I was going to do a whole newsletter on CTV this week, but so much interesting news has come up in the last week that I decided to push that off for a week (or so) and open a discussion about some interesting things that are happening in the industry.*
*In case it isn’t clear at this point, this newsletter will mostly be about ad tech, media, management, etc., but very occasionally, I may stray into other things that interest me. You’ll be spared a 5,000-word essay on why the New York Rangers are the greatest hockey team in the history of the world ever … for now.
OK, let’s get it.
Let’s Get This One Out Of The Way
The thing about betting a long shot is that sometimes they pay out. What are we calling this thing? Microflix? Netsoft?
With players like Google and Comcast pitching that business, my knee jerk reaction was that Netflix didn’t want to lean into an organization that’s a competitor of theirs and Microsoft looks way more like a partner than a competitor. There’s been many articles written about this in the last three days, so I’m not going to rehash the whole things, but that was very much a “would you mind holding this live grenade” type story.
Meanwhile, At The DOJ …
I’m not sure if Google is actually willing to play ball here or if this is something that’s been floated to see if someone will bite, but this WSJ article (sub. required) suggests that Google might actually be willing to make some changes to the way their ad businesses functions today.
It reads a bit vaguely in the article. I can’t quite tell from the text if Google is offering to spin off the tech and media businesses into one separate entity or two, but one thing that’s clear is that it would still nest under the Alphabet corporate structure:
As part of one offer, Google has proposed splitting parts of its business that auctions and places ads on websites and apps into a separate company under the Alphabet umbrella, some of the people said. That entity could potentially be valued at tens of billions of dollars, depending on what assets it contained.
I suppose that’s something. And something is usually, though not always, better than nothing. But if Alphabet still owns the entity or entities, what’s the difference? How does this change anything? What additional regulatory scrutiny would exist for these entities under in this paradigm? It’s one thing for one set of functionality at a company to be more tightly integrated with compatible functionality at the same company - they’re on the same code base - but what’s preventing Google from continuing to put their thumb (or something much heavier) on the scale in this set-up? It’s no secret that Google uses things like dynamic enhanced allocation to actively steer external supply and demand to the demand and supply (respectively) that they source and that the algorithm behind that is a black box guarded by a grizzly bear inside of Fort Knox*, so what (or I guess who) is stopping them from continuing that behavior? And I guess most importantly, who is going to stop my 9-year old son from getting Cymbalta and Spectrum Business ads in his Minecraft videos?
*It’s challenging to find and understand is what I’m getting at here
Maybe I’m a cynical jerk (editor’s note: probably), but if they’re really feeling heat from the regulators, then the regulators need to regulate, much like Warren G and Nate Dogg* did on that clear black night with the clear white moon. There’s absolutely nothing to lose by trying to turn the screws on these guys a bit more to make the landscape more competitive.
*Factoid: Warren G is Dr. Dre’s brother. Also, RIP Nate Dogg
So that’s what happening here in the US. But, you may be sagely asking, “what is happening in the EU? I’ve been given to understand that the EU has stricter anti-trust and privacy regulations in place. What is the EU asking about Google’s tech market share?” The EU is sharply focused on anti-competitive practices as it pertains to YouTube. Here, Google has also come with an offer.
As part of that offer, Google would allow competitors to broker the sale of ads directly on the video service, those people added. Currently, the only way to buy ads on YouTube, the world’s biggest video-sharing platform, is to use Google’s ad-buying tools.
OK, this is much more interesting for me, assuming it takes the shape of, you know, actually allowing other tech on the platform and allowing it to transact at functional parity with the Google tech. I mean, the revenue share that Google takes on ads that transact through YouTube would make the mafia blush. If you control the supply and the demand channel, you can do that sort of thing. Open up that walled garden and let some other players play.
Do You Hulu?
I feel like Hulu has more existential crises than an emo teenager.
This is another nugget that dropped after I hit send on last week’s newsletter. There’s a fairly large bill coming due on Hulu for Disney as part of their acquisition of the Fox properties and (in a twist no one saw coming*), there are questions about Hulu’s future as part of the portfolio of Disney streaming properties.
*Everyone saw this coming
It’s reasonable to understand. Disney+ is on a rocket ship as a paid subscription property (and likely headed for an ad-supported model of some kind if the past is a meaningful indicator of the future). ESPN+ is doing its thing as a sports only property. Hulu occupies this purgatory between them - they broadcast some live sports (in partnership with ESPN), but they’re not the only place where you can find content made for adults because Disney+ airs all kinds of stuff (including the Simpsons!) and not just kids’ content. In other words, Hulu was a strategy until it wasn’t.
Is Hulu headed for acquisition by Comcast as the article would suggest? Despite what Rich Greenfield suggests in the article (and this isn’t a knock on him, he’s probably forgotten more about media than I know), I’m not sure why it would be, unless it came with a guarantee of some kind that Disney programming would still be able to air on it and a pretty steep discount on whatever the market value is as determined by whatever third party is agreed upon. But Hulu comes with costs - and not just the cost to acquire it, the cost of production of its (really good) original programming for instance - that probably make that kind of an acquisition prohibitive for Comcast, especially given that Comcast has a streaming service of its own* and just entered a gigantic joint venture with Charter to license its hardware and streaming platform. Hulu just doesn’t seem like the kind of investment Comcast would want to make, given where they’re already investing.
*That airs reruns of Columbo that more than validate the monthly cost, IMO
And, just one more thing, if I may*: the Hulu backend tech was supposed to be the foundation for a Disney-wide ad serving technology that was going to power their push to vertically integrate content, advertising and distribution across the entire enterprise. What happens or happened to that strategy? In a deprecation scenario, I suppose they could trash the service and keep the tech. In a divestiture scenario, they could make a deal to keep or license back the tech, I guess. It just all gets more complicated.
*That’s a Columbo reference, for the uninitiated
Long story short, I’m interested to see what happens and I don’t envy the decision.
That’s The Way The Cookie Crumbles
Disney and the Trade Desk have announced a partnership to connect Disney’s audience graph with the Trade Desk’s UID 2.0 to allow advertisers to transact on Disney first-party data in a privacy safe workflow.
While I’m not entirely convinced that the death of the cookie is imminent, it’s obvious that the landscape is shifting away from cookies and toward first party data. I’d argue that’s a generally positive move, although it very clearly favors entities that already own (or have great access) to pools of first party data. That seems like fairly obvious thing to say, but the statement itself isn’t the point. The entities that have the most first party data are the giant organizations that are the ones that are (as a for instance) deprecating cookies that other entities rely on or they’re licensing that data at great cost to the licensee. Entities such as those are set up for success in Web 3.0*. And there are bad actors (or I guess data parasites might be a better way to put it) out there that dropping cookies could flush out of the ecosystem. I think there’s going to be some Butterfly Effect here as well that I can’t possibly predict, but will be interesting fallout in terms of who wins and who loses. Lastly, I’m sure there’s a cottage industry to develop (or that already) exists to take advantage of this (Blockgraph, perhaps?)**.
*I didn’t want to; I had to
**For this vague suggestion of a possible new business, I will accept a point of equity in whatever company arises. Please reach out
I think it’s also worth noting that first party data is more than just specifically information that people have volunteered to organizations about themselves. There’s a wealth of data that’s endemic to the bidstream (think browser, OS, etc.) that qualifies as first party and can be very predictive of consumer behavior without at all violating their privacy in any way. Companies like Chalice and SciBids are developing custom algorithms predicated on exactly that: that available bidstream data can be leveraged intelligently and drive better results for brands and consumers.
That’s all for this week, folks. See you next time.