In this week’s Week in Review: Elon Musk completes his takeover of Twitter, ProSieben warns of a difficult ad market over Christmas, and IAB UK reports continued strong digital ad growth in H1.
Musk Fires Management and Appeals to Advertisers After Completing Twitter Takeover
Elon Musk has completed his on-again off-again $44 billion takeover of Twitter, and immediately laid off several members of senior management including CEO Parag Agrawal.
Alongside Agrawal, CFO Ned Segal and legal affairs and policy chief Vijaya Gadde were fired and escorted out of Twitter’s headquarters, according to sources cited by Reuters. The change in senior management is seen as the first step in Musk’s wider plans for the platform, which include changing Twitter’s content policies, restoring previously banned accounts, and removing fake accounts.
There have been concerns, since Musk’s plans to buy Twitter were first announced, that his self-proclaimed “free speech absolutist” stance would enable the spread of hate speech and misinformation on the platform. Musk immediately sought to assuage advertisers’ concerns, addressing them directly in a Twitter post in which he said that “Twitter obviously can’t become a free-for-all hellscape, where anything can be said without consequences”.
Dear Twitter Advertisers pic.twitter.com/GMwHmInPAS
— Elon Musk (@elonmusk) October 27, 2022
ProSieben Lowers Revenue Outlook as Ad Revenues Struggle
European broadcaster ProSiebenSat.1 has lowered its full year revenue guidance after a disappointing revenue decline in Q3, with further struggles forecasted for Q4.
ProSieben had previously expected full year revenues of around €4.375 billion, which has now been lowered to €4.15 billion. The adjustment comes after a tough quarter in which ad revenues across Germany, Austria, and Switzerland fell by ten percent year-on-year. ProSieben said that revenues in Q3 last year had been particularly strong, making this year look worse by comparison. But nonetheless, the broadcaster said persistently high inflation and increasing consumer restraint have taken a significant toll this year.
ProSieben also warned that the Christmas period “shows signs of a more pronounced weakened macroeconomic environment” than had previously been the case.
Digital Ad Market Grew 15 Percent in H1, Finds IAB UK
The UK digital ad market grew by 15 percent year-on-year in H1 2022, IAB UK and PwC revealed on Wednesday. Advertising spend totalled £12.52 billion during the first six months of the year, according to the half-yearly Digital Adspend update. The figure marks a return to pre-pandemic rates of spending growth, following a turbulent two years for the digital ad market.
The trade body noted that search made up 53 percent of the total market, growing 16 percent to reach £6.66 billion in H1 2022. Display meanwhile grew 8 percent, with spend on video display increasing by 6 percent and non-video increasing 10 percent year-on-year. Mobile drives 57 percent of spend from a device perspective, the trade group found.
“Looking to the future, we have Christmas and the World Cup coming up, which will likely see spend peak in 2022, but digital advertising won’t be immune to tightening budgets as the cost-of-living crisis takes hold,” said IAB UK CEO Jon Mew. “Continuing to invest in marketing throughout challenging times is well documented, and digital has the benefit of offering advertisers a powerful combination of proven results and flexibility.”
The Week in Tech
Good-Loop Introduces Charitable Ad Format
Good-Loop has launched a new CTV ad format that generates a charitable donation when played, funded by the brand. The units include pre-, mid- and post-roll, alongside a QR code for accessing Good-Loop’s Impact Hub, featuring details about the charity. The Eden Reforestation Project, Love The Oceans and Black Minds Matter are among the participating charity partners.
Alphabet and Meta Hit by Slowing Ad Spend
Alphabet and Meta filed declining revenues amid a slowing ad market in their Q3 results. The Google owner’s profits fell 27 percent year-on-year, with YouTube posting its first ever decrease in ad revenue, as covered by VideoWeek. Meanwhile the Facebook parent’s profits halved in Q3, sending shares down by 60 percent. Prior to the announcement, investment firm Altimeter Capital wrote to Meta advising the company to cut staff and pare back its metaverse ambitions. “Meta has drifted into the land of excess,” said Altimeter CEO Brad Gerstner. “Too many people, too many ideas, too little urgency.”
ID5 Launches Product Advisory Group
Identity provider ID5 launched a Product Advisory Group intended to collaborate on privacy-first addressability and measurement solutions for advertisers and publishers. The group is chaired by ID5 CSO Joanna Burton, and comprises 11 members, including Lotame, MediaMath and PubMatic. “We wanted to better understand the industry’s needs in order to create solutions that provide real value,” said Burton. “ID5’s goal is to provide a service that benefits the entire advertising ecosystem.”
TikTok Pushes into Gaming
TikTok is moving into gaming, the FT reported, with the introduction of a dedicated tab leading to a suite of mobile games. The games will host adverts and opportunities for users to pay for additional content, according to four people familiar with the plans. The video sharing company appointed Assaf Sagy as head of global gaming last month. “I look forward to working closely with all gaming companies globally to help make TikTok a central foundation in your marketing strategies,” he said in a LinkedIn post.
Meta Threatens to Block News in Canada
Meta has warned the Canadian government it will block the sharing of news content if lawmakers proceed with legislation forcing tech giants to compensate domestic media outlets. Cultural minister Pablo Rodriguez said in a statement: “All we’re asking the tech giants like Facebook to do is negotiate fair deals with news outlets when they profit from their work.” The dispute follows last year’s clash between Facebook and Australian legislators, which saw the social media platform block news outlets, as well as government agencies, emergency services and vaccination charities. The standoff ended after five days when the government capitulated.
MPs Call for Tougher Sanctions on Tech Giants
The UK’s Business, Energy and Industrial Strategy (BEIS) Committee has called for tougher penalties for big tech firms abusing their market power. The group pushed for a law allowing companies to be fined up to 10 percent of global annual income, instead of the “small business costs” currently incurred. The MPs argued that consumers are at risk without such legislation.
Apple Faces Fresh Criticism Over Latest App Store Changes
Meta and Epic Games have led the latest round of criticism against Apple, whose new App Store policy changes force advertisers to use its in-app purchase system when “boosting” their posts on social media – a move that requires social platforms to pay 30 percent of that ad revenue to Apple. Epic Games CEO Tim Sweeney accused the tech firm of “brazen monopoly rent seeking,” while Meta said, “Apple continues to evolve its policies to grow their own business while undercutting others in the digital economy.” Both companies have a track record of criticising App Store policies, with the Facebook owner blaming falling ad revenues on Apple’s privacy changes, and the Fortnite maker suing the tech giant over its restrictive practices.
A great summary of Apple’s latest policy insanity from @FOSSpatents: https://t.co/0QgqbDL7gK. It’s quite shocking that, in the presence of antitrust lawsuits and greatly increased legislative and regulatory scrutiny, Apple’s doubling down on brazen monopoly rent seeking.
— Tim Sweeney (@TimSweeneyEpic) October 25, 2022
Google Hit with Second Antitrust Fine in India
The Competition Commission of India has fined Google $113 million for abusing the dominant position of its Google Play Store. The Indian regulator said forcing app developers to use its in-app payment system “constitutes an imposition of unfair condition”, and ordered Google to allow the use of third-party payments in the Play Store. It marks the second time this month that the Indian watchdog has levelled a fine against Google for anti-competitive practices.
Amazon Shares Tumble After Gloomy Holiday Forecast
Amazon’s share price fell by 19 percent following its Q3 earnings report, after issuing Q4 forecasts well below Wall Street expectations. Despite a Q3 sales total of $127.1 billion (up 15 percent year-on-year), with $9.5 billion in ad revenue (up 25 percent), it projected that “uncharted waters” could see holiday sales slow to as low as 2 percent in Q4. “We are seeing signs all around that people’s budgets are tight, inflation is still high, energy costs are an additional layer,” said Amazon CFO Brian Olsavsky. “We are preparing for what could be a slower growth period.”
The Week in TV
Price-Conscious Streaming Customers Are Warming to Ads, Finds LoopMe
Almost half of UK consumers cite affordability as the main reason for cancelling an SVOD service, according to a LoopMe survey. The report follows news that almost one million UK households have cancelled their streaming subscriptions this year, days ahead of the launch of Netflix Basic With Ads. In April, 36 percent of respondents said they would not keep a Netflix subscription if it became ad-funded, but the figure has now dropped to 27 percent as viewers become more conscious of spending. “As the economic crisis continues, it makes sense that consumers are looking for cheaper services,” said Sarah Rew, Senior Director, Global Marketing at LoopMe. “While the introduction of ads may have been seen as a risk for Netflix at first, it seems that consumers are warming to the prospect of a more affordable service.”
Warner Bros. Discovery to Write Off $2.5 Billion Worth of Content and Staff
Warner Bros. Discovery (WBD) intends to write off $2.5 billion through content and staffing cuts, as the recently combined entity tries to recuperate losses incurred in the merger, ahead of its Q3 earnings report. The company will also cut “people, budgets and projects” at its news channel CNN, chairman and CEO Chris Licht warned in a staff memo. “While the Company’s restructuring efforts are ongoing, including the strategic analysis of content programming which could result in additional impairments above the estimate provided above, the restructuring initiatives are expected to be substantially completed by the end of 2024,” according to WBD.
Sky Media Invites Ad Tech Companies to ‘Innovation Sprint’
Sky Media has invited ad tech companies to pitch their technology to feature in its inaugural ‘Innovation Sprint’. The event will take place at Sky’s Osterley HQ on 26th and 27th January 2023. “We want to collaborate with the media and ad tech worlds to address current challenges and find innovative new solutions that only Sky can deliver,” said Dev Sangani, Advertising Capability and Strategy Director at Sky Media UK & Europe.
RTL to Launch Ad-Free SVOD Service in Hungary
RTL will launch RTL+ in Hungary, the commercial broadcaster revealed on Monday. The SVOD service will be ad-free, according to CEO Gabriella Vidus, and aiming to provide local Hungarian content. “It is important to emphasise that in this case we are not talking about our current linear shows, but only about special content being prepared for this platform,” she added.
Viaplay Cuts Full-Year Revenue Guidance
Viaplay has cut its full-year revenue guidance to 10 percent, “as a result of the immediate effects of the general economic slowdown on advertising and subscription sales.” The forecast follows a healthy Q3 for the Nordic broadcasting group, which saw net sales rise by 25 percent, and subscribers by 78 percent year-on-year. The company noted the completion of its Premier Sports acquisition, and the UK launch of Viaplay on 1st November.
TF1 Ad Sales Drop 8.9 Percent in Q3
French commercial broadcaster TF1 recorded an 8.9 percent drop in Q3 advertising sales. Digital ad revenue fell after the group sold off its Livingly Media and Gofeminin.de publishing brands. Good news came in the form of TF1’s content studio Newen, which grew by 86.6 percent, boosting overall TF1 revenues 5.4 percent for a total €1.74 billion. The company declined to provide year-end financial targets.
Netflix and Walmart Announce Merchandising Partnership
Netflix and Walmart announced a partnership on Thursday that extends the Netflix Hub “digital storefront” to 2,400 physical stores in the US. The deal brings Netflix merchandise to Walmart shops, which will also offer a Netflix streaming gift card. “From popcorn and confectionary to collectible cups, we’ve created curated kits with everything customers need to amplify the couch-centric viewing experience,” said Frank Barbieri, VP Content and Digital at Walmart US.
Comcast and Sky Revenues Down in Q3
Comcast revenues dropped 1.5 percent to reach $29.8 billion in Q3, according to the communications giant’s earnings report. Though Sky added 320,000 subscribers, the British broadcaster’s revenues fell 15 percent as advertising spending diminished. Comcast shed 561,000 pay-TV subs in Q3, but gained 2 million Peacock subscribers, doubling the streaming service’s revenue year-on-year to reach $506 million. “Despite the challenges that may lie ahead, we are in an enviable strategic and financial position, and our future remains bright,” said Comcast CEO Brian L. Roberts.
Disney Keeps Formula 1 on ESPN
Disney renewed its contract with Formula 1 this week, keeping F1 races on ESPN through the 2025 season. The deal will see at least 16 races air on ABC and ESPN each season, with expanded direct-to-consumer rights enabling additional content opportunities on ESPN+. “The extension and expansion of our partnership is a reflection of exciting times ahead and a result of our shared desire to bring Formula 1 to as broad and diverse an audience as possible in the US,” said Ian Holmes, Director of Media Rights and Content Creation at Formula 1. “The popular commercial-free broadcasts ensure that viewers continue to engage with F1 before, during and after the race.”
EBU Brings FIFA Women’s World Cup to Free-to-Air Linear TV
EBU-owned Eurovision Sport has secured the free-to-air (FTA) broadcast rights to the FIFA Women’s World Cup 2023, on behalf of 32 EBU Members. The rights cover all key matches across TV, digital and radio, with at least one match per day on FTA linear TV, across 28 territories. “This agreement will build on the great legacy of the extraordinary coverage of the FIFA Women’s World Cup 2019 where EBU members provided record audiences,” said Eurovision Sport executive director Glen Killane. “Next year’s World Cup provides us with an opportunity to once again show that public service media is committed to ensuring that showcasing Women’s Football and women’s sport continue to be central to our mission.”
M6 Suffers 8.2 Percent Fall in Q3 Ad Revenues
M6 has posted an 8.2 percent fall in ad revenues, part of an overall revenue drop of 5.8 percent in Q3. M6 pointed to “an uncertain economic environment that is impacting advertising investment in several sectors, which are suffering from inflation on raw material prices and supply chain problems.” On Tuesday, the French broadcaster signed a distribution agreement with Vivendi-owned Canal+. The deal comes in the wake of a dispute between Canal+ and M6’s aborted merger partner TF1, over the pay-TV operator’s removal of TF1’s channels.
The Week for Publishers
The Week For Agencies
Publicis Raises its Organic Growth Forecast
Publicis has raised its full year guidance for organic growth to 8.5 percent, up from a previously forecasted range of 6-7 percent, after another solid quarter in which organic revenues grew 10.2 percent year-on-year. CEO Arthur Sadoun said the growth was driven by continued client investment in first-party data management, digital media, and business transformation.
Interpublic Group says Brands are Prepping for Downturn
Interpublic Group this year raised its full year guidance for organic growth from 6.5 percent to seven percent, as revenues continue to grow in all markets. But CEO Philippe Krakowsky said 2023 is less clear, and revealed on an earnings call that the majority of its clients are asking for some type of contingency planning in case a global economic downturn takes hold next year.
Wages and Chinese Lockdowns Weigh on WPP
WPP reported 3.8 percent growth in its like-for-like revenues less pass-through costs in Q3, and raised the bottom range of its full-year growth guidance up to 7.0 percent from 6.5 percent. WPP also said that its clients are continuing to invest in their brands despite current economic uncertainty. But the agency group said that wage bill inflation and the impact of continued lockdowns in China are weighing down its operating margin.
Havas Media Group Strikes Data Deal with Samba TV
Havas Media Group has agreed a deal with ACR data provider Samba TV in North America which will see Samba’s CTV and linear TV measurement data folded into HMG’s audience and data management platform Converged. “Samba TV’s direct relationship with the consumer and the accuracy of their data – which we have found to be the most representative TV data set in the U.S. – will provide our clients with powerful new tools and insights needed to find difficult to reach audiences and engage consumers today across every screen,” said Mike Bregman, Havas Media Group North America’s chief data officer.
Omnicom Media Group Pushes Omni Training Among its Staff
Omnicom Media Group is pushing for the majority of its workers to get trained up on Omni, its agency-wide data platform designed to make more data from across the business available for media planning, Adweek reported this week. Currently nearly 10,000 employees – or 40 percent of OMG’s staff, are trained up on Omni. The agency hopes to raise that figure to over 80 percent, according to Adweek.
Half of Britons Plan to Spend Less This Christmas
As agencies mull over Christmas campaigns in light of the cost of living crisis, research from Kantar suggests there will be less consumer spending for brands to capture in the UK. Half of UK citizens say they plan to spend less on Christmas this year, with 47 percent of those surveyed by Kantar saying they are worried about the Christmas season due to financial circumstances.
Hires of the Week
Omnicom Appoints Kathleen Saxton as First CMO
Omnicom Group has appointed its first chief marketing officer, hiring Kathleen Saxton for the role. Saxton joins from MediaLink where she served as managing director EMEA.
Hearst UK Picks Katie Vanneck-Smith as CEO
Hearst UK has named Katie Vanneck-Smith as its new chief executive, replacing interim CEO Simon Horne. Vanneck-Smith joins from Tortoise Media, which she co-founded.
Bill Swanson Joins Connatix as SVP of EMEA
Bill Swanson, previously EMEA strategy lead at IRIS.TV, has joined Connatix as its SVP of EMEA. Swanson will be responsible for driving the company’s leadership, strategy and expansion in the EMEA market.
This Week on VideoWeek
Why CTV Publishers are Exploring Audience Extension: Q&A with Publica’s Steph Miller, read on VideoWeek
How Can Traditional Broadcasters Keep Younger Viewers? read on VideoWeek
Are YouTube’s Ad Revenue Declines a Short-Term Blip or a Sign of Something More? read on VideoWeek
TV Bore the Brunt of the UK Advertising Pullback in Q2, read on VideoWeek
Amazon Unveils New Video Ad Features Ahead of Q3 Results, read on VideoWeek
Ad of the Week
Karma, Online Shopping, But Better, Mamash Productions Group