Google's Search Trial, X's Trials, The State of the Economy and In-House Media Agencies. Plus, A Deluge of 2Q24 Ad Trends From Disney, Reddit, The Trade Desk, WPP and Many, Many More
Madison and Wall: Saturday Summary for August 10, 2024
This past week felt like one of the busiest of the year, and with it we published 11 times.
We started the week exploring why an economic slowdown isn’t happening in the United States, at least, and why it wouldn’t necessarily impact the advertising market, but then the Sherman Act featured prominently on both Monday and Tuesday. First came the ruling from a US District Court around Google’s search business and the looming likelihood that remedies will be required to make search advertising more competitive. We wrote about some of the potential implications that could follow for the overall ad industry in general and search in particular.
And then the next day came X’s novel sales strategy to sue several of its customers, undoubtedly scaring off any partners who might have contemplated coming back in the future. As we sized the likely amount of spending by large brands on X before Elon Musk’s takeover, it’s unambiguous that X’s challenges are not due to any large brand spending cuts. Of course, as the week played out, they and News Corp., whose CEO put forward similar sentiments on its earnings call, won a pyrrhic victory as the World Federation of Advertisers announced it would shut down X’s primary legal target, GARM. It’s a good reminder that the industry needs to take threats to marketers’ efforts to remain “brand safe” and avoid funding objectionable content both seriously and literally.
It’s hard to imagine that fewer industry-level standards around brand safety – a likely consequence of this week’s news – will help either X or News Corp. If anything, a more fragmented landscape for standards will probably lead to less spending with smaller publishers and more spending within the largest walled gardens because the complexity of managing these standards on a publisher-by-publisher basis renders spending on smaller ones as less operationally efficient.
Going well beyond News Corp, earnings calls featured prominently this week. In notes on Disney and Tegna as well as Warner Bros. Discovery, Sinclair and Magnite and Paramount, Nexstar, Gray and Pro7Sat1 we saw generally weak US television advertising trends (with low single digit declines, on average) along with some international growth, albeit off of relatively easy comparables or other unusual factors. Perhaps unsurprisingly, political advertising in the US has been coming in at relatively soft levels vs. 2Q22 levels. Outdoor advertising was at least relatively positive vs. other forms of traditional media, as we saw in results from Clear Channel Outdoor and Outfront as well as Lamar, but we saw softness from the largest radio industry company, I Heart Media as well.
To be sure, digital advertising remains the industry’s key source of growth (at least among companies not suing or threatening to sue their customers and prospects) as we saw with Reddit and Uber, whose earnings we wrote about on Tuesday, and with The Trade Desk whose leading independent DSP continues to grow rapidly, too. While recognizing their clear successes and outperformance vs. the rest of ad tech (including Magnite, Pubmatic, Liveramp and Innovid (which also reported this week), we critiqued a wide range of assertions made on The Trade Desk’s earnings call.
Meanwhile, agencies continue to progress relatively well, or at least better than many might have feared, despite weakness at WPP who reported this past week. With their numbers now in, we looked at the agency industry’s global growth and key regional trends for the most recent quarter and the year ahead.
One marketer who won’t be working with any agency any time soon for media services is the insurance company Progressive. During their earnings call they provided an unusually extensive review of their in-house media operation. Naturally, we provided extensive commentary around related themes, generally exploring why the choices Progressive has made aren’t likely to ever be widely adopted by many other marketers. A topic that many marketers do have to make for themselves, regardless of the agencies they work with, is how they justify their budgeting choices. In our regular review of comments from CEOs and CFOs of large brand owners related to marketing in the past week, we found senior leaders from both Airbnb and Shopify offering useful descriptions of the ways in which they make their marketing budget decisions.