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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 --

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 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 --

  • 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? 

  • 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

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