April 27 2023 - My New Recession Indicator 2.0

👋Happy Thursday friends. I've talked about recession indicators before, but McDonalds french fries may be a new one. Also, today is the 1 month anniversary of brandtrackers! Thank you all for subscribing and supporting. All this and more below –

Joe's Quick Take

• Meta numbers are in and better than expectations (+ Mark teasing out generative AI in products on earnings call as well)
• MSFT & Google both had a "positive" week, given the overall market conditions – throw CPG brands into that bag as well. Doesn't mean the Fed won't raise rates in May.
• More info on Amazon and Disney layoffs
• AI all day, every day
  

Meta reported a 3% increase in revenue for the first quarter of 2023, reaching $28.6 billion, despite a fall in profits. The company also added 37 million daily users to Facebook, up 4% from the previous year, and beat Wall Street expectations. CEO Mark Zuckerberg said Meta is becoming more efficient to deliver its long-term vision, amid a transition to the metaverse and increasing competition from TikTok and Apple.

During Meta's Q1 earnings call, CEO Mark Zuckerberg revealed that the company plans to introduce generative AI to its apps, with a focus on chat experiences in WhatsApp and Messenger, visual creation tools for posts on Facebook and Instagram, and business messaging and customer support. Zuckerberg also hinted that generative AI would be integrated into Meta's work on the metaverse. While Meta has released an AI language model called LLaMA to researchers, it has yet to debut anything resembling OpenAI's ChatGPT in a way that is widely accessible.

Amazon has decided to shut down its health-focused Halo division, which includes the Halo Band, Halo View, and Halo Rise. Amazon has stopped selling the products and plans to lay off portions of the team. All Halo hardware will be discontinued, with operations winding down over the next several months.

Microsoft's $75 billion deal to acquire Activision Blizzard has been rejected by the U.K.'s antitrust watchdog, the CMA, stating that the acquisition would harm competition in the videogame industry. The CMA investigation focused on the UK market, but legal experts say this decision could prevent the deal from closing since the industry is complex and global, and it wouldn't be practical for a combined Microsoft-Activision to operate outside the UK market. The deal also needs endorsement from regulators in the U.S. and European Union, both of which have expressed concerns that the transaction could allow Microsoft to control how consumers access Activision games such as Call of Duty, potentially reducing competition in the global videogame industry.

Reddit has hired former Meta exec Jim Squires as the new EVP of business marketing and growth in a newly created role. The move is part of Reddit's charm offensive toward the marketing community as it prepares for its long-awaited IPO. Squires will be tasked with expanding Reddit's work with small businesses and growing its international footprint, among other things. Reddit has recently released a bevy of new ad products, including updates to its self-serve ad manager tool, a simple creative tool to help make ad campaigns, over 1,000 new communities for advertisers to target, and a tool that makes these communities easier to search.

• PepsiCo CEO Ramon Laguarta expressed concern about private label products in certain categories during an earnings call, with in-store brands showing growth in water, juices, and salty snacks. Laguarta expects private label prominence to increase in the coming months, particularly with salty snacks. This is the first time a major company like PepsiCo has acknowledged in-store brands during an earnings call in the current inflation era. Store brands have continued to outperform national brands in sales, with double-digit sales increases and greater market share in both dollars and units during the first quarter of 2023.
• The Type Directors Club has announced winners from 42 countries in its TDC69 Competition. The competition received entries from 77 countries, the most in TDC's 77-year history. The top five countries with winners are the US, Germany, China, the Netherlands, and Ukraine.

• Discord saw its revenue grow 44% to $445m last year, according to an internal presentation seen by The Information. The company's revenue growth slowed from 126% in 2021, but still outperformed many of its tech industry peers. Discord posted a loss of $66m in earnings before interest, taxes, depreciation and amortisation and other items last year, with losses increasing to $11m in Q1 2023. The company was valued at $14.7bn last year after rejecting a $12bn acquisition offer from Microsoft, but more recently Fidelity cut its valuation to $9.4bn.
• YouTube has introduced new AI-powered music ad solutions that allow advertisers to reach Gen Z audiences with trending music on the platform. These solutions are available across devices and formats including long-form, audio, and YouTube Shorts.
• Atlassian has partnered with Droga5 to launch a new US creative campaign called ‘Impossible Alone’ that highlights the power of teamwork when tackling complex problems.

• Nordstrom Rack's new logo, which is inspired by the one used in the ‘70s and ‘80s, has received mixed reviews from experts, quoting:

The appeal to consumers is the word Nordstrom, not the word Rack. De-emphasizing Nordstrom makes Rack just another discounter selling branded product at an allegedly lower cost. A brand is a promise, and the promise of Nordstrom is high quality, great service, and style. The promise of Rack? Well — there’s the problem in one word.”

• The NFL has developed gaming experiences in an effort to engage with a new generation of fans. The partnerships include NFL Rivals Offseason, a free arcade-style mobile game that features blockchain technology and allows gamers to purchase “Draft Player Packs,” as well as Super NFL Tycoon on Roblox, which features a Draft-themed environment that includes new avatar items for fans to collect. Rec Room is creating an interactive room for players to hang out during the Draft, while Madden NFL 23 allows fans to play as first-round picks before they take the field. The NFL is also adding Draft branding to the NFL Zone in Fortnite.
• Disney's digital content division, 20th Digital Studio, has been dissolved as part of the company's ongoing layoffs. The unit, founded in 2008 as Fox Digital Studio, was acquired by Disney in 2019 and was known for producing short-form and digital content. Its EVP, David Worthen Brooks, will be transitioning into a first-look deal with Hulu, 20th Digital's main distributor, as an independent producer. In addition, D23, Disney's official fan club, has seen staff cuts amid speculation that the division may be restructured.
• Amazon has started to lay off staff in its cloud services division, which generates most of the company’s profits. AWS employees in the US, Canada, and Costa Rica whose jobs are being eliminated were informed on Wednesday. The company has already cut about 18,000 corporate positions earlier this year, and announced another 9,000 layoffs in March, which would land on AWS, human resources, advertising and the Twitch livestreaming service
• TikTok is reportedly introducing a feature that allows users to create AI-generated profile pictures within the app. Users can submit three to ten photos, and the tool will create up to 30 avatars, which can be set as the user's avatar or downloaded. TikTok calls the tool an "experiment" and said it is already available in select regions.

• Netflix lost more than a million users in Spain in Q1 2023, according to Kantar, with two-thirds of that number being users who had shared passwords. In February, Netflix introduced a €5.99 monthly fee for users in Spain who shared their login details with others, and technical measures to detect such sharing. Subscription cancellations in Q1 tripled compared to the previous quarter, with 10% of subscribers in Spain saying they planned to unsubscribe in Q2. Netflix believes that a cheaper streaming version with ads and the password-policing plan will accelerate growth in the second half of the year.
• Netflix has spent $6bn making TV shows and films in the UK since 2020 – $2bn more than originally planned. It is double the amount rivals Amazon and Disney are estimated to have spent in the country during the same period. The increased investment has come as the US-based company has sought to maintain viewer numbers during a global slowdown in new subscribers.

• Snap says its bot won’t notice instantly that you stopped sharing your location
• Apple's MR Headset Said to Be in 'Final Sprint' & 'Delivery Stage' Ahead of WWDC
• Madison Alley: The M&A outlook this year is better than you’d think
• How a Twitch streamer’s NFL Draft event shows brands’ interest in fans at the crossroads of gaming and sports
• Disney sues DeSantis, alleging political effort to hurt its business
• How the ‘New York Times’ wooed a new generation of readers
• Tesla has lost $140 billion in market value in under a month
• Omnicom, Publicis and WPP report widest gender pay gaps across adland
• Amy Lanzi named CEO of Digitas North America
• Paper Magazine Lays Off Staff, Citing Economic Headwinds
• Balenciaga Uses AR to Raise Awareness of Regenerative Agriculture
• YouTube Music contractors win historic union vote
• Apple's iMessages Are Finally Coming to Windows 11

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