Here’s today’s AdExchanger.com news round-up… Want it by email? Sign up here.
Crushin’ It
Because Microsoft’s proposed acquisition of Activision Blizzard is still in the air, the Candy Crush owner didn’t host an earnings call.
But Activision Blizzard did share a Q4 earnings summary, which included some revealing nuggets about what it takes for ad-supported games to survive.
Mobile gaming “sits at the center of the impact zone” of Apple’s AppTrackingTransparency (ATT) framework, writes Eric Seufert at Mobile Dev Memo.
But “the depredations of ATT are not evenly distributed,” Seufert says. Some games monetize solely with ad revenue, while others rely on in-app purchases.
Games with a more balanced approach to monetization are best poised to survive ATT, according to Seufert.
Activision’s Candy Crush franchise is one of the few super-popular mobile games with a broad enough audience to monetize effectively, despite signal loss.
Activision reported that demand for Candy Crush in-game inventory grew 20% year-over-year in Q4. Activision’s large portfolio of casual games, which includes the entire Candy Crush franchise and Call of Duty Mobile, likely helped the company outperform the broader mobile gaming market.
Expect ATT to precipitate a move toward casual games that rely on more than targeted ads, Seufert writes.
Tick Tock
Privacy. Antitrust. Misinformation.
Getting Congress to move on Big Tech legislation is like … well, we don’t know what it’s like because it hasn’t happened yet.
But TikTok might finally break the government’s inactive streak.
The White House has a plan that would allow TikTok to operate in the US – if the company stores data on Americans using Oracle servers in the US, Bloomberg reports.
Buuuut, under Chinese law, Chinese companies can still be compelled to share data with the government.
American companies such as Google and Microsoft face a similar catch-22 in Europe, since US law enforcement can subpoena data from American companies even if the data is stored in servers in another country. That’s why Max Schrems keeps winning his complaints.
If the TikTok plan goes through, there could be serious blowback. The tech lobby probably won’t like it, according to Bloomberg (although Google, Meta and Apple may not be super motivated on this one).
TikTok also has a certain super power: its immense popularity with users. Unfortunately for TikTok, though, it mainly targets people too young to vote.
How Satya Gotcha
Satya Nadella has had an epic run as Microsoft CEO. But Microsoft’s recent deal with OpenAI, maker of ChatGPT and DALL-E, may go down as the savviest move he’s made.
Microsoft put $10 billion into OpenAI, which is committing to build its products on the Microsoft Azure cloud. The deal is structured so Microsoft is paid back over time. That’s partly because OpenAI is a nonprofit with a capped-profit subsidiary, meaning this isn’t an investment that’s likely to turn a big profit via acquisition or IPO.
But who cares about profit?
“From now on, the [gross margin] of search is going to drop forever,” Nadella told the Financial Times.
Microsoft can undercut Google’s profit margin on search as long as users come along for the ride, and ChatGPT is Microsoft’s best bet to wrench users from Google to Bing.
Axios writes that the association with OpenAI may have done the seemingly impossible and made Microsoft cool again.
Oh, and the biggest win could actually be for Azure. OpenAI will be its flagship account. That’s a jewel in Microsoft’s crown just like Netflix gives Microsoft Advertising some sweet bragging rights.
But Wait, There’s More!
Retail media needs to sell measurement first. [The Drum]
Google: Learn the status of Fledge auction features as we approach third-party cookie deprecation. (Lol.) [blog]
Why more grocers are putting electronic shelf labels in their stores. [Grocery Dive]
The Super Bowl is always high stakes for advertisers – but marketers don’t have the same enthusiasm to spend big on ads around the game as they’ve had in the past. [Digiday]
