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AdTechGod Pod
The Refresh News: July 7 - Apple Goes Hollywood, Google Bets on Micropayments, and Holding Companies Face an AI Reckoning
00:09:08
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- [00:00]
Nexon Representative
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- [00:52]
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- [01:25]
Kate
Weekend with a short pod to get you caught up on the top ad industry headlines. I'm Kate with Merchitecture and this is the Refresh, your weekly download on what went down in advertising. Today is Monday, July 7th, and this week we're covering F1 finally premiering and what's up with Apple streaming ambitions, Google launching offer Wall and Barclays downgrading most holding company stocks while also offering a silver lining. Many thanks to our sponsor Freewheel for their continued support. Now let's get into it. Apple's F1 finally premiered after being in the works for over four years. In its first weekend, the film grossed $55.6 million in North America and an additional $88.4 million overseas. And with these numbers, Apple just might be looking at its first box office hit. But even with F1 off to the races, it's TBD on whether they'll turn a profit. The movie did cost upwards of $250 million to produce and an additional 125 million, maybe even more, to market. Speaking of marketing, Apple and its distribution partner, Warner Brothers were in charge of the strategy, which was all very Apple coded and the New York Times referred to as aggressive even by Hollywood standards. Marketing of the movie relied heavily on Apple's ecosystem, from a WWDC 2025 opening that was F1 themed to a haptic trailer that could be watched on the Apple TV plus app to Tim Cook hyping the film alongside leading man Brad Pitt. They also launched a controversial ticket discount promotion pushed to users iPhones via Apple Wallet, which some deemed a massive overstep, likening it to that time Apple dropped YouTube's album onto everyone's ph. May we never forget. I don't know if I would personally be offended by an Apple Wallet promo, especially if it has a discount code, but it does serve as a good litmus test for advertisers of what could possibly deter consumers. Another unique piece of Apple's strategy was product placement, with the movie not only serving as a feature film for Apple products, but also racking up $40 million in brand integrations, helping to offset production costs. All of this still leaves me and maybe you too wondering why is Apple going to such great lengths to make streaming and movies happen for themselves? Shouldn't they be putting this energy and expenditure into doing something like, I don't know, improving Apple intelligence? Speculation for why Apple is so insistent on making fetch or streaming happen is that it's a branding play. By focusing strictly on high quality content, Apple continues to deepen its identity as a premium brand. And in an era where consumers spend more time figuring out what to watch rather than actually watching, wouldn't it be advantageous for Apple to be known for curated quality entertainment no matter what you choose? I don't buy that it's just about branding, though. Apple's services division now accounts for about 25% of their total revenues. This includes services like Apple Music, cloud storage, and streaming. Even though its streaming service is currently losing about $1 million a year, establishing themselves as a pillar in the entertainment category rounds out a critical piece of their ecosystem. Think about it. Apple knows what you buy thanks to Apple Pay where you go thanks to CarPlay and Apple Maps, the data you're storing in their cloud services, and nearly everything else about you thanks to your iPhone. For now, this seems to be a gamble that Apple is willing to make, with losses they're willing to take. Moving over to our next story, Google has officially launched Offer Wall, their latest attempt to help publishers recover some revenue as AI powered search results chip away at referral traffic and the potential for ad impressions. And here we see Google simultaneously playing both the villain and the hero. Offerwall gives publishers tools to let readers choose how they want to unlock premium content. A pretty big deal considering a recent Pew Research center survey found that just 1% of people will pay to access content when they hit a pay, and the other 99% will do literally anything else with something like offer wall. Instead of hitting a hard pay wall you can watch a short ad, fill out a survey, pay a small fee, or even opt into a newsletter, all of which create a much more mutually beneficial value exchange. The feature lives inside Google Ad Manager and has already been tested with over a thousand publishers. An interesting addition is an AI powered tool called Optimize, which figures out the best moment to show someone an offer so they're more likely to say yes. Publishers can also configure OfferWall to display their own logo and custom text or Offering offerwall isn't just a new tool to help publishers, it's tapping into a bigger trend, the push towards an incentivized Internet. Instead of always relying on passive ads in the background, users make a clear value exchange. You pay with your time, your data, or your wallet, and in return you get access to the quality content that you're seeking out. As third party cookies disappear and AI upends search, more experiments are putting user choice and consent at the center of how the open Web could stay funded and open. As much as I'm an optimist for an incentivized Internet, there are a few things that could make it a potential pipe dream. For starters, an incentivized Internet would require some big infrastructure and behavioral shifts. Think better digital wallets for micropayments, tokenization of attention or engagement, and maybe even a blockchain layer that can handle transactions securely and at scale. Google has thought about some of this, particularly the payments piece partnering with a third party called Supertab to help facilitate those payments. But still, people have to get used to the idea of constantly consciously paying for what they click, and that's a big shift from decades of free content funded by background ads. There's also the question of whether the open Web as we know it today will even exist in the same way if AI agents become the main consumers of online content in the future. This definitely isn't a silver bullet solution, and who knows if it will even take off, but it does provide a way for publishers to dip a toe into micropayments or data exchange models without having to build it all themselves. Overall, Google's offer wall is a bet that giving people more ways to pay for content, whether with micropayments, their input or personal data, could help keep the open Web funded in an AI heavy world. But whether the web's next chapter is really incentivized and whether we build the tech and behaviors to support it is still an open question. Moving on to our final story this week from the Wall Street Journal, which highlights why Barclays thinks the world's largest ad agency's era of slow growth will continue to drag on, even as many of them throw their full weight behind AI. In a recent report, Barclays downgraded Interpublic, Omnicom and WPP after dozens of meetings at Cannes Lions, where AI dominated conversations but didn't provide enough promise for near term growth. As the industry continues to adapt and transform itself as a result of the technology, the analysts said they've historically been bullish on agencies, but came away more bearish expecting the current low growth around 2% for the biggest players to stick around longer than they'd originally thought. In the short term, AI is putting pressure on agencies old business models. Tasks that once accrued billable hours can now be automated and some clients may feel empowered to take more work in house as newer tools and platforms make the craft and science of advertising more accessible, barclays said. Navigating all that will take time, money and good execution. But it's not all doom and gloom. Barclays and other banks like B of A and Goldman still see a path for holding companies to adapt and ultimately thrive. They point out that agencies have a deep tradition of evolving and forming smart partnerships. Whether or not they did that fast enough with the last wave of ad industry evolution is debatable. Overall, I'm with Barclays on this one. The entire industry is adapting to the disruption brought on by AI, and after covering the big holding companies for a while now, I actually think this is something they're tackling better than most. Unlike when the industry shifted toward ad tech, this is very clearly a train they don't plan on missing. Most major holding companies aren't just talking about AI in meetings and thought leadership decks. They're shipping products and platforms like wpp, Open Publicist, Core AI Omniassist and Horizon Blue. To be fair, they also have the cash flow, talent and operational muscle to experiment at scale and figure out what really drives value. Meanwhile, many other players in the industry have taken a more cautious or conservative approach, a natural stance if you're smaller or tighter on resources. But that caution also leaves the gap open for both holding companies or scrappy startups to own the next wave of AI driven ad services. While projected holding company growth may be soft for now, but if they get this AI thing right, the big agencies could be much better positioned for the next evolution of advertising. For the rest of the industry, this serves as a reminder AI is moving faster than anything we've ever seen. Waiting too long to act might cost you more than trying and iterating early. I have to admit, I lied a little bit. I said at the beginning this would be a shorter pod, and it kind of isn't. That said, that's all for this week. Thanks for joining us for the refresh and we'll catch you next week.