Insider Advertising: Why Q3 will be a big test for the digital ad duopoly

Hello, welcome back to Insider Advertising, your weekly look at the biggest stories and trends affecting Madison Avenue and beyond. I’m Lara O’Reilly, Insider’s media and advertising editor. If this was forwarded to you, sign up here.

As always, my inbox is open for your thoughts, tips, and perfectly shot pet portraits (more on those later). You can find me at

Let’s take you straight to the news:

Ain’t no stopping us now

GettyImages Google CEO Sundar Pichai delivers the keynote address at the 2019 Google I/O conference at Shoreline Amphitheatre on May 07, 2019 in Mountain View, California.
Google CEO Sundar Pichai.

We’re deep into earnings season, and it was a solid second quarter for the digital advertising giants.

A year after reporting its first-ever revenue decline, Google’s parent, Alphabet, rebounded with its best-ever quarter. Ad revenue grew 69% year-over-year to $50.4 billion, driven largely by Google search ads and retail advertisers.

YouTube’s ad business jumped 84% to $7 billion. And it looks as if next quarter will be strong for the video property, too. Ad-industry sources told Insider that YouTube’s sales representatives had a barnstorming US upfront this year. (The NewFronts presentations ran in May.) Of course, it’s a fairly easy narrative to sell: Traditional TV viewership continues to fall, while YouTube use continues to climb.

Still, some of the volume commitments that YouTube secured were fairly eye-popping. Sources said in some of the sales talks, particularly for tentpole sports, YouTube was pushing for – and in some cases able to secure – 30% price hikes. When contacted for comment, a Google representative didn’t respond specifically to the company’s NewFronts performance but pointed toward company blog posts from earlier in the year highlighting how many people watched YouTube on their main TV screens.

Google’s duopoly buddy, Facebook, also had a solid quarter, reporting $29.1 billion in revenue versus the $27.9 billion analysts had expected. Facebook’s chief operating officer, Sheryl Sandberg, said on the earnings call that its strongest verticals were those that performed well during the coronavirus pandemic: e-commerce, retail, and CPG.

Elsewhere: Twitter and Snap also reported earnings beats in Q2. And, for all you “triopoly” fans: Amazon is due to report earnings after today’s market close.

Track to the Future: Part II

A chart showing App Tracking Transparency opt-in rates by country.
App Tracking Transparency opt-in rates by country. (The sample includes only apps that are showing the ATT prompt to users.)

Hold on a minute, wasn’t the sky meant to be falling for digital ads hawkers this quarter after Apple rolled out its App Tracking Transparency privacy update in April?

The simple, boring, and noncommittal answer is that it’s too early to tell how it’ll shake out. Yes, the ATT change immediately made it more tricky for many advertisers to precision-target and measure the effectiveness of their mobile ads. And there’s some data showing that some advertisers have even upped their spend on Android, which hasn’t yet rolled out a similar anti-tracking measure for apps.

But in spite of all of this, the big trends favoring digital ad platforms – the rise in digital content consumption and spending on e-commerce – were so buoyant that they cushioned any early underlying turbulence.

“While some were expecting major fireworks when App Tracking Transparency went into effect, ATT was never going to dramatically hurt the walled gardens in the short term,” said Alex Bauer, the head of product marketing at the mobile measurement platform Branch.

“Longer term, the full impact is still to be seen: Walled gardens have a huge trove of incredibly valuable first-party data, but ATT means Apple is planning to enforce an equal playing field for everyone,” he added.

So, there may be trouble ahead. Facebook’s CFO, Dave Wehner, warned investors of a significant slowdown in growth and said the company expected “increasing ad-targeting headwinds in 2021” from regulatory and platform changes, which it expects to have “a more significant impact in the third quarter.” Alphabet, too, faces several antitrust inquiries, both in Europe and stateside, and it isn’t immune to Apple’s tracking changes, either. Plus, Alphabet in particular will have tougher comparable year-ago quarter.

There’s light at the end of the funnel

Simone Biles

Ad agencies are already having the awkward “make goods” talk with the Olympic broadcaster NBCUniversal, Variety’s Brian Steinberg reports. The negotiations come amid shaky ratings and advertiser anxiety following the decision of the star US gymnast Simone Biles to pull out of her first two events at the games. Elsewhere, the tennis champ Naomi Osaka also exited early.

“Don’t worry, it’s all under control,” is essentially the narrative coming out of NBCU, where execs are trying to convince impatient ad buyers that events like the Olympics often deliver results over a longer period of time.

Ultimately the real test for NBCU won’t be its ability to peddle multi-mix modeling reports and charts demonstrating “top of the funnel” awareness but its ability to spin up compelling storylines for viewers – against the odds.

There’s precedent for it. As told by Disney’s executive chairman, Bob Iger, in his book, “The Ride of a Lifetime,” the 1988 Winter Olympics in Calgary, Alberta, were a mess on the face of it too. High winds, fog, and warm weather meant many of the alpine events had to be called off.

ABC, the broadcaster for those games, pivoted to human-interest stories: the Jamaican bobsled team and the unlikely British ski-jump hopeful, Eddie “The Eagle” Edwards.

“Somehow it all worked,” wrote Iger, who was ABC’s senior vice president of programming at the time. “The ratings were historically high.”

Recommended reading

WPP’s GroupM pulled out of Facebook’s media agency review. People familiar with the matter pointed toward Facebook’s request for strict contractual terms as one of the reasons – WSJ

The TV seller Vizio is cutting off some adtech companies from ad targeting data as it tries to build a TV ad business to compete with the likes of Roku and Samsung – Insider

Brands including Nike, AB InBev, and Red Bull have set up or are building in-house teams for esports and gaming – Digiday

Kuaishou, a Tencent-backed Chinese TikTok competitor, is on a US hiring spree as it prepares a big marketing push to launch “a new global brand” – Insider

The basketball star Kyrie Irving alleged on social media that Nike was set to release a “trash” sneaker collaboration carrying his name without his permission. Nike hasn’t responded – Bloomberg

Weddings are back! But this time it’s different. Brands like Zola and David’s Bridal are trying to cash in with new ad campaigns, digital services, and perks – Insider

And finally: Apple’s long-running “Shot on iPhone” ad series is back, and this time it’s teaching us how to take the sorts of portraits of our pets that Annie Leibovitz would be proud of. It is your duty as Insider Advertising subscribers to send me your results: loreilly@insider.comAdweek

That’s all for this week. See you next Thursday. – Lara

Read the original article on Business Insider

Insider Advertising: CMOs need to get smart on price

Hello and welcome to Insider Advertising, a weekly newsletter where I break down the most important news and trends on Madison Avenue and beyond. I’m Lara O’Reilly, Insider’s media and advertising editor. If this was forwarded to you, sign up here.

Thanks so much to everyone who offered their feedback on last week’s edition. Please do continue to send your comments, tips, and pun suggestions to

On with this week’s news:

Price, price baby

groceries grocery store grocery shopping coronavirus

Summer’s here and for many marketers, that typically means it’s budgeting season once again.

But this time it’s different: US consumer prices rose at their fastest monthly rate since 2008 between May and June this year – and at a higher rate than analysts had forecast.

While lots of companies raise their prices at a regular frequency, businesses this year are also contending with supply chain issues and rising commodity costs that are eating into their margins.

Many marketers and academics consider “Pricing” as the most important of the “4Ps of marketing” (product, price, place, promotion) – or more specifically, the ability to build a brand strong enough to maintain sustainable pricing power.

PepsiCo certainly thinks it has. Consumer-products companies including P&G and Kimberly-Clark also set out intentions earlier this year to raise their prices.

Marketing consultant and former AB InBev CMO Chris Burggraeve tells me the topic of pricing is coming up at every board he speaks with right now: “In unusual times like this, more than ever.”

Burggraeve, who recently published a book entitled “Marketing IS NOT a Black Hole,” said it’s important for marketers to make sure they’re in the mix as these conversations happen. It’s not just about raising prices either – there can be opportunities to hold or even lower prices strategically and capture market share or volume from competitors.

Marketers without the luxury of having already built a strong brand may get away with raising their prices in the short-term, Burggraeve said. But he added that it’s likely they may have to immediately pull back and discount again to counter negative dips in volume and share.

I’m reminded of that often-quoted Warren Buffett adage: It’s only when the tide goes out that you see who’s been swimming naked.

I get knocked down, but I get up again

a chart about the 2021 ad spend growth forecasts for the marketing newsletter on July 14
2021 ad spend growth forecasts by industry

Global ad spend is expected to grow by 10% to $634 billion in 2021, according to an upgraded forecast from Dentsu. That would mark a swift recovery from last year, which was the weakest-performing since the global financial crisis.

But, wait a minute! Gartner’s latest annual CMO Spend Survey found that marketing budgets as a proportion of companies’ revenue have fallen to 6.4%, down from 11% in 2020, as the WSJ’s CMO Today reported.

Why the discrepancy between these two datapoints? The suggestion is that much of the surge in ad spending anticipated by Dentsu and other forecasters this year will be driven by smaller, often online-only businesses and not necessarily the larger companies that Gartner surveys.

For those marketers, it’s as good a time as ever to get closer to the finance decision makers in their business. As Burggraeve put it to me, marketers need to “out the comfort zone of storytelling and advertising, and go back to Kotler and the 4Ps,” referring to Philip Kotler, the renowned marketing author and professor who has been dubbed “the father of modern marketing.”

You can find me in the club

Red velvet rope for VIP Slack group list
Advertisers, marketers, and PR professionals are vying to get into VIP Slack groups.

At the end of the working day, the very last thing on my mind is the idea of logging back in to Slack to continue the industry chatter where it left off. (Not offence to my lovely, witty, and talented colleagues, readers, and sources.)

But it turns out a bunch of advertising pros are champing at the bit to join a set of highly exclusive VIP Slack groups.

This fun piece from my colleague Lindsay Rittenhouse details how some of these industry Slack groups have thousands of people years-long waiting lists to get accepted in. Many have a list of rules to follow once you finally do get behind the coveted velvet rope.

While some of these Slacks – described by some as digital versions of the Soho House private members’ club – were established years ago, the pandemic has added extra urgency to the clamor to join these groups to network and hunt for work opportunities.

I’d like to know whether any private industry groups are also popping up on newer platforms. A Discord for digital buyers? A Mumble for marketers? Let me know if you can sneak me in on the guest list.

The 90-second slot

In this semiregular corner of the newsletter, I’ll bring you a rapid-fire, 90-second interview with the industry’s most influential executives who are dominating the week’s advertising news.

This week I spoke with Mediaocean CEO Bill Wise, hot on the heels of the company’s announcement of its intention to acquire adtech company Flashtalking, in a deal reportedly worth $500 million.

Mediaocean Bill Wise
Mediaocean CEO Bill Wise.

How did the acquisition talks first come about?

They have been a longstanding partner for us so it kind of came together naturally. We were trying to solve similar things philosophically and it just made sense.

Are you still on the hunt to make more acquisitions of similar sized companies?

We are always on the hunt. This is our 11th acquisition in about five years. We are already in another discussion. There is a massive opportunity to be the leading, independent, and neutral operating system because Big Tech just has so much of the ad dollars that the world needs us to do this.

Adtech dealmaking is off the charts at the moment. How do you think the pace of M&A is going to ebb and flow over the next year?

I think whereas maybe five or six years ago it was advantageous to be a startup, scale matters now. And global presence matters. Marketers want proven companies at scale who can expand globally. So I think the best companies are going to continue to consolidate.

What does that consolidation mean for marketers?

It means marketers have more choices. They don’t just have to rely on Google, Facebook, and Amazon for their digital marketing. They are going to be able to have neutral alternatives.

Recommended reads

There are plenty of extracts doing the rounds this week from “An Ugly Truth,” a new book from New York Times reporters Sheera Frenkel and Cecilia Kang, which takes readers behind the scenes at drama inside Facebook. While the book doesn’t delve too deeply into the nuances of its ads business, it does portray an apparently withering relationship between Mark Zuckerberg and Sheryl Sandberg, and also how Facebook often prioritized its image first, and fixing things later – The New York Times

Speaking of Facebook: Kate Kaye reports that its brand safety audit with the Media Rating Council – an olive branch promised in July 2020 in the wake of an advertiser boycott – is on ice for now – Digiday

The new “Space Jam” is set to be a product placement and brand-collab bonanza – Ad Age

Travel influencers are finding their work is picking up again as the tourism industry returns to spending on marketing – Insider

Goldman Sachs’ consumer bank Marcus takes digs at other banks’ perks in its biggest ad campaign since launching in 2016 – Insider

See you next week – Lara

Read the original article on Business Insider