U of Digital Newsletter - 11/6/24 (free)

October 31st-November 5th

Below is a roundup of last week’s notable industry news, with summaries and our opinions. More Q3 earnings, including Meta, and a lightning round of other headlines…

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Q3 Earnings 📈

Meta (🤷‍♂️): Revenue was up 19% to $40.59B, beating estimates. Ad revenue was up 18.7% to $39.9B. User growth, up 5%, missed expectations, and rising infrastructure costs related to AI and the metaverse spooked investors. Shares fell 2%.

Amazon (👍): Revenue was up 11% to $158.9B, beating estimates. Advertising revenue was up 19% to $14.3B. Amazon's cloud business growth slowed to 19%, reaching $27.5B and missing estimates. Capital expenditures were up 81% due to AI. Shares rose 7%.

Microsoft (👎) Revenue was up 16% to $65.59B, beating estimates. Azure revenue was up 33%, driven by AI services. Search and news ad revenue was up 18%. But weaker-than-expected guidance for the current quarter sent shares 6% lower on Thursday, its worst day in two years.

Roku (👎): Revenue was up 16% to $1.062B, beating estimates and marking the first time the streaming platform broke the $1B mark for quarterly revenue. Household users were up 13% to 85.5M. However, stock-based compensation continues to offset profits and average revenue per user has stagnated. Shares fell 15%.

Criteo 🔒 (👎): Revenue was down 2% to $459M, missing estimates. Retail media was a bright spot, but its ad retargeting business has flat-lined. The company slightly lowered its full-year guidance, warning that the election and a short holiday season would hurt its bottom line. Shares fell by double digits.

Apple (👎): Revenue was up 6% to a record $94.9B, beating estimates. Its iPhone sales rebounded, while its Services unit, which includes advertising, was up nearly 13%, missing estimates. Net income took a hit due to a one-time charge related to a tax decision in Europe. Shares fell 2%.

Fox (👍): Revenue was up 11% to $3.56B, beating estimates. Ad revenue was up 11% to $1.3B, driven by record political advertising. Profits doubled. Tubi is expected to top $1B in revenue this year. Fox has already sold out 2025 Super Bowl inventory. Shares rose nearly 5%.

New York Times (👎): Revenue was up 7% to $640.2M, slightly missing estimates. The publisher's total subscribers topped 11M for the first time, although digital subscriber growth slowed. Digital ad sales were up 8.8%, its strongest growth since 2022. Shares fell 8%.

Comcast (👍): Revenue was up 6.5% to $32B, beating estimates. Peacock paid subscribers were up 29% to 36M, driven by the Paris Olympics, which also increased revenue by 82% to $1.5B. The company said it could spin off its cable business. Share rose 6%.

Opinion: Nearly all companies reporting earnings this week beat Wall Street's estimates, and many had double-digit quarterly growth. But forward-looking guidance failed to match Wall Street expectations for several companies, dragging down their stock prices. AI is driving a surge in cloud computing revenue for companies like Amazon, Microsoft, and Google, but it is also forcing significant capital expenditures. So, in summary, things are going well but Wall Street is skittish about what’s coming. Next week will be big, with 19 earnings reports(!). Stay tuned…

Other Notable Headlines ✍️

Google And The DOJ Recap Their Cases In The Countdown To Closing Arguments - The US Justice Department and Google filed their updated findings of fact in Google's landmark ad tech antitrust case. The case wrapped up in late September, lasting only three weeks. The revised materials will help the judge decide if Google is indeed a monopolist in digital advertising. (It’s already been deemed a monopolist in search.) The new docs—totalling more than 1,000 pages—summarize the arguments for each side and don't reveal any new information. The DOJ highlighted Google's inability to call a single live witness who wasn't on its payroll or who had used its ad tech tools. Another damning tidbit: Google provided "Communicate with Care" training that informed employees that their ad tech-related communications would likely be handed over to the government. Closing arguments begin on November 25 and a ruling is expected in early 2025. A similar but separate antitrust case filed by a group of states led by Texas is scheduled to start in early 2025.

Samba TV Acquires Semasio To Beef Up Its Contextual CTV Targeting - Samba will integrate its TV data into Semasio's audience data and contextual targeting platform. This is the second AI-related acquisition for Samba, which wants to accelerate its efforts to use AI to analyze video content for contextual targeting. Semasio's semantic analysis, based on analyzing 2.5B web pages monthly, was a big draw. Terms of the deal weren't announced, but Semasio has raised $80M in funding since its founding in in 2010; its annual revenue clocks in at around $20M. Samba plans to leverage Semasio's platform as the access point for its data, which is used by ad tech platforms such as Acxiom and The Trade Desk. 

Evertune is building marketing analytics tools for LLMs. Check out the pitch deck it used to launch from stealth with $4 million in seed funding from Eniac. 🔒- Three Trade Desk veterans have just launched a brand analytics tool that can tell companies what large language models (LLMs) say about their brand or product and how they compare to competitors. The tool is meant to help brands gain an advantage at a time when consumers are increasingly using LLMs like ChatGPT as they shop, rather than using traditional search engines to  research products. Evertune can be used with all the big LLMs in the market, including OpenAI's ChatGPT, Google's Gemini, Meta's Llama, Anthropic's Claude, and Perplexity. And just like companies can try to improve their SEO rankings, Evertune can also help brands improve their standing with LLMs, like a retail brand recently did when it used its employee handbooks to train an LLM. 

Nielsen gets MRC approval to integrate first-party streaming data into ratings 🔒- The MRC has given Nielsen the thumbs-up for incorporating networks’ first-party streaming data into its panel as part of a renewed accreditation. Nielsen did this last year with Amazon. Integrating Amazon's first-party data with its panel data was a bit controversial, partly because Amazon's data based on users logged into its own servers typically measured bigger audiences than Nielsen's panel data. The approval will immediately impact currency measurement of Amazon Prime’s “Thursday Night Football.” But now that Nielsen competitors VideoAmp, iSpot.tv, and Comscore also use networks' first-party streaming data in their measurement, but aren’t MRC accredited yet, though Comscore is in the process. In a recent study, 49% of agency and marketer respondents said alternative currencies were just as effective as Nielsen, while 36% said they were more effective.

Integral Ad Science Is Raising the Prices of Brand Safety Solutions for Buyers 🔒- IAS is raising its CPMs for its various services by one to three cents, effective Nov. 1, according to advertisers. Yahoo DSP customers received news of the price hikes through an in-platform notification. The news comes as the brand safety vendor explores a sale, which pushed shares nearly 12% higher. But the company has also weathered some negative headlines, including research from Adalytics finding that brand safety tech failed to prevent some brands' ads from appearing next to unsavory content. As a result, the US Department of Justice and the Naval Criminal Investigative Service are now sniffing around to determine effectiveness of the tools and potential conflicts of interest. “With all the press they gotten, it’s hard to justify asking for a price increase,” said one source. Ouch.

How Six Brands Changed Strategy to Ride Out the Political Ad Surge🔒- With political ad spending expected to top $12B in the US, some brands are priced out and going dark. Advertising in swing states is a no-go for some advertisers like personal health benefits startup Venteur, which can't stomach the high prices and are afraid of getting drowned out or caught in controversy. Ad prices for Facebook and Instagram doubled or tripled in the last week, sending some brands like baby product maker Lalo to Amazon and TikTok. Others like connected rowing machine company Hydrow are pursuing channels that haven't seen the big price swings like podcasts, affiliate marketing, and fitness influencers, and it will also lean into the so-called “Q5” period between Christmas and mid-January, when the digital ad market will be cheaper and less competitive. Finnish health-tracking wearable Oura Ring, however, is taking a "If you can't beat them, join them" approach by partnering with CNN on election day and sponsoring the network's Magic Wall, its interactive digital display of election results.

Google launches curation service in its ad manager for agencies to find deals 🔒- Google is getting in on the curation trend with a new product in Google Ad Manager that will package publisher inventory and data into deals that help advertisers meet their campaign goals. Curation has shifted from DSPs to SSPs as signal loss increases and advertisers try to avoid made-for-advertising inventory. Audigent, Integral Ad Science, LiveRamp, Lotame, Multilocal, Permutive, PrimeAudience, and Scope3 will offer curated deals within Google Ads Manager by packaging programmatic inventory with their data. Publishers will be able to decide if they want their inventory to be part of these curated deals and can choose their partners within Google Ad Manager. Google won't charge agencies a curation fee and agencies will be able to coordinate their own deals.

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