Sep 6, 2019

Tech giants keep legacy ad businesses afloat

Data: eMarketer and Zenith Media; Chart: Axios Visuals

Big tech companies like Google and Facebook, as well as newer direct-to-consumer (DTC) tech upstarts like Away and Peloton, are driving advertising growth for legacy industries, like traditional television and out-of-home (billboard) companies.

Why it matters: The very industry that's upending legacy media companies is also the one that's keeping their ad businesses afloat.

Driving the news: Out-of-home (OOH) advertising grew by high-single digits for the third consecutive quarter during Q2 of this year, according to Vincent Letang, executive vice president and director of global forecasting for Magna Global, the media buying unit of global ad agency IPG.

  • The reason for such high growth is increased spending by the tech sector, per Letang. Amazon increased its spend by 130% last quarter, while Apple increased by 22%. Letang notes that DTC brands also increased spend.
  • Last year, a quarter of top OOH spenders were major tech brands, according to the Out of Home Advertising Association of America.
  • Netflix in particular has been increasing ad spend, as it vies to promote movies to critics in Hollywood. One billboard executive says Netflix's out-of-home spending has so far doubled this year compared to last year.

Television networks are also seeing increases, thanks in large part to the commercial spending by tech rivals on linear channels. Both broadcast and cable networks saw their ad businesses grow and stabilize, respectively, last quarter, due in part to the investments made by big tech companies with heavy pockets.

  • "Well over $1 billion this year came from digital-native companies that literally didn't advertise 4 or 5 years ago," NBC Universal CEO Steve Burke noted on Comcast's second quarter earnings call.
  • "Companies like Amazon, Facebook, Google and Netflix are spending big, big dollars on network television," CBS Chief Revenue Officer Jo Ann Ross said on CBS' second quarter earnings call.

Be smart: The investments being made by big tech companies and newer companies that are just beginning to join the TV advertising market are a reflection of a healthy economy.

  • "Digital companies like Google, Facebook, Wayfair, etc., have been driving so much growth in the last two years in total advertising," says GroupM's Brian Wieser, one of the top advertising industry analysts.

Yes, but: Wieser notes that as these mega-companies mature, their growth rate, and thus ad spend growth rate, is also likely to slow, which could cut ad growth for the rest of the advertising ecosystem.

Flashback: In the late '90s, spending by dotcom-era tech companies flooded print outlets, particularly magazines and newspapers, with cash. When that market collapsed at the turn of the millennium, print began a long decline that hasn't yet ended.

Go deeper

Alliances are Advertising Week's big trend

Illustration: Aïda Amer/Axios

Heading into Advertising Week, The ad market is healthy and is forecasted to grow slightly higher than expected during the second half of the year due to positive economic growth.

The big picture: It's still mostly controlled by Google and Facebook, and after years of trying to figure out how to take on the "duopoly," publishers have mostly resorted to the same thing they've been trying to do for years: team up.

Go deeperArrowSep 24, 2019

Washington Post builds ad network for publishers to take on Big Tech

Photo by Thomas Trutschel/Photothek via Getty Images

The Washington Post on Tuesday will unveil Zeus Prime, a product that will allow companies to buy automated ads in real-time, similar to Big Tech platforms. Zeus will also support a new ad network that will include other publishers.

Why it matters: Advertisers often complain that they would like a better alternative to buying ads on Google and Facebook — where the content isn't always vetted — but there are no other places where they can buy ads as quickly and efficiently in real-time. The Post hopes this product will change that, and put more ad money in publishers' pockets.

Go deeperArrowSep 17, 2019

Political ads become 2020 flashpoint

Illustration: Lazaro Gamio / Axios

Tech giants, TV networks, and even transit companies are all struggling to figure out how to manage political ads ahead of the 2020 election. While some firms choose to run lots of political and issue ads with little oversight, others opt to ban them altogether.

Why it matters: Absent strict government regulation of political ads across all media, the decision over how to manage those ads is left to companies. And while most firms have faced this dilemma for years, the hyper-political environment leading up to 2020 is shining a stronger spotlight to their decisions.

Go deeperArrowOct 4, 2019