The Daily: How a Trump Administration Will Affect Media, Advertising and Technology | Dec 5, 2024

Summary

Behind the Numbers: An eMarketer Podcast Episode: The Daily: How a Trump Administration Will Affect Media, Advertising and Technology | Dec 5, 2024

On December 5, 2024, eMarketer released an insightful episode of their daily podcast, Behind the Numbers, titled "The Daily: How a Trump Administration Will Affect Media, Advertising and Technology." Hosted by Paul Garjo, the episode delves into the potential ramifications of Donald Trump’s re-election on key sectors such as media, advertising, and technology. Joined by senior analyst Gajo Sevilla and Vice President of Content Paul Werner, the discussion offers a comprehensive analysis of the anticipated shifts under the new administration.

Introduction: Setting the Stage

The episode begins with a light-hearted segment featuring a "Fact of the Day" about Yap, a Micronesian island known for its unique stone currency. While the hosts express some confusion over the practicality of using heavy rocks as money, this anecdote serves as a segue into the day’s main topic: the influence of the Trump administration on pivotal industries.

Impact on Media

Paul Werner initiates the conversation by addressing the unpredictable nature of the Trump administration and its potential retribution against traditional media companies.

Paul Werner [03:26]: "I have to caveat the whole conversation by saying to expect the unexpected because this is a very unpredictable administration. ...he's going to move more aggressively than he did last time, which is why I think these companies are more in the line of fire."

Werner anticipates actions such as revoking broadcast licenses and pressuring media outlets to disclose reporter sources, particularly targeting major corporations like Comcast, Disney, Paramount Global, and Warner Discovery. He underscores Trump’s focus on appointing loyalists to key positions, which could reshape media dynamics significantly.

Gajo Sevilla complements this by exploring the broader impact on media consumption and public discourse. He notes a decline in the influence of legacy media, citing the rise of platforms like X (formerly Twitter) under Elon Musk’s leadership, which could alter how information is disseminated and consumed.

Gajo Sevilla [04:46]: "The mainstream or the legacy media outlets carry a lot less weight in terms of public discourse and their power of persuasion than they did in 2016."

The hosts also discuss projections for media engagement, referencing Professor Frank Cesno's prediction that Trump’s second term would energize right-wing media while causing panic among left-leaning outlets. They consider the possibility of a temporary spike in media subscriptions, although Paul Werner remains cautious, citing factors like user decline on platforms like X and potential backlash from outlets like The Washington Post losing subscribers after refusal to endorse Trump.

Impact on Technology

Transitioning to technology, Gajo Sevilla highlights the administration's potential crackdown on immigration, which could significantly impact the tech sector’s innovation and workforce diversity.

Gajo Sevilla [10:06]: "The incoming administration is going to clamp down on immigration... 60% of doctorate level computer and mathematical scientists and engineers in the US are foreign born."

He emphasizes that restricting H1B visas and reducing the influx of international talent could stifle innovation, particularly in fields like artificial intelligence (AI) and engineering. Paul Werner adds that such policies might disrupt established tech leaders who are immigrants, potentially leading to a loss of America's competitive edge in global technology markets.

Paul Werner [13:54]: "American could lose its leadership role in some of these industries, but that would play out in a longer timeline."

The discussion further narrows down to AI, where Gajo Sevilla predicts a shift from the previous administration’s regulatory stance to a more deregulated approach aimed at accelerating innovation.

Gajo Sevilla [14:26]: "They’re going to deregulate AI development for the sake of innovation, to speed it up. ...take off the guardrails."

This deregulation could lead to ethical and safety concerns, as highlighted by a Brookings report indicating that 45% of AI experts view inadequate regulation as a significant risk. The hosts also consider the potential increase in AI applications within military and defense sectors, driven by the administration’s goal to outpace China.

Impact on Advertising

In the realm of advertising, Paul Werner discusses ongoing litigations and antitrust suits involving major players like Google, Meta, Amazon, TikTok, and Apple, which collectively dominate over two-thirds of the U.S. digital ad market.

Paul Werner [18:12]: "Even if Google is forced to, for example, sell Chrome... I just don’t see that impacting the health of the digital ad market, which is quite strong."

Despite the uncertainties surrounding these companies, Werner remains optimistic about the overall digital ad economy, forecasting a 12.5% growth in the U.S. digital ad market for the following year. He attributes this resilience to the market's robust foundation, despite potential regulatory challenges.

Additionally, the hosts highlight the varied growth rates within the broader media ad spending landscape, noting a 7.5% growth forecast for the next year, which, while lower than the previous 12%, still indicates a healthy upward trend.

Paul Garjo [20:33]: "We're still expecting 7.5% growth in that overall piece for next year. That's down, but down from 12% ... 7.5% is better."

Conclusion: Navigating an Uncertain Future

As the episode wraps up, the hosts reiterate the complexity and unpredictability of the Trump administration’s potential policies and their far-reaching impacts on media, advertising, and technology. They acknowledge the dynamic nature of these industries and the multifaceted challenges that lie ahead, emphasizing the need for stakeholders to stay informed and adaptable in the face of changing political landscapes.

Paul Garjo [21:19]: "But thank you so much as always for hanging out with me... we hope to see you tomorrow for the behind the Numbers Weekly listen."

Notable Quotes

• Gajo Sevilla [00:01]: "They're going to deregulate AI development for the sake of innovation, to speed it up. ...you want powerful AI, then take off the guardrails."

• Paul Werner [03:26]: "Expect the unexpected because this is a very unpredictable administration."

• Gajo Sevilla [10:06]: "60% of doctorate level computer and mathematical scientists and engineers in the US are foreign born."

• Gajo Sevilla [14:26]: "They’re going to deregulate AI development for the sake of innovation, to speed it up."

• Paul Werner [18:12]: "I don’t see that impacting the health of the digital ad market, which is quite strong."

Final Thoughts

This episode of Behind the Numbers provides a nuanced exploration of how Donald Trump’s presidency could reshape critical facets of the digital landscape. From potential media retributions and technological innovation challenges to robust advertising market growth, the discussions offer valuable foresight for marketers, advertisers, and technology enthusiasts navigating an ever-evolving industry.

For those interested in staying ahead of digital trends and understanding the interplay between politics and industry, this episode serves as a must-listen, packed with expert analysis and forward-thinking perspectives.

Transcript

[Gajo Sevilla]

They're going to deregulate AI development for the sake of innovation, to speed it up. Right. Because those are the two switches there. You want safe AI, it takes time. You have to test it. But if you want powerful AI, then take off the guardrails.

[Paul Garjo]

Hey, gang. It's Thursday, December 5th. Paul Garjo and listeners, welcome to the behind the Numbers Daily, an emarketer podcast made possible by Liveram by Marcus. Today I'm joined by two people. We start with our senior analyst who writes for our AI and technology briefings. He is based in New York City. It's Garjo Sevilla.

[Gajo Sevilla]

Hey, Marcus, how are you?

[Paul Garjo]

Hey, fella. Very good. How are you? No one asks anymore. You know, terrible people. Why bother? Thank you for asking, though. Appreciate it.

[Gajo Sevilla]

Sure.

[Paul Garjo]

All right, Paul, time for you to step up. You're also joined by one of our vice presidents of content covers everything. Advertising, media, because everything. Okay. Covers most things. He's based in. Well, he's based in Maine now. Ladies and gentlemen, it's Paul Werner.

[Paul Werner]

Great to be here. And how are you, Marcus, by the way?

[Paul Garjo]

Paul, you don't have to ask. Okay. You should now. Well, I appreciate it. I'm great. Thank you for.

[Paul Werner]

I think I knew you were great and so does our audience. That's why they don't ask.

[Paul Garjo]

They're misinformed. I'm in a terrible place. Anyway, today's fact. So this is BBC article from 2018. The Micronesian island of Yap has a famously unusual currency. Hundreds of giant discs of rock that are scattered all over the island are used as money. I don't know how because they're too. They're too heavy to move. I've read this article a million times. They're too heavy to move. Each village has a stone money bank where pieces that are too heavy to move are displayed. But I don't know how you pay people. Do you just go, oh, that'd be. You know, that would be three rocks. And then you just have to walk to where they're at, where they are. And you're like, this is them.

[Paul Werner]

Wonder how little kids get their allowance.

[Gajo Sevilla]

Yeah.

[Paul Garjo]

The unique stone currency has been used for several centuries, although no one's quite sure how the concept began. I don't. Yeah, I still don't. This was not a good fact of the day. So I don't know how it works, but it's true. It's true. They're using rocks as money. It's kind of brilliant. To be honest.

[Paul Werner]

I'm still trying to wrap my mind around the fact that I've never heard of this island.

[Paul Garjo]

Yeah, 11,000 people. Soon to be 11,001. I'm coming. Yap, sounds like you got everything figured out, to be honest. Anyway, today's real topic, how the outcome of the US Presidential election will affect media, advertising, and technology. All right, gents. So Mr. Donald Trump was once again elected President of the United States. But how will his administration affect the areas of media, advertising, and technology? I asked Paul and Gajo, who joined me today, to think about how Mr. Trump's presidency might influence those areas. Paul's up first. He's going to tell us one of the main ways he thinks the incoming president might affect the world of media. Let's begin with media. Paul, what are you expecting?

[Paul Werner]

I guess I would have to caveat the whole conversation by saying to expect the unexpected because this is a very unpredictable administration. But what I foresee in the relative near term is that the administration is going to make good on its threats to exact retribution against traditional media companies, particularly the ones that it has characterized as hostile or enemies of the people or some other term that clearly puts them in the crosshairs. And those would include Comcast, Disney, Paramount Global, and Warner Discovery. Those being the parent companies, respectively, of NBC News, ABC News, CBS News, and cnn. I think the Washington Post is probably also on the hit list. And as far as what penalties the administration might try to exact, they have threatened things like revoking broadcast licenses or forcing their reporters to reveal sources. Could be easier said than done. But then again, I think we're in unchartered waters. And the things that we have assumed to be part of the way government works in the US A lot of that could be out the window as this administration takes hold.

[Paul Garjo]

Why do you think they're in danger this time around? Because those same news organizations were less in favor of the President. Velasco around as well. Correct.

[Paul Werner]

I think that Trump feels like he has a very strong mandate despite not having won a majority of the popular vote. I think that he doesn't have to worry about reelection, and I think that he's been a lot bolder in choosing people on the basis of loyalty as opposed to on the basis of qualifications. That includes the people he plans to nominate as head of the FCC and other government agencies that will impact how these things play out. So I think it just has a different flavor now. It has a different feel. He's got both houses of Congress in his favor, so even the fact that he won election again is an indication that he obviously controls the party and every indication is that he's going to move more aggressively than he did last time, which is why I think these companies are more in the line of fire. I think also that things have happened during his first term and since his first term to only solidify those opinions on these companies. And that doesn't bode well for them in terms of what might be in store.

[Paul Garjo]

Yeah, yeah. Your point about the 22nd Amendment as well, the fact that he can't be elected again. We have seen president say, you know what, I'm going to be more bold this time round because I don't need people's votes a third time because I can't be elected to the office a third time. Paul, before we move on to technology and what he might do in that space, Gaja's going to give us a take there. I was wondering whether you're going to talk about, in terms of his effect on media, whether time spent with media will get another Trump bump because we saw that the first time around, right. People were glued to their screens, to their devices, to the news when he was elected the first time. And Frank Cessno, a professor at George Washington University and former Washington bureau chief of CNN, was saying, quote, Trump 2.0 will likely be a very different administration than we saw before. That will carry immense consequences and news value. It will energize right wing media and will panic the left. Close quote. And Benjamin Mullin, he was, he was quoting Benjamin Mullins article the New York Times, he was noting that the Times, the Washington Post and other newspapers saw a sudden influx of subscriptions in 2016 as readers puzzled through the consequences of Mr. Trump's initial victory. And he goes on to write that David Clinch, a revenue consultant for Media Growth Partners media advisory firm, said that he thought news organizations would see another uptick in customers, but they would be more muted than the first Trump administration because some readers have become fed up with or exhausted by mainstream news coverage. What are your thoughts there?

[Paul Werner]

I think that for starters, the mainstream or the legacy media outlets carry a lot less weight in terms of public discourse and their power of persuasion than they did in 2016. I think also that the bumps that some of the organizations that you might consider left leaning saw at that time, they may not happen the same way. And the Washington Post is a case in point because when they declined to make an endorsement for the presidency, they actually lost a lot of subscribers. So I think that backlash effect is very much in play. And that was not a factor. I think in 2016, the left was generally shocked, but also mobilized and interested in keeping track of what's been going on. I mean, now I think we live in a world where Joe Rogan has more sway than any of the traditional cable or news networks. It is a different climate, but that doesn't discount the possibility of an influx of time span or a growth in time span or a temporary spike and potentially some outlets gaining subscribers. I mean, I think for one thing, X, you know, we have been talking a lot over the past year and a half since Elon Musk took it over, that it's been losing users, it's been losing ad revenue that could actually turn positively for them. Given that, obviously Elon Musk right now is very much in the graces of Trump and I think the administration is going to do a lot to pump up that platform. So going back to my original point, it's almost impossible to make predictions because there's so many forces pulling in different directions. But that's how I see it right now.

[Paul Garjo]

Yeah, we talked about X and what can you expect from them on Monday's episode. Tuesday we talked about Blue sky and whether they're going to steal some users from them. I'll continue to. And that was on Tuesday's episode. So we'll see. I went back and looked at our time spent with media numbers. TV did get a bump in 2016, but it also had a Summer Olympics, so maybe that gave it a bit of a bump. So it's hard to know to pass it out and say, was this just Trump related? Because he got voted in social media, also did slightly better in 2016 than it had in previous years. So it's hard to know exactly, but there was something there. Gajo, we'll turn to you for a prediction on how you think the upcoming presidency is going to impact technology. That space.

[Gajo Sevilla]

Sure. So technology is, that's a very big question. I mean, you're talking EVs, AI. All of that is going to be touched. But I wanted to focus on the innovation part of it. And mostly there's been an indication that new, you know, the incoming administration is going to clamp down on immigration and this is going to have a ripple effect on H1B visas, which are a huge part of what makes, you know, the tech industry as vibrant and innovative as it is. So according to the center for Strategic and international studies, 60% of doctorate level computer and mathematical scientists and engineers in the US are foreign born. And, you know, more than that, there's 19% of the entire US STEM workforce comes from abroad. So that may seem like a small number, but their contributions are disproportionately concentrated in the most advanced fields, including AI.

[Paul Garjo]

Yeah. You said 60%, right? 6, 0 that first.

[Gajo Sevilla]

6, 0, yeah. Of Dr. Level computer and mathematical scientists and engineers.

[Paul Garjo]

Okay, okay.

[Gajo Sevilla]

And it goes the same for the students. Like 83% of STEM doctorate degrees are awarded to international students. And a majority of those 71% remain in the U.S. right. They do contribute to very key fields. Again, AI, engineering, security, defense contracts. So, you know, constricting that brain trust does risk short term and long term, you know, choking of the intellectual capital. So just imagine a world without Google, Sundar Pichai, Microsoft, Satya Nadella, or in Vegas, Jensen Huang. Right. We're all foreign born and we've come here through that path.

[Paul Garjo]

Yeah.

[Gajo Sevilla]

So. And you know, these are individuals that didn't just grow companies, they've shaped industries and we've seen the effects of their work. So it's really more than immigration. I think it's about global competition.

[Paul Garjo]

Yeah.

[Gajo Sevilla]

Shutting down that door just means, you know, a lot of this talent which is already here. We'll have to look elsewhere. Right. And given how competition across various fields and technology is at a heightened clip right now, that can't be a good thing for the U.S. do you think.

[Paul Garjo]

This is going to have like, is this something that's going to happen within months of him getting in office, or is it something by the end of his term we're going to start to see this play out?

[Gajo Sevilla]

It's hard to say. Again, it's super unpredictable right now, depending on who, who he puts in charge of this and what their agenda is. My fear is they want to have something to show for it right away. So there's going to be numbers. Right. And for that to happen, it's likely going to be discouraging for a lot of these visa holders and students to sort of see a future where they can kind of grow in the industries that they've chosen.

[Paul Werner]

Yeah. I could see the potential for short term impacts in terms of people who are already in positions at these tech companies having to leave or having their lives disrupted because, you know, family members are deported or can't be allowed to come into the country. But I think in the longer term, I agree, Gadjo, that, you know, if you look at the leadership of these companies, these are many, many immigrants, first generation immigrants. So in terms of what a protracted restrictive immigration policy might do. Yes. I think you will see that America could lose its leadership role in some of these industries, but that would play out in a longer timeline.

[Gajo Sevilla]

Great.

[Paul Garjo]

And there's this Forbes article I've got pulled up here from Stuart Anderson. 65% of top AI companies have immigrant founders. So it's going to hit certain industries harder than others as well. And Gajo, sticking with AI for a second, you mentioned that. I said, give me a prediction on how this is going to affect technology. And to your point, you know, that covers literally everything pretty much. But you mentioned AI as one of those pieces. So if we zoom in on that for a second, what do you expect from AI and how that might be impacted with this new administration?

[Gajo Sevilla]

Yeah, I think we're going to see a sea change from where, you know, the Biden administration took it, which is they're pushing for regulation. They got a lot of AI startups and big tech companies to buy into that idea. You know, they sort of signed initial ways to ensure that there's regulation. I think that's going to change. And the reason is, you know, they're going to deregulate AI development for the sake of innovation, to speed it up. Right. Because. Because those are the two switches there. You want safe AI, it takes time. You have to test it. But if you want powerful AI, then, you know, take off the guardrails. And that could be problematic because, you know, According to a 2020 Brookings report, 45% of AI experts are citing inadequate regulation as a top risk to ethical AI deployment. And that's at scale. Right. And we're seeing businesses, governments, adopting these tools. That's their first and biggest concern is how safe is this? Right.

[Paul Garjo]

Yeah.

[Gajo Sevilla]

And to what point do we have to be cautious about it that might get thrown into a loop for the sake of innovation, just to speed up the models, what they can do. I also think there'll be more application into areas that were kind of in the gray before, namely military and defense applications. So the, the Department of Defense's 2020 budget for AI related R&D was just under 4 billion. But that could grow under the Trump administration, especially since we know that the objective there is to outpace China. So you could see more investment getting into those applications. Defense AI applications for government as well.

[Paul Garjo]

Yeah, yeah. I mean, so pushback here for a second is folks like Gavin Newsom, governor of California, didn't sign SB 1047. And people were, you know, some people were upset about it, some people weren't. But the argument for that, at least from his camp, was, look, he signed multiple bills that have tried to regulate AI, just not this One, he's, he tried to crack down on deep fakes AI, he's trying to encourage AI watermarking, protecting children, combating AI generated misinformation, things like that. So, you know, what do you make of the argument that, look, the big existential threats may not be regulated, but there are other things happening with AI laws at a more granular level?

[Gajo Sevilla]

I do agree. I mean, on an industry basis we're starting to see that. But again, without the foundation of the government initiative, then, you know that, that sort of opens up a wild west of possibilities. Right. Because there won't be any sort of oversight on a national or governmental level. Right.

[Paul Garjo]

I'm talking state level here. Yeah, exactly.

[Gajo Sevilla]

I mean, not that we have that now, but at least, you know, there is some scrutiny, right? There is some. So there are some checks and balances. And you know, going back to the first point, you know, national foundation for American Policy study found that 70% of AI researchers in US universities are all foreign nationals. So again, you could see a direct correlation between your desire to accelerate AI development and also who the key personnel are for this to happen.

[Paul Garjo]

Yeah. All right, Paul, let's end by swinging over to the world of advertising. We covered media, tech, AI. Give us one prediction or one way that advertising could potentially be affected.

[Paul Werner]

There are several companies that are subject right now to ongoing litigation or legislation around their business practices. Those would be Google, Meta, Amazon, TikTok and Apple. They represent over two thirds of the digital ad market in the US So there's already a lot of uncertainty as to how those cases will play out. And we don't know how the administration is going to approach some of those, for example, the antitrust suits. But I do think that the overall ad economy, I don't expect it to suffer greatly. I mean, even if Google is forced to, for example, sell Chrome, if that is appealed, and eventually that is something that's going to happen. First of all, it'll be a long time before it actually comes to pass. But I just don't see that impacting the health of the digital ad market, which is quite strong. I mean, we're forecasting 12.5% growth in the digital ad market in the US next year, which is quite big in terms of a growth factor when you consider that it's already building from a large base. So I just don't see a direct impact in the short term on that overall economy. Clearly, some companies may be winners or losers, depending on the decisions that come down, but a lot of this is subject to whim as well. Everything I said earlier about the mainstream media would apply also to Meta. I think what some of the pronouncements that Trump and his allies have made about Meta and Google are quite strong. But then we come to learn that Mark Zuckerberg had a private dinner with Trump. So maybe is that enough to smooth things over? Did he make some concessions? We don't know the substance of that conversation, but we do know that Trump responds a lot to feeling like people are either on his good side or his bad side. And sometimes that is just a phone call or a dinner away from having the script totally flipped. So I think those things will have a much larger impact on the administration's decisions than any sort of thought out policy positions or anything that's predictable.

[Paul Garjo]

Yeah, yeah. You mentioned digital ad growth that we're forecasting for next year. 12 and a half percent growth. And Zoom out a little further to the big picture of total media ad spending risk. We're still expecting 7.5% growth in that overall piece for next year. That's down, but down from 12% basically from 2024. But 7.5% is better. The next year's growth will be better than 2023's 5%. So it is a very healthy picture. And those numbers are like hot off the press from November from our wonderful forecasting team. All right, gents, that is where we have to leave a conversation for today. But thank you so much as always for hanging out with me. Thank you. First to Garjo.

[Gajo Sevilla]

Thanks. Mark. Marcus.

[Paul Garjo]

Yes, sir. Thank you to Paul.

[Paul Werner]

Thanks. Always a pleasure.

[Paul Garjo]

Yes, indeed. Thank you to Victoria who edits the show, Stuart runs the team, and Sophie who does our social media. Thanks to everyone for listening in. We hope to see you tomorrow for the behind the Numbers Weekly listen. That is of course, an E marketer podcast made possible by Live Ramp.