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Eric Seufert Profile picture
@eric_seufert
May 21 • 15 tweets • 7 min read Twitter logo Read on Twitter
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EVERYTHING IS AN AD NETWORK: Back in 2021, I proposed that "Everything is an ad network" because foundational changes in digital privacy were "upending many of the fundamental precepts" of digital advertising. This trend has accelerated since. Thoughts in a thread (1/X). Image
2/ The Information reports that Instacart delivered perhaps 30% of its revenue in 2022 from advertising. Instacart operates a grocery marketplace; why does 1/3rd of its revenue derive from ads? Because Everything is an Ad Network. theinformation.com/articles/insta… Image
3/ Similarly, Walmart delivered $2.7BN in advertising revenue in 2022, up 30% from 2021. In March, the company declared that it expects to derive more profit from ads and services than from core retail sales going forward. money.usnews.com/investing/news…
4/ In my original post on the topic, titled Everything is an ad network, I identify a number of advertising initiatives from retailers (RMNs, or retail media networks) which were launched or enlarged in the wake of Apple's App Tracking Transparency (ATT) privacy policy. Why? ImageImageImage
5/ ATT precipitated a tectonic upheaval in digital advertising. The IAB estimated in 2016 that, in combination, Facebook and Google captured 89% of all digital advertising spend growth. I wrote at the time that "Facebook and Google own our eyeballs." mobiledevmemo.com/facebook-googl… Image
6/ But ATT breaks the data feedback loop (on iOS) between large ad platforms and advertisers that facilitated behavioral profiling and user-level ad targeting. I describe this change and its consequences in The App Tracking Transparency Recession. mobiledevmemo.com/the-att-recess… Image
7/ Other, similar privacy restrictions will or have achieved the same: the DMA in Europe, Google's deprecation of third-party cookies in Chrome & the GAID on Android, etc. The tectonic upheaval will be universal. mobiledevmemo.com/rip-gaid-priva…
8/ Like Pangea, digital advertising's monolithic landmass of Google+FB is decomposing into a constellation of advertising platforms that don't rely (exclusively) on SDKs or pixels to pair user data with advertising outcomes. These new ad networks utilize first-party data (1PD). Image
9/ In the absence of a feedback loop of deterministically identifiable (through cookies or device identifiers) conversion data, 1PD aggregated through marketplace sales -- like Instacart's -- prevails. And that is playing out. From the original Everything is an ad network piece: Image
10/ Meta has adapted to this landscape disruption by utilizing AI to pursue two of the four opportunities for ad platform revenue growth I outline in this piece from July 2022: increase engagement (reels) and increase ad value (Advantage Plus). mobiledevmemo.com/unpacking-meta… Image
11/ Google has done the same with Shorts and its Performance Max (PMax) advertising product. But marketplace apps can simply conjure up advertising businesses because their 1PD (including simple contextual relevance) holds acute value now. mobiledevmemo.com/why-is-everyth…
12/ This is why Everything is an ad network: as @modestproposal1 pointed out in 2018, ad businesses are attractive, high-margin projects that can be derived from existing assets -- data. The tectonic upheaval in privacy has made them even more accessible.
13/ Note that ATT didn't engender this dynamic. As I wrote in 2018, Amazon challenged the Facebook+Google stranglehold on digital advertising revenue growth long before ATT. But ATT and other policies have enlivened this contest dramatically. mobiledevmemo.com/can-amazon-ups…
14/ And Amazon is a primary beneficiary! Amazon's ads business grew by 19% in Q4 2022 versus -0.21% for Alphabet and 4% for Meta. mobiledevmemo.com/alphabet-q4-ea…
15/ Everything is an ad network, November 2021: mobiledevmemo.com/everything-is-…

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More from @eric_seufert

Eric Seufert Profile picture
May 10
Interpreting Airbnb’s shift away from performance marketing: Back in February 2021, Airbnb announced that it had scaled back investment in performance marketing to focus on brand marketing campaigns that would "educate" consumers and potential users. (1/X) Image
2/ Brian Chesky revealed that, despite dramatically reducing spend on performance marketing in 2020, the company's traffic levels had returned to 95% of 2019 levels. Chesky stated that Airbnb would "never" spend as much as a percentage of revenue on marketing as it did in 2019.
3/ Airbnb does not break out its Sales and Marketing expense by marketing category, but the change in marketing strategy is visible in a chart of the company's Sales and Marketing expense over time. Image
Read 9 tweets
Eric Seufert Profile picture
Mar 17
Pinterest $PINS has always felt like a missed opportunity related to advertising, given the purchase intent inherent in the product's core use case. Last June, an exec from Google Commerce was appointed CEO, and the company appears to be overhauling its ads platform (1/X) Image
2/ Pinterest's global ARPU, at $1.96, lags that of Snap ($3.47) and Meta ($10.86). But its ARPU has grown more than that of those companies in the same timeframe. Image
3/ Pinterest's MAU had stagnated in the quarters before its new CEO took the helm. But the company saw 4% y/y MAU growth in Q4 and, notably, 4% y/y revenue growth, vs. 0.15% for Snap and -4% for Meta in the quarter. Image
Read 10 tweets
Eric Seufert Profile picture
Mar 15
With the prominence of Advantage+ and PMax, as well as Generative AI tools like Stable Diffusion, it's common for marketing teams to develop the ambition to build a wholly automated, end-to-end advertising system. My advice: build exoskeletons, not cyborgs (1/X). Image
2/ The desire to automate digital advertising is not new, but Advantage+ / PMax and text-to-image tools make it seem much more accessible now than it ever has -- deceptively so. Advertising automation appears to be as simple as connecting a few APIs. Image
3/ I classified the different tiers of advertising automation in this piece from 2020. At the time, I proposed that most teams were at Level 1 automation, which entailed automating tedious tasks away but leaving judgment decisions to humans. mobiledevmemo.com/the-four-level…
Read 10 tweets
Eric Seufert Profile picture
Feb 25
I received some pushback on this piece / tweet storm that I felt deserved to be addressed. Some thoughts on Spotify's podcast advertising business in a thread: (1/X)
2/ First: I wrote the piece to attempt to articulate the "why" of Spotify's abrupt about-face related to podcasting, not the "what," which I feel is incontrovertible: the company is reducing its investment into podcast content as its gross margin remains below target.
3/ Further, the company parted ways with its chief content and advertising business officer -- the architect of the podcasting content strategy -- distributing that role's responsibilities between two long-time execs. variety.com/2023/digital/n…
Read 13 tweets
Eric Seufert Profile picture
Feb 22
Between 2019 and 2022, Spotify $SPOT spent more than a billion dollars on acquisitions related to podcasting, across both content and advertising/analytics technology. And early this year, the company abruptly changed its strategy. (1/X) Image
2/ Spotify hired a television veteran to scale its content strategy in 2018, and the company subsequently went on a spending spree, buying up podcast publishing tech & exclusive publishing rights to tentpole content such as The Ringer, The JRE, Gimlet Media, and Call Her Daddy. Image
3/ Ostensibly, the strategy sought to aggregate exclusive rights to broadly-appealing podcast content and drive monetization through both incremental subscriptions and advertising. For a time, it seemed to work. Image
Read 9 tweets
Eric Seufert Profile picture
Feb 1
Champagne is being popped in Menlo Park tonight: not only is Meta's share price up ~18% after-hours on its Q4 earnings beat, but a judge also rejected the FTC's request for an injunction to block its acquisition of VR developer Within Unlimited today. bloomberg.com/news/articles/…
2/ Related: mobiledevmemo.com/unpacking-meta…
3/ Related: mobiledevmemo.com/google-pmax-me…
Read 4 tweets

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