13 min read

September 22 2023 - From Pitches to Pitches

September 22 2023 - From Pitches to Pitches

👋Happy Friday friends. Sports continues to dominate streaming platforms, as the unbundling and rebundling continues. Some account swaps in adland, and a flurry of features announcements across video & AI platforms. Let's get into it–

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Warner Bros. Discovery plans to add live sporting events to Max starting in October. The streaming service will include MLB playoff games, NBA, and NHL regular-season games. Initially, the events will be free for Max subscribers, but starting in late February, they will cost an additional $10 per month on top of the standard subscription price.

Instacart made a strong debut in its initial public offering. The company's shares opened at $42 each, up from the IPO price of $30 per share, raising $660 million for the company and its selling stockholders. While Instacart's valuation has declined from its previous peak of $39 billion, it is still valued at over $11 billion on a fully diluted basis. This is seen as a positive sign for the equity capital markets, which have seen a relatively slow year compared to the record-setting year of 2021. The company has been focusing on expanding its advertising business, which now accounts for about 30% of its revenue, capitalizing on shopping data to offer targeted ads and sponsored products to users.

Google is upgrading its chatbot, Bard, by integrating it with its popular services like Gmail, Docs, and YouTube. This aims to make Bard more useful and integrated into users' personal lives. Google is also revamping its "Google It" button on Bard's website to provide more trustworthy information and clarify when it cannot find facts to support a claim.

Wasserman has announced that the company has acquired Brillstein Entertainment Partners, a Hollywood management firm and content production company. Brillstein represents a range of stars, digital creators, podcasters, and professional video game players. The move signifies a shift for Wasserman, which had previously stayed away from the traditional entertainment business but now sees the changing media landscape as an opportunity to represent talent from various fields. Wasserman intends to expand Brillstein's television and film production business and may consider acquiring additional film and television companies in the future.

The United Auto Workers union has initiated a "limited and targeted" strike involving approximately 12,700 workers at General Motors (GM), Ford Motor, and Stellantis (the parent company of Chrysler, Jeep, and Ram). This strike could expand if contract negotiations continue to face obstacles. The key demands from the union include a 40 percent wage increase over four years, cost-of-living adjustments to address inflation, reinstatement of pensions for all workers, improved retiree benefits, shorter work hours, and an end to the tiered wage system.

Byron Allen has offered $10 billion to acquire Disney's ABC, FX, National Geographic cable channels & local stations. This offer comes as Disney considers shedding non-core assets and focusing on streaming amid a decline in cable TV subscribers and losses in its streaming business. While Disney has not publicly acknowledged the offer, these negotiations could help determine the value of television assets in today's market. Bob Iger has previously indicated a willingness to divest linear TV assets that may not align with the company's core focus.

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Rundown
  • S4 Capital experienced a significant drop in its stock price, falling as much as 30% to a record low. This decline came after S4 reported disappointing sales figures and lowered its full-year guidance for the second time in two months. Mary Basterfield, S4's Chief Financial Officer, mentioned that some of the large tech companies the agency focuses on have become more cautious in recent months, impacting their business. This decline reflects a broader trend of large technology firms reducing their advertising spending, but S4 Capital has been particularly affected, with its stock down 65% since the beginning of the year. In comparison, other advertising companies like WPP and Omnicom have experienced smaller declines or gains in their stock prices during the same period. S4 Capital employs 8,500 people worldwide, with the original founders of Media.Monks still in charge.
  • Federal Reserve officials are forecasting higher interest rates through 2026, indicating that the era of ultra-low interest rates may be coming to an end. While the Fed has left interest rates unchanged at their highest level in two decades, it expects borrowing costs to remain elevated for years. Policymakers anticipate their benchmark short-term interest rate to stay above 5 percent next year and nearly 4 percent by the end of 2025. Even in 2026, rates are expected to remain well above pre-pandemic levels. This shift suggests that higher rates may continue for an extended period, marking a significant departure from the environment of low borrowing costs.
  • Amazon is hiring Microsoft's product chief, Panos Panay, to head the division responsible for Alexa and Echo devices. Panay, a nearly 20-year veteran at Microsoft, previously led the company's Windows team and played a significant role in its hardware endeavors, particularly the Surface line. His hiring comes as Dave Limp, Amazon's longtime hardware chief, announced his retirement. This move represents the latest in a series of senior executive swaps between Amazon and Microsoft.
  • TikTok is introducing a "self-attributing network" for ad measurement to gain more credit for sales resulting from its platform. While it continues to work with third-party providers like Kochava, AppsFlyer, Singular, and Adjust, it will provide vital conversion data via the self-attributing network. This system reports "view through" data, which tracks when ads are seen on TikTok and measures when views contributed to a conversion, even without the last click.
  • Snapchat has announced that its subscription service, Snapchat+, now has over 5 million subscribers, up from 4 million in late June and 3 million in mid-April. The $3.99 per month subscription offers exclusive features such as custom app themes, unique app icons, the ability to pin your No. 1 BFF, tools to enhance Stories, and more. While this subscription revenue is only a fraction of Snapchat's total revenue, which primarily comes from ads, it has been growing steadily, aided by the addition of new features and channels like Verizon's +Play subscription store. Snapchat reports 397 million daily active users.
  • Disney plans to invest roughly $60 billion over the next decade to expand its domestic and international theme parks and continue building Disney Cruise Line. This amount is double what Disney spent on parks and the cruise line over the past decade. Disney aims to boost its parks division, which has been a bright spot for the company, amid challenges in its film and TV divisions. Spending per guest at Disney parks has increased 42 percent since 2019. Disney owns 1,000 undeveloped acres across its existing theme park resorts and sees opportunities to incorporate new intellectual properties like "Black Panther" and "Coco" into its parks. The company plans to expand capacity at its original Disneyland park and turn a parking area south of the park into a themed shopping, dining, and hotel district.
  • TikTok is introducing a labeling feature that allows creators to disclose when content has been generated using AI tools. Creators will be prompted to enable the labeling feature, which will display an "AI" label below the username in videos. TikTok's user guidelines already require such disclosure, and the new feature aims to make it more transparent. TikTok will also begin testing automatic labeling of AI-generated content. The company also plans to rename AI-powered effects to include "AI" in the name and will require effects creators to do the same.
  • Agencies are establishing internal think tanks to explore the implications of AI. Omnicom has set up a network of committees to examine various aspects of AI strategy, including responsible AI and partnerships. Dentsu also has an AI steering group split into two teams: one focused on client-facing solutions and another on internal use cases.
  • adam&eveDDB has joined Amazon's agency roster, which already includes Lucky Generals, Droga5 London, Joint, and Above & Beyond. Amazon's Ed Smith expressed excitement about working with adam&eveDDB and delivering "great stories that delight our customers."
  • YouTube is launching a new app called YouTube Create, designed to facilitate video editing on mobile devices. The app is aimed at simplifying the creation of YouTube Shorts, a format similar to TikTok's short-form videos. YouTube Create provides various video editing tools, such as precision editing, automatic captioning, voiceover capabilities, and access to a library of filters, effects, transitions, and royalty-free music. The app will initially be available in beta on Android in select markets, with plans to expand to iOS next year.
  • Wunderman Thompson has launched Reveal, an AI creative testing solution aimed at helping brands assess their advertising and brand assets. Developed by Wunderman Thompson's team of data specialists and technologists, Reveal uses AI techniques to measure consumers' attention and emotional responses to content in real-world environments. It uses an AI-powered emotions detection model to predict seven micro-expressions, assessing emotional reactions in real time. Reveal also provides insights into how consumers react to branded content on a second-by-second and frame-by-frame basis.
  • Accenture has made a strategic investment in Writer, a platform that uses generative AI to help create and shape content. Writer's platform enables organizations to deploy AI-driven applications across various enterprise functions, from marketing to HR. Accenture plans to use Writer's capabilities internally and offer them to clients as part of its existing services. The investment aligns with Accenture's strategy to offer clients generative AI capabilities and tools for content creation, personalization, and distribution.
  • Roblox is introducing the ability for developers to create subscriptions for their experiences, allowing them to establish recurring economic relationships with users. Users will be able to purchase subscriptions in their local currency, but the payments will be made to developers in Robux, Roblox's virtual currency. Subscriptions will renew automatically unless canceled by users, which aims to boost ongoing revenue for creators.
  • Unity has announced plans to change its forthcoming pay-per-install program following criticism from game developers. The company apologized for the confusion and announced that it would be making changes to the policy, with updates expected in the coming days. Unity's tentative new plan will limit fees to 4 percent of a game's revenue for customers making over $1 million, and installations counted toward the threshold won't be retroactive. Unity is expected to continue charging per installation but with a cap for high-earning games. The changes aim to address concerns raised by developers about the new pricing model.
  • Studio Ghibli has been sold to Nippon Television Network Corp. This move is aimed at securing Ghibli's financial stability and artistic independence as its leading figures, including Hayao Miyazaki potentially consider retirement. Nippon TV plans to support Ghibli's focus on animation and artistic projects while honoring its creative independence. The studio has had a longstanding collaboration with Nippon TV, with the network helping produce many of Studio Ghibli's iconic films.
  • The music industry's midyear revenue report reveals that it hit an all-time first-half high of $8.4 billion, with streaming accounting for 84 percent of that revenue. Streaming revenue grew by 10.3 percent from the previous year, totaling $7 billion. Paid subscriptions also saw an 11 percent increase, reaching $5.5 billion. However, the total number of paid subscriptions only grew by 6 percent, possibly due to price hikes by services like Spotify. Vinyl sales continue to grow, reaching the highest revenue since 2013 at $882 million, with vinyl accounting for $632 million of that figure. Physical media sales also included 15 million CDs sold. Ringtones remain a $6 million business.
  • OpenAI has introduced the third version of DALL-E 3. This update comes with improved contextual understanding and integrates with ChatGPT, simplifying the prompt creation process. Users can ask ChatGPT to generate a prompt, and DALL-E 3 will create images based on the provided text. Additionally, DALL-E 3 includes enhanced safety measures to prevent the generation of explicit or hateful content. Artists can also opt their art out of future versions of text-to-image AI models. DALL-E 3 will be initially available to ChatGPT Plus and ChatGPT Enterprise users in October before being rolled out to research labs and the API service later in the year.
  • Disney+ is expected to fall tens of millions of subscribers short of its previously stated target for the streaming service. The goal, set in August 2022 by then-CEO Bob Chapek, aimed for 215 million to 245 million subscribers by 2024. However, factors like price increases, reduced demand in India, and a focus towards profitability have led to the company falling short.
  • In an interview with CBS Sunday Morning, Tim Cook discussed various topics, including advertising on the platform formerly known as Twitter (X), the release schedule of the Vision Pro headset, and Apple's environmental initiatives.
  • Meta is reportedly considering putting ads in WhatsApp as it seeks to boost revenue.  Discussions within the company have explored the idea of displaying ads within lists of conversations on the chat screen. WhatsApp's head, Will Cathcart, initially denied the reports but a spokesperson later stated that while the idea has been discussed, it was not being tested or worked on.
  • Cisco announced its plans to acquire Splunk, a data-analysis software company, for $28 billion in cash. This acquisition marks the largest deal ever announced by Cisco and reflects the company's shift away from its traditional focus on network hardware towards higher-margin software subscriptions. Splunk, founded in 2003, specializes in mining customer data for insights, particularly in areas like security vulnerabilities and business trends.
  • Substack has unveiled a redesign of its mobile app aimed at enhancing user discovery and engagement. The app now features a reading queue at the top, allowing users to browse posts. Substack is also introducing a discovery feed to recommend notes and posts to users, encouraging writers to share notes and expand their readership. Substack aims to create a more social network-like experience for its users and boost writers' retention and growth.
  • Nestlé has appointed WPP's media unit OpenMind to handle its European media planning and buying account. The consolidation process began in December, with Nestlé's aim being to create a "seamless and integrated audience-first media communications approach across categories and markets." This move follows Nestlé's decision to whittle down its media agency choices to two groups, WPP and Publicis Groupe, in July. Nestlé is one of the largest FMCG companies globally, marketing brands including KitKat, Nescafé, Haagen-Dazs, Maggi, and Purina.
  • TikTok is testing a feature that includes a link to search Google for the same query on its search results pages, according to app researcher Radu Oncescu. This development comes as the app has been adding Wikipedia snippets that link directly to the site for some searches. While Google declined to comment, TikTok confirmed it's testing the feature in certain markets.
  • Catch+Release has introduced an AI-powered search feature for UGC. This search engine allows users to seek out relevant content using natural language queries, eliminating the need to move between different platforms. Rather than relying on keywords and tags, the search engine employs image recognition to identify scenes and objects within media assets. Catch+Release has indexed over 300,000 items from 600 creators on its platform, with plans for ongoing improvements to its recognition capabilities.
  • Havas has won the global media business for Shell, taking over the account from WPP, which had held it since 2005. This move comes at a time when environmental activist group Clean Creatives has been targeting agencies working with fossil fuel clients. Havas has stated that it is willing to work with companies like Shell as long as they are actively engaged in a transition towards more sustainable practices. Shell has outlined its intention to become a net-zero emissions business by 2050. Havas London and Havas New York are registered B Corp companies.
  • YouTube is introducing a new AI tool called "Dream Screen" for creators using its Shorts platform. This tool allows users to search for AI solutions and create fantastical short videos by entering terms into a custom search engine. During a live demonstration at the Made on YouTube event in New York, Dream Screen generated mashups like a dragon flying over a city or a dog appearing to drive a car.
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Joe Nash

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