The expected economic turmoil has prepared the entire media industry for (yet another) realignment, and the austerity that has followed as clients slash budgets, buyers lower forecasts, and layoffs have followed.
In particular, this calls into question ad tech (a much-hyped and widely misunderstood sector of the industry) and the value it creates for key players in the industry, especially amid the ongoing high-profile transparency investigation time.
In the past 18 months, a large number of such companies have been listed on the public market, this move (presumably) should bring to make the above question clearer. Over the past two weeks, the leaders of this group have disclosed their most recent quarterly earnings, and executives there are pulling out all the stops. On the surface, the numbers look good, and the arrows point in the right direction for this June quarter — even as every company in the industry is down sharply from its 2021 highs. The Trade Desk reported revenue of $377 million, up 35% year over year, while Magnite’s revenue was $123 million (excluding TAC*), up 23%, and Criteo’s revenue was $215 million (excluding TAC*) TAC), down 3 percent, with most attributing this to challenges facing its traditional retargeting business. Elsewhere, PubMatic reported revenue of $63 million for the period, up 27%. Meanwhile, LiveRamp — a company whose strategy hinges on accepting alternative identifiers for third-party cookies — posted revenue of $142 million for the period, up 19%.
“narrative” may be misleading
Brian Wieser, Global President of Business Intelligence at GroupM, said in an interview with Digiday that, in his opinion, about The broad narrative that a deep global recession is inevitable runs counter to key data points. “It certainly didn’t meet the consensus expectations of economists and others,” he said, noting how GroupM’s parent company WPP, along with some of its Madison Avenue peers, raised its 2022 revenue forecast. “To be clear, everything is relative, everything is not sunshine and roses… There is a lot of risk ahead, but the level of certainty you hear about negative opinions is not normal.” For Wieser, there was a “mix of decelerations and declines” that led many to jump to conclusions, failing to account for the exponential growth in numbers following the initial shock of the Covid-19 pandemic. “There are a lot of noisy parts of the pandemic that are hard to identify,” he added. “For example, e-commerce, as a general concept, has grown much faster than sustainable development,” he added.
In addition, “general commentary” provided by executives of large tech companies as the remainder of the year The outlook — which is often used as a proxy for other markets — makes it difficult to predict how small digital companies will fare in a few months. Most publicly traded independent ad tech companies have given relatively positive guidance for earnings for the rest of the year, with the upcoming U.S. election seen as a particular boon for those aspiring in the CTV space. Nonetheless, the leadership of both Magnite and PubMatic have expressed their “conservative” outlooks, given weak European market conditions and the complication of Russia’s invasion of Ukraine intensifying to continue to have wide-ranging economic repercussions.
Macroeconomics aside Conditions aside, all companies in the digital media space are at the mercy of the whims of policy decisions made by major platforms on the internet — phasing out traditional ad targeting tools like third-party cookies or MAIDs. Google’s recent postponement of cookie depreciation means that many people make hay when the sun is shining, a strategy that only lasts so long. Despite speaking on Magnite’s earnings call, CEO Michael Barrett spoke about the complicity of some media buyers in this retrograde attitude. “As long as there are third-party cookies, it’s a simple button,” he said. “I just think that as long as there are third-party cookies, you don’t see a frenzy on the buy-side [for alternatives], which is what they’re used to.” Meanwhile, The Trade Desk CEO Officer Jeff Green appeared to suggest that allegations of monopolistic practices surrounding Google’s ubiquitous ad stack continue to gain public attention — Bloomberg reported that the Justice Department could sue Google as early as this week as early as next month — a tailwind for Independent advertising technology. “Walled gardens like Google’s are being relegated to priority,” he told stock analysts, explaining how this cautious approach from those who control media budgets means his company is able to build a better deal with marketers direct relationship. “The integrity of the market they operate is questionable.”
More scrutiny, but little change
The Trade Desk Green’s assertion may be correct, but lesser-known companies in the ad tech space must also be wary of marketers’ focus on transparency, a trend that the National Association of Advertisers has over programmatic media buying. Nick Manning, founder of Encyclomedia and former co-founder of media agency Manning Gottliebb OMD, points to the latest ANA procurement report, which highlights little change in practice over the past decade. Although digital growth accounted for the majority of marketer spending during this period, and programmatic, its well-documented transparency issues, accounted for more than half of digital media spending in many cases.
“When things start to get tough and they start to get so tough, the thing to do is reduce waste,” Manning told Digiday . “ANA is trying to do this industry-wide. But in many cases, marketers charge their partners to reduce redundancy.” He said: “They still want to spend advertising dollars , but they don’t want to spend that money on the supply chain,” he said, adding that progressive advertisers are doing so, but in many cases, “media agencies have moved from the supply chain, little to no change.” For Nandi Gurprasad, a veteran of the ad tech space and CEO of YEARXERO, transparency is critical for smaller ad tech players, especially sell-side players, when it comes to continuing engagement with media buyers. when planning. He also suggested that smaller ad tech companies need to find a unique selling proposition in the short term. “If you look at the players who are able to get by, they’re either smart, nimble, or they’re able to evolve,” he said. “You look at the companies that are in the second tier [outside of Big Tech], they’re all trying to find the A product or solution where they have an advantage – whether it’s pinpointing or header bidding.” *Not included Traffic acquisition cost