Category Archives: Industry Commentary

Media and Tech Moguls’ ‘Rare Displays of Mortality’ Will Make You Feel Better About Your Mistakes

Jeff Bezos is #1 on Vanity Fair's listWeighted way-too-heavily with tech platform executives, journalists and media moguls, Vanity Fair’s New Establishment list (out today) is basically a who’s-who of people I idolize… But my favorite part of the list is how they recap their picks and in particular, an occasional category dubbed “RARE DISPLAY OF MORTALITY” which highlights one of their colossal missteps in 2017, instead of how they continued to dominate.

I’m a perfectionist. I’m an asshole to myself when I make mistakes. So it helped me a ton to read a laundry list of mistakes and embarrassments made by a usually infallible elite. They’re just like us! Here are some highlights:

  • Peter Thiel would have $6 billion if he hadn’t unloaded his Facebook stock soon after the IPO
  • Two of Shonda Rhimes‘s new shows were cancelled this year
  • The joke was on Stephen Colbert and Showtime’s Election Night Special when the election results upended the entire show
  • Remember when Mark Zuckerberg said it was “crazy” that Facebook might have swung the election?
  • Larry Page‘s own CFO is giving hell to his pet-projects like Fiber
  • Tim Cook helms a company about to be worth a trillion dollars… but his latest innovation is an Echo rip-off and their first original program was Planet of the Apps which one reviewer said “feels like something that was developed at a cocktail party”
  • Sundar Pichai, CEO of Alphabet/Google, made a $2.7-billion-dollar anti-trust mistake in the EU
  • The New York Times is firing hundreds of employees
  • Snap’s stock is down 40% and it was probably the most-anticipated IPO of the year
  • Game of Thrones creators David Benioff and DB Weiss announced their next project was about an alternate-history where the Confederates won the Civil War and it was naturally hosed into submission online
  • Head of Lucasfilm Kathleen Kennedy has had to fire 3 directors of Star Wars installments
  • Marc Andreessen has never hired a female partner at Andreessen Horowitz
  • But of course Jeff Bezos, #1 for the second year in a row… is perfect

The Google/Facebook Digital Ad Duopoly by the Numbers – 2017 Advertising Revenue by Company

Digital ad revenue by company 2017People keep saying that Google and Facebook get 90% of digital ad spending… though still a concerning stat, this is somewhat of a distortion. The rumor started with Mary Meeker’s Internet Trends report and has been paraphrased and rounded up. The real stat is that the duopoly gets about 90% of digital spending growth. So, as advertisers and agencies spend more on digital ads, Google and Facebook are gobbling up most of the new money. That doesn’t really make them a monopoly… it just means they’re doing a great job at keeping other companies from growing in a white-hot space.

eMarketer released some reports giving us real insight into their dominance. Turns out, the duopoly has about 63.1% of the spending. Again, this should still be concerning to you if you work in advertising for anyone but Google and Facebook… but it paints a slightly more optimistic picture.

Check out their data below. Since I’m mostly concerned with market share, I’ve compiled that nicely here:

  • Google 42.17% (YouTube 4.67%)
  • Facebook 20.93% (Instagram 3.71%)
  • Microsoft 4.34% (Linkedin 0.98%)
  • Verizon 4.34%
  • Amazon 1.99%
  • Twitter 1.46%
  • Yelp 0.87%
  • Snap 0.77%
  • IAC 0.54%

Here are my observations:

  • Google has twice the market share of Facebook – When we say the word “duopoly” or call out 90% of growth and 60% of market share, we’re missing the fact that Google has more than twice the market share of Facebook. Put another way, Google has more market share than Facebook and all the other significant digital ad companies combined.
  • Instagram vs. YouTube – By the same token, Facebook has one asset that’s whooping Google: Instagram. Without much of a video product, Instagram is still only $800M behind YouTube in terms of net revenue and the eMarketer predictions have Instagram surpassing YouTube next year.
  • Photo finish for 3rd – I’m really interested in who has the best chance of eating away at the duopoly and it’s a photo-finish for third place with Microsoft and Verizon holding 4.34% of the market each. But they might not really be competitors because AOL/Verizon actually reps a lot of Microsoft’s inventory and why wouldn’t they partner to take down the Goliaths? It would be interesting if these two could start to chip away at either.
  • Snapchat is slightly better off than they look – I’m bullish on Snap because I like a good underdog. eMarketer points out that while they only have .08% of the overall digital ad market, they have more than 1% of mobile and a lot more teens than Facebook and Instagram.
  • And Amazon is lurking at 2% and they just started trying.
  • Apple isn’t on this chart.

Could Disney Be the First to Stream Day-and-Date?

I love how ballsy this would be. Disney is out of Netflix and has announced their plans to make a similar service. And in a guest post on THR, Ben Weiss posits this crazy new move: that Disney could quickly amass a big subscriber base by launching their movies on the service “day-and-date” — that’s the much-feared-by-theaters idea that a movie could be streamed the same day it releases in theaters. 

It’s brilliant because it endruns the entire traditional entertainment distribution-windowing business model in favor of the consumer preference of when-I-want-where-I-want. It would definitely grow them a huge base of subscribers. But they’ll never do it. 

  • Disney is already giving up $300 million in revenue by opting out of Netflix. 
  • Theatrical is the majority of their studio entertainment revenue, about 60%… and a move like this wil piss of theaters and threaten that nut. Theaters may refuse to carry the movies or put them in fewer cities. It may even piss off some consumers who still like the theater experience– if their local chain decides not to carry the movies over this move. 
  • If Disney does day-and-date they’re not just threatening the theatrical revenue. They’re endrunning all of their studio ent distribution: pay TV, home entertainment, etc. Why would another provider value their content the same way if it’s already debuted in a streaming window? 
  • And finally, the REAL business of Disney is parks and products — maybe twice the revenue of all of the studio business. What if this slow, gradual windowing model actually helps propel their brands in those venues? It might be a stretch but my instinct is that being in every theater in America is the best billboard ever for a parks attraction or action figure. Better not mess with that. 

But, boyyyy, would I love to live in a world where studios made distruptive moves like this. I dare you, Bob! 

My Favorite Slide Explaining Apple, Google and Amazon’s Domination of Entertainment Companies like Disney

Market Caps of Content Companies vs Distributors via BTIG

I LOVE LOVE LOVE this slide from Rich Greenfield at BTIG. His whole presentation is definitely worth the watch but this one graph truly says it all. (And I’m always trying to pull it up online to share in meetings… so I’m also posting it here to make that much easier.)

In the presentation, Rich first shows market caps of the companies below the line — all of our beloved entertainment creators. We see them in print and on every screen and think of them as massive, powerful companies. Then, he layers on the market caps of the “platforms” and distribution companies that sit between those companies and their audiences… and it’s easy to see how those content co’s are dwarfed.

Rich is looking at this through almost exclusively through a lens of financial analysis and market value… which might not tell the WHOLE story, but it paints a pretty dim picture for content creators and brand owners: Content is not king.

Some things worth noticing (many of these points are made by Rich):

  • None of the entertainment companies below the line — even the juggernaut, Disney — has a meaningful direct-to-consumer platform… they all depend on the companies above the line to reach their audiences
  • Apple could buy Disney in cash
  • Google or Apple could buy the entire entertainment industry in cash, except Disney
  • Every one of the distribution companies above the line have meaningful plans to make their own content that they own completely and perpetually (in other words, they could start to make their own content without depending on the content companies and their brands)
  • Netflix isn’t even on here but its market cap around $70B, making it bigger than everyone but Disney
  • Neither is Snap… it’s much smaller than Netflix at $20B (as of this writing), but it still stacks up above Viacom, Discovery and others
  • The digital-oriented distributors like Facebook, Apple, Google and Amazon have incredible volumes of data and knowledge describing their audiences, which is a huge advantage in content creation
  • While some of the content companies have partnered with and invested in the FANGS companies, they’ve missed their chance to buy one of them or build their own; Hulu is the only example and they half-heartedly participate in it
  • Nobody has been able to successfully create a large “direct to consumer” platform with content or brands alone… Netflix had to use DVD rentals, Amazon is using ecommerce, Spotify is using music and UI. In other words, we haven’t seen someone earn lots of subscriptions and ad revenue by only saying “we have ESPN.” It’s always content paired with some other strategy.

What Rich calls the “punchline” is this great thesis: content companies — especially Disney — have to make an acquisition in order to complete their business. What should they buy? Well, all of their options SUCK. Netflix is too expensive. Snap and Twitter don’t come with subscriptions. Pandora or Spotify aren’t video platforms.

That punchline explains many of the plays we see being made around the industry: Twitter continuing to pursue video in an attempt to demonstrate its value as a video platform. Time Warner selling itself to AT&T. Netflix spending billions on original content. NBC investing heavily in Snap. The list goes on…

Development and Advertising Creative via Crowdsourcing and Committee

I’ve searched all the parks in all the cities and found no statues of committees.

– British writer, G.K. Chesterton

Boy this is a GREAT quote cited by copyranter Mark Duffy on Digiday. Duffy is focusing on creative agencies in the post, explaining why a new trend of “crowdsourcing” creative work is a horrible idea.

On the digital entertainment side of media, there are examples of the same trend (that are frequently also labelled as “innovation”). For instance, Amazon, for a long time, has used crowdsourcing to determine which movies and shows it would produce. And that’s a big, obvious example. On less consumer-facing level at digital platforms and in development, I’ve experienced many teams more or less “internally” crowdsourcing their development process by allowing too many people with disparate tastes, areas of expertise and business goals to give creative notes on a project. Inevitably, projects get watered-down, regress toward the mean and join the internet “sameness” crap-trap… And it’ll only get worse as digital content gets more closely controlled by distributors.

Duffy explains some of the cons of this approach in advertising, and internal crowdsourcing is a problem in digital entertainment for the same reasons. But that G.K. Chesterton quote says it all for me.

Here’s the awkward Publicis video explaining their new creative tool:

SnapChat’s Viewability Advantage Over Facebook

What’s one of today’s prime digital advertising concerns? Viewability.

In case you’re out of the loop: Viewability is more or less a measurement of whether or not a video ad is actually viewed by an audience. (Seems odd, right? A marketer can buy and pay for an ad that was never “viewed.”) A number of factors contribute to the dwindling of this number from fast-scrolling users to bots and videos played “under the fold” or hidden in banners or buggy units.

That is why it should be very concerning that Facebook was recently accused of a less than 30% viewability rate by agencies using third-party measurement firms. Viewability is never going to be perfect and that’s OK — viewability is really just a proxy for “how much is my ad dominating that consumer’s attention” and that’s why agencies are measuring it. Some products and platforms will always perform better in this way… we love TV because that’s a big-ass screen with sight, sound and motion and I get all of it for a 30-second spot.

SnapChat’s ad product, by comparison, is extremely viewable. This is one reason that Snap has a huge advantage (esp. in terms of shifting TV ad spend), even though Facebook and Instagram have potentially slowed their growth. Snap’s ad product takes up the whole screen. It can’t be minimized, ignored or “tuned out.” Further, its users are completely engaged in the content — they’re burning the screen, skipping anything they deem unworthy of their attention. They’re leaning forward, right into your ad. Earn their consideration and you get a never-before-seen level of “dominating the consumer’s attention” for 10 seconds. It’s probably BETTER than TV.

Here’s SnapChat continuing to master product design and UI — it’s all about the user first… and just so happens to whet the advertisers’ demand for viewability.

How Apple’s iOS Advantage is Like a Content-Distribution Merger

WWDC 2017 Apple vs Google Penetration statsThere’s a quick Recode note by Tess Townsend pointing out Apple’s huge advantage over Google: they can quickly deploy new features across all of their devices. So, even a mediocre augmented reality feature would catch fire among Apple users well before it could with Google’s Android. (Apple pointed out at WWDC: 86% of iOS users have the current software, iOS 10, while only 7% have Android 7.)

This reminded me of the entire content-distribution “debate” and the mergers we’re seeing lately between the two types of companies. This Google vs. Apple AR metaphor makes it much easier to see why it’s good for content businesses to join distribution pipes (aside from the obvious data and advertising synergies).

Theoretically, Verizon can use its pipes, retail stores and devices to quickly seed new content from HuffPo, TechCrunch and content arms of AOL/Yahoo. And a new combined AT&T + Warner could launch new shows and franchises the same way. They don’t have to wait for the right cable channel to say yes or for the right network slot to open up. Then, once the show or brand or character or channel has earned a following or gained momentum, they can force their competitors to carry it or license it. Just like Apple can quickly deploy new features, a content + distribution co can quickly deploy new IP. So, whether it’s an AR revolution or the next Game of Thrones, those that own distribution are still in the driver’s seat.

Work at a Digital Media Company? Here’s How Much It’s Worth

We’re in a huge boom of VC-backed media start-ups with tons of investment in digital media brands that are growing because of the obvious shift of consumer attention from print and radio to mobile and internet. And if you work at one of these, you might be wondering how much your equity is worth or when/what the co’s exit prospects are.

There’s a pretty neat article on Medium called The Art and Science of Online Media Exit Valuations. It’s a simple 101 about how media companies are being valued these days based on interviews with real media investors and detailed research on these types of companies.

If you’re just looking for the so-called “multiple valuation” punchline, here it is:

Digital media companies tend to sell for between 2.5 and 5 times (2.5–5x) revenues from the previous, or “trailing,” 12 months.

Also:

Most digital media companies sell for about 8–12x EBITDA.

I find it interesting how investors prioritize different types of revenue. Digital media is generally very TBD in the business model department and part of the excitement to me is how much experimentation we see in this space: loyalty programs, tip jars, paywalls, merch, licensing… but according to Dorian Benkoil and Rafat Ali’s research, four areas add big value. These could kind of be used as a playbook for CEOs and strategists trying to bump their valuations:

  1. Subscriptions services — because these are much more predictable than advertising
  2. Paid research
  3. IRL events/conferences/parties, and…
  4. Databases of user info (very lacking for co’s in the distributed media world)

YouTube TV — UGC and Vlogging Next to Premium Television

Bloomberg has an awesome breakdown of YouTube’s really cool announcement today. They’re launching their own “skinny bundle” of network and cable traditional TV access which will fuse with a high-tech cloud DVR and their own recommendations for YouTube videos.

A conversation will commence online about the viability of these low-priced “skinny bundles” and I tend to think they’re not a great model and won’t last. I don’t think Google thinks they’ll last either — I think their intention is to blur the lines between content on YT and TV. Because that’s the battle they’ve been fighting for years… Google is dominating digital ad spend but barely chipping away at television ad spend.

If they can change media buyer perceptions — prove that their content is just as premium as TV — then maybe they can get some of that dough. I don’t think it’s nearly that easy. Literally, this is the example, cited in the Bloomberg piece:

A query for cooking shows, for example, might turn up recommendations for Hell’s Kitchen, the TV staple from Fox, alongside Epic Meal Time, a web-only show produced by Studio71 GmbH.

Now THERE’S a stretch: Competition reality fans seamlessly transitioning into a handheld brofest about binge-eating. Is surfacing vloggers next to This Is Us going to accelerate cord cutting? Or shift ad spend from TV to digital? There’s no way.

This is a really cool service and it’s extremely thoughtfully designed. I’m thrilled to use it. But the idea that just putting these two types of content next to each other will somehow “merge” them in the eyes of audiences and advertisers is flawed. Until YouTube makes content like Empire, it’s not going to command revenue or ratings like Empire.

YouTube Bets It Can Convince Cordcutters to Pay for TV via Bloomberg

Annoying, Unskippable Ads Get a Really Bad Rap — And Might Be Better for Us


Jason Hirshhorn piqued my interest quickly (maybe accidentally?) in the mix of his rantnrave on Redef today [bolding from me]:

All advertising is content, some more enjoyable than others. Sometimes the less enjoyable ads sell product better, using less of a viewer’s time.

That’s a great trade off for a viewer! The advertiser gets to sell HARD in exchange for not much of your time. I’d take that any day.

And yet, most advertising “quality scores” (a fundamental component of bidding algorithms aka getting a low CPM) would penalize an ad for local-car-dealership-style of hammering jingles, prices, locations and calls to action. And skippable ads obviously disincentivize consumers from watching brisk but sales-ey ads… they get annoyed and hit skip. It’s all in the name of “the user.”

I’m afraid that the ad networks, ad tech and technologists are favoring more insidious, “engaging” branded-content type ad creative because it supposedly puts the user first. We know that branded content is sometimes just manipulative… hiding the fact that it’s advertising in favor of engagement. So we need to be open to unskippable, “less enjoyable” ads and heavy calls to action — because sometimes they can be annoying, but they use less of our attention… and attention is way more valuable to the user and the platform.