What's next for ad tech
A conversation with ad tech veteran Ari Paparo
If you haven’t already, check out the People vs Algorithms podcast on Apple or Spotify. This week, Troy Young and I discuss why charismatic billionaires end up screwing up.
This week, I’m taking a look at where ad tech is going next with a veteran of the area, Ari Paparo, along with some more thoughts on Twitter and signs the impending recession is starting to hit home in publishing.
First up, a message from my friends at Omeda.
Newsletters are the new homepage. But we regularly hear we’re at peak newsletter. Omeda, the full-stack marketing technology platform for managing first-party data,, analyzed over 1.7 billion emails its client sent in the third quarter. According to the Omeda Email Engagement Report, open rates have normalized one year into Apple’s Mail Privacy Protection rollout. Unique open rates rise by only 1.1% percent in Q3 2022, compared to 6.6% in Q2 2022 and 36.6% in Q1 2022. Click rates, which plummeted after the introduction of MPP, have seen a slight uptick to an average of 4.6%. Find out how your newsletter measures up – and how to measure success in a post-MPP environment.
What’s next for ad tech
I think it was from Rishad Tobaccowala that I first heard that “agencies are like cockroaches: they survive anything.” I’d say that’s also true of ad tech, which is why I never pay attention to the sky-is-falling stuff that comes out of trade groups anytime there’s some move toward regulation, either from a government or what is in essence the giant platforms that control the ecosystem.
We’re in the midst of a shift in the digital advertising market. Sure, reports of Meta’s demise are likely overstated. Managing decline at that scale is a multi-generation undertaking. Google is weakened but still juggernaut, unless AI renders search completely unusable. Apple has upended the preferred micro-targeting model of big tech platforms, sending their stocks spiraling and causing the first meaningful share shit in some time. Of course, that doesn’t mean money flooding into publishers’ coffers. Instead, the beneficiaries have been other massive tech companies like TikTok and Amazon, along with retail media offerings from big consumer platforms. Still, it’s hard not to see how the pendulum is swinging in the favor of publishers who have tight connections with loyal audiences.
On this week’s episode of The Rebooting Show, I spoke to Ari Paparo, a longtime ad tech executive going all the way back to the DoubleClick days. I’ve relied on Ari for years to disentangle the jargon, complexity and acronym soup of ad tech – and held that he’s the funniest person in the industry, although that obviously comes with a large asterisk. One of his new projects is Marketecture, where Ari and other industry experts interview ad tech providers to get under the hood of exactly what their software does for advertisers and publishers. Ari describes it as a way to replace the first meeting. (If you want to check out Marketecture, you can get 20% off by using the code REBOOTING at checkout.)
Some highlights of my conversation with Ari:
Innovation requires fragmentation. Ad tech’s complexity is a longtime talking point. And it is undeniably a convoluted supply chain that’s given the veneer of plausible deniability to all kinds of corner cutting, at least in my experience as an observer for many years. But Ari points out that “innovation requires fragmentation,” and besides, many of those pushing an anti-complexity narrative just happen to have “anti-complexity solutions” to sell. Go figure.
Small publishers can opt out. Google is the simple ad tech solution. Most small advertisers can just default to Google and Facebook. But larger enterprises gravitate to more complexity simply because they have more complex businesses.
Apple overturned the industry. Cynical or not, Apple’s use of privacy to restrict data flows has upended how the industry operates and will operate going forward. It’s of course no coincidence that these privacy restrictions hurt their rivals in Meta and Google. “There's no love lost between those companies, so hitting them in the kneecaps was kind of fun,” Ari said.
Twitter watch
My wife said to me this morning, “What did Elon Musk do last night?” It wasn’t tied to anything, just an assumption. I’d like to say this will wear off as people weary of the pointless drama, but I feel Trump unleashed a playbook for hacking the attention economy. Twitter isn’t real life, but a lot of real life increasingly resembles pro wrestling.
Musk is the perfect heel, delighting in skewering critics, firing engineers mid-thread and cosplaying the Alpha. Inevitably, this becomes part of our running culture wars, with the aggrieved tech elite using criticism of Musk as more fodder for their war with the “woke elite” of media who live in small apartments in Fort Greene. Have you even coded before?
Meanwhile, advertisers, even some publishers, want no part of any of this. The Builders vs the World dogma works in some quarters but not all.
Musk himself clearly has no time for advertising. After all, he’s the latest in a long line of tech founders to brag about not needing to advertise, only now he’s got Tesla advertising on Twitter. Plenty of ad space available, considering the app must have double ad frequency. I suspect Musk sees ads as a tool to force users to pay a subscription fee, similar to how Spotify seems to tune its algorithm to just the right annoyance to convince people to pay rather than leave entirely.
A lot of this betrays a misunderstanding of the ad industry. Ari and I discussed how brand advertisers will not want to be part of this mess. They’re conservative by nature, and Musk not understanding this was clear by his rash changes opening the door to brand impersonation that is simply not going to fly with these major companies. In Corporate America, everything can’t be for the lulz.
Recession Watch
While a rising tide does tend to lift all boats, it also goes out. No company is immune from the economic turbulence we’re experiencing throughout the economy. While TikTok has benefited from share shift from Meta properties in particular, it is also seeing ad spending shrivel, paring back its growth forecast by 20%.
BuzzFeed continues a rough run as a public company. Its latest results show a mature company that’s still unprofitable and is also losing audience attention. Time spent overall on BuzzFeed is down by a third, but it’s most pronounced in time spent with BuzzFeed content on platforms, as its owned properties now account for half of audience time spent with the brand. The future of (most) media is owning the relationship with the audience, not renting from platforms.
If it’s any consolation, even the strongest players are seeing pullbacks. Dotdash Meredith reported an “unexpectedly weak” digital ad market that it doesn’t expect to improve in the first half of 2023. That should speed up the tough calls that are part of any sizable acquisition like the $2.8 billion deal to buy Meredith a year ago.
Inevitably, this will filter down to employees. The pandemic was a needed correction in the relationship between capital and labor, which had grown completely out of whack for over a generation. The mass layoffs at tech companies are without a doubt unique in terms of simply how large these companies had gotten – Meta at 87,000 employees? – but it’s also a signal that the Fed’s moves to stop inflation will spur more job cuts. It will also cause employers to take a harder line with issues like the return to the office. After all, nobody’s a fan of presenteeism, but you can be sure they don’t want to risk getting put on the list simply because they’re “out of sight, out of mind.”
It will also cause many employers to take a harder line on labor unions. Marching into executive offices with demands to forswear layoffs just isn’t going to cut it in this environment. The vibes always shift, and they’re shifting back to our natural state of lionizing the grind.
Thanks for reading. Send me your feedback: bmorrissey@gmail.com.
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