The anticipated economic storm gets the entire media industry bracing itself for (another) realignment with belt-tightening already occurring as clients cut budgets, buyers reduce forecasts and the trimming of headcounts follows suit.
Specifically, this poses questions over ad tech a much-hyped and widely misunderstood sector of the and the worthiness it creates for the industrys primary actors, especially as high-profile transparency investigations are underway.
Actually, some experts are asking if the marketplace is on the precipice of the bursting of another digital bubble?
Central banks, think tanks plus a variety of other forecasters cite chilling economic indicators pointing to an expected recession with some believing it’ll last longer when compared to a year. Predictably, protective measures include layoffs within an echo of the widespread cuts which occurred in 2020 because the Covid-19 pandemic took hold.
Actually, even the boom sectors of esports and gaming are beginning to have the pinch because the optimism surrounding everything digital subsides with some presaging that the contagion will spread to ad tech.
You can find great risks ahead however the amount of certainty with that you hear negative opinions are simply out of whack
Brian Wieser, global president, for business intelligence, GroupM
Within the last 18 months, a slew of such companies listed on the general public markets in a move that (presumably) should bring more clarity to the aforementioned question. And within the last two-week period the best names of the cohort have disclosed their earnings for the most recent quarterly period with executives there all putting their finest foot forward.
On face value, the numbers look good with the arrows pointing in the proper direction for the June quarter this season even though the stock price for each company in this sector is down considerably in comparison to their 2021 highs.
The Trade Desk reported revenues of $377 million, up 35% year on year, while Magnite recorded $123 million (ex-TAC*), up 23%, while Criteos revenue was $215 million (ex-TAC) a decline of 3% with most pinning this on challenges to its legacy retargeting business.
Elsewhere, PubMatic reported revenues of $63 million for the time, lots representing a 27% rise. Meanwhile LiveRamp an organization whose strategy depends on the acceptance of alternate identifiers to third-party cookies posted revenues of $142 million for the time, a 19% hike.
Narratives could be misleading
Talking to Digiday, Brian Wieser, global president, for business intelligence, GroupM, spoke of his belief that widely held narratives on the inevitability of a severe global recession run contra to key data points.
It really doesnt map to consensus expectations among economists among others, he said, noting how GroupM-parent WPP has raised its 2022 revenue guidance, plus a amount of its Madison Avenue peers.
To be clear, everything is relative, and everything isn’t sunshine and roses you can find great risks ahead however the amount of certainty with that you hear negative opinions expressed are simply out of whack.
For Wieser, there exists a conflation of deceleration and decline leading many to jump to conclusions that neglect to remember that digital rose exponentially following the initial shock of the Covid-19 pandemic.
Theres so many noisy elements of the pandemic which are so difficult to recognize, he added. For instance, e-commerce, as an over-all concept was growing at much too rapid a clip in accordance with what works out to possess been sustainable, he added.
Additionally, the generalized comments provided as an escape of year outlook by executives at Big Tech companies this is used as a proxy for all of those other market ensure it is difficult to divine how smaller digital players will fare in the months ahead.
Most public independent ad tech companies gave relatively positive guidance for rest-of-year earnings with the upcoming U.S. elections cited as a specific boon for all those with ambitions in the CTV space.
Albeit, leadership at both Magnite and PubMatic telegraphed their conservative outlook given the softening of market conditions in Europe where complications exacerbated by Russias invasion of Ukraine continue steadily to have widespread economic effects.
I simply dont think youre likely to visit a rabid appetite for cookie alternatives on the customer side.
Michael Barrett, CEO, Magnite
The long goodbye
Macroeconomic conditions aside, all companies in the digital media space are at the mercy of the whims of the internets major platforms policy decisions namely the sunsetting of traditional ad targeting tools such as for example third-party cookies or MAIDs.
Googles latest delay to cookie depreciation means many can make hay as the sun shines, a tactic which will only work with such a long time. Although speaking on the Magnite earnings call, CEO Michael Barrett spoke of some media buyers complicity such retrograde attitudes.
Provided that third-party cookies remain, its sort of the simple button, he said. I simply dont think youre likely to visit a rabid appetite [for alternatives] on the customer side provided that theres third-party cookies, and thats what theyre used to.
Meanwhile, Jeff Green, CEO of The Trade Desk, appeared to claim that allegations of monopolistic practices surrounding Googles ubiquitous ad stack continue steadily to capture public attention Bloomberg reported the Justice Department may sue Google the moment the following month earlier this week is really a tailwind for independent ad tech.
Walled gardens like Google are increasingly being downgraded in priority, he told equities analysts, explaining how such wariness the type of controlling media budgets means his company has the capacity to build more direct relationships with marketers. They will have run a marketplace with questionable integrity.
More scrutiny, but little change
The assertions created by The Trade Desks Green could be true, but less well-known companies in the ad tech sector must be skeptical of marketers concentrate on transparency, a tendency borne out by the Association of National Advertisers probe in to the practices of programmatic media buying.
Nick Manning, founder of Encyclomedia and former cofounder of media agency Manning Gottliebb OMD, pointed to the most recent ANA Procurement report which highlights that practices have changed little during the last decade.
That is despite digital growing to take into account nearly all marketers spend throughout that time, and programmatic, using its well-documented transparency issues,accounting for over fifty percent of digital media spend oftentimes.
In the event that you look at those players which have been in a position to manage, theyre either smart, nimble or in a position to evolve.
Nandi Gurprasad, YEARXERO, CEO
When things begin to get tough, which theyre getting to be, the thing to accomplish is cut right out wastage, Manning told Digiday. And the ANA is wanting to achieve that at an industry-wide level. However in many cases, you have marketers charging their partners to cut right out redundancies.
They still desire to spend ad dollars, however they want less of these to visit the supply chain, he said, adding that progressive advertisers are doing this but, oftentimes, the truth that media agencies earn so much from the supply chain, hardly any has changed.
For Nandi Gurprasad, a veteran of the ad tech space and CEO of YEARXERO, transaprency will undoubtedly be crucial for smaller ad tech players, particularly for sell-side players, with regards to remaining on media buyers plans.
He also advised that smaller ad tech players have to look for a unique selling proposition in the near term. In the event that you look at those players which have been in a position to manage, theyre either smart, nimble or in a position to evolve, he said, you go through the companies in tier-two [outside of Big Tech] plus they all were able to look for a product or solution that provides them an advantage be it refined targeting or header bidding.
*Excluding Traffic Acquisition Costs