Just How Screwed is the Internet?
Plus, Tubi-Bowl observation
I was looking for a recent headline regarding the state of the open web when it comes to advertising, and was first served this Gemini AI overview, which sort of says it all:
AI Overview
Yes, the open web is facing significant challenges and is considered by many to be in trouble, particularly in the face of increasing dominance by large tech companies and walled gardens.
Here’s the summary:
“In essence, the open web is facing a critical juncture. Its future depends on a concerted effort to address the challenges it faces, promoting innovation, competition, and user privacy to ensure a truly open and accessible internet for everyone.”
Needless to say, the vibes have not been great when it comes to old school online advertising on websites of late. One company would seem to be poised to help is Teads, which just completed a $1 billion merger with Outbrain after the deal was announced last August.
The new company says it pulled in approximately $1.7 billion last year, and now reaches 2.2 billion consumers.
If you think about it, it makes sense on paper. While there are a million ad tech companies that can access ad inventory on the web, Teads now exclusively controls the bottom (the space where those Outbrain ads were) and somewhere in the middle (where those outstream Teads ads would run). That’s potentially a pretty powerful combination - or at least would have been at another time in digital ad history.
But today, depending on what you read, the growth of conversational AI search is killing, or about to kill web traffic. Plus AI is letting any crook or clown push out totally garbage web content, potentially displacing or competing with the kinds of publications - the CNN.coms and FoxNews.coms - that Teads supports.
So is the internet screwed? Is Teads’ timing terrible?
Well, I had David Kostman, CEO of the new Teads, on my podcast this week to talk about the threat that AI poses to quote unquote ‘real’ publishers.
“It's obviously early days and AI I think it's a real driver for I think a lot of opportunity, but also a lot of lot of some risk for sort of the traffic,” he said. “I think what we've seen to at least today is that - and we compared every month - when you look at the professionally-produced content whether it's news or entertainment or hobbies or others we have not seen that impacted at this point.”
“I do think that when you look at a newsworthy content that is sort of short-term, I don't think that sort of even the AI summaries will hit that anytime soon. I think more on evergreen content, think potentially you're looking at more of an impact on traffic. I think there's going to be advertising sort of opportunities around it. It has to be monetized somehow.”
Yes, which is something that Google and Meta and Microsoft and Perplexity are trying to figure out. Whether that new monetization model finds its way to publishers is a big open question. Some are getting paid, some are suing, but there doesn’t seem to be an AI ad sense in the offing that I can see.
Meanwhile, the ad dollars continue to go toward retail media, CTV, and pretty much anybody who has tons of logged-in users or shopping data. That puts the open web in a very tough spot.
“Any of the companies that compete on the open internet, we do compete with budgets that get allocated across platforms from the walled gardens to the open internet,” Kostman said. “We don't have the logged-in users, but we, for example, we have as a difference, we have the real intent of the person.”
“So when you go and you're going to sort of start reading about, you know, maybe cars or maybe a health condition, God forbid, or something else, that is data that we have. I don't have you as a logged-in user, but I know…all of that in real time…You're not going to post it on Instagram or TikTok or Facebook. That's not going to do. So that's the advantage we have.”
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One unfortunate disadvantage that Teads would seem to have is that they have a lot of prominent news publishers in their roster, at a time when brands are wary of anything seen as either dangerous or partisan.
Kostman said his company, and various industry efforts are making headway in terms of trying to get brands past their blanket news aversion, but there are structural barriers.
“It's an interesting thing when you talk to CMOs and so they say, ‘I didn't even know, wouldn't I be on [news site]? Of course I want to help journalism and I think it's important for society.’ But then you have the buyer at some agency say, no, I'm going to block. And then they block it like in a huge way where it's like domain blocking totally.”
“I think we are managing to make some progress around being more selective about it, more judicious about what [gets a] yes or no. And I think we can make a lot of progress. And I think it's part of something that Teads, with the new Teeds, want to continue to do with others in the industry.”
Tubi’s Data Play
Did anybody stream the big game on Tubi? While I watched the main broadcast on Fox, we threw the game on in a side room for my son - and since we don’t have cable in that room, we used the Fox-owned FAST platform, which streaming the game free for the first time.
Except that is wasn’t totally free. You had to create an account and log in. “While Tubi doesn't normally require users to create an account to access content, an account will be required for the Super Bowl.”
Which was, sort of no big deal. Except that it sort of goes against the ethos of the “FASTs” which are anti-subscription streaming services, in that you don’t have to pay, create an account, make any sort of commitment. That’s supposed to be a great business.
Except that my guess is, having data on tons of users is a better business. Now, Tubi has at least 13.6 million new email addresses. It will be interesting to see how the Tubis and Plutos start to use stunts like sports to force people to create accounts…so they can know a little bit more about them, and sell more to brand, participate in cross devices IDs, that sort of thing.
At a certain point you might wonder, does the value proposition of being a FAST need change for these platforms to level up?