In this week’s Week in Review: Netflix reports on ad growth, Sony mulls a bid for Paramount, and Axel Springer’s CEO explains why he no longer fears Google: it’s already won.
Top Stories
Netflix’s Ad Tier Grew by Two Thirds in Q1, but Scale Remains an Issue
Netflix said its ad membership grew by 65 percent quarter-on-quarter in Q1 this year, following two quarters of similarly high growth, as it continues to scale its ad offering. And 40 percent of new subscribers signed up for the ad-supported tier, in markets where that tier is available. Netflix didn’t give a specific number for how many users are now signed up to Netflix with ads, but given it reported 23 million monthly active users in January, a 65 percent increase would have been a considerable jump.
Nonetheless, Netflix executives said that scaling the amount of inventory available is its major priority, and its advertisers’ number one request. Inventory volume doesn’t just come down to number of subscribers – how much content these subscribers watch is also key, especially in streaming environments with lower ad loads.
CFO Spence Neumann also said that the while ad inventory has been scaling, monetisation of ad inventory hasn’t been keeping pace – which has brought down the average revenue per user on the ad supported tier. Neumann and other Netflix executives however said that as they roll out new features for advertisers, including measurement capabilities, the aim is for revenue generated by ad-supported subscriptions to be roughly equal to that of ad-free subscriptions.
Sony and Apollo Line Up Paramount Bid
Sony has reportedly entered talks with investment firm Apollo Global Management over a joint bid for Paramount, according to the New York Times. Speculation has been rife over Paramount’s future – previous rumours of a merger with Warner Bros. Discovery have died down, but Skydance Media has been reported recently to be close to sealing a merger.
Should Sony and Apollo follow through with a bid and be successful, Paramount would sit as a media brand within Sony according to the reports. Paramount would add a substantial amount of IP to Sony’s own portfolio, while also bringing a number of distribution channels. This would include streaming service Paramount+.
Sony has so far avoided launching its own streaming service, instead choosing to license its content to third parties (though it has started running FAST channels in some markets). Whether Sony would want to take on Paramount+ as a sole distribution point for its own IP or not remains to be seen.
“Don’t Fear Google, It’s Already Won” says Axel Springer CEO
Ten years ago Axel Springer CEO Mathias Döpfner wrote an open letter to Google’s CEO at the time Eric Schmidt, outlining why he feared the search giant and its potential to displace traditional media companies. This week he published a follow up in German newspaper FAZ stating that publishers no longer need to fear Google since the company has already “won across the board”.
While he said the zeitgeist has changed and anti-Google sentiment has increased from politicians and the public, Döpfner said that Google’s economic reality doesn’t reflect this new mood.
“On closer inspection, everything turned out to be much worse than feared at the time,” he said. “What Harvard professor Shoshana Zuboff calls ‘surveillance capitalism’ has largely taken hold. With a market capitalisation of almost $2 trillion, Google (or Alphabet) has largely absorbed the business model and therefore the sales of the publishers – and almost the entire ‘creative industries’. Competition in digital journalism is correspondingly thin and, with a few exceptions, unattractive as a business model.”
Döpfner did point to one cause for optimism: AI (which Axel Springer has openly embraced). While Google is one of the major players in AI too, Döpfner said politicians and regulators will move much more quickly against AI than they have previously against tech related issues, since AI has wider impacts on power and democracy. As a result, he believes they’ll move more quickly to ensure a fairer playing field.
The Week in Tech
Yahoo Advertising Launches Identity Solutions for CTV
Yahoo Advertising announced the launch of Yahoo Identity Solutions within CTV environments, such as Paramount, Tubi, NBCUniversal and FreeWheel. The identity solutions include Yahoo ConnectID and Next-Gen Solutions, enabling advertisers using the Yahoo DSP to target and measure the performance of their CTV campaigns. “As CTV investments increase, identity signals are declining, impacting targeting and performance across channels, including CTV,” said Elizabeth Herbst-Brady, Chief Revenue Officer at Yahoo. “Yahoo is committed to helping advertisers evolve with the landscape, safeguarding addressability and measurement for our partners while supporting consumer privacy. Today, we’re excited to introduce Yahoo Identity Solutions to CTV environments, furthering its momentum across the industry.”
EU Privacy Watchdog Speaks Out Against Meta’s “Consent or Pay” Model
The EU privacy watchdog this week called on Meta to allow users to use its apps for free without targeted advertising. The social media giant recently launched paid, ad-free versions of Facebook and Instagram as a means to comply with EU legislation that restricts tech companies’ use of personal data for advertising purposes. But the “consent or pay” model has sparked criticism from privacy bodies who warn that more tech companies could follow suit.
Impact Media Launches with Attention-Based Guarantee Model
Impact Media, a new programmatic ad buying platform enabling advertisers to only pay for ads which reach certain minimum thresholds for attention, announced its launch today. CEO Wayne Blodwell said the company aims to bridge the gap between ad spending and actual ad attention, focussing on brands and independent agencies. Impact Media’s ‘Guaranteed Attention Measurement Suite’ at launch will bill clients only when a display ad is seen for one second or a video ad is seen for three seconds. The company plans to cover CTV and audio inventory in the future, and says billing points will vary depending on brands’ individual needs. Read more on VideoWeek.
Goldbach Partners with Operative for Advanced Ad Management Solution
Operative this week announced a partnership with Swiss sales house Goldbach Media which will see Goldbach use Operative’s AOS to support their entire pitch-to-pay workflow for both linear and digital inventory. In addition to the ability to optimise inventory and yield on client campaigns, Goldbach will use AOS to manage a broad variety of ad products, including pause and fast-forward ads delivered via Goldbach’s “Replay Ads” platform, according to the two companies.
Virgin Media Partners with PubMatic to Scale FAST Advertising in the UK
Programmatic tech business PubMatic this week announced a partnership with Virgin Media to help monetise inventory on its growing free ad-supported streaming TV (FAST) channels. Virgin Media currently runs 15 FAST channels in the UK, with more planned to launch this year. “This is an important step forward for Virgin Media as we continue to expand and evolve our TV services and the commercialisation of our FAST offering,” said David Bouchier, chief TV and entertainment officer at Virgin Media O2. “Employing PubMatic’s advertising solutions, we’re now able to deliver enhanced advertising experiences for our customers, while maximising engagement and value for advertisers.”
Pixability and Cedara Team Up to Reduce YouTube Campaign Emissions
Pixability, a context and brand suitability specialist, has partnered with Cedara, a carbon intelligence platform, with the aim of reducing carbon emissions from YouTube ad campaigns. Cedara will integrate its carbon measurement and optimisation tools into Pixability’s AI-driven contextual targeting solutions. “As we embark on this pivotal partnership with Pixability, we are proud to align our efforts with a company that shares our commitment to environmental sustainability”, said Eric Shih, Chief Operating Officer at Cedara.
Adobe Adds AI Video Tools, Explores OpenAI Partnership
Adobe is looking to add third-party generative AI tools, such as OpenAI’s Sora, into its video editing software, the company announced on Monday. The integration would allow tools from OpenAI, Runway and Pika Labs to generate and use video within Premiere Pro. Adobe will also use its own AI model, Firefly, to let users fill parts of a scene with AI-generated objects or remove distractions from a video. Firefly is already deployed in Photoshop for still image editing.
YouTube Ups Defences Against Ad Blockers
YouTube is upping its defences against ad blockers, claiming that mobile users accessing videos through a third-party ad blocking app may encounter buffering issues or an error message. Last year the company began disabling videos where ad blocking extensions were detected, now effectively extending the policy to mobile. The move is partially designed to push users onto YouTube’s ad-free Premium subscription.
IAS Expands TikTok Brand Safety Measurement
Media verification and measurement platform Integral Ad Science this week announced an expansion to its brand safety measurement on TikTok, introducing its tools Category Exclusion and Vertical Sensitivity Segments to the platform. Brand safety and suitability measurement is also being expanded into 11 new countries: Bangladesh, Cambodia, Costa Rica, Denmark, Dominican Republic, Finland, Greece, Guatemala, Hungary, Norway, and Panama.
Equativ Adds News Tools to its Curation Product
End-to-end ad tech business Equativ this week announced a number of additions to Equativ Buyer Connect, its self-serve curation platform. Equativ says the platform now offers expanded addressability options, facilitating more direct, efficient, and transparent transactions for both buyers and sellers. The company also says it’s simplified creation of data-enriched deals across multiple media owners. “The addition of further curation capabilities to the EBC platform helps drive our goal to streamline supply paths by facilitating clear, straightforward, and flexible deal creation, as well as smart data-led targeting,” said Parag Vohra, Equativ’s CRO. “In the near future, the addition of immediate campaign activation capabilities will see Equativ become the only end-to-end curation platform.”
The Week in TV
MFE Sees Ad Growth in Italy and Spain
Following a tough year for European broadcasters, in which ad revenues fell for many of the major players in a tough ad market, the early signs for 2024 are more promising. Following ProSieben’s announcement earlier this week that it’s seen a recovery in TV advertising revenues (see below), MFE announced it has seen six percent year-on-year ad revenue growth in the first quarter of 2021. In Italy, its largest market, ad revenues were up by five percent while in Spain, growth hit eight percent. Read more on VideoWeek.
Strong Performance at ProSieben Raises the Stakes in MFE Battle
ProSiebenSat.1 shareholders are gearing up for a pivotal vote at its annual general meeting (AGM) at the end of the month, as its main investor MFE-MediaForEurope seeks greater control of the German broadcaster. But after a difficult financial year for ProSieben, the company has reported a positive start to 2024, potentially strengthening its hand ahead in negotitations with MFE. In Q1 2024, ProSieben generated €867 million in revenues, up 6 percent YoY. The results mark a return to growth in TV revenues, coming off the back of 2023 when group revenues were down 7 percent across the full year. The TV business started to show signs of recovery towards the end of last year, when the weak TV ad market was “partially offset” by digital ad revenues. Read more on VideoWeek.
Amazon Brings Live Shoppable Channel to Prime and Freevee
Amazon is launching Amazon Live, its shoppable livestream service, to its streaming products Prime Video and Freevee in the US. Amazon Live functions like a traditional shopping channel, but with interactive features allowing users to browse and buy products directly from the live stream. Amazon says Amazon Live, which was already available as a standalone app in the US and India, has attracted more than one billion customers since it launched in 2023.
Viaplay Launches on Prime Video Channels in US
Nordic streamer Viaplay has launched on Prime Video Channels, Amazon’s service which enables customers to subscribe and view third-party TV channels via Amazon, in the US. Viaplay previously ran a dedicated streaming service in America, but shuttered this app as part of a wider rolling back of its international expansion. However products like Prime Video Channels give broadcasters a way to maintain a subscription presence in international markets without the need to maintain and market a standalone product.
Canal+ Increases its Holding of Multichoice
French telco Canal+ this week increased its shareholding in South African telecoms provider Multichoice to over 40 percent, as Canal+ gears up to take over the business. The two agreed a deal last week which saw Canal+ make a mandatory offer for Multichoice (necessitated by the number of shares it owns in the company), which Multichoice is now considering. Canal+ s allowed to keep buying shares under the terms of the deal, but must increase its buyout offer if it pays above the buyout figure for any shares it acquires.
Disney+ Acquires European Football Rights for Denmark and Sweden
Disney+ has begun adding sports rights to its offering in Europe, acquiring streaming rights for UEFA’s Europa League and Europa Conference, the second and third-tier European club competitions, in Denmark and Sweden. The rights, which cover the next three seasons, mark Disney+’s first foray into sports streaming in Europe.
TV Ads Have Strong Search Impact, finds Ad Alliance
Nearly a quarter of all brand web searches could be traced back to advertising, in a recent study conducted by RTL Data and OMG Germany on behalf of RTL Detuschland’s Ad Alliance, and over half of these ad-initiated searches were sparked by TV Ads. Ad Alliance says the study shows that TV has a strong impact both on short-term performance metrics as well as long-term branding. “The forces behind Google Search are an exciting approach for us to investigate, since in practice key figures such as Google search volume or website views are increasingly being used as parameters for advertising effectiveness,” said Lars-Eric Mann, CMO of Ad Alliance.
The Week for Publishers
Google Trials Blocking News Links in California
Google this week began blocking links to Californian news sites in its search engine for a small number of users, in response to a proposed piece of legislation which would require Google to pay publishers to link to their sites. The Californian Journalism Preservation Act is similar to other pieces of legislation around the world which require tech companies to negotiate payments with publishers in order to use their content, though the specifics often differ. Google described the proposed Californian law as a “link tax”, and said it is also pausing new partnerships with news publishers in California through its Google News Showcase and Google News Initiative products.
The Daily Mail Closes In on The Sun as UK News Publisher with Biggest Reach
The Sun is still the biggest UK newspaper in terms of reach, but The Daily Mail is close behind, according to the latest data from Pamco as reported by Press Gazette. The Sun’s total monthly reach across print and digital is 26.5 million, just ahead of the Mail’s 26.3 million, according to Pamco. But both publishers have seen total reach fall in the past six months, hit by falling traffic referrals from social platforms.
South Africa’s Daily Maverick Stages Shutdown to Warn of Crisis in Journalism
South African news website The Daily Maverick shut down for the day on Monday, warning its readers of a crisis in journalism as market conditions make news journalism unsustainable. The website runs a paid membership programme which it uses to keep its journalism free, and has nearly 30,000 subscribers. But the website said that given falling ad revenues and philanthropic funding, its current income isn’t sufficient to sustain its reporting.
WELT Launches AI Digital Assistant for Subscribers
German newspaper WELT, owned by Axel Springer, has launched a new AI-based digital assistant for subscribers called WELTgo!, which it says can be used to “delve into journalistic topics interactively and individually”, as well as for everyday tasks like writing emails. WELTgo! is built on Axel Springer’s own AI Hey_, which itself combined several different GPT models. “WELTgo! offers a completely new way of experiencing journalism at WELT,” said Ulf Poschardt, editor-in-chief of WELT Group. “Today’s version is the most rudimentary version that will ever be. From now on, WELTgo! will improve day by day: We are learning together with our users and will continue to adapt the service to their needs.”
UK Gender Pay Gap in Media Industry Narrows Slightly to 11 Percent
The UK’s gender pay gap in the media industry has decreased slightly, but still sits at 11 percent, according to data provided by media organisations to the government and analysed by Press Gazette. This is a very small improvement from last year’s 12 percent. There has been more progress in women being employed in top roles across the industry: three quarters of those required to report their gender pay data to the government increased the proportion of women in their top pay quarter.
The Week For Brands & Agencies
Omnicom Posts Four Percent Q1 Growth
American agency holding group Omnicom has reported its Q1 financial results, posting organic growth of four percent, with revenues reaching $3.6 billion. Flywheel Digital, a digital commerce platform bought by Omnicom last year, was a significant contributor to this growth, according to Omnicom executives. And Flywheel was the major topic of discussion on Omnicom’s earnings call following the results, with Omnicom positioning Flywheel as central to its future prospects. Flywheel was mentioned 64 times on the call, far more than the agency topic du jour generative AI, which came up 13 times. Read more on VideoWeek.
UK Advertisers’ Budgets Continue to Grow, finds IPA Bellwether
Just under a quarter of UK advertisers said their marketing budgets were revised upwards in Q1 this year, according to the latest IPA Bellwether Report, compared with 15 percent which reported their marketing budgets contracted. This net balance of +9.4 percent was a decrease from the last report, but maintains a run of net positives since the second quarter of 2021. However, given ongoing inflation, the IPA’s forecast for the year is that ad spend will decrease by 0.5 percent in real terms – a slight improvement on its prediction last quarter of -0.7 percent.
Nike Plans Biggest Ever Ad Spend on Olympics
Nike is planning to spend more on advertising around this year’s Summer Olympics than any previous Games, Reuters reported this week. Nike’s president of consumer, product and brand Heidi O’Neill said in an interview that this summer will see “the most investment and the biggest moment for Nike in years”. Marketing is currently Nike’s number one investment priority according to O’Neill, as the sportswear brand seeks to boost lagging sales, and the company’s current strategy is to focus on “fewer, bigger” marketing campaigns.
Video Made Up Nearly a Quarter of US Digital Ad Spend Last Year
Total digital ad spend in the US grew 7.3 percent in 2023, reaching $225 billion, according to the IAB and PwC’s latest Internet Advertising Revenue Report. And video is a significant driver of this growth, having had the fastest growth rate in recent years, powered by the influx of CTV inventory. Video revenues grew by 10.6 percent in 2023, reaching $52.1 billion. This means video now accounts for 23.2 percent of all digital ad revenues in the US, and it’s expected to continue growing at a high rate in the coming years, according to the report. Read more on VideoWeek.
WFA Charts Slight Fall in Media Inflation
Global media price inflation is expected to fall from 3.2 percent in 2023 to 3.1 percent this year, according to the World Federation of Advertisers’ (WFA) latest Outlook report. But this trend isn’t expected to be spread evenly across media types. The WFA’s data, drawn from media price forecasts from media agency groups and auditors, predicts TV inflation to cool from 6.6 percent last year to 5.6 percent this year. Meanwhile in the UK, TV prices are expected to rise by an average of seven percent this year for Adults and ABC1 Adults, following deflation in 2023.
Political Ads May Arrive on UK (C)TV
The UK doesn’t allow paid political ads to air on TV, but broadcaster ITV is considering running paid ads on its ITVX streaming platform thanks to a legal loophole, The Guardian reported this week. The law which bans political parties from buying ads on TV doesn’t cover internet-delivered television. And while broadcasters have so far abstained from running political ads, ITV is considering changing course, especially given that refusing to do so will likely see that money funnelled to tech-owned video platforms.
Decathlon Picks Fifty as UK Media Agency
Sports retailer Decathlon has chosen independent agency Fifty as its UK media agency, following a non-competitive pitch process. Decathlon’s media duties in the UK were previously held by Goodstuff. “[Fifty’s] capabilities perfectly align with our growth goals, with the AI platform showcasing how we can adapt to market trends quickly and more accurately,” said Decathlon UK’s head of performance marketing Oliver Simpson.
IPA Offers Agencies Free ABC Membership
The UK’s Institute of Practitioners in Advertising (IPA) has partnered with joint industry commission ABC to give its members free ABC membership. This will give IPA agencies access to ABC’s audited data covering print, digital, and event advertising. “Knowing that ABC is a JIC run for and by the industry, providing trusted independent data to industry-agreed standards makes ABC membership a must-have for any IPA agency,” said Belinda Beeftink, research director at the IPA.
Hires of the Week
Warner Bros. Discovery Hires Dave Porter in Data Role
Warner Bros. Discovery announced it has hired Dave Porter as head of ad sales data, research, and insights. Porter will work to drive sales across channels with a focus on data driven products. He was previously CEO of Canoe Ventures.
This Week on VideoWeek
Are Publishers and Buyers Ready for the Demise of Third-Party Cookies?
Programmatic is No Longer on TV’s Periphery
“If They Ban TikTok, Something Else Will Pop Up” – Q&A with team5pm’s Jelmer Wind
Cookie Deprecation Could Have Implications for CTV Measurement
Strong Performance at ProSieben Raises the Stakes in MFE Battle
Video Made Up Nearly a Quarter of US Digital Ad Spend Last Year
Samsung Creates European Services Division Under Newly Promoted SVP Alex Hole
Flywheel Takes Centre Stage in Omnicom’s Growth Plans
With Marketing Budgets Under Pressure, CTV Measurement is More Important Than Ever
Live Rights Are the Goal for FC Barçelona’s New Streaming Service
More Promising Signs for European TV as MFE Sees Ad Growth in Italy and Spain
Impact Media Launches with Attention-Based Guarantee Model
Ad of the Week
Dove, The Code
