← Marketecture: Get Smart. Fast.
Loading summary
Transcript194 lines
- [00:00]
Ari Poparo
This episode is brought to you by U of Digital, the Go to training company in adtech. They've launched the AI Accelerator, a hands on bootcamp that gets teams actually using AI for marketing and advertising use cases. Most people in our industry still aren't confidently using AI, even for basics like better email or smarter research, let alone creating content or analyzing data. The AI Accelerator changes that. It's participatory, immersive, and it's being used by teams at Diageo, Disney and MediaOcean with tremendous results and industry AI Leader Scope 3 is now the exclusive sponsor of the AI Accelerator. This program is legit Go to u of digital AI and use promo code market for 20% off or email contact of Digital for group rates. This podcast is brought to you by Incremental. You ever run a holdout test, wait between two and five weeks for the results and then realize you just wasted a big chunk of budget? By the time the data comes in, the campaign's over, the money's gone and the insight's basically a post mortem. That's why I like what Incremental is doing. They give you always on incrementality measurement. No experiments, no holdouts, no delays. You get answers while the campaign is live so you can actually make changes, not just analyze the wreckage. With Incremental, you don't just learn what worked, you do something about it. Check them out at Incremental the Future of Measurement. All right, welcome to the Market Podcast. This is Ari Poparo. I'm joined today by Eric Franchi and Brian Weiser from Madison Wall. Brian's been here a couple of times and he's got his perspective on all the public companies, the agency world, how WPP and Publicis are fighting it out, where AI fits in a lot of really interesting stuff. And so we wanted to have him on again. Eric, what are you looking forward to in this conversation?
- [02:06]
Eric Franchi
Brian is not just again. Brian is again and again. He's a three time guest and he probably is the only other one besides Chris Kane who's a three time guest. He is so good. Like he was able to synthesize so much data and provide perspective on like the ad market, on agencies in a way that no one else can. I just, you know, learn from him every time. And he's also been a prognosticator of doom around the tariffs and it'd be good for us to check in with him as well because things haven't necessarily played out quite yet what his doomsday scenarios from earlier this year were.
- [02:40]
Ari Poparo
Yeah, last Time he was on, he gave us like a lot to think about in not a good way, like get an extra passport, head out of the country, that sort of thing. So it's, it's interesting to be watching that. So Market Extra Live is coming up. We've announced it last week. So this is our big conference. It's on October 27th in New York City. Early bird pricing remains until Labor Day, and we have a great lineup of speakers and we'll be announcing the full agenda sometime in the next couple of weeks. So you should really join@markchitectorlive.com to get discounted tickets because the prices go up on, I think, September 2nd. Also, I had some news this week. Did you happen to see me on social media this week?
- [03:18]
Eric Franchi
Eric, I saw you all over social media and I was very happy to see other people on social media talking about you and showing the book. Congratulations, man. I personally sent you my unboxing video. I didn't think it was something I wanted to put out there, but I'm so psyched for you. How's week one going?
- [03:35]
Ari Poparo
It's going great. So my book Yield came out Tuesday the 5th. It is currently the number one or number two bestseller on Amazon in the media category. Oh, hell yeah. Hell yeah.
- [03:47]
Eric Franchi
That's right.
- [03:48]
Ari Poparo
Yeah. There's a little bestseller logo next to the name. It's a long way from the New York Times, but I'm pretty happy with it. Reviews are good. We're getting a lot of five stars. If you've read it, please leave a review on Amazon. And the reaction's been good. You know, it's funny because this book's not perfect. There are some errors. I misspelled your partner Joe Zawotsky's name, which is really embarrassing. He's got so many Z's in his name. Do you know how many Z's he has in his name? Does he know?
- [04:12]
Eric Franchi
It took me a little while. Yeah, took me a while. I never misspell it now though.
- [04:16]
Ari Poparo
I know I double checked everyone's spelling. I just missed it. So I'm creating a corrections page for it to be fully accountable. I'll probably post it tomorrow or next week. All these little things that people are like, ah, that didn't exactly happen the way you said, oh yeah, my grandfather invented header bidding before you were ever born, that sort of thing. So I'm keeping track of those and I want that feedback. If anyone reads the book and has issues, you know where to reach me. But yeah, the reaction has been great and I'M speaking at Index Exchange this afternoon. I'm giving my first reading. It's really fun and I hope people like the book. So please keep the feedback going with that. Let's jump in. So Brian Weiser of Mass and Wall will tell us what's going on with the agencies and with the public companies. All right, Brian Weiser, thank you so much for being here.
- [05:00]
Brian Weiser
Thanks so much for having me. Where's my jersey?
- [05:03]
Ari Poparo
Yeah, this is your second time on the show, so you get.
- [05:06]
Brian Weiser
I'm a third timer.
- [05:07]
Ari Poparo
Oh, wow. You might be the record. I think it's you and Chris Kane are up there three times.
- [05:13]
Brian Weiser
Next time that'll be my four time jersey.
- [05:15]
Ari Poparo
But the reason we have you here is because you do such in depth coverage of all these financial topics and these agency topics and you know, a lot's been happening in the agency world. It's never dull, is it?
- [05:28]
Brian Weiser
No, there is a lot to pay attention to and it's still an underappreciated sector because there's, it's like so many of the people in the industry work. I'm surprised more people don't pay more attention.
- [05:38]
Ari Poparo
It's true. Because it just feels like, you know, here's, here's what I would say my opinion is when I read these stories, I'm like, oh, wow, a big company changed from WP to Publicis and a bunch of people got fired and those exact same people just got jobs at the other agency and none of it matters. So why, why is that not the actual storyline?
- [05:59]
Brian Weiser
There is an element of that, yes, but is the most human of parts of the business and ultimately the bulk of decisions that matter are so driven by people one way or another. Subjectively. Why is a PMAX better than Advantage Plus? Should someone even think about using one of those platforms? What is the role of retail media? It's humans who are making those decisions at the biggest scale. And I think that that's really, it comes out of agencies or people who work directly in and around agencies. They might be getting more and more commoditized, but again, because it's so human, it evolves in that sense, it's also a more durable industry than most people give credit for. It's just, it's, it's constantly changing as well because of that human element. I'm fascinated by it.
- [06:49]
Ari Poparo
Sure. Is it like watching sports a little bit. Like, you know, the players move between teams but you still root for the same team?
- [06:56]
Brian Weiser
Maybe, you know, I'm not a golf fan, but now that you mention it, People who love golf like, like to watch. I don't know, you tell me, you guys golf fans? I don't watch it. But is it. There's baseball, better example. It seems really boring, but there's a lot of nuance to it and if you pay close attention to it, it's really, really interesting.
- [07:17]
Ari Poparo
Okay, I'll take the baseball. Yeah, golf wasn't working for me, but.
- [07:21]
Brian Weiser
Baseball, not for me either.
- [07:23]
Ari Poparo
Okay, so let's get the tea. So the main thing that I've been hearing about in my half paying attention to this world mode is that WPP is down, Publicis is up and WPP has a new CEO obviously. And things just seem pretty bad. And they, they released their earnings I think this morning. We're recording on Thursday. So what's the scoop?
- [07:41]
Brian Weiser
Yeah, well, I mean, that's a very good summary of it by the way. That does highlight what makes this such an interesting industry. It's because whoever invests against the people doing the most useful, important, growthy things is the agency group that gets to grow. The agency group that organizes its people in the right way, that captures where the market needs to go is the agency group that grows the fastest. So you could generally characterize it as publicist is growing the fastest because they've created the best go to market strategy because they figured out the right product mix. And what I mean by that is it's this combination of media inventory or access to media inventory with effectively discounted services. That bundle is preferred by the market to something that's more separated.
- [08:33]
Unknown
Right.
- [08:33]
Brian Weiser
The idea of having your media buying as relatively completely transparently priced totally separately. I mean, marketers can talk all they want about how much they prefer transparency, but you can follow who's winning the media agency wars right now. And it is Publicist and Omnicom as well who are prioritizing a lot of alternative trading models.
- [08:55]
Ari Poparo
Wait, so you said discounted services, so how do they make the money? Is it that they have more clout on the media side so they make margins on media and then subsidize the people?
- [09:08]
Brian Weiser
Well, essentially, I mean, there's lots of different clever ways. It could be inventory based media where the agency gets possession of media that they can then resell onto the client. They may never take possession of that inventory, technically speaking, so they're actually principal based, but they may make a fee on it, they might get paid by the media owner. There's just a lot of different ways to trade media that aren't simply, you know, you place an order, you get an Invoice and pay it. But figuring out different ways to compensate the agency means that the agency can basically say, we're going to bundle access to this inventory, you're going to pay us a separate fee for it or the meter is going to pass and, and then we're going to provide a lot of extra services for you that you're not really going to pay for directly.
- [09:50]
Eric Franchi
What's the difference between principal based buying, which has been in, you know, the conversation for some time and what you just referred to with like, you know, unique inventory relationships? Is this like rebates or like the barter stuff? Is that categorized in that?
- [10:05]
Brian Weiser
Second, I think often we call principle based media or we use the term principle based media to refer to a wide range of trading models. Sometimes when you ask people about principle based media, get very specific. So in fact, when on earnings calls, analysts ask Arturi Sedun, the CEO of Publicists, about principal based media, he'll say, oh, it's only 1% of our revenue or something like that. Well, that doesn't include all the legacy Epsilon business, the old conversant ad network.
- [10:35]
Ari Poparo
Conversant, yep.
- [10:36]
Brian Weiser
There's a lot there that is not in their definition principle based media. Now I would suggest it is. Nothing wrong with that. Similarly, it's OPP Nexus.
- [10:46]
Unknown
Right.
- [10:46]
Brian Weiser
The form of Zaxis. Most people would say it walks like a duck, smells like a duck, it's a duck.
- [10:52]
Eric Franchi
Are those still large businesses?
- [10:54]
Brian Weiser
Yeah, I mean it's in billions in terms of trading activity and those are disclosed numbers. But the reality is that with Publicis, theirs is growing quite a bit, whereas it's not. You could argue WPP backed off investing in this space because of what happened with concerns about transparency. They were the leader in the mid 2010s by far, and then they really backed off. Now with Omnicom, they're getting more aggressive in terms of just taking possession of the inventory and selling it on to you.
- [11:22]
Unknown
Right.
- [11:22]
Brian Weiser
And so basically the deal that you go to the marketer with is you say, hey, what if the fee you're paying for your existing agency, we'll offer the same services for say 89% of that price or whatever, some number lower. As long as you agree to buy some media through us, we'll spare you the details right now as to what exactly that is. Just give us a promise that you'll allocate resources in that direction. And as long as we're making the same money we would have otherwise made had you had a conventional relationship with us, you know, we're all good, the relationship can continue. You'll get serviced the way you want to get serviced. There's just different ways to structure all this. And principle based media can take lots of different flavors. Again, you want to be if someone says we don't do principle based media, you may just need to parse what exactly their definition is and what it isn't.
- [12:10]
Ari Poparo
Right. I guess the question is just are you making margin on the media or not? Is that the easiest way to separate it?
- [12:15]
Brian Weiser
That's a good way to do it. I think that's a simple way to do it. But you really have to unpack the commercial strategy that the agency has. And I think that certainly more sophisticated clients and the partners that they work with, their advisors, page consultants or others, certainly understand these deal structures. I think that unfortunately a lot of clients, those who complain in particular about some of these trading patterns, they've underinvested in trying to understand the industry they're operating in. And at the same time they're trying to squeeze their agency partners down for all the fees they're paying. Unfortunately, these are consequences.
- [12:55]
Ari Poparo
Well, yeah, you said earlier that the clients prefer this model of effectively subsidized services. Is this just like procurement shell game where it's like I had a budget for, let's say influencer marketing and I can shave off tens of millions of dollars on that budget, but my media budget stays the same in some magical way.
- [13:16]
Brian Weiser
That's a good way to characterize it. And by the way, I should be more specific in my word choices because I've appeared on other podcasts where I said that they prefer this and I get a lot of grief from people saying we don't prefer it. We want transparency. I'll hear that all the time. But what I am saying is they exhibit a preference by allocating resources in this direction. Whether or not they like it or not, they're taking this trade off in favor of other troughs. So they're exhibiting preferences in this direction.
- [13:42]
Ari Poparo
All right, let's talk about wpp. Specifically, earnings. Say, weren't that great, right?
- [13:47]
Brian Weiser
No, no, they were pretty terrible. I mean it's really remarkable. You just go down almost every single business in every single region. Now again, this was not a surprise. Certainly they pre released the overall numbers conveniently a day before announcing a new CEO. So this, these numbers were not surprised. But yeah, they're just down everywhere and they're just. And it's not just Group M, I mean, or WPV Media. They were prior to last year counting on WPP Media, the media agency business, to support the growth. These media agencies are still a fast growing business regardless of whether or not you're doing a lot of principle based trading. Media services are where the growth is in the industry. Then Group M, WP Media started to falter. And that's, I mean, this is coming, obviously.
- [14:31]
Ari Poparo
Yeah, it's always good to get all the bad news out with the new CEO. The new CEO doesn't want to have a good first earnings report. They would have a terrible first earnings report. Then all the rest look good.
- [14:39]
Brian Weiser
Yeah, exactly. Get it out of the way, set the, you know, the baseline low for everything going forward. But no, I think it's a combination of factors. You know, I would argue that WP has too many agency brands, too decentralized. They're working through a lot of the things they need to do. And I think, you know, you guys are following what Brian Lester is doing, I'm sure closely. And I think we all have a lot of faith in him in terms of actually being able to do something with Group M or WPP Media.
- [15:09]
Ari Poparo
Right. So what's on the agenda? What do you think they're going to be doing over the next 12 months?
- [15:14]
Brian Weiser
Well, I mean, they've been very vocal about this. I think more automation, more centralization. Go back to when I joined GroupM 2019. Remember I was there from 2019 to 2023. I was very vocal in public as an analyst saying the only correct strategy out there is the one that public is taking with a monolithic, unified, centralized model. And that's kind of what I thought we were going to do. Well, they're getting there now, five years later, six years later.
- [15:43]
Ari Poparo
So there was this interesting rumor that went around. I think Bloomberg or Reuters said that Accenture song WPP might be talking about an acquisition merger.
- [15:53]
Brian Weiser
And who says the sector is not exciting?
- [15:54]
Unknown
Right.
- [15:55]
Brian Weiser
So Accenture again, I think some people may find what Accenture does to be not that interesting. I disagree. I think that business process outsourcing, supply chain management, outshoring, MIT services in general can actually be quite interesting because it really comes from the bulk of the operations of the industry. Let's go back in time here when I joined the ec.
- [16:16]
Ari Poparo
Sorry, hold on. I fell asleep during that conversation.
- [16:18]
Brian Weiser
What were you talking about? It turns fast.
- [16:23]
Ari Poparo
All right, wait, before you get to that, I just want to correct myself. It is the drum that reported this, so give credit to.
- [16:29]
Brian Weiser
Well, actually campaign is the one that broke it.
- [16:31]
Ari Poparo
Okay, thank you.
- [16:33]
Brian Weiser
There you go. Let's go back in time. I knew nothing about agencies.
- [16:36]
Unknown
Right.
- [16:36]
Brian Weiser
I went into agencies. I would never have taken a job in an agency had actually understood what they did. But back in 2003, I got this really cool opportunity. It's like, I don't know where it is, but it sounds pretty cool. It turned out it's like, oh, agencies do this. What? I said, you look a lot like in 2003, what Accenture wants to do in terms of. Again, they're the outsourced marketing department. Why do media agencies exist? Why do advertising agencies exist? They're effectively an outsourced marketing department.
- [17:04]
Unknown
Right.
- [17:04]
Brian Weiser
And it's like that's what Accenture kind of was trying to do back in the early 2000s, late 90s. So there was always a lot of overlap between what agencies do and what Accenture and the other the BPOs at a large scale do. Accenture invested in a lot of these adjacent businesses and they started building out again IT services for marketing.
- [17:25]
Unknown
Right.
- [17:26]
Brian Weiser
That's what Accenture Interactive was. Accenture Song now as it's called. They started letting on some creative agencies.
- [17:32]
Unknown
Right.
- [17:32]
Brian Weiser
But they were missing some really important pieces, media in particular. And arguably because there's still too much in the IT services side of the world and not close enough to the. The creative Madison Avenue part of the industry, certainly for at least a decade. I was arguing, well, of course Accenture is going to buy something at some point anyways, that they continue to build up their business. They've done fine, they're doing well overall. So yeah, then there was apparently there were meetings that happened according to campaigns reporting.
- [18:03]
Ari Poparo
That's one way for the new CEO to make a mark right away.
- [18:06]
Brian Weiser
Well, yeah, Sir Martin Sir Else was advocating for separating group bound for quite a while. And so who knows what structures they come up with. They have to be looking at all possibilities at this point. And you can imagine how Accenture. The surprising thing is not that WPP would have tried to get meetings. The surprising thing is that Accenture took the meeting, given how much they've been protesting about the fact that they don't need to own an agency.
- [18:30]
Ari Poparo
What relative size, off the top of your head, how much bigger is Accenture than WPP at this point?
- [18:35]
Brian Weiser
Hundreds of times.
- [18:37]
Ari Poparo
Hundreds of times.
- [18:38]
Brian Weiser
Well, last I checked, I think WPP after the last earnings call is worth about four or five billion dollars. We can look behind the couch right now and see if there's enough cash there.
- [18:47]
Ari Poparo
You heard it here first, the Madison.
- [18:49]
Brian Weiser
Wall takeover, wpp, whereas Accenture is in the hundreds of billions. So, yeah, I mean, it's certainly a doable thing. It's always a question of would you want to.
- [18:59]
Ari Poparo
Right, let's flip to Publicis. So they're doing really well. They announced. One thing I really want to dive in on is their acquisition strategy because they've been very acquisitive. They acquired Lotamy. I don't know how that's going. I almost forgot when I was doing the research for this episode, I was like, oh yeah, that happened. And then announced they're going to spend something like 300 million on AI acquisitions. It wasn't clear it was the AI investment, some of which would be acquisitions. So what's the strategy there and how's it going?
- [19:26]
Brian Weiser
Let's take a step back about why agencies are exciting.
- [19:29]
Unknown
Right?
- [19:29]
Brian Weiser
Because there are always going to be acquisitions in new areas where clients are exhibiting demand or interest in whatever. And it's really hard to spin these businesses up internally quickly at scale. And so you have to do a fair amount of M and A if you want to be successful. I'd argue now again, Omnicom's take very different strategy for the years. Global CIS has been way more acquisitive over the last, you know, for all their existence, really for the last 30 years. The current focus on AI related activity is absolutely critical. And whether you acquire talent and people and tools and processes or you just invest internally, that's fine. Now there's not a lot of businesses right now other than maybe creative businesses that are what obviously look like AI.
- [20:15]
Ari Poparo
And to interrupt you, acquirable for, you know, and acquirable and acquirable for those dollar amounts and actually have traction.
- [20:22]
Brian Weiser
Yeah, absolutely. And so I think that does skew agencies towards partnering when it comes to AI related activities where you've seen a publicist flash out certainly recently, last year that when they bought influential and buying a couple of influencers, calling them agencies I don't think is quite the right term. But if you look at anything related to influencers is that you know that marketers are going to spend money, you want to have scale fast. So that made a lot of sense. And WPP similarly made a couple of interesting acquisitions in the influencer space in the last two years as well.
- [20:54]
Eric Franchi
Captivate.
- [20:55]
Brian Weiser
Yeah, captivate, exactly. That was another recent one. I think if you look at some of the other transactions that they've been trying to make, I mean, Bullets is really interesting because of Sapient. Again, don't fall asleep. Sapient, always an interesting business. IT services is interesting.
- [21:11]
Ari Poparo
IT services. It's fascinating. I mean, you have all those People and you have to enable every one of them for Lotus Notes and deploy their ThinkPads.
- [21:21]
Brian Weiser
Can I tell you that thing that sticks out in my mind about how this is supposed to work? I remember it's just one that stuck out. McDonald's wants to figure out how to automate its entire ordering system and it wants to make the customer experience something that sticks with a couple consumer in a positive way. You need an IT services firm to do all the backend stuff, but also one that's capable of understanding what that consumer experience is and how it ties to the brand. That's really interesting. And that sort of work, I mean. So in that case, puvas has partnered with, I think Capgemini for some work. Sapient did some of it and you had your creative agency like I don't know, that's an old example. But that's okay.
- [22:02]
Ari Poparo
I'm going to ask you a really out of left field question because it's somewhere else in our show Notes, is Palantir a competitor?
- [22:08]
Brian Weiser
Ooh, I don't think so from what I've seen. Although it is interesting that Stagwell's starting to partner with them. And you could argue anyone working with data, they're adjacent, they're not competitor. They could be a supplier, they could be a partner.
- [22:20]
Ari Poparo
I disagree. I think you could. For the right customer, they may use Palantir in the way that these agencies want to be used for the right customer.
- [22:29]
Brian Weiser
Not for everybody maybe, but the service layer, the human layer is the thing that I think a lot of tech companies don't appreciate. So unless Palantir, and I don't know this, unless they have a services arm that is.
- [22:40]
Ari Poparo
Well, they have four deployed engineers, they just code it all.
- [22:43]
Brian Weiser
I know, but it's not the same as account people.
- [22:46]
Eric Franchi
They could acquire an indie agency tomorrow and that solves it.
- [22:49]
Brian Weiser
Yeah, and so you do see situations like that where like Infosys buys, you know, Wong Duty. I think that you know, as an example like or Accenture buying drill.
- [22:59]
Ari Poparo
Sorry, did you make that name up? Is that real?
- [23:01]
Brian Weiser
No, no, that's real. They're one of Amazon datasets.
- [23:03]
Ari Poparo
Okay, Eric, as an investor do you see these old goes as future homes for some of your companies?
- [23:11]
Eric Franchi
So no, traditionally the multiples that hold co's pay are not as attractive. Although you know, a couple of these deals, you know, just the rumblings of loadamy and Captivate, they were, they were good numbers. But you know, traditionally they haven't been great returns in terms of just like the upfront versus Earn out versus management stuff is number one and then number two. They've traditionally not been and but I think this is changing. They've traditionally not been great acquirers of tech. So they make an acquisition and then it sort of dies on the vine and then the expectations get lowered for future acquisitions as a result. So never say never. I do think, and I spoke to Business Insider about that piece of what could publicists actually go and buy to accelerate their AI ambitions? I think there's a host of startups that can get them from 0 to 60 very quickly, but we don't think about that in terms of the, you know, the real emphasis on the acquirer universe.
- [24:09]
Brian Weiser
I think AI is just so ubiquitous in terms of like every company uses like saying we use it like it's just a thing that everyone uses wherever they can as opposed to being a coding shop or is something different. But I did want to give one example about a good example of where Publicis has gone. Three acquisitions have stood out to me over the last few years.
- [24:28]
Unknown
Right.
- [24:28]
Brian Weiser
Per Federon Brian Wieners business.
- [24:31]
Unknown
Right.
- [24:31]
Brian Weiser
Been a few years now, that was a digital shelf business. They bought Citrus Ad, which was a SSP for retailers, primarily competing with Critio and others.
- [24:43]
Unknown
Right.
- [24:44]
Brian Weiser
And a company called Spinnaker, which didn't get a lot of attention. Art of Safety Net. Now a supply chain management optimization business for the CPG industry. That's kind of interesting. Now you are a packaged goods company. You're trying to figure out how you maximize and optimize your overall supply chain. Because remember what is advertising part of a supply chain? And we've got to think about the industry in that context.
- [25:10]
Unknown
Right?
- [25:10]
Brian Weiser
You want to talk about boring supply chain management, that's where it's at. No, but seriously, this industry is all about supply chain management because marketers want to procure audiences as an input into their overall marketing activities.
- [25:25]
Unknown
Right.
- [25:26]
Brian Weiser
So now look at those three acquisitions in that context and think about where it could go. There is a lot of fun and interesting possibilities.
- [25:32]
Ari Poparo
Yeah, let's zoom out. So the last topic I want to talk to you about before we get to the full week of news is last time you were here, I guess it was like January if I remember correctly, maybe February. And it was a pretty gloomy show. You were talking about the tariffs and how automotive was just going to go.
- [25:47]
Brian Weiser
I remember freaking out, wasn't it?
- [25:49]
Ari Poparo
Yeah, you were freaking us out. So now we're in August. What's your vibe check on the economy?
- [25:55]
Brian Weiser
Well, always remember this adage, the distinction between Being wrong and being early is often indistinguishable. Now, it wasn't incorrect to say in December, as we did, that the policies of the current administration are economically destructive. They're anti business for the most part. It was not incorrect to then say in March looks like it's going to get worse because they're actually doing these things. They're not backing off. The stock market and the bond market realized this stuff when of course, the Liberation Day, such as it was, came out. And that's around the time when I was on.
- [26:34]
Unknown
Right.
- [26:34]
Brian Weiser
And it was sort of the really capital flight became a real risk for the country. It hasn't really gone away as a risk. And just look at again the tariffs going into effect right now. Just because we haven't seen the negative consequences yet doesn't mean that they're not coming. So when it came to our numbers, we brought down our numbers following the election because this outcome, where the policies of the current administration were likely to be implemented, were clearly negative or underlying economic activity. We had to account for that in our model. So we bring our numbers down in March. It looks really clear these are actually going to happen. And then you still have a lot of other wildcards, like the really crazy stuff that hasn't even started still. We were saying stagflationary conditions are what we're thinking, meaning low or reduced economic growth, higher inflation. Sound familiar? So we were talking about that and that had to have some impact on the ad market. We brought our numbers down a bit more. Then Liberation Day happens is like, okay, we look good, right? We're like, our number, it's terrible. But our forecast looks good. What happened next was earnings came out in the first quarter and the commentary for markers and what we saw was that actually people haven't really changed their decisioning despite these circumstances. So we raised our numbers because we said it doesn't mean all these problems aren't going to happen. But they haven't hit yet. That was back in what, May, June.
- [28:01]
Unknown
Right.
- [28:01]
Brian Weiser
So now where we are three months after that, having seen all the numbers from the most recent earnings, most recent quarter, things are still good. Second quarter will look as good as the first quarter. The third quarter probably will be okay too. But we're just kind of like there's this massive sort of Damocles hanging over us. Massive. Get bigger about the day.
- [28:21]
Ari Poparo
So bottom line, what is your official growth forecast for advertising for the fiscal year 2025?
- [28:29]
Brian Weiser
Well, it's going to change within a.
- [28:30]
Ari Poparo
Couple weeks, but what is it as of right now?
- [28:31]
Brian Weiser
Yeah, like 6%, 6% growth.
- [28:34]
Ari Poparo
That sounds pretty good.
- [28:35]
Brian Weiser
Yeah, it's going to be a decent growth year. It's probably going to be better than that. I mean, we haven't calculated, we haven't finished calculating second quarter yet. So once, once we get all that in, it's going to be a decent growth year. But again, the stagflationary conditions are real. Right. We're already starting to see higher inflation and lower real growth.
- [28:54]
Eric Franchi
So since that cocktail party that you scared the crap out of me out of, I've avoided you. Brian, are you saying, are you saying that now I can venture out to places I know you're going to be and we can hang out and it.
- [29:08]
Brian Weiser
Could be civil, I don't know, I'm still going to be, you know, I try not to be alarmist. And even then I was saying, well, here are all the parade of horribles.
- [29:16]
Eric Franchi
Of things you were talking second passports, Brian.
- [29:21]
Brian Weiser
Well, I got three. How about you?
- [29:23]
Ari Poparo
I, I know, I, I know people who are like, oh yeah, my bank account outside the US Is doing well.
- [29:29]
Brian Weiser
Yes. And I think I, I think everyone doesn't. This was actually a serious consideration. Look at what was in the one big beautiful bill ad. The actual threats on capital from abroad into the US Are real. No company based outside the US should operate without having a plan for capital restrictions.
- [29:45]
Ari Poparo
Yeah, I'm the only one who has to deal with the Mamdani mayorship. So I've got a lot more jeopardy than you guys do. All right, let's call it there and take a quick break. This was fascinating and we will be back with a lot of news. This podcast is brought to you by Adquick. Ad Quick connects the real world to your tech stack. They make it easy to plan, buy and measure out of home media with the same precision you expect from your digital campaigns. Visit adquick.com to learn more. That's adquick.com to learn more.
- [30:20]
Eric Franchi
All right everybody, welcome back. We are here with a refresh the news of the week. So on the docket today there's a bunch of stuff we'll go through earnings. Having Brian here on earnings will be great. Some of the I think notable sell side companies reported this week, another suit for Google, some vibes coming out of Silicon Valley that I think are interesting and worth noting around ads, big deal out of ESPN and maybe a little bit more if we have some time. So from the top earnings I'm just going to tick through it and then you know, maybe you guys give Me your sentiment after we go go through just like 4 so double verified B on both revenue and adjusted EBITDA. Revenue up 21% Magnite grew revenue 6.4% but unfortunately missed estimates Stock took a hit but management is like actually optimistic about a bunch of things. CTV, SMBs, Google, so on and so forth. Apple Evan revenue up 77% but also miss estimates stock was down and then New York Times added 230,000 subscribers. Overall revenue up 10%. Digital ad revenue up 19%. Stock is at an all time high. So taking into context everything you follow Brian with the whole codes in the macro space, some of the awesome earnings out of the big platforms, a little bit of kind of softer stuff out of these companies. What's your vibe on the Overall space in Q2?
- [31:45]
Brian Weiser
Yeah, well looking at the ad tech names in particular, obviously we'll know a lot more after the trade desk comes out because it's so heavily weighted in terms of the I think what most of us would call conventional ad tech. But it looks like the quarter will be about as good as the first quarter. Like high teens probably is where I think we'll see which is faster than overall digital advertising if you look at the platforms. So that's the first thing. The big surprise frankly was New York Times where small as they are relative to the overall world. And you forgot print. Print was flat, not negative. When print is not down, that's telling you something about a robust ad market at least when it comes to the New York Times because clearly they're capitalizing on, I guess, I don't know, consumers trying to follow the news as long as it's legal. So the Times, I think it was quite a standout number as far as I matured.
- [32:35]
Ari Poparo
Yeah. I mean the lesson for me really is that Brian's forecasts were wrong earlier in the year. It was going to be a banner year. Like I always said, do we correct.
- [32:43]
Brian Weiser
Our numbers whenever we can. They're the best available forecasts at any one time. What can I say?
- [32:49]
Ari Poparo
I don't know if there's a pattern here except it feels a little bit like the winners are winning, that there's a little bit of a breakaway because we're in a period where the open web has its challenges and we're no longer talking about this disruptive innovation of the sandbox and and cookies going away. And so the folks who have at working business model now can just put their foot on the gas in a relatively stable environment and the folks who are more vulnerable like we didn't talk about Snap having another crappy earnings quarter, the small guys not being able to break out.
- [33:26]
Brian Weiser
Well, Snap and Spotify, I mean, are two names worth bringing up too? Because I think that they're good examples of, I think, unrealistic expectations. Those companies are never going to be as big as Meta or Google. So what's wrong with being as big as they are?
- [33:40]
Ari Poparo
They're also not, they're not must buys. You can definitely leave those companies off of your, of your media plan. You can't leave Google. You can't go without either DV or is currently. So, you know, winner's winning.
- [33:55]
Eric Franchi
Okay, let's move on. OpenX is suing Google for antitrust. Ari, this is your wheelhouse. He'll let you take this one.
- [34:03]
Ari Poparo
Not a big deal here. So Google has been declared a monopoly by the federal judge and so this is a civil suit.
- [34:09]
Brian Weiser
Is there a book about that, by the way?
- [34:11]
Ari Poparo
I think there is one. It's called Yield. You should buy it. So yeah, so this is a civil suit because OpenX was a competitor that believes they were damaged by Google's activities and they're looking for civil damages. It's worth noting there are several other civil suits. The major one is from the Daily Mail Group and Gannett, which will be coming to trial, I believe in January 2026. And there's a bunch of other publishers in that and that's a pretty big suit. They're asking for a lot of money. There's also a smaller suit by Rumble, the kind of right wing YouTube. Rumble had multiple suits against Google and most of them, many of them were just dismissed. So they had this big suit against YouTube but the ad tech suit is still ongoing and we may see a lot more of this because if you were on the wrong side of Google's monopolistic behavior, and the judges already said it was monopolistic, then why not jump in and try to get some cash out of it? In addition though, the big news, and we don't actually have this in the notes here, is that there's a pretty good consensus that the search trial remedies are coming out next week, maybe even this week. And that's going to be the biggest news really of the year in that judge Meta is expected to require a Chrome spin out and some other things. And of course it's subject to appeal, but it's not subject to, to further fact finding. That will be the decision. And then it's a matter of adjudicating whether, who, how it's going to be deployed and how it's going to be appealed and all of that sort of stuff. So that's really big news and we should be on the watch for it.
- [35:43]
Eric Franchi
Makes sense. The one thing about the OpenX news is that they're looking for damages and the damage to their business was pretty severe. Again, just according to the suit.
- [35:53]
Ari Poparo
Right.
- [35:53]
Eric Franchi
Which is, which is going to be aggressive. But basically it's like, like you heard our exchange, you heard our ad serving business and at the time I remember 2019, OpenX was a big business. So they're probably coming for real damages.
- [36:06]
Ari Poparo
Yeah. So there's going to be a lot of mitigating factors here, of course. So in particular, and I wrote a book about this, so OpenX had an ad server, it used to be called php ads for those who are old enough to remember. And it really fell apart sometime in like the early teens, 2011, 12. And if you do the research, it was a mess. So it's not like this was a leading ad server. It was, they had numerous privacy problems and phishing and security problems. There are websites all over the web using this product that got hacked because of issues with their ad server. So that's going to be a tough, a tough argument. And then the issue with their exchange, the one I dramatize in my book as well, where Tim had to fire 200 people, was caused by Google effectively bidding against algorithms that it felt OpenX were implementing that were exaggerating revenue. So there were some dirty business on both sides around not really having second price auctions and stuff like that. So this is not going to be a clean case for OpenX.
- [37:06]
Brian Weiser
The one thing I am looking for, and I don't claim to have a clear view on how the world evolves after these rulings play out, spinoffs happen or not. But the one thing I'm looking for is whether or not an unconstrained spinoff business, one with effectively unlimited access to capital and effectively unlimited choice strategically relative to the existing business, becomes a more formidable competitor versus one which has kind of been unable to compete aggressively the last few years. I don't know, what do you guys think about that?
- [37:39]
Ari Poparo
Are you talking about the browser or the ad tech stack?
- [37:42]
Brian Weiser
We don't know. Who knows what direction each business goes. Whatever the anti competitive behavior, they've been operating two hands tied behind their back the last five years.
- [37:51]
Ari Poparo
I think it's definitely an issue where the Google may be dominant in some of these spaces, but they don't act dominant or they act in a way that's cautious the sandbox being the most obvious example where they could have either just ripped the cookies out or they could have replaced the cookies with something even better for advertising and instead they couldn't do either one of those things. They ended up muddling through. So I think that's part of the rationale for doing these spin outs to create more innovation.
- [38:18]
Eric Franchi
Yeah, it could be exciting. I agree. We shall see. All right, move off of Google. I am detecting a shift in the vibe as it relates to Silicon Valley AI ads in AI and ads in general. Let me give you two examples. Last night I took a long train ride and I happened to flip open X and they were beginning a spaces around ads with Elon hosting. So I put a post out and like kind of, you know, just took notes in real time and summarized it. There's been some follow ups afterwards. You can, you can read about it. But there were, there were a couple things that I thought were interesting. So the first was it's kind of funny to hear Elon talk about ads on X. He's said this before, but it's quite funny when he says, you know, I go around, I ask people, how long have you been on X or Twitter? And they say 2009. And then I ask him, have you ever bought an item of an ad you saw on X or Twitter? And he says, nobody has ever said that. So he trashes the former kind of regime and the ad product. I think he's inspired to do something about this in the way of Meta and Google. So his vision for advertising on X is really twofold or threefold. So it's number one, this is coming off of the spaces which I'm sure you can all tune into. Heavy emphasis on graphics. Grok believe that GROK will be the engine that drives great targeting, great optimization. Number two, he's really into catalog ads and product ads. There were three different times during his talk and then subsequent AMAs where he asked marketers to give us all of your products, all of your SKUs, make it individual ads, not necessarily catalog ads, but like individual product ads and let GROK do its thing. And then number three, he said something very interesting. There has been subsequent posts and this is kind of where I saw something interesting. He said we're going to have to put ads in GROK answers to pay for all the GPUs. So I know it was interesting. You also had a team on, they were talking about brand suitability and product roadmap. Overall, I was quite impressed. I came around to the future of ads. On X. But I thought that last point was interesting in that ads in Grok are inevitable. What do you guys think?
- [40:35]
Ari Poparo
It sounds like he's thinking about this in the right way, like an engineer. I like the focus on catalog ads because it just gives you a lot for the AI to work with. I think the current ad system is so bad, they might as well just throw it out and start over. You know, their ads are terrible and have been for years. I would wonder though, and this comes back to discussions we've had previously, whether he has all the raw material he needs because the Twitter timeline has no intent, it has no demographics, it has very little information that's useful for advertising. So just because you have this catalog filled with stuff, how are you going to know not to show me, you know, a, you know, a sports bra ad? You don't even know my gender. Maybe with AI you could figure it out, but like what they have to work with is so measly that I think that that's a missing part of the puzzle that maybe he doesn't even know is missing.
- [41:27]
Eric Franchi
Which is actually fascinating because the second thing he said after hey, Big Bad is on Grok is that the audience is the best thing about Twitter. He put it as, there's me and people like me. So Michael Dell and Larry Ellison and you know, all my buddies, we're all on Twitter. It's the only place to speak to us, to reach us, to engage us. And I think he implied that the advertising could follow suit. But yeah, I agree that there's a.
- [41:53]
Ari Poparo
Real big gap there that doesn't match catalog ads though. Of course not. That's like the, allow drilling in the, in the, you know, Bay of America type stuff.
- [42:01]
Brian Weiser
Sure, yeah, it's not that there's not a business. But the problem is, and what I think Musk and certainly others who are newer to the industry don't appreciate is that advertising is a least bad alternatives business, meaning there are a lot of bad choices. You, you pick the least bad one or ones when you're making a choice as a marketer. And that is to say if you're a small business with say a $10,000 annual budget, whatever the flaws of Google, whatever the flaws of Meta, you're really not going to spend more than a couple places. And it's like, okay, they dramatically dwarf anything FedEx will ever have, size wise. So what segment of marketer, if you're a hundred million dollar advertiser, you want brand building, okay, you want performance. But there's plenty of places to get performance. So what are they doing that make whatever their flaws, whatever the limitations, that makes them one of the top two or three choices for some segment of marketer. And that's the fundamental problem that, that X has never. They were almost able to solve that for, for a little while under the old regime.
- [43:02]
Eric Franchi
Yeah, they had elements of, you know, we know we are, you know, the town square. We know we are where live is done best. You know, they talked around this stuff. But I think you're right in that really understanding how to, you know, tell every marketer, here's where you should slot in X on every buy is. Is job number one.
- [43:21]
Brian Weiser
They were figuring that out. And I think that the only, the only problem with Twitter as it was going into 2022 was I think expectations were still out of whack that there was this belief going back to Dick Costolo era that, well, why can't we be as big as Facebook? It's like, no, you're a niche, Own it, be great at that niche.
- [43:40]
Ari Poparo
It also comes back to the product itself. The consumer behavior on the product is not conducive to the current form of ads. And so I think you have to think about how do you get people to watch more video on the site, which I think they're trying to. How do you get them to engage more on issues that aren't all political and nasty. It's a, it's an uphill battle. It's an uphill battle.
- [44:00]
Unknown
Yeah.
- [44:00]
Eric Franchi
Yeah, totally. They did talk about how, you know, they're going to be making brand safety, like, easier to buy on as well as. What was the other thing?
- [44:10]
Ari Poparo
The.
- [44:11]
Eric Franchi
Oh, that whole thing about prioritizing aesthetics. You know, they're basically going to, you know, give you lower pricing if your ads look nicer and presumably then perform better if this whole world is going towards like, you know, kind of high quality product and video product ads.
- [44:26]
Brian Weiser
Sure.
- [44:26]
Ari Poparo
I mean, Google implemented that in like 2003. Right. Like the quality support.
- [44:30]
Eric Franchi
Okay, let me give you another thing that I picked up on just yesterday. So Marc Andreessen was on tvpn. That's a great, you know, Daily Show. And he had about a minute and a half where he was just writing a love letter to ads specific to what this needs to look like within the realm of AI. So I pulled out a couple of, a couple of notes here. So number one, you can't get to 5 billion people with only a subscription offering. Right? Like meta Google, these are reaching up to 5 billion people. Global ads is the obvious business. So that was number one, made perfect sense. Number two, and I like this one, if you take a stand against ads, you take a stand against broad access, meaning there's a lot of that 5 billion people in the world that can't necessarily afford a $20 subscription to ChatGPT and you want everybody to have this type of access to world changing technology. And then number three, again pointing to Meta and Google Ads done properly are positive to the user experience. I got up and just like clapped. It was like so good, especially to hear Marc Andreessen, who hasn't necessarily been the biggest fan of advertising, talk about it in this way. And I think this is a sign of things to come, especially with Elon's comment about ads coming to Grok. What do you guys think?
- [45:51]
Ari Poparo
I think he's right, first of all, you know, and I don't, I'm not a big fan of him in general, but I think he's right on this. I think the reason why this vibe shift is happening is twofold. One is the technology change that's going from the last revolution of mobile to this new AI revolution. And people are saying, well, there's going to be a new crop of hyperscaled companies and they're going to be really expensive. So how do we put them on the revenue trajectory that Google and Meta were on in the last wave? And there's a limit to how many people are going to pay for OpenAI. Right. So that's why it's top of mind. And I think he's basically right about it. I would ask you maybe, you know, has Andreessen Horowitz been involved in any meaningful ad business? No.
- [46:34]
Eric Franchi
So I saw they invested in one of these next gen kind of generative AI for creative startups. I heard some rumblings that this new fund called Speedrun is like doing some things in ad tech, but we haven't been in a deal with them in recent history and you know, they, they're not coming up as you know who we're seeing, you know, in the hottest yields. There are other tier one firms that are though.
- [46:59]
Brian Weiser
So there was this little company invested called Face Face something. Facemash, Facebook. Oh, Facebook. He's bought it on the board. Facebook forever.
- [47:08]
Eric Franchi
He was a personal investor. It wasn't an Andreessen.
- [47:11]
Brian Weiser
Oh, right now it wasn't Andreessen Harwitz.
- [47:13]
Ari Poparo
He was also personal in App Nexus, which is not as well known.
- [47:16]
Brian Weiser
It's worth keeping in mind that it's not that people can't afford some number, it's that you need to get attention and you attract people who are indifferent to certain things. And that's the advertising just. And making something free or costless eliminates some friction. It's not the only model, though I don't think it's necessarily the case. You can have business models. You could have a business model where some small number of people are paying a massive amount of money. But for the product to be useful, it depends on a lot of free riders who aren't willing to pay. Whether there's advertising or not, it may not be necessary. So I'm not sure it's always going to be true. I buy it.
- [47:55]
Eric Franchi
Okay, let's hit the other major news of the week which was coming out of espn. Ari, you want to take us through this one?
- [48:03]
Ari Poparo
Yeah. A lot of movements in espn, so I'm not a huge expert here, but the history here is that ESPN still doesn't have an app. They've had only one of the app only available if you're a cable subscriber. And it's been long rumored they're going to come out with an app or more than rumored, almost discussed. And they made like two blockbuster deals in advance of of this app coming out. One being with WrestleMania, excuse me, with the WWE where they paid 1.6 billion for WrestleMania and a bunch of other stuff and the other where they gave away 10% of the company. ESPN, 10% ownership is going to the NFL who now will give it the NFL Network as well as certain rights to the Red Zone trademark. Trademark and a bunch of other games. And it's a really complicated deal. They're also negotiating with the mlb. So ESPN is sort of bulking up its offering in advance of offering a standalone $30 a month streaming product. It's expensive, but for sports lovers it's a pretty important subscription to have. And this is just really interesting and it affects kind of everyone because the NFL is really the most important media property in the US I'd add one.
- [49:16]
Brian Weiser
Thing about sports on this, and this is back to the ad supported models and non ad supported models. Every league, every sport needs to be mindful of what happened to boxing, right. It used to be an important. And I mean everyone cares about Brazilian Jiu Jitsu, right?
- [49:32]
Eric Franchi
But we care about all combat sports.
- [49:33]
Brian Weiser
All combat sports. But back in the 70s, right. Boxing was like a thing. Everyone seemingly cared about boxing. And then of course they try to maximize revenue near term and it's now a niche.
- [49:43]
Unknown
Right?
- [49:43]
Brian Weiser
Right. I think that there's a real risk around sports where what was working really well, for most leagues was the idea that they made a ton of money from their deals with either ESPN or Fox or other, you know, subscription based services that could charge large affiliate fees to fund it. And then consumers ended up paying in very indirect ways. Essentially, whether or not you were watching espn, you're still paying for it, Right? Not ads, but you're paying for it. And then you kept the broad appeal for people who had casual interest in it by making sure there were some games available for free and there is some access to everyone. So you could kind of give everyone some buy in and that could be ad supported. But the bulk of the economics really were dependent on subscriptions. We're going into this phase now where the leagues and the streamers are going to kind of sort of lock out the casual fan. And so there's a real risk that sports more or less becomes more of a niche thing and they all have to watch out for boxing's fate.
- [50:41]
Ari Poparo
Yeah, but they're trying to avoid that. Like they're really only giving these streaming exclusives very sparingly and they're. And the local blackouts assure that the local areas still get, you know, transmitted over free. And I think that this is probably the case here. I don't, I don't think you'll need this $30 a month ESPN deal in order to watch a lot of this stuff. If you have an alternative way of getting broadcast tv.
- [51:07]
Brian Weiser
Yeah, there'll still be a lot of, I think football in particular is still available free to air. And I think the NFL has been certainly very savvy around making sure they don't fall into that trap. But I think this sort of thing, plus the news from Fox will also announce their Fox one sports app. Similarly, it will accelerate cord cutting or contribute to further cord cutting. We're going below 50% pay TV penetration in the United States this year and that means fewer people will be accessing broadcast television too.
- [51:32]
Ari Poparo
And part of the problem, Rich from Lightspeed when he was here talked about this, is there's no silver bullet. You can't just subscribe to one reasonably priced fee and get all the NFL. Right now you have to use something like Google TV to get the broadcast stuff. Then you might need Amazon to get the Thursday night and it's starting. The price tag for getting it is going up, up because of the fragmentation.
- [51:56]
Eric Franchi
That's really well said. And this is also, I think these deals also show how hard it is and how fiercely everybody needs to compete with Amazon and Netflix.
- [52:06]
Ari Poparo
Yep, yep. You got to bulk up get the consumers direct and not let the bigger cash hordes of the tech companies just side check you to the sidelines.
- [52:16]
Eric Franchi
Absolutely. I think this is a good place to leave it. What do you think, Gus?
- [52:20]
Ari Poparo
Can we talk about Icon just because it's funny?
- [52:22]
Eric Franchi
Oh, it's old. It's like last week's news, but yes, please, go ahead.
- [52:26]
Ari Poparo
Okay, so icon ads, for those of you who don't know, was a very highly funded company. Yeah, we talked about it. They basically founders fund their AI for creative. And the thing is, they just were really obnoxious. They had so much swagger. They're like, we're disrupting everything. We're working seven days a week. The advertising industry has no idea what's coming. We're going to be the first trillion dollar SaaS. And. And you know, fast forward two months and now they're saying, well, we're offering creative services and agencies for people who need help with their ads. I guess the AI doesn't do it all. And, you know, it's basically a really fun victory lap of everyone on Twitter bashing on these assholes, basically. So I would like to join in and I'm joining in because I have a podcast. So this is me joining in.
- [53:08]
Eric Franchi
A lot of Schneidenfruit going on. I, you know, I haven't. I have empathy for the company. I have empathy for the founder. I mean, he was going out hard publicly. Pivoting is hard after you made such bold and brash statements. I don't want to see the company go down in flames.
- [53:25]
Ari Poparo
Personally, I would take it.
- [53:28]
Brian Weiser
Nothing wrong with course correcting. That's what I'll say.
- [53:31]
Eric Franchi
Yeah, you got to figure it out along the way. Well said, Brian.
- [53:35]
Ari Poparo
All right. This was a great episode, Brian. Thank you so much for being here. A lot of great stuff. Really appreciate your perspective on the whole agency work.
- [53:42]
Brian Weiser
Thanks for having me. I'll be back with the jersey.
- [53:45]
Ari Poparo
All right, Eric, we'll print it out. Thanks as always.
- [53:48]
Eric Franchi
See you next week, everybody.
- [53:50]
Ari Poparo
Thank you for subscribing to marketecture. New interviews are added every week at marketecture TV and your favorite podcasting app. Thank you for listening to the Market podcast. New episodes come out every Friday and an insightful vendor interview is published each Monday. You can subscribe to our library of hundreds of executive interviews at marketecture tv. You can also sign up for free for our weekly newsletter with my original strategic insights on the week's news at News Market tv. And if you're feeling social, we operate a vibrant slack community that you can apply to join@adtechgod.com.