A Life Of Luxury
The internet is a powerhouse for commerce – just not so much when it comes to the luxury category.
Although that’s hardly surprising. Over the past several years, fast-fashion and discount-driven marketplaces like Temu, Shein and Amazon have put relentless downward pressure on the cost of luxury items.
Now, major retailers are trying hard to change that narrative by looking for ways to make certain products feel premium in order to attract a higher-earning segment of the population while also better competing with Amazon.
Walmart, for example, finally secured the right to sell Nespresso’s nearly $1,700 espresso machine, The Wall Street Journal reports. And AdExchanger also recently wrote about Walmart’s expansion up-market into more humble categories, toothbrushes.
Amazon, meanwhile, sidled into luxury through a different avenue by making a $475 million investment in Saks in December 2024 following a decade-long strategic relationship. But the venture quickly soured when, in January, Saks filed bankruptcy and Amazon alleged a breach of contract. Saks, for its part, claims luxury brands refused to list their products on the “Saks on Amazon” storefront.
The tension here comes down to perception. Selling on Amazon or Walmart inevitably erodes a brand’s aura of exclusivity – especially when these platforms penalize sellers that offer different prices elsewhere.
Even in luxury, Amazon can’t help but have a cheapening effect on brands overall.
Is Being Indie Still Cool?
Independent agency Tombras has gobbled up Opinionated, a 40-person boutique ad agency based in Oregon. Terms were not disclosed.
Tombras, which has both media and creative arms, views this acquisition as the next step in its ambition to become the world’s largest independent agency, Ad Age reports.
The move positions Tombras closer to West Coast clients and creative talent – as in, human actors (for now). The plan is to rebrand Opinionated to Tombras West next year.
Indie agencies have historically pointed to their smaller size as giving them a leg up over agency holdcos, which are hampered by siloed teams and slow reaction times.
But now, faced with more formidable foes in an increasingly competitive and consolidated landscape – see OMG/IPG – indie agencies are joining forces rather than risk being made obsolete.
Eventually, Tombras, which now handles roughly $1 billion in annual media spend, plans to expand even further, noting that a presence in Europe and Asia will be necessary at some point. (It already has an emerging presence in South America.)
The question now is whether indie agencies can keep their edge as they scale.
Bubble, Bubble, Toil And Trouble
Like CES before it, the World Economic Forum in Davos this week is already dominated by conversations about AI – or, rather, the dreaded AI bubble.
Per the The Irish Times, Microsoft CEO Satya Nadella kicked off the first day with a speech arguing that if AI is going to be more than just a bubble, it needs to gain widespread adoption beyond the tech sectors of wealthy nations.
However, as The New York Times pointed out last summer, many developing countries lack the resources needed for AI computing power at scale – which also happens to be far more expensive to maintain in hotter climates, Rest of World recently found.
Developing nations would presumably rely on the US and Chinese tech companies that already dominate the AI landscape. But the economics of the current market, where most AI tech is paid for by subscription fees, makes access more difficult. To offer a free, widely available alternative, those companies would likely turn to advertising.
Nadella’s broader point – echoed by many at Davos – is that AI’s future depends on continuous, large-scale investment in AI innovation. The problem is that these investments are growing faster than real-world adoption or evidence that there’s a viable path forward for global AI startups beyond the massive incumbents like Google, Amazon and Microsoft.
But Wait! There’s More!
OpenAI might consider expanding into licensing deals as another way to make money, aside from advertising. [Business Insider]
Salesforce CEO Marc Benioff calls for AI to be regulated because he says “AI models became suicide coaches.” [CNBC]
Agentic AI has the potential to cause huge cybersecurity risks, suggests Signal Foundation President (and former Googler) Meredith Whittaker. [Bloomberg]
Microsoft plans to show ads to Xbox Cloud Gaming users who have purchased Xbox games digitally but do not subscribe to Game Pass. [Mashable]
Sony is spinning off its TV hardware business into a new joint venture with TCL. [The Verge]
Netflix is pivoting to an all-cash deal to acquire Warner Bros. [WSJ]
A case that’s currently in review before Meta’s Oversight Board might alter the way the company tackles permanent account bans. [TechCrunch]
You’re Hired!
Pinterest adds a new chief business officer – former Spotify exec Lee Brown – and a new CMO, Claudine Cheever, Amazon’s former VP of global brand and marketing. [Axios]
Meanwhile, Microsoft AI names Pinterest’s former CMO Andréa Mallard as its chief marketer. [Adweek]
Comcast taps David Shaw, Snap’s former head of revenue and product partnership for EMEA, to lead global expansion for its Universal Ads product. [Campaign]
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