAB relevant again -- https://www.whatisawhappen.com/post/what-i-saw-happen-q2-2019
Platforms/Aggregators/Distributors -- Still Winning, Though Have they Peaked?
I think google knows more about me than Facebook, Amazon or Apple; though I trust Facebook the least. It took me 30 minutes to figure out what these platforms know about me and that process should be much easier, like a monthly email pointing me a dumbed down version
Google is using Chrome to become a stronger walled garden
FTC approves a $5B settlement with Facebook -- nice deal who wouldn’t pay $5B for a guaranteed monopoly
Apple continues to play the privacy card more than any other tech company
The 20 Democrats running for President spent the majority of advertising on Facebook
Netflix plans to start moving toward a more cost effective spending
Netflix is testing a new pop-out player, the feature will let users watch videos in a small box that sits above other windows in a browser
Amazon is allowing ad-tech companies to sell ads in streaming TV apps, and some marketers see it as a sign that the e-commerce giant is becoming less of a walled garden
Facebook is still figuring out its commitment to high-quality video content; It's been two years since Watch launched, and it's taken a while to make it a habit with users
Facebook ads are getting more expensive in the Facebook blue app and their effectiveness is going down
Facebook launched a transparency tool that will give people a more information about how its targeted ads work -- Again, here we go
Microsoft, Amazon and Apple were all worth more than $1 Trillion at some point in Q3
TikTok continues to grow with 1 billion users with a valuation of over $100B by the parent company
Marissa Mayer killed Yahoo!, the last straw was the unloading of Tumblr for a nominal fee
LinkedIn standalone revenue in Microsoft suites of business will be close to $10B by 2020
Facebook plans to add the Facebook name to both Instagram and WhatsApp, the social network will rebrand the apps to “Instagram from Facebook” and “WhatsApp from Facebook”
Instagram is taking another bite out of Snapchat; Facebook is developing a new messaging app called Threads that is meant to promote constant, intimate sharing between users and their closest friends
Where is Samsung in advertising, feels like they are missing the boat
Publishers -- Challenges Continue, YouTube dominates Video and Consolidation Grows
30 digital publishers need to get together and create a YouTube competitor
If we all killed behavioral and went back to contextualize advertising, will we be in a better place?
As expected, Apple News + seems dead on arrival
For publishers, YouTube is by far the best way to get consumers to watch video, though takes away from the more profitable Owned and Operated site
I stopped watching videos on ESPN.com and the ESPN app; I now watch espn exclusively on YouTube such, a better experience for content and less advertisements
Video ad load, controlled by the YouTube algorithm is so small makes it hard to monetize
Amazing that publishers really don’t know anything about the demographic profile of their audience
Expecting to see more publisher investment in Sports since that they are DVR resistant
ADX move to unified auction does not seem to be hurting publisher revenue, a nothing burger
Invest more time and energy into SEO
Vox acquires New York media -- are we finally seeing some much needed consolidation
Apps are better than websites. Apps are hard to maintain but better for long term growth and user experience
BuzzFeed, Insider and Group Nine Media have created an alliance offering a unified ad option for their combined video-ad space across websites, apps and YouTube
Samsung Ads said that 45% of all video viewing time is now spent with streamed content -- I assume this will grow
Internet Television -- Streaming Wars Continue and Competition Mounts
Saying it again. All of broadcasting is endangered, because what’s happening with streaming and other services is that the only people who are watching commercials are people who can’t afford to buy the products that are being sold - this a HUGE issue long term
What happens when all the streaming services bundled together cost more than the traditional cable bundle -- time to hack the system
Hulu should go 100% programmatic, all self-serve and remove the Direct sales team
Will consumers always be able to easily cancel the Internet services
All streaming services have different goals. Netflix subscribers, Amazon e-commerce Hulu more TV consumed to sell more targeted ads Disney building the brand and HBO winning Emmys
Cable operators second-quarter results show that the rate of cord-cutting has gotten bad, the three big cable companies reported a combined loss of more than 1.2 million traditional video subscribers
Cord-Cutting sped up in 2018, losing 3.2M subscribers
YouTube is the go to place to consume video
We still need the service to tell me what show to watch, when and where
Apple has $210B in the bank and has only spent $6B to date on content
Netflix spent $12B on content in 2018, analysts expect that to grow to $15B in 2019
HBO Max launches in Spring of 2020 and Comcast is targeting next April to launch its new streaming service -- maybe a few years too late for both companies?
Connected TV advertising makes up 49% of video ad impressions as more consumers shift their media consumption to on-demand devices
Netflix content chief Ted Sarandos met his middle-ranking and senior film and TV executives in early June and delivered a message: be more careful with money
OTT players and social platforms are cashing in on live sports streaming
It’s estimated to cost eight to $15 million per episode for a significant streaming show on one of the new services
I pity the OTT ad buyer, who must manage reach and frequency goals while finding inventory across a fragmented TV landscape
Frequency management is a mess in OTT/Video landscape. There may be too much inventory and ad load will have to decrease and programming minutes increase.
Netflix lost subscribers in Q2 the US partly due to price increase and weak content -- maybe we hit the ceiling price, may have to crack down on password sharing or get into gaming services, Live TV and/or Sports
Will Netflix one day license is content, like Stranger Things, to an ABC, NBC or CBS?
At the end of the day watching television on the living room and a 50+ inch TV is much better than on your smartphone
Vizio is not the only smart TV maker with an interest in advertising. Samsung has been building up its own connected TV advertising business to rival the likes of Amazon and Roku. For these hardware manufacturers, advertising offers an opportunity to generate revenue from customers who may only buy a new TV once every seven or eight years
NBCUniversal raked in nearly $1 billion in ad sales from digitally native brands during its 2019 Upfronts — showing how quickly these brands are turning to TV to scale
Ad Tech -- Continues to Slow, More Consolidation and CTV Thrives
Four years ago the top 3 DSPs where The Trade Desk, Turn and MediaMath -- my times have changed
Only ad Tech companies doing well are focused on CTV
Three areas of growth inside of ad tech for the next few years. Accountable and addressable supply chain, identity and connected TV
Consolidation is happening though on a very small scale
Zeta Global trying to emerge as a true competitor to the big mar tech companies
Teads and Triple Lift are performing well
Big ad agencies are slashing the number of ad-tech companies they work with Havas said they are reducing their numbers of supply-side partners from over 40 to around eight
Too many cookie replacement/Identity technologies out there, but none of them have reached critical mass yet
The move from display to mobile to video continues
No new ad tech companies have emerged in many years
Retail -- Still Dominated by Amazon
Think twice about Amazon that one day shipping next time you click the button -- https://youtu.be/d9m7d07k22A
1% of Amazon retail sales are private label with about 10,000 products under the private label brand
More than 7,100 US retail stores are expected to close in 2019. Multiple top brands have decided to close numerous stores including Gymboree, Charlotte Russe, Family Dollar, Freds, etc.
Walmart is expecting to lose more than $1 billion on its U.S. ecommerce business this year on an anticipated $2 B in revenue
The global retail market will reach $25 Trillion in 2019, an increase of 4.5% and a slight acceleration in growth vs. the prior year
Facebook has become the storefront for many DTC companies with Pinterest looming
Amazon will invest more than $700M to upskill one in three employees by 2025
Amazon, which sold over 100M products over Prime Day 2019, retail giant will generate sales of $6.1B (a $2B improvement over last year)
Amazon’s Prime Day faced competition from over 300 rival retailers piggybacking on the annual event with their own sales
Walmart has thousands of stores close to where its customers live, and Amazon doesn't. But turning a store into a fulfillment center is not easy. Along the way, retailers have to figure out how to not sacrifice the shopper experience, and how to match the capacities of massive e-commerce warehouses
Amazon is offering its customers a $10 coupon in exchange for tracking them all over the web in a promotion that experts say offers the online retail giant an unprecedented view into individual web browsing habits
Those hundred million households with Amazon Prime feel lucky to have it and rarely check prices on other websites
Shopify powers more than 800,000 retail stores across the world and over $40B in sales for its customers -- Amazon competitor one day?
Amazon.com Inc. has adjusted its product-search system to more prominently feature listings that are more profitable for the company
Marketers & Agencies -- Agency Secular Decline Continues
A 30 second TV spot, with sight sound and motion, is still the best way to deliver a brand message
Storytelling is still the most important piece of marketing
Digital is growing thanks in large part to small businesses that otherwise wouldn’t be spending on media at all, It’s untapped advertisers that have been coming into the market using simple, self-serve tools provided by platforms like Facebook and Google
For smaller brands and businesses with annual budgets of less than $10,000, traditional media is too expensive. But these advertisers use digital platforms to target scaled audiences.
Advertisers need to reach a mass audience without redundancy -- gets harder and harder every year as more fragmentation occurs
All DTC companies are pretty much obsessed with acquisition at any cost
DTC companies, in order to acquire customers, they MUST go through Facebook and Google. Followed by Outdoor and Radio. Maybe Print is next?
The holding companies should work together and pass drive initiatives that help marketers -- yes, I know, something else the IAB should be doing
Agency reviews are a race to the bottom to deliver the lowest price. Very unfortunate. Should be all driven by return on ad spend. Should be CMO driven not CFO driven.
Agencies are always looking for partners to make their life easier
Agencies must become more neutral to survive with objective vendor selection a core competency
Holding companies should start to spin off some assets
Agencies continue to look for fewer and bigger partners to work with -- finally
Creative agencies need to find a better way to measure return on creative
Is it time for marketers to move to one DSP
Never bet against our Sir Martin Sorrel -- I am sure he’ll figure out a way to make S4 capital successful for clients and shareholders
Publishers may be having issues but marketers will be here forever
Large consultancies aren’t the only businesses making a move on traditional ad agency turf. The line between Hollywood promotions and Madison Avenue marketing have also begun to blur
As audiences move from television to ad-free streaming networks, marketers need to find new ways to reach consumers, and talent agencies have a pipeline into production
Voice/Podcasts/Audio -- In the Middle of a Growth Spurt, Though Podcast Ads are Too Easy to Skip
Apple AirPods are a game changer, smart for Amazon to launch their own version, Echo Buds
No one listens to podcast ads, just too easy to skip
Podcast ad revenues in the United States grew 53% last year to $479 million and are expected to surpass $1 billion by 2021 -- still very small
In the past year, Amazon Music Unlimited has shown a growth rate of 70% while Spotify grew by 25% and Apple Music by 40%.
Amazon is quietly asking top brands to participate in its early tests of music ads, representing the e-commerce giant's first steps toward offering paid product placements within its Alexa voice-activated ecosystem
21% of Americans over 18 own a smart speaker
Music is the biggest use of smart speakers (77% weekly)
Amazon Music Unlimited has grown subscribers by 70% year over year
In April, Amazon had 32M subscribers for Unlimited and all of its other music services combined.
Spotify has 100M subscribers, representing a 25% year over year
Apple putting more focus on podcasting -- better ads may be next
Apple plans to fund original podcasts that will be exclusive to its audio service
Very long tale of podcasts out there, discoverability is extremely hard unless you have an existing infrastructure set up. Most people find podcast through marketing on existing podcasts
Podcasts typically attract a younger more affluent more engage intimate medium for advertisers
Programmatic Truths Over the Past Two Years
The 320x250 is the workhorse of programmatic
Mobile 320x50 and Video (in stream and out-stream) are growing
Google ADX still remains supreme with over 40% share and DBM really only runs on Google inventory
Mobile is continuously growing as Desktop slows
For Viewability, not worth going over 70%
Top 8 Partners make up 80% of publisher revenue and the top 13 Partners make up 90% of publisher revenue
PD/PA higher CPM’s though make up only 10% of revenue
PD/PA is dominated by the big publishers with Direct sales team
Data driven organizations at the executive level tend to outperform the benchmarks
So What Does This All Mean -- There is White Space, Start Planning Now
More changes will happen in the advertising, subscription and ecommerce ecosystem in the next few years than ever before, the speed of change is extraordinary
All companies in these categories need to spend more time thinking about the future vs. the quarterly earnings and daily recaps they typically focus on
If you are not creating your dead! Status quo is unacceptable in today's world
There is white-space out there, just need to brainstorm and figure it out and take some educated risks -- here are my top ideas
CRM competitor to Salesforce, App based with better reporting and insights
Holding company should spin off an agency and be 100% transparent and data driven
Next generation Business Intelligence tool like Tableau or Looker with more AI and ML driven insights including better google analytics insights for publishers
Video research company to compete with Nielsen across all platforms
Next generation TV Guide, what to watch and what to subscribe to and when
YouTube competitor, ideally created by content producers, like Hulu did 11 years ago
Be like Bezos/Amazon and plan today for 2-3 years in the future