Why There Might Be No Stopping the Next Ad Monopoly
Plus, new data on YouTube's audience, and it's ad preferences
This week, I talked to some folks about what might happen next following the Google trial(s) of the century. Everyone has a theory about what will or won’t happen to the digital ad market over the next few years, if Google has to break itself up. This will be good for ad tech. Better for publishers. Worse for publishers. Maybe better for Google. Or it won’t matter at all.
My question is, will whatever conditions or set of solutions that handed down by the Department of Justice matter long term, if - as many expect - ad buying, planning and selling becomes more and more the domain of artificial intelligence.
Because unless specific restrictions are put in place on that front - another set of monopolies will be right around the corner- and the feds may be powerless to stop them (or even understand them).
“For [these two cases] to have real consequences, they can’t be just just to punch at Google,” said Charles Manning, CEO of Kochava. “This has to be about the longstanding dynamics of the market.”
The challenge seems to be that the dynamics of the market area headed in a direction that would make programmatic advertising look positively transparent in comparison.
That’s because nearly all the big digital platforms have rolled out AI-powered planning and buying tools that are complete black boxes. The big ones are Google’s Performance Max, and Meta’s Advantage+. But Amazon is coming on strong with Ads Relevance, and even Pinterest has rolled out Performance+.
While they all promise varying degrees of controls for brands transparency, for the most part, they buy ads and marketers have very little visibility and control of where their ads are running and when.
These tools are just scratching the surface. Indeed, many of you have seen this recent quote from Meta CEO Mark Zuckerberg:
“Over the long term, advertisers will basically just be able to tell us a business objective and a budget, and we’re going to go do the rest for them. We’re going to get there incrementally over time, but I think this is going to be a very big deal.”
That’s a potentially amazing and scary place for the ad industry to imaging being. Surely, machines are faster and smarter that media buyers – they don’t make mistakes in flowcharts and you don’t have to buy them steaks or jeans. You probably don’t have to sell to them at all.
So in this potential the future reality - will it matter if Google has been forced to sell off its ad network and exchange, if you won’t even need ad networks or exchanges?
Let’s say that Performance Max and Advantage+ are able to do what Zuck says - take brands’ data, goals, and budgets, and then deliver them whatever outcomes they want. They’ll get most of the global digital ad budgets. Maybe more than they do now.
That raises many questions:
Will those dollars and campaigns be deployed only on Google and Facebook properties?
Will they need to the open web at all?
Will there still be a need for software to aggregated supply and demand, and facilitate transactions (i.e. those programmatic middlemen that Google allegedly has been trying to put out of business for years)?
As Manning said, the real problems with Google’s alleged monopolistic behaviors weren’t really the result of the company being both a seller and buyer – it was because it’s exchange was the ‘clearing house’ the Sotheby’s or stock exchange, pick your analogy for the digital ad market.
“Anyone who participates in a two-sided marketplace, the clearinghouse - can’t be owned [by any participants],” Manning said. “In a fair, unfettered market, the clearinghouse has its own rules and is owned separately.”
Therefore, going forward, Manning theorized besides breaking Google into pieces, the Feds might need to help establish a third party to become that arbitrator so this stuff doesn’t happen again. Or, the the government could even play that role itself, as Ari Paparo and Brian Morrissey talked about on The Rebooting Show (an SEC for ad tech).
Makes perfect sense – assuming that an AI-centric media buying landscape needs a clearinghouse, or could accommodate one. As Manning notes, clearinghouses in the financial work well when they are able to gather pertinent data from across the industry. But we’re in an anti-PII moment in the ad world. Plus, how is a clearinghouse going to extract what its need from an AI platform?
Digging in deeper - how are regulators going to know if a Performance Max or an Advantage+ are fair? I’m going to assume that execs at these companies are going to shy away from official project codenames and emails if they attempt anything shady or anti competitive going forward.
Are regulators going to be outgunned?
That said, perhaps the media agencies will build buy side tools that can compete on AI. Or a new indy AI media buying platform comes along. Yet from my understanding, this stuff is incredibly expensive, inherently limiting competition.
Which means that that the AI ad market could develop as yet another unregulated, poorly understood Wild West without some specific, preventative rules being in place.
As Manning put it, a question coming out of the Google trial, and other anti-trust cases, is, “do the consequences change the behavior?
Let’s hope that that the DOJ doesn’t wait another 17 years to find out.
YouTube Ad Love?
As part of an ongoing partnership between Next in Media and Precise.TV, I got an early look at some research the company commissioned in conjunction with Giraffe Insights on teen media consumption.
The clearest takeaway from the Precise Advertiser Report: Teens & Youth (PARTY), is hardly surprising - teens love YouTube and Netflix.
Indeed, one of the biggest media stories of this past year has been YouTube’s ascendancy as a central hub of the TV screen - accounting for nearly 10% of all TV viewing, per Nielsen. Netflix lands at number 2, with 8.4%, according to Nielsen’s The Gauge report. No other service tops 3.1 % of TV viewing.
However, the way that teens rank both services may surprise you. Precise.TV found that 27% of respondents named Netflix as their favorite viewing platform, while16% opted for YouTube.
However, when it comes to advertising, the dynamic is flipped. The research found that just 9% of teens claim that the best ads are found on streaming services, a stark contrast to the 27% who prefer ads on YouTube.
In fact, more than half of respondents (52%) say they recall ads on YouTube, compared to just 31% for VOD and 30% for broadcast TV.
A few notes of caution on these numbers:
I always take research on ad preferences with a grain of salt, since people in surveys tend to complain about ads, no matter what. The fact that any portion of these teens saying they like or recall ads feels noteworthy
Even as Netflix pushes its ad-supported service, the vast majority of Netflix subscribers today are watching without any ads, which could certainly skew this data, particularly any ‘favourite’ questions
Putting these caveats aside, what I find intriguing are the positive responses regarding YouTube ads. What is behind this sentiment?
Is this because YouTube ads are skippable?
More relevant?
Less interruptive?
When teens refer to ads, are they thinking more about brand integrations - like say Mr. Beast touting Experian!
As Precise TV CCO put it on my podcast this week, YouTube execs went into creating ads with users and brands in mind in a way that is different from other media: “A big thing when I was at YouTube and Google used to talk a lot about kind of a three -legged stool. So the three main stakeholders in YouTube was the audiences, the advertisers, and then the partners who uploaded the content. And that was always like making sure that the stool didn't lean too much in one way or the other.
Is there something that traditional CTV players could learn from YouTube here? I’m not sure.
Here are some other notable findings from the report:
Among the popular teen channels on YouTube are Mr. Beast, 5 Min Crafts, Dude Perfect, and Disney Music
Video games, and video gaming content is obviously huge for teens. 65% of teens play game - which is slightly more than who uses TikTok (64%)
Among the teens who watch people play games - a whopping 81% of
Check out the full report from Precise.TV here.
By the way, I'll be taking to the stage at the SoHo House in New York at the Precise.TV hosted event\ “YouTube is TV: How to Seize the Opportunity” to both moderate and present some findings from this ongoing survey. (LINK)
I’ll be joined by execs from companies like ASICS, Adult Swim, and Confideo as we dig into how top brands and media agencies are leveraging YouTube on TV, how they are funding it, measuring it, and what challenges they face in doing more on the platform. It should be an awesome discussion. If you’re interested, check out this link: precisetv.eventbrite.com.
Here’s my full podcast with Mr. Crushell: