U of Digital Newsletter - 9/11/24 (premium)

September 5th-September 10th // Estimated Reading Time: 9 minutes

Below is a roundup of last week’s notable industry news, with summaries and our opinions. The biggest case in digital advertising history started on Monday…

In anticipation of the #USvGoogle antitrust trial outcome, Digiday's editorial team wants to gauge whether the industry feels that a divestiture of Google’s sell-side business would be adequate.

Fill out the survey here. It's short and totally anonymous!

Top Story 👁️ 

Google’s second antitrust trial could help shape the future of online ads
Source: CNBC, various
September 6th, 2024

Summary: Google's highly anticipated ad tech antitrust trial kicked off Monday with a who's who of industry veterans testifying about how the company's publisher ad tools and policies impacted their businesses. The case centers on Google's dominance in several key areas of the ad tech supply chain, including ad serving, ad buying, selling, and an ad exchange, and whether the company abused that control to give itself an advantage at the expense of competitors, publishers, advertisers, and consumers. The DOJ and a coalition of states that joined the case are looking to break up Google's ad tech operation, including a forced divestiture of its Ad Manager suite. There has already been plenty of spicy testimony.

The DOJ aims to show that Google amassed massive market power by buying companies like DoubleClick, which it says enabled Google to reach 91% market share for publisher ad serving. Google policies commonly locked in customers, the government says, such as forcing publishers to use Google's ad server in order to access its ad exchange. For example, former NewsCorp executive Stephanie Layser testified that the publisher would have lost $9M in revenue if it switched to another ad server and lost access to Google's ad exchange. When Layser started working at NewsCorp in 2017, more than half of its ad sales flowed through Google's ad exchange, increasing to 70-80% by the time she left in 2022.

Google will try to show that advertisers and publishers have plenty of options in a highly competitive digital ad industry. It claims that customers use its tools because they are superior and that the DOJ may stifle innovation and make it more costly for small businesses to advertise if it is successful in "picking winners and losers." But Google seems to be facing significant headwinds just a month after it lost another major DOJ antitrust lawsuit over its dominance in search; punishment in that case won't be decided until next summer. Last week, the UK's Competition and Markets Authority (CMA) also accused Google of anti-competitive practices in digital advertising, which could lead to a significant fine (10% of annual global revenue) if the company is found guilty. And on Tuesday, the EU upheld a $2.7B fine against Google for giving itself an unfair advantage through its price comparison shopping tool at the expense of its European competitors.

Below are some helpful resources that are providing regular, blow-by-blow coverage of the trial:

Marketecture’s “The Monopoly Report”
Jason Kint’s Twitter Account
AdExchanger’s Coverage
USvGoogleAds.com (Check My Ads Coverage)
The Verge’s Coverage

Opinion: Coming out of day 1, Ari Paparo of Marketecture broke down the DOJ’s case as follows:

The plaintiffs’ case tracks their original complaint but with a bit of refinement and simplification. Instead of a litany of code words and secret projects, the case boils down to four allegations:

1. Monopoly on publisher ad serving

2. Monopoly on the ad exchanges

3. Monopoly in the advertising ad network market (e.g., AdWords)

4. Illegal tying of the ad server and the ad exchange

They supported these arguments with both juicy quotes and eye-popping market share stats…

Google’s defense, shared on their blog, breaks down into four points:

1. There are hundreds of ad tech competitors—including many big players.

2. Ad buyers and sellers mix and match our tools with those of our rivals.

3. Our ad tech fees are lower than reported industry averages.

4. DOJ’s case could make it harder for small businesses to grow and hurt the quality of ads people see.

The main point Google is trying to make in court is that these “markets” (e.g. ad serving, ad exchanges, ad networks, etc.) should not be considered distinct markets at all, there’s no such thing as “open web ad tech”, and that all of these markets should be viewed as part of a larger digital advertising ecosystem, which includes spend on walled gardens like Facebook and TikTok. In which case, Google and its specific products would not be considered monopolistic. This argument, of course, seems silly.

We don’t know how this case will go down. Here are a few things we do know:

• There is tons of bipartisan support, and public pressure, to reign in big tech. Google is the poster child for big tech. 

• Google has already been found guilty in the search antitrust case.

• There will be very little pro-Google testimony in this case from folks across the industry that work at advertisers, publishers, ad tech cos, etc.  

• There is tons of damning evidence that has come forth already, which very much paints Google as an ad tech monopolist. There will be more.

None of this seems great for Google. More to come…

Other Notable Headlines ✍️ 

Amazon Is Quietly Bringing Ads to Rufus, Its Gen AI Search Engine 🔒- Amazon launched its  generative AI-powered shopping assistant, Rufus, in February to answer customer's shopping questions and make recommendations. It will begin adding sponsored ads to Rufus in the US this month that are personalized to user searches. Sponsored ads are Amazon's core search ad format, but not all marketers are entirely onboard yet with them appearing within Rufus. For example, it will be difficult matching an ad to the context of an AI query, which could result in the wrong recommendations and wasted ad spend.

Marc Benioff says Salesforce is basically starting from a 'beginner's mind' mentality and going all in on AI agents 🔒- Benioff believes that the next wave of AI will be led by AI agents that are more advanced than AI chatbots and can be customized by companies to communicate with their customers. As a result, Salesforce is undergoing a "hard pivot" to Agentforce, its customizable AI agent builder being tested by some clients. The product will officially launch next month and be displayed next week at Dreamforce, its annual user conference. In the last week leading up to the event, Salesforce bought two companies: Tenyx, an AI-voice chatbot startup, and Own Company, a data backup firm. Terms of the Tenyx deal weren't disclosed, but Salesforce paid $1.9B for Own. Tenyx's voice AI solutions will extend agent capabilities for the Agentforce Service Agent, while Own's tools will give Salesforce more comprehensive data protection and loss prevention capabilities.

AppsFlyer And Unity Integrate With The Android Privacy Sandbox To Avoid Another ATT-Style Disaster - Mobile gaming and ad platform Unity helped mobile measurement platform (MMP) AppsFlyer design the integration with the Android Privacy Sandbox's Attribution Reporting API. Unity Ads will use the integration for campaign optimization as the mobile ad ID on Android  (the Google Ad ID, or GAID) is phased out. Although Google says it won't fully deprecate third-party cookies anymore, instead giving consumers the choice, the company hasn't revealed its exact plans for the GAID. That's forcing mobile marketers to figure out the Android Privacy Sandbox. AppsFlyer says its MMP is the first to integrate with the Android Attribution Reporting API to help the industry prepare for GAID deprecation.

Dentsu Unveils Post-GARM Ad Coalition, Backs Credible News Media - Dentsu is joining forces with consultancy The 614 Group to launch a new coalition to support investments in quality news media. The unnamed coalition, which is being underwritten by ad tech suppliers OpenX and Sightly, will research why brands invest in news, improve brand safety tools, and give marketers a voice in current offerings. The development comes a month after the Global Alliance for Responsible Media (GARM) was disbanded by the World Federation of Advertisers. GARM helped brands assess the brand safety and suitability of their media buys but was sued by Elon Musk's X, which claimed the nonprofit illegally organized a boycott on X that cost the platform billions of dollars in ad revenue. Dentsu's new group didn't explicitly say its formation was a response to GARM's demise.

August Update from IAB Shows Ad Spend & Opportunities For Growth In 2024 - The 2024 ad spend picture is looking rosier, according to the IAB. The trade group updated its November 2023 study of buy-side investment decision-makers and raised its 2024 forecast to 11.8% growth for the year, up from 9.5% previously. Political advertising and the Summer Olympics have driven an acceleration in ad spend, lifting revenues for nearly all channels, even linear TV. Retail media ad spend is now expected to increase by 25.1% this year—reaching one-fifth of all 2024 ad spend—while connected TV is expected to surge by 18.4%. These findings suggest optimism for the industry as we head toward the all-important Q4.

Other Notable Headlines
(that you should know about too) 🤓 

Google will automatically opt new advertisers out of controversial parked domains 🔒- Parked domains are typically “for sale” website URLs that show ads, and are part of the Google Search Partners program.

Location App Life360 Is Growing a $10 Million Ad Business 🔒- Life360's new direct ad sales business has signed on Uber as one of its first major advertisers. Life360 is a family location safety app.

Aditude acquires Hashtag Labs 🔒- Both companies specialize in publisher monetization. In its first funding round last year, Aditude raised $15M Series A to pursue acquisitions that would help it grow quickly.

Automakers are getting back into advertising’s biggest arena: NFL -  After a slowdown the past few years, Toyota, Hyundai, and Ford are expected to pony up for NFL advertising.

Advertiser exodus from X gathers pace with 26% ‘planning to cut spending’ - Ad revenue on the platform is expected to drop from $4.46B in 2021 to $1.9B this year due to growing concerns about brand safety and misinformation.

Industry vet Angela Zepeda to join X as first global head of marketing since Musk takeover - Zepeda most recently served as CMO at Hyundai. Good luck, Angela!

That’s It For This Week 👋

The U of Digital Weekly Newsletter is intended for subscribers, but occasional forwarding is okay!

To subscribe visit Uof.Digital/Newsletters or contact us directly for group subscriptions.

And remember, U of Digital helps teams drive better outcomes through structured education on critical topics like programmatic, privacy / identity, CTV, commerce media, AI, and more. Interested in learning more about how we can supercharge your team?