Laura Martin, a media and tech analyst at investment bank Needham & Company, opened her presentation at AdExchanger’s Programmatic I/O in Las Vegas this week by singing her own walk-on music.
“I came in like a wreccckkkkkiiiiinnnnggggg baaalllllllllll.”
The Miley Cyrus single was an apt choice, since Martin came in hot with some bold, contrarian predictions.
For example, Martin believes that the advertising revenue pendulum will swing back in favor of the open internet and the programmatic ecosystem, rather than towards the walled gardens that gobbled up so many ad dollars over the past decade.
Her optimism is partly due to the relative weakness of the open internet.
Huh?
Needham estimates that Alphabet, which owns Google and YouTube, of course, Meta, Amazon and Disney combined will grab around $650 billion of ad dollars in 2023.
By comparison, The Trade Desk earned just $1.2 billion in 2021, its first time clearing the billion-dollar mark in a single year. Criteo, which Martin doesn’t cover, generates low billions in revenue as well, and even the strongest other programmatic companies earn in the hundreds of millions in terms of annual revenue, which is peanuts by walled garden standards.
But “what that means is that a tiny 1% or 2% shift in budgets from the big platforms could double or even triple” the pie for open programmatic, Martin said.
And those shifts are happening. Meta in particular, she said “is losing and will lose” its current feud with Apple.
Last year, Facebook benchmarked its expected revenue headwinds from Apple’s iOS 14.5 privacy changes at $10 billion. Presumably, at least some of those ad dollars will go somewhere else. If just 10% of that loose sofa change found its way to open programmatic channels, it would represent a huge injection of spend to the category.
Apple’s privacy changes and other privacy-related upheavals, such as Google’s “threatened” third-party cookie phaseout, favor the open web, somewhat counterintuitively, because the return on ad spend calculations enabled by third-party site tracking accrued largely to platforms like Google, Facebook and, to a lesser degree, Snapchat, which all have ubiquitous tracking pixels.
Martin refers to impending demise of third-party cookies as a threat rather than a foregone conclusion, because she doesn’t think Chrome will follow through.
“Google will kick the can again on Chrome third-party deprecation,” she said.
And how’s this for a prediction? Martin expects Google will punt on cookie deprecation until an open industry solution such as the Unified ID 2.0 initiative reaches scale and Google can just join that program, rather than forging its own solution. Anything Google develops as a tracking and measurement alternative would inevitably face suits by regulators, she said, since any decision Google makes will disadvantage publishers, advertisers and/or competitive ad tech.
“Joining an outside industry solution” is the only way to avoid this fate, Martin said.
(Considering Google’s stance on email-based IDs, wonder what the under/over would be on that wager.)
Beyond walled garden woes, CTV advertising is another big potential driver of programmatic growth. The walled gardens dominate mobile advertising, but CTV is still a jump ball, Martin said.
Martin is far more optimistic about CTV and programmatic CTV compared with other advertising prognosticators. EMarketer, for instance, forecasts that CTV advertising will grow between 5% and 10% per year over the next three years. Martin said she thinks CTV growth will be 50% annually over the next three years.
“I’m more bullish on CTV and its tailwind for the open internet,” Martin said.
That’s an understatement.
But, hey, she said, in the world of Wall Street investment banking “you don’t have to be right, you just need to have an opinion.”
