U of Digital Newsletter - 10/9/24 (premium)

October 2nd-October 8th // Estimated Reading Time: 15 minutes

Below is a roundup of last week’s notable industry news, with summaries and our opinions. We have some signficant Google updates. But first: another major industry acquisition we must break down!

Check out the recording + deck from U of Digital’s LIVE LEARNING EVENT: TikTok Ban? Google Breakup? Where Will Ad Budgets Go?

In this session, we covered:

• Just how much money could be up for grabs?

• How should advertisers and agencies think strategically about re-allocating their ad dollars?

• If a bunch of money goes up for grabs, which platforms are likely to be the biggest winners? How can you position your platform to be a winner?

With special guests Brian Wieser, CFA and Olivia Morley of Madison and Wall. CLICK HERE TO ACCESS.

Top Stories 👁️ 

Zeta Global to Buy Marketing Tech Company LiveIntent in $250M Deal
Source: The Wall Street Journal
October 8th, 2024

Summary: Marketing cloud Zeta Global adds to its data arsenal with the deal for LiveIntent, which was historically an email marketing platform that expanded to offer a wider range of services, including helping publishers resell ads in their email newsletters and leverage an ID solution to improve ad monetization. Zeta will integrate LiveIntent's identity graph, which is based on 235M hashed email addresses, into the Zeta Data Cloud to expand its identity resolution capabilities. The acquisition also helps Zeta break into publisher monetization. LiveIntent's publisher network includes more than 2,000 premium media companies, including eight of the 10 largest publishers ranked by Comscore. 

Zeta plans to integrate LiveIntent's tech into its marketing platform within six months. The deal consists of $77.5M in cash and $172.5M in common stock at closing sometime in Q4. But there is also an opportunity for a earn-out of 50% cash, 50% stock if LiveIntent hits its margin expansion targets from 2025-2027.

Zeta, a legacy CRM company which bolted on the remains of the Sizmek DSP and DMP (formerly RocketFuel), among other acquisitions, went public in 2021 at a $1.7B valuation. 

Deal Grades:
Zeta Global: B
LiveIntent: A-

Opinion: In the face of cookie deprecation and more broadly, signal loss, first-party data is the name of the game! Zeta already has a ton of it from advertisers, who use Zeta’s CRM technology to house their first-party data. Now it brings in a treasure trove of first-party data from publishers as well, in addition to publisher data it already accesses through its social commenting platform, Disqus. 

There are walled gardens with their own, unique data. Let’s put them aside for a moment. Given Zeta is not a publisher and is an independent tech company, let’s consider their strategy versus other indie tech companies from a 30,000 foot perspective. 

There are indie ad tech companies that onboard data from publishers and advertisers to facilitate programmatic transactions (e.g. Magnite, The Trade Desk). These companies don’t have any unique access to data.

There are other indie tech companies that have “deeper” data relationships with advertisers (e.g., Salesforce, Epsilon) AND / OR publishers (e.g., LiveRamp, Quantcast), which gives them some level of unique access to data, and SOME of them also have activation platforms.

With this acquisition, Zeta will have “deeper” data relationships with BOTH sides (CRM for advertisers, newsletter monetization and identity for publishers), PLUS an activation platform (Zeta DSP), which will put it in quite a unique position. Check out our KnowledgeScape^TM below, which depicts how Zeta + LiveIntent is placed:

It paid a pretty penny for LiveIntent, but Zeta now has the potential to offer a future-proof, data-rich platform that can generate tons of value for the industry from a planning, activation, identity, measurement, analytics, and monetization standpoint. 

We’ll see if they can realize their full potential!

Google’s AI search summaries officially have ads
Source: The Verge
October 3rd, 2024

Summary: Google's AI-generated summaries appearing at the top of search results will now have ads. Google began testing ads in AI Overviews in May. The ads, which appear below a "sponsored" header, suggest products when the user's search query has a "commercial angle.” So, if you search for how to remove a grass stain from your clothing, which Google demonstrated for the press before its announcement, you'll probably see recommendations for products and services that would be useful for treating it. Google has also made some tweaks to how AI Overviews are formatted, including making cited web pages more prominent, and will start using AI to organize search results based on the query and user account history.

So far, Google is only rolling out the AI Overview ads for its mobile app users in the US. Google doesn't plan to give ad revenue to the publishers 🔒whose content is included in the AI Overviews. But the move could appease some Alphabet investors who have questioned if generative AI, which has been expensive to develop, might siphon revenue from Google's search business, which remains the company's bread and butter.

Google’s dominance in search advertising is slipping. Rivals such as Amazon, TikTok, and others are eating into Google's share of the market. Amazon, for example, is expected to take 22.3% of the search advertising market in 2024, thanks to its 17.6% growth. In comparison, Google is projected to have 50.5% of the market, with 7.6% growth.

Opinion: Out of all the prominent AI companies, Google has the best shot at AI monetization, because Google controls more ad demand than any other company in the world.

Of course, Google has to get the user experience right (which it doesn’t always do), so that it doesn’t turn consumers off and lose them to other AI tools—especially since other AI tools (aside from Perplexity) are not introducing ads quite yet. 

Early industry reaction is that this is terrible for publishers, since Google will be keeping users on Google.com instead of pushing them out to other websites, where publishers can monetize via ads.

Here our breakdown of what’s happening and where we might be headed:

1. Google is doing this for two reasons:

   1. It makes more ad revenue from ad space on its own site vs. getting a cut of ad revenue from publishers who use Google’s ad monetization tools

   2. It has to retain search dominance. If it loses too much search market share (to AI tools and other walled gardens), it will be the beginning of the end of Google.

2. This is, indeed, terrible for publishers. It’s yet another headwind to deal with in a major windstorm of headwinds (e.g., signal loss, dominance of walled gardens, emergence of AI, etc.) that publishers are facing.

3. If publishers and content creators continue to die off because they can’t monetize, then eventually the AI won’t have any useful answers to give, and Google’s two reasons for doing this will be moot. 

4. Google knows #3 will take some time, and in the near term, Google cannot afford to lose search market share to other AI tools. They have to play the game, too. For them, it’s about survival.

The outcome of all of this is not pretty. At this point, it feels like only regulation, or some collective act by people in the name of the greater good, can prevent the web from becoming an infinite loop of vapid, AI-generated content blended with ads, which will further numb the creativity and cultural value of humanity.

Dystopia, here we come…

Other Notable Headlines ✍️

US Says It’s Weighing Google Breakup as Monopoly Case Remedy - Following the recent court ruling that found Google to be an online search and search advertising monopoly, The Department of Justice has suggested potential remedies that could fundamentally alter the tech giant's business and the industry overall. The proposed remedies include:

• Requiring Google to divest certain business segments

• Limiting the company's ability to leverage its various products (like Chrome, Android, and Play) to boost its search engine

• Granting website owners more autonomy with regards to Google's AI tools

• Enhancing transparency and control for advertisers using Google's ad platform

• Curtailing Google's investment activities in the search sector

The company intends to challenge the decision once the court finalizes its remedial actions, expected in late 2025.

Google must crack open Android for third-party stores, rules Epic judge - After ruling that the Google Play app store is a monopoly, the judge is ordering Google to open up its store to competitors for three years, beginning Nov. 1. Google lost the case, Epic v. Google, late last year, when a jury found that Google's various contracts and side deals with some game developers and smartphone makers hurt Epic Games. The maker of Fortnite, Epic has fought a multi-year battle against Google and Apple to create its app store and keep more of its in-app purchase revenue. Google will have to allow competing app stores within Google Play, give them access to Google Play's full catalog of apps, and stop requiring apps to use Google Play Billing. There are loads of other conditions Google must adhere to and will surely appeal, but it's a big win for Epic and other developers.

Home Depot Launches Self-Service Ads Platform, Orange Access 🔒- The home improvement brand has launched a self-service ad-buying tool called Orange Access to make it easier for its small and mid-sized suppliers to advertise on Orange Apron Media, its commerce media network. Advertisers can use Orange Access to plan, activate, and optimize their media campaigns and access its on-site, off-site, and in-store ad units. To launch Orange Access, Home Depot has partnered with Vantage (an orchestration platform), Pentaleap (an ad server, a publisher manager, and unifying API) and Kevel (an API-based retail media cloud solution) to help scale its processes and tech. For smaller suppliers who may only make a handful of products, gaining access to Home Depot's customer base could be huge: The brand has more than 200M customers and 3.5B annual website visits.

Amazon Shook Up the Streaming Ad Market in 2024. Will It Do It Again Next Year? - Months after turning on ads for all its Prime Video users and becoming the world's largest ad-supported subscription streaming service, Amazon scored $1.8B in upfront ad commitments. The retail behemoth disrupted streaming advertising, flooding the market with inventory, and driving down CPMs across various streaming services. Now the company is poised to shake things up even more in 2025 as it increases its ad load on Prime Video and wades deeper into live sports. However, the increased streaming inventory will also further fragment the landscape and exacerbate existing pain points, such as the overall lack of standardization. Streaming TV may be moving toward maturity, but these persistent challenges will prevent even more ad dollars flowing to the channel. 

Buyers Can Now Target High-Attention Inventory In The Trade Desk - Attention measurement vendor Adelaide will offer attention-based segments for pre-bid targeting to The Trade Desk's self-serve buyers. Using attention as a proxy for quality could help advertisers steer clear of inventory that manipulates viewability metrics by stuffing ads on pages. Attention has typically been used to help buyers measure post-campaign performance. But there has been a growing shift to using attention for targeting use cases. Buyers increasingly want to avoid targeting low-attention inventory, since it correlates to low-quality media that typically fails to move the needle on meeting marketing objectives.

Want to learn more about attention? Check out the recording from U of Digital’s Live Learning Event with Marc Guldimann, CEO of Adelaide: Attention Metrics Explained (Minus the BS).

TikTok Video For Open Web Publishers? Outbrain Built It. - The content recommendation company has introduced Moments, a new vertical video feed for publisher mobile sites. Moments will show at the bottom of articles to bring a social media-esque vertical video format to the open web—and out of walled gardens. This type of content is in demand: Time and The Arena Group are also bringing short-form vertical video 🔒 to their open web properties through a partnership with Webflix.Publishers like Axel Springer are testing Outbrain’s Moments by using their existing assets to drive audience engagement. So far, the results look promising, with early tests showing that nearly 40% of mobile users watched three or more Moments videos after reading an article, while 10% of readers watched more than 10 videos. Beside engagement, Moments viewers also had 56% higher brand recall in a study compared to those who were exposed to display ads. Moments offers a full-screen takeover format that will replace Outbrain's native content widget for publishers that use it on their mobile sites. With the Outbrain-Teads merger closing soon, timing is great for Outbrain to be getting traction on a new video offering.

 TikTok joins the AI-driven advertising pack to compete with Meta for ad dollars - Move over, Performance Max and Advantage+ 🔒— there's a new, aptly-named black box in town. TikTok has launched Smart+, its AI-powered ad-buying tool to automate the heavy lifting on creating, targeting, and optimizing ads running on the platform. However, TikTok gives advertisers the option of taking some control over their ad campaigns at key stages such as campaign management. In comparison, some tools like Google's Performance Max and Meta's Advantage+ force advertisers to give up control or insights in exchange for performance. TikTok's 2024 ad revenue is expected to hit $22.32B, a huge figure, but still a drop in the bucket compared to Meta's projected 2024 ad revenue of $154.16B. TikTok's momentum is under threat as it deals with significant regulatory headwinds and fights a US ban or forced sale. The company also got slapped with lawsuits from 14 attorneys general who claim the platform has “addicted” young people in the US and hurt their mental health.

Check out the recording from U of Digital’s Live Learning Event with Brian Weiser of Madison & Wall: TikTok Ban? Google Breakup? Where Will Ad Budgets Go?

Seriously though, they couldn’t come up with a better name than Smart+?

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

Meta faces data retention limits on its EU ad business after top court ruling - The EU told Meta that it can't continue to indefinitely leverage users' personal data for ad targeting. Meta needs to follow the data minimization principles outlined in the General Data Protection Regulation, which limit how long companies can keep people's personal information for ad targeting purposes.

Microsoft looks set to shutter its retail media business 🔒 - Sources say Microsoft is shutting down PromoteIQ and directing clients to Criteo.

Snapchat Debuts Ads In The Chat Tab - “Sponsored Snaps” will send an interactive vertical video Snap to Snapchatters in their chat inboxes.

Amazon Follows Google Into Visual Search To Strengthen Shopping - “Circle” lets users upload an image to Amazon Lens and draw a circle around the item they want to search for.

Meta Expands Gen AI Tools to Video Ads As Platform Competition Ramps Up🔒- Users spend 60% of their time watching video on Facebook and Instagram.

Commission sends requests for information to YouTube, Snapchat, and TikTok on recommender systems under the Digital Services Act - The EU is taking advantage of new legislation to rein in Big Tech.

LUMA's Q3 2024 Market Report - M&A deal activity through the first nine months of 2024 is up 51% compared to last year!

Dave Morgan Returns as Simulmedia CEO - The big dog is back at the helm of the company he founded 16 years ago. 

Instacart Is Selling More Ads on Its Smart Grocery Carts 🔒- Instacart's Caper Carts are getting new ad formats that are personalized using AI and loyalty program data.

Warner Bros. Discovery Ad Sales Chief Jon Steinlauf to Exit Company - Steinlauf's departure is a surprise after spending the last 32 years at Turner, Scripps, Discovery, and WBD.

Taboola Partners with Jounce Media to Verify Ad Inventory Is Free From Made for Advertising (MFA) Properties - Taboola will use Jounce's MFA-detection tech and data to guarantee that Taboola Select, its curated premium publisher network, is is MFA-free.

Unlocking Faster, Smarter Data Collaboration With LiveRamp’s Latest Platform Release - With the latest update to the LiveRamp Data Collaboration Platform, users will be able to spin up a first-party identity graph within hours.

Vizio renews Comscore deal despite Walmart acquisition—what it could mean for measurement 🔒- Vizio’s Inscape unit will continue to provide smart TV viewership data to Comscore. It could be a potential sign that Walmart will keep selling Vizio data after its acquisition closes. (The sale still needs regulatory approval.)

Roblox is starting to take programmatic advertising more seriously 🔒- Roblox is beefing up its ads team to support its growing programmatic ambitions. It also inked a new partnership with WPP.

WATCH & TAKE ACTION: Building Change, the Team Dayā Story - Team Dayā is an incredible organization run by ad tech vets that builds primary schools in impoverished areas around the world, so that more kids have the opportunity to access education. Check out this incredible documentary about their work: Building Change, the Team Dayā Story.

That’s It For This Week 👋

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