Drip Sequence💧

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Headline Overviews

• ByteDance prefers TikTok shutdown in US if legal options fail, sources say ByteDance, the owner of TikTok, would prefer to shut down the app rather than sell it if legal options fail to fight legislation banning it from U.S. app stores, sources say The company's algorithms are deemed crucial to its operations, making a sale unlikely, and it would rather face a shutdown than compromise its core algorithm. Despite TikTok's small share of ByteDance's revenues and daily active users, the parent company is prepared to withstand a shutdown, stating that it would have limited impact on its business.

• Billionaires race to buy TikTok after Chinese owners ordered to sell app — with Steve Mnuchin in the lead Billionaire finance and tech moguls, including Steven Mnuchin, Bobby Kotick, Bill Ackman, and Kevin O'Leary, are preparing multi-billion dollar bids to buy TikTok following an act signed by President Biden forcing its Chinese owners to sell. However, challenges such as ByteDance's resistance, regulatory scrutiny, and the difficulty of recreating TikTok's algorithm present significant obstacles to any potential sale. Mnuchin, Kotick, and Ackman are among the potential buyers, but faces challenges in acquiring TikTok and rebuilding its technology. Other potential buyers include Susquehanna founder Jeffrey Yass and Walmart's Doug McMillon, but whether TikTok will be divested or banned remains uncertain as legal actions are pursued to prevent such outcomes.

• Microsoft makes Copilot available to all advertisers Per Search Engine Land:
  Copilot offers several AI-powered capabilities within the ad platform, including:

  • Natural language conversational chat to get answers and synthesize info.

  • Recommendations for ad creative assets like images and copy.

  • AI-generated images and other assets on demand.

  • Integrated throughout the platform UI and workflows.

• Roku and iSpot Announce Streaming Audience Measurement Partnership Roku and iSpot.tv have announced an expanded partnership aimed at enhancing streaming audience measurement. iSpot will become Roku's preferred third-party measurement partner, providing advertisers with reliable metrics on ad reach, frequency, and outcomes. The partnership will also integrate Roku's Advertising Watermark to validate ad inventory and strengthen iSpot's audience measurement infrastructure. The collaboration aims to improve performance and measurement for advertisers on Roku's platform and across the streaming TV ecosystem.

Overview of AdTech Earnings Report

Meta 4/24

Revenue: Increased 27% from $28.65 billion. Average revenue per user in the quarter was $11.20

Takeaway: Meta's CEO, Mark Zuckerberg, focused on financial losses during the earnings call despite reporting better-than-expected profit and revenue. Shares plummeted up to 19% in after-hours trading, wiping out over $200 billion in market cap. Zuckerberg emphasized long-term investments in AI and efficiency measures while urging investors to stick with the company despite a light revenue forecast for the second quarter and focusing his opening remarks on products that currently do not make money (Meta’s Reality Lab Units reported sales of $440M but accrued $3.85B in losses).

Meta also is no longer reporting Daily and Monthly Active Users.

A lot of us are still consistently spending on Meta’s platforms, especially with the uncertainty surrounding TikTok’s nebulous future and X’s perennial brand safety issues. If ad spend on Meta were to ever dip as Zuckerberg ramps up his AI consumer hardware ambitions I would anticipate more layoffs on the horizon to cut costs as the focus seems to be back on AI and augmented reality over products for advertisers on their social media platforms.

Snap 4/26

Revenue: Increased 21% to $1.19 billion. Average revenue per user in the quarter was $2.83

Global Daily Active Users: 422 million

Takeaway: Snap reported 422 million daily active users (DAUs), up 10% year over year, with expectations to reach around 431 million DAUs in the second quarter. The company forecasted quarterly infrastructure costs per DAU to range between 83 cents and 85 cents for the rest of 2024, emphasizing a focus on long-term business interests. Snap noted an increase in user engagement with Spotlight and Creator Stories, leading to a 125% year-over-year growth in time spent watching content. Despite laying off 10% of its global workforce in February, Snap expects headcount and personnel costs to "grow modestly" throughout the year.

Snap doing better than expected in this current economic climate and alluding that they do not want to do any moves that would rock the boat and double down on improving their ad products which likely indicates as them being a consistent partner for any future social activation on their platform.

Alphabet 4/26

Revenue: Increased 15% of $80.54 billion

• YouTube advertising revenue: $8.09 billion

• Total ad sales: $61.66 billion

Global Daily Active Users: 422 million

Takeaway: Google’s core advertising business re-accelerated this year compared to 2022 when rising rates and inflationary concerns forced brands to pull back on their ad spend. Similar to Meta, Google is rolling profits heavily into AI investments.

Amazon 4/30

Revenue: Advertising revenue increased by 24% ($11.8 billion)

Takeaway: The singular source for this significant jump in revenue is Amazon Prime’s video ads. Unlike Netflix and Disney/Hulu, Amazon Prime’s streaming ads potentially have a significantly better methodology on tracking ROAS for consumer brand spend given how Amazon is conveniently the world’s largest online retailer. Given how streaming ads is incredibly new to Amazon, it’s hard to have any historical insight on ROAS for this as of now.

Current Flow of Ad Spend

Just based on these handful of Earnings Reports on entities that take the lion share of the world’s ad spend, it is pretty evident that advertising revenue is up across the board. I remember polling the audience circa 2021-2022 on the nature of everyone’s ad spend (shout out to the media planners who contributed) and it felt like ad spend was either down or flat-lining at time.

What we are seeing now is increased ad spend in concurrent with the seemingly never-ending parade of layoffs across every facet of our industry (in-house, agency, adtech, etc.) which just feels like rubbing salt in the wounds to everyone who has been laid off in the last 18 months.

Why Is Ad Spend Going Up?

The fact that advertising spend is going up in spite of massive waves of layoffs hitting our industry almost feels like an oxymoron. There is no longer a contraction in ad spend, just a contraction in reducing operating expenses because the cost of doing business is more expensive in 2024 than it was in the past (you can thank rising interest rates for that). It’s not great for those who have been laid off, given that the cost of EVERYTHING to survive has risen dramatically.

But in spite of rising consumer goods, economic analysts are still forecasting a “strong and rallying economy.” Despite the rising cost of goods, advertisers are getting laid off more than in other industries, so the rest of society still has the appetite to spend.

Things are expensive, but consumers still have money. There are a lot of valid arguments that citizens in lower economic brackets are barely surviving, but the fact of the matter is, the lion's share of consumer spend has not seemed to break yet, given how the appetite for consumption has not abated, clearly, as we see consumer brands report increased sales and profits.

And with Generative AI shaking things up on how businesses (especially in advertising) are being run to reduce operating expenses, big brands are going to shove ad spend as much as they can while people are still willing to spend.

Just look around you. People are still going to festivals. Playoff games in the NBA and NHL are sold out with packed arenas. No one I know is cancelling vacation plans to save money this summer.

Advertising is an industry that parasitically operates off consumer sentiment. If there is the appetite for consumption, then there is a budget for advertising.

It just kinda sucks that we are still seeing all these layoffs.

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