Meta, Disney, Dentsu, Globant, Ad Tech and More 3Q24 Results and News Analyzed, Plus The Latest Estimates for Growth in Video Services Trends
Madison & Wall: Saturday Summary for Nov. 16, 2024
Each week on the M&W Podcast, we discuss Madison & Wall’s latest research and walk listeners through how the advertising business really works. Episode 10 of the Madison & Wall M&W Podcast is now available on Spotify, Apple, or wherever you get your podcasts.
Weekly Work
As the core part of 3Q24 earnings season came to a close we reviewed results from media owners including Disney, IAC/Dotdash Meredith, Spotify, RTL and more. Disney likely outperformed other US-based TV-centered sellers of advertising during the most recent quarter, while underlying trends of digital growth and broader decline for television were evident.
We assessed 3Q24 trends for publicly listed ad tech companies and found ongoing growth in line with the rest of digital advertising, higher profitability and slowing, if still solid double digit growth expectations for the remainder of this year.
Meta had a very newsy week and we provided our analysis of their plans for the EU, where the company will offer its users the option to receive contextual ads.
Dentsu and Globant provided their 3Q24 results and showed unsurprising, but still important diverging trends in marketing-related services. No surprises, but we saw strong growth in IT services for marketers and weaker trends for more traditional agency services. We compared and contrasted Dentsu to other agency holding companies and Globant to similar businesses at Publicis and Accenture.
Finally, we provided our latest analysis of consumer spending trends in video services, illustrating that consumers continue to increase their overall spending on a combination of pay TV, streaming, cinema and physical media at a low single digit rate. Streaming SVOD services continue to drive growth by taking share of wallet from traditional pay TV for the most part.
Additional Context
Meta had a busy week with news that Threads would initiate selling advertising, a new massive fine in the EU and reports of a proposal for that region to offer contextual advertising instead of personalized targeted advertising. On this latter item, we think that revenues will mostly be unchanged for Meta because of our framework for thinking about how budgets get allocated to advertising in the first place, which we explained in some detail in a note this week.
To over-simplify, most marketers allocate budgets to different types of media for a wide range of reasons, and then look to optimize for different goals once the budgets are allocated. Targeting the delivery of advertisements narrowly against identifiable but anonymized people is only one of many goals, and not the only way to accomplish the real goals most marketers have.
It’s true that better targeting can lead to a lower cost per unit of ad delivery and is important for some narrow segments of marketers, but that doesn’t necessarily change the budget the marketer allocates nor the success they will have in accomplishing any given outcome. The broader-reaching the platform, the more likely that audience can be reached and the more likely that a marketer will be able to find ways to optimize a budget despite the constraints the platform sets.
Moreover, for smaller marketers, budgets are typically allocated based on where they best reach their audiences one way or another. At a more practical level, to the extent that these smaller marketers can only devote time to manage one or two suppliers of ad inventory, the broadest reaching platforms will capture virtually all of the budgets these marketers hold. These observations largely held during the GDPR transition and also generally held during Apple’s roll-out of App Tracking Transparency, and we think they will again here.
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