Adobe's GenAI Video Tools, SMB Vs. Large Advertiser Growth, Omnicom/Publicis and Principal-Based Trading, Netflix Results and Top 100 Marketer Commentary
Adobe's GenAI Video Tools, SMB Vs. Large Advertiser Growth, Omnicom/Publicis and Principal-Based Trading, Netflix Results and Top 100 Marketer Commentary
Madison & Wall: Saturday Summary for Oct. 19, 2024
Each week on the M&W Podcast, Olivia Morley and Brian Wieser discuss Madison & Wall’s latest research and walk listeners through how the advertising business really works. Episode 7 of the Madison & Wall M&W Podcast is now available on Spotify, Apple, or wherever you get your podcasts.
Weekly Work
Adobe announced the limited public beta release of its AI-based model for video (the Firefly Video Model) as well as the general release of GenStudio for Performance Marketing. We think the Firefly Video Model should be more impactful than others which have come before it, but the performance marketing suite might be more challenged to realize meaningful traction.
We analyzed the newest data from the IRS that allows us to study different growth rates for small vs. large advertisers and what we consider to be the highest quality category-level data in order to better identify current trends. Perhaps surprisingly to some (but not us), SMBs are not growing faster than large brands.
Omnicom and Publicis reported 3Q24 results, which we wrote about here and here. Superficially Omnicom numbers were better than Publicis, but as we analyzed the numbers it’s very clear that Publicis outperformed on a comparable basis. We also deconstructed some of the commentary (or lack of commentary) that each company provided during their earnings calls on principal trading of media, which we think is widely misunderstood.
Netflix reported its third quarter results, too. As we found in our analysis, advertising remains relatively small, although it’s certainly helping to grow the company’s subscriber base. As we look at the industry, we calculate that Netflix captures around 10% of consumer spending on video services with around 8% of time. However, to the extent that Netflix continues to invest in its programming there can surely be more market share to be captured.
Finally, we reviewed CEO and CFO commentary on marketing spend this past week from American Express, LVMH, Nestle and Pernod-Ricard.
Additional Context
Diving a little deeper into the Adobe news, we think that an AI tool for video production that is “designed to be safe” for commercial use is more likely to see traction with marketers looking to deploy AI tools into creative assets that will actually be seen by consumers. Towards those ends, we think this new product from Adobe could be more impactful than others which have come before it and which are likely primarily used in the developmental stage of creative campaigns.
We think the GenStudio for Performance Marketing product – an all-in-one combination of tools for creative asset development, digital asset management, campaign execution (through properties owned by Meta, TikTok and Snap among others) and reporting – should have a lot of appeal. However, our study of martech and ad tech “suites” in the past has suggested that where software does not match the structure of marketer organizations, it may struggle. And when the software does match structure, but the software is too sophisticated or expensive for the marketers it best matches, the total addressable market may be modest in size. We explore these topics in more detail in our note on the topic.
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