Home Daily News Roundup The Power Of Search Compels Google; DTC’s Profitability Plight

The Power Of Search Compels Google; DTC’s Profitability Plight

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Search For A Replacement

The Google antitrust trial allows for a great deal of cynical theater.

Microsoft CEO Satya Nadella testifies with, of course, exactly what Microsoft wants from the trial. Sridhar Ramaswamy, former Google search product chief who started an ads-free search engine, gets to speak his piece on why ad-supported search is bad.

But one thing that’s come up, Digiday reports, is how search ads have separated from other digital advertising channels – the other biggie being social media – as a must-have media with the power to compel advertiser behavior. 

Back in the social media heyday of 2021, Snapchat’s market cap hit a peak of $130 billion, while Facebook was briefly a trillion-dollar company. Meanwhile, Google was mocked for trying and failing with its own social media (aside from YouTube). 

But Google Search has proven its mettle even though social media did not stand the test of time.

A year ago, an investor asked Alphabet CEO Sundar Pichai to explain his confidence in Google’s ad biz while Meta, Snapchat, Pinterest, TV broadcasters, news and other ad-supported media (except Amazon) were getting hammered. 

The DTC Growth Paradox

Many DTC brands blew up in terms of popularity and name-brand collaborations but sizzled out like a match when that goodwill never turned into profit. 

Underwear brand Parade ended up in a liquidation sale despite high growth rates and deals with the likes of Coca-Cola and Swarovski, The Information reports. 

Revenue grew well, but 60% of that net revenue was going to paid media. The company was spending as much on ads to convert a sale as the average price of the purchase.

Clearly, this situation wasn’t tenable for Parade. Although, many DTC startups find themselves in similar situations because of investors who bet on outside potential gains in the future, which can come at the expense of a sensible business model.

Often, too, a DTC brand takes a strong philosophical position on a topic like sustainability (Allbirds, anyone?), accessibility (Parade touted itself as the not-Victoria’s Secret underwear) or equity (like women’s shaving brand Billie). But then they have to beat legacy brands on their home turf – the store shelf – while rationalizing out-of-control online acquisition costs.

In A Pickle

TikTok Shop is a blessing and a curse, Insider reports.

Adding ecommerce to a platform known for viral videos makes sense for the bottom line. When 42,000 people decide to buy the same pickle-themed sweatshirt they’re seeing reposted over and over, for example, it’s a big haul for TikTok and individual sellers like Bad Addiction Boutique.

But creators are struggling to keep up with the platform’s strict three-day shipping policy. TikTok can’t compete with Amazon if it can’t deliver items quickly and guarantee quality, but sellers are nearly all creators or homegrown businesses that have to package and ship on their own. Add that to the unpredictability of social media virality, and creators can easily end up with more orders than they can fulfill.

TikTok is taking a hard line on refunds and shipping guarantees (Amazon’s table stakes). But that means advertisers and merchants risk being booted if they create customer service problems.

But Wait, There’s More!

Google agrees to reform its data terms after German antitrust intervention. [TechCrunch]

Snap receives an enforcement notice from the UK privacy watchdog over its chatbot tech, My AI. [Bloomberg]

Campbell Brown’s exit from Meta elicits no response from publishers facing a deteriorating relationship with Facebook. [Digiday]

Adalytics: How much is Procter & Gamble paying per ad impression? [blog]

You’re Hired!

Agency vet Deirdre McGlashan joins brand governance platform BrandGuard as CMO. [MediaPost]

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