It was encouraging to see GroupM maintain its global advertising forecast this week in its latest update, despite continued uncertainties in the market. GroupM expects global advertising revenue to grow 5.9%, which is unchanged from its forecast at the end of last year. This contrasts with Dentsu's slight downgrade from 3.5% to 3.3%, which was released only two weeks ago. The main drivers of the steady growth include China’s quick recovery from lockdown and retail media’s continued growth momentum. However, GroupM shows less confidence for the US and UK, trimming growth expectation in both countries. Elsewhere, the EU has charged Google for abusing its dominance in the ad tech market, which could force it to divest part of its ad business. This week, the tech giants are finally addressing the well-discussed concerns of news publishers over paying for their content to train AI. Meanwhile, Netflix's password sharing crackdown has had an immediate positive effect. Instead of losing subscribers in the short term, as previously warned, it saw a surge in new subscriptions, beating the pandemic record. In other news, YouTube is giving more creators an opportunity to earn money through its partnership program. Finally, Spotify has launched a new ad analytics tool to support better performance measurement.
News of the week
GroupM retains 2023 global ad revenue growth forecast
For its mid-year update, GroupM has maintained its global advertising forecast for 2023 and beyond. It forecasts growth of 5.9% and 6.0% for 2024. After a slow start to the year due to inflation and supply chain issues, it expects a normalisation of growth for the second half. However, when accounting for inflation which is expected to be 7% globally, advertising will decline slightly in real terms. Digital pure-play will remain the dominant force, growing at 8.4% this year. As a proportion, it will account for 69% of total spend in 2023, growing to 74% in 2028. Within Digital, retail media is expected to be one of the strongest performers growing by 9.9% in 2023, and is expected to surpass TV by 2028. Among the markets, growth in China was upgraded from 6.3% to 7.9%, while the US was downgraded from 7.1% to 5.1%. The UK growth rate was revised down slightly to 4.8%, compared to 5% in December. For the next five years, GroupM anticipates a mid-single-digit growth rate for global advertising, as drivers of growth matures and the pandemic disruption fades. However, it also acknowledges that AI could potentially change this trend. GroupM, Digiday, WSJ
Netflix sign-ups increase after password sharing crackdown
Netflix experienced a surge in subscribers in the US, indicating a positive impact from the new password sharing policy. A data analytics company, Antenna, reported that Netflix's average daily sign-ups increased by 102% in the first four days of the crackdown, compared to the previous 60-day average. On May 26 and 27, the number of sign-ups reached 100,000, surpassing the peaks during the Covid lockdown. Netflix has expanded its password crackdown to more than 100 countries including major markets such as the US and UK, where it requires subscribers to pay an extra £4.99 or $7.99 to share their account with people outside their household. The company warned about cancellations in the short-term. However, so far sign-ups still outnumber cancellations according to Antenna’s tracking data. Meanwhile, Netflix is gaining traction with its ad-supported offering in the US, which adds a new revenue stream while attracting more price-sensitive subscribers. However, we believe it is still too soon to assess the long-term effects of these changes on Netflix's subscriber base and revenue. Reuters, The Verge
EU threatens Google to divest part of its ad-tech business
Google has been charged by the EU over its monopoly in the ad tech sector. The regulator said that only a structural remedy, such as divesting parts of Google's ad-tech business would address its concerns. It believes that Google's advertising business plays a significant role at every stage of the buying and selling process of advertising on the open market, providing services for publishers and advertisers while operating its own ad exchange. This gives Google an unfair advantage in its own ad market place. As a result, it could be forced to sell-off its publisher ad server DoubleClick and ad exchange AdX. The antitrust charges only affect a relatively small part of Google’s ad business that doesn’t involve search advertising. However, it represents a tougher new approach by EU regulators, following the US DoJ’s announcement about suing Google over the same concerns in January. Google disagrees with the commission's view and plans to respond accordingly. FT
Tech companies discussing potential content deals with news publishers
Tech giants such as OpenAI, Google, Microsoft, and Adobe are in negotiations with major news publishers such as News Corp, Axel Springer, The New York Times, and The Guardian regarding the use of news content for training AI technology. The discussions revolve around copyright issues related to AI products like text chatbots and image generators. The news industry has been concerned about the competitive threat AI poses and the use of their content by tech companies without proper agreements in place. An industry-wide solution is needed to address this concern and build a healthy ecosystem for both IP creation and AI development. Potential pricing models include a pay-by-quantity model similar to the music industry or a subscription model, although the negotiations are still in the early stages. FT
YouTube is lowering criteria to access its monetisation program
YouTube has announced that it is lowering the threshold to join its YouTube Partner Program (YYP), which allows creators to earn money from their videos. The new criteria requires a creator to only have 500 subscribers (down from 1000), three public uploads in the last 90 days, and 3000 watch hours or 3m views for Shorts in the last 90 days (down from 4000 or 10m). By becoming a part of YYP, creators can share ad revenue and access various monetisation tools, such as audience tips, membership subscriptions and promotion of their merchandise on YouTube Shopping. YouTube's move comes as other social media platforms, such as Meta's Facebook and Instagram, and TikTok, are also ramping-up revenue sharing to creators. In a letter released in March, YouTube said that supporting creators to make more money is one of its priorities for 2023. Techcrunch
Spotify launches analytics tools to measure ad effectiveness
Spotify has launched Spotify Ad Analytics, a new platform that help advertisers assess how well their audio campaigns have performed. Advertisers can access this platform for free by downloading Spotify Pixel and creating an Ad Analytics account. With this platform, advertisers can get data on impressions and household reach on Spotify, which can help them optimize their digital audio marketing strategy. This move comes as the company is facing challenges from various fronts. The company recently announced more job cuts in the loss-making Podcast division. It also has to deal with the issues arising from the use of generative AI in music, such as inflated streaming and IP infringement. Campaign
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