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September 1 2023 - Summer's Swan Song

September 1 2023 - Summer's Swan Song

👋Happy Friday friends. I know it's technically September, but my brain is still in "late August mode" - so that's where I'm at. A quiet week in news and I'll take it. OpenAI with a few big announcements, Instacart IPO is official, and a handful of stories across media and tech. Let's get into it–

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Top Stories

OpenAI has introduced ChatGPT Enterprise, a business-focused version of its ChatGPT tool, directly competing with its partner Microsoft. ChatGPT Enterprise, built on OpenAI's GPT-4 language model, aims to aid employees in learning new skills and analyzing internal data. It boasts improved speed, running up to twice as fast as the paid ChatGPT version, while also addressing data privacy concerns by assuring data won't be used for training.

CNN has appointed Mark Thompson, former top executive of the New York Times and BBC, as CEO. Thompson is set to begin on October 9, as CNN aims to reverse its multiyear ratings decline. Thompson's experience includes successful transformations, most notably at the New York Times. This move hopes to bring stability and fresh leadership to CNN after a period of turbulence with previous CEOs.

Tech leaders including Elon Musk of Tesla, Sundar Pichai of Google, Sam Altman of OpenAI, and Satya Nadella of Microsoft will gather in Washington on September 13 for a series of closed-door listening sessions initiated by Senator Chuck Schumer of New York. The sessions, known as "A.I. insight forums," aim to inform lawmakers about the regulation of AI technologies. The discussions will cover topics such as the impact of A.I. on jobs, disinformation, intellectual property theft, and opportunities in disease research.

OpenAI is reportedly on track to generate over $1 billion in revenue over the next year from the sale of its AI software. This revenue projection far exceeds what the company had previously shared with its shareholders. The rapid growth in revenue suggests that businesses and app developers are increasingly finding ways to utilize OpenAI's conversational text technology for profit or cost savings.

Instacart has revealed its financials in an offering prospectus ahead of its planned IPO. The company reported a profit of $428 million in 2022, compared to a $73 million loss the previous year. Instacart's profit was partially attributed to a $358 million tax benefit. However, its growth in the core grocery delivery business is slowing, with flat orders in the first half of this year compared to the same period last year. Instacart has shifted its focus from low-margin delivery services to higher-margin online advertising, with nearly a third of its revenue coming from advertising sales. The company plans to list its shares on the Nasdaq stock exchange under the symbol "CART."

Lego has reported its steepest fall in profits in nearly two decades as its revenue growth stalled following a pandemic-driven surge. While sales in the first half of the year rose by 1% ($4bn), operating profits dropped by 19%. The company attributed the profit decline to increased raw material costs and investments in new factories, software engineers, and sustainability initiatives. Despite the fall in profits, Lego's CEO Niels Christiansen stated that the company remained "very satisfied" with its performance compared to a challenging toy industry and was maintaining its position as the world's largest toymaker by sales and profits.

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Rundown
  • Disney VFX employees, including 18 from Marvel Studios, have taken steps to unionize with the NLRB. This move follows a similar action by Marvel VFX artists. This trend signals a significant shift in the historically non-union VFX industry, with over 80% of the Disney employees expressing a desire for a unionization vote.
  • GALE has formed a strategic partnership with gaming design specialist Moonrock Labs to enhance its gaming solutions for clients. Moonrock Labs is known for creating activations within popular video games like Fortnite, Roblox, Minecraft, and ARK: Survival Evolved. The collaboration will enable GALE to offer interactive experiences to its clients, conduct research to understand impact, and tap into Moonrock's network of real gamers to promote activations. GALE's Chief Innovation Officer, Ben James, emphasized the need for authentic integration into gaming ecosystems, transforming impressions into immersion for marketers.
  • Elon Musk has announced that the platform will soon introduce video and audio calls. Musk mentioned that the feature will work across iOS, Android, Mac, and PC, eliminating the need for a phone number. While he didn't provide a specific launch date, he stated that the feature is "coming."
  • Global ad spending is expected to exceed $1 trillion next year, an 8.2% increase from this year, according to WARC. The growth is attributed to the dominance of five tech companies—Alibaba, Alphabet, Amazon, ByteDance, and Meta—which contribute over half of the global ad revenue. These firms, particularly in social media, are driving the surge. Ad spend in categories like retail media and connected TV is also projected to rise. WARC's analysis shows that financial services, technology/electronics, and pharma/healthcare will contribute significantly to the expenditure growth. The U.S. maintains a leading share in global ad spend, with the ad industry projected to benefit from the upcoming presidential election.
  • Amazon, Google, Apple, and Target are among the most culturally resonant brands with adult consumers, according to The Marketing Arm's "Cultural Resonance Score" report. These brands are recognized for carrying their relevance throughout time, focusing on consistent and lasting impact. The report evaluated brands on four categories—recognition, alliance, engagement, and advocacy—to determine their resonance.
  • Shopify is responding to the threat from TikTok Shop by integrating its e-commerce software with TikTok's online shopping service. This move allows Shopify sellers to access TikTok order and customer data within their dashboards. The collaboration benefits both companies, retaining Shopify sellers' interest and helping TikTok attract more merchants. Although the integration streamlines order management, TikTok won't share customer emails with Shopify.
  • Apple's iPhone 15 event titled "Wonderlust" is scheduled for September 12. The keynote will be broadcast at 10:00am Pacific time via Apple's Events page and Apple TV app. While details about the launches are not provided, it's anticipated that Apple may launch the iPhone 15 and iPhone 15 Plus with improvements in display technology, camera enhancements, and more. The event could be followed by another in October, potentially showcasing new Mac models and updates to the Apple Watch and iPad series.
  • Amazon's shopping app "Inspire" is paying influencers $25 per video to promote products, raising questions about fair compensation for content creators. The payout structure includes a limit of $12,500 for influencers submitting a maximum of 500 videos within a month. This model contrasts with other platforms like TikTok and Meta, where creators receive a share of generated revenue. Critics argue that low compensation could lead to low-quality content and diminish the overall value of influencer content.
  • Starz is lowering their annual subscription price for its streaming service, while many other services are increasing theirs.  Starz emailed its subscribers about the price reduction, which took effect on August 29th. While the reason isn't explicitly stated, it's suggested that Starz aims to attract more customers to its annual plan while rewarding existing subscribers.
  • Comscore research highlights advertisers' reluctance to swiftly transition to streaming TV despite the majority of US households streaming content. Advertisers still allocate significant budgets to linear TV, influenced by factors like live sports pricing. Ad-supported tiers' variability on streaming platforms impacts reach and revenue. Growing interest lies in free ad-supported streaming (FAST) channels, with platforms like Roku, Pluto TV, Tubi, and FreeVee experiencing audience growth, offering potential for diverse audiences and incremental reach.
  • Skincare brand RoC has chosen Gravity Road as its "TikTok creator campaign lead," a role similar to an agency of record, as it focuses on TikTok for its influencer and social marketing efforts. The move follows a growing trend of brands hiring TikTok-specific agencies, with drinkware brand Stanley also recently appointing GSD&M as its TikTok agency of record. Gravity Road will manage RoC's creator-driven TikTok campaigns, helping the brand scale its presence and target Gen Z users. RoC's new TikTok push, called #BeARoc, features beauty influencers sharing advice and using RoC products, leading to increased traffic.
  • Agency holding groups have experienced an unusual divergence in performance, with some issuing profit warnings while others upgrading guidance. Factors like weak tech client spending and startups curtailing expenses due to rising interest rates have likely contributed to this variance. Creative and media sectors have also been impacted differently, with WPP's creative businesses declining and Publicis reporting positive growth.
  • According to the latest "Marketers Most Wanted" report from Studiospace, demand for content is on the rise across various categories. Social media still remains at the top, followed by creative and production requests. Content-related areas such as video and copywriting have also seen increases. Studiospace CEO Pete Sayburn noted that advertising briefs are resurging as brands prepare for the year-end. The report also highlights growth in SEO and PPC briefs, while event briefs experienced a decline after a summer surge.
  • Chris Bellinger, VP of Creative and Digital at Frito-Lay North America and Quaker, shared his insight on the in-house vs. external agency debate. While Frito-Lay has an internal agency, it also works with up to a dozen external agencies for different functionalities. Bellinger emphasized that external agencies offer unique perspectives and edge that complement in-house capabilities and highlighted the importance of maintaining a balance between in-house and external partnerships for different aspects of marketing.
  • Instagram is reportedly planning to increase the maximum length of its Reels videos from three minutes to 10 minutes, according to mobile developer and leaker Alessandro Paluzzi. This potential expansion would position Instagram as a more longform video-sharing platform, similar to YouTube. The move is seen as an effort to compete with TikTok, which already allows users to post videos up to 10 minutes long.
  • Niantic has introduced new generative AI developer tools to its 8th Wall platform. These GenAI modules are designed to simplify the integration of AI technology for developers using the platform. These modules enable developers to incorporate interactive AI-driven characters and features like ChatGPT and DALL-E into their WebAR projects. Niantic has also introduced two sample projects, one featuring an AI character called Rainbow Ray and another that uses DALL-E to generate textures for AR objects.
  • Salesforce has reported a 31.6% operating margin for the second quarter of its fiscal year 2024, exceeding a 30% profit margin that activist investors called for. This achievement comes ahead of schedule, as Salesforce had been working on a plan to reach above 30% profit margins by fiscal 2025. The company has been under pressure from investors to prioritize profits over revenue growth. Salesforce increased list prices on some products and implemented cost-cutting measures, including layoffs and shedding real estate, to improve profitability. CEO Marc Benioff emphasized that profit is now the company's "highest priority."
  • AI21 Labs, an Israel-based competitor to OpenAI, is reportedly close to securing a new funding round that would value the company at $1.2 billion. This investment would bring AI21 Labs' total funding to over $278 million. The company offers a writing assistant for consumers and access to its LLM for developers. AI21 Labs generated $20 million in revenue in 2022 and projects revenue of $50 million for this year.
  • Snapchat is introducing a new feature called "Dreams" that allows users to create AI selfies within the Memories section of the app. This feature lets users upload photos which are then used to generate packs of images based on themes like doppelgangers or back-to-school. The first pack is free, and additional packs can be purchased in-app for $1 each. The feature is part of Snapchat's push to incorporate generative AI into various aspects of the app.
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Published by:

Joe Nash

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