Strong 3Q for digital advertising

It has been a good week for digital advertising. Meta and Alphabet's YouTube have shown promising ad revenue growth for 3Q at 21% and 12% respectively, continuing 1H’s positive momentum. Alphabet’s Search advertising also delivered solid revenue growth of 11% . Both companies are doing well in terms of the shift to short-form video content on their platforms, seeing stronger engagement and improving monetisation. Even Snap, which had a couple of rough quarters previously, swung back to 5% growth and beat expectations. Spotify also saw solid advertising at 24% growth CER, even though it is a smaller part of the overall market. This positive trend contrasts with the mixed results of global marketing services holding companies. Publicis, Havas, and Omnicom reported organic growth of 5.3%, 4.5%, and 3.3% respectively. However, IPG and WPP fell short of expectations, with a slight organic decline in 3Q. The reduced spending by Tech clients continues to be a drag. Despite the revenue growth of Tech giants, they continue to manage costs tightly, as demonstrated by Meta and Alphabet's reduced sales and marketing spend in 3Q. As we move into 4Q, many management teams have warned of potential negative impacts to advertising spend due to the ongoing conflict in the Middle East. In other news, TikTok is testing longer videos and horizontal format while rivals focus on short-form. Advertisers are eager to tap into Amazon Prime’s vast audience but are hesitant to pay a premium. WPP terminated the Shanghai-based GroupM executive over bribery allegations. In Europe, changing market conditions may prompt a reevaluation of the PE buyout of classifieds giant Adevinta. Over in the US, a new fintech intelligence platform debuted at this year’s Money20/20 US.  


News of the week

TikTok is testing long-form and horizontal format.
As other social media platform shift to short-form, TikTok is exploring longer videos. The company is now testing a new feature that allows users to upload 15-minute videos, an increase from the current ten-minute limit. It is also testing the horizontal full-screen format. This move is seen as TikTok's attempt to compete more directly with YouTube by attracting creators of longer-form content. However, it is unclear if all users will welcome this change as TikTok is traditionally known for short, entertaining videos. The company has not confirmed when or if this feature will be rolled out to all users. WARC, TechCrunch
Advertisers are hesitant to commit to Amazon Prime Video ads due to high prices
Amazon has been negotiating with top advertising agencies for its new Prime Video ad tier, which is priced between US$30 to US$38 CPMs (cost per thousand impressions), according to AdAge. Despite these rates being lower than competitors like Netflix, which has reduced its rates from the initial c.US$60 to the c.US$40 range, media buyers are hesitant due to the high price. Amazon is also asking for advance investments of US$100m or higher from major agency holding companies. However, the timing of this offer is not ideal as brands have already committed to upfront ad deals for the coming year. Despite these challenges, the potential audience for advertising on Prime Video is attractive to advertisers. Amazon's Prime Video accounts for almost 4% of all streaming consumption (only behind YouTube and Netflix). Including ads to its existing service, Amazon Prime is expected to have a larger ad-supported subscriber base than competitors like Netflix and Disney+. Adage
Money20/20 launches a fintech intelligence platform, Twentyfold
Money20/20, the leading fintech show owned by Ascential, is launching a Data as a Service (DaaS) intelligence platform called Twentyfold at its event in Las Vegas this week. Twentyfold offers a comprehensive source of fintech startups. It helps fintech professionals find ideal investment and partnership opportunities and organize deal pipelines more efficiently. The platform will profile and list over 80,000 fintech companies at launch. Twentyfold will be initially available to Money20/20 customers but will be commercially available to the global fintech and investment community at the start of next year. Ascential
Adevinta deal under reevaluation due to worsening market outlook
In September, the Oslo-based online classifieds company Adevinta confirmed a non-binding approach from a consortium led by PE firms Permira and Blackstone. The share price reacted positively on the news. However, according to Bloomberg, the buyout group might be re-evaluating the deal  due to worsening market conditions. The company's largest shareholders, eBay and Norwegian media group Schibsted ASA, support the transaction and would retain part of their stakes if the deal proceeds. Bloomberg
WPP terminates shanghai-based executive suspected of bribery
WPP has dismissed a senior executive from its media-buying division GroupM based in Shanghai after the individual was detained by Chinese police on suspicion of bribery. The Shanghai Public Security Bureau's economic crime investigation department announced that it had uncovered a commercial bribery case involving an advertising company, leading to the detention of a current executive and two former employees of GroupM. WPP is cooperating with the authorities and conducting its own investigation. The incident comes as foreign companies face increasing scrutiny from the Chinese government. FT
Other news 

  • Meta sued by several US states over harmful content for youth. AdAge
    Hipgnosis shareholders vote against its continuation. FT