Advertising Digest: August 2024

Summer may be over, but the industry hasn’t slowed down.

In this month’s edition, I dive into the latest moves from Netflix, Warner Bros, Disney, Amazon, and Paramount.

I also explore the rivalry between IAS and DV for Moat’s market share and highlight key M&A and partnership deals reshaping the scene.

Netflix cuts ad prices, boosts tech

Netflix has been actively adjusting its advertising strategies and pricing in 2024, particularly in its efforts to scale its ad-supported tier. The company lowered the prices of its ads, offering competitive CPMs between $20 and $30 for different ad slots. This move coincides with Netflix's push into programmatic advertising, aiming to attract a broader range of advertisers by offering more flexible pricing and advanced targeting options.

Additionally, Netflix saw a significant 150% increase in upfront ad sales compared to the previous year, indicating strong interest from various industry sectors. Netflix is also enhancing its ad tech capabilities by deepening partnerships with companies like Snowflake, LiveRamp, and InfoSum, providing advertisers with access to advanced clean-room technologies for secure data sharing and precise audience targeting.

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Warner Bros. Discovery balances struggles with streaming gains

Warner Bros. Discovery faced financial challenges in 2024, reporting a $9.1 billion write-down on its TV networks, which led to a notable decline in its stock. Despite the downturn in traditional TV revenue, the company's streaming business, centered around its platform Max, showed promise by adding 3.6 million new subscribers, bringing the total to over 103 million globally.

Warner Bros. is also expanding its digital advertising capabilities with the launch of AIM (Audience Insights and Measurement), a first-party data platform designed to enhance CTV and digital ad targeting across its media properties. This platform allows for more precise audience segmentation and is expected to boost ROI for advertisers by leveraging comprehensive data collected from various consumer touchpoints.

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Disney boosts ad sales and streaming profits

Disney's performance in 2024 reflects a strong position in both the advertising and streaming markets. The company reported a 5% year-over-year increase in upfront ad sales for the 2024-25 period, with significant contributions from its sports and streaming divisions. This growth is largely attributed to the expansion of the ad-supported tier on Disney+ and the continued global appeal of live sports, which has driven both revenue and volume.

Additionally, Disney's streaming segment reached a significant milestone, becoming profitable for the first time in Q3, a quarter ahead of expectations. This profitability was bolstered by the performance of ESPN Plus and the narrowing losses from Disney Plus and Hulu. The company also reported a healthy increase in subscribers across its streaming platforms, further solidifying its leadership in the digital entertainment space.

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Amazon's ad growth faces challenges

In 2024, Amazon's advertising revenue grew 20% year-over-year to $12.77 billion in Q2, though this marked a slowdown compared to previous quarters. Despite missing investor expectations, Amazon remains a significant player in the digital ad space, particularly through its Prime Video platform, which recently began integrating ads and hosted its first upfront event.

Amazon's ad services, which are expected to generate over $40 billion annually by year-end, continue to be driven by sponsored product formats, though the company is increasingly focusing on video monetisation and expanding its ad inventory amidst a competitive retail media landscape.

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Rivalry heats up: IAS and DV battle for Moat’s market share

Integral Ad Science (IAS) is aggressively pursuing opportunities in the wake of Oracle's decision to divest Moat, with IAS hiring 20 former Oracle employees and incorporating expected contributions from Moat into its 2024 revenue outlook.

DoubleVerify (DV), meanwhile, has successfully attracted several of Moat's former clients, including major brands like Pepsi and Ulta Beauty, bolstering its market position.

The competition between IAS and DV for Moat's soon-to-be-former business highlights the ongoing rivalry in the ad verification and measurement space.

Paramount’s strategic shift: Layoffs amid streaming profit surge

Paramount is navigating a challenging landscape, recently announcing plans to lay off 15% of its U.S. workforce as part of broader cost-cutting measures amid its merger with Skydance Media.

Despite these challenges, Paramount's direct-to-consumer business, including Paramount+ and Pluto TV, achieved its first-ever quarterly profit in Q2 2024, generating $26 million, a significant turnaround from a $424 million loss in the same quarter last year.

The company also continues to see growth in streaming ad revenue, which increased by 16%, driven by higher CPMs and increased viewing hours across its platforms.

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Strategic M&A and partnerships

Recent M&A and partnership developments in the advertising sector include Outbrain's $1 billion acquisition of Teads, boosting its video monetisation capabilities, and Criteo's advanced talks to acquire Skai, positioning it as a leader in retail media.

Additionally, WPP’s Choreograph has partnered with InfoSum to leverage clean-room technology for enhanced data collaboration and audience targeting across its agencies.

Meanwhile, Netflix is collaborating with Snowflake, LiveRamp, and InfoSum to advance its clean-room data capabilities, and Warner Bros. Discovery launched AIM, a first-party data platform aimed at optimizing CTV and digital ad targeting.

Conclusion

August 2024 saw both successes and challenges in the advertising world. Disney and Netflix enjoyed strong growth, while Warner Bros. and Paramount faced financial difficulties. The industry is navigating a period of intense competition and transformation.

What will Q4 have in store?