Ep. 97: Rushing to the End of Earnings Season

[Music] Woo! I'm just a massive, I've had some massive, I'm a massive, I'm a massive, I'm Brian Leaser. And I'm Luke Stilman, Brian has your week been up in Canada. But you know it's been pretty good to start. And to get settle into, you know, let's need you off as new house, learning to adapt to the weather. It's, um, it's a little bit different. I think what I've been used to, uh, have you. Yeah, it's good. We're also, uh, settling into our new office space down in New York. And it's funny, there is a, uh, office dog that runs around with a little bow tie on. So, uh, the, a lot of the work that we've been done with a little companion, hunting for treats nearby. Well, it makes sense. I mean, formal wear, you know, uh, uh, business casual, at least it's the right standard for any animal. Um, uh, did you do anything fun that wasn't work in the past week? Uh, I know, gearing up for, uh, little traveling week after next. So, uh, just all work stuff. What about you? Well, I did go to see, uh, my first or what first, uh, live music events, uh, in my time here. Um, actually two of them. Um, I got to see rush, which was quite starting. Nice. And, uh, yeah, that's a, oh, man, so good. Uh, you know, we need to like do the equivalent of written work in non-standard time signatures. I don't know what that is, but it's like, we need to create like paragraphs that aren't exactly paragraphs. That's my thinking that the rush equivalent of written work. So that was probably the highlight of the past week. So, any who, uh, let's see economics news, um, what stood out to you of late? Yeah, I mean, we got retail sales today, which were a little weak, but some of that was Amazon Prime Day was time shifted by a month compared to last year. Other than that, inflation still not too bad down a tenth from the month before. So the fed likely to stay on hold and the UK GDP, eurozone, industrial production, a little better than expectations. What about you? Anything stand out? Yeah, well, I think the retail sales number certainly was, uh, what stood out to me. And I think that, you know, again, the commentary that is so commonly used focuses on the sequential growth and a disappointment on a sequential basis. But again, the right way we think to look at the data is year over year and then compare what the year over year trend is and how that's evolving. Because then it starts to look like, uh, 5% or 6 kind of the same, right? As opposed to the way that it gets characterized on a sequential, monthly basis just doesn't really reflect it. I think the underlying tenor of the market, we know that inflation is real. We know that inflation is elevated. But if you think about retail sales historically over the last decade, 15 years, it's been a 3% kind of number in nominal terms with low inflation. So if we're now at a five with inflation, it's elevated, uh, backs of this healthy economy not standing any case shaped outcomes. Yeah, consumers are remarkably resilient and we see it in the, the results of sellers have advertising. Absolutely. Well, let's just talk a bit about the actual work that we did this week. First of all, I guess we had, uh, results from, uh, both dense and lowland. Let's start with them. Softish, but could it worse, right? Could be worse. I mean, put it in perspective, low single digit growth overall for a lot of the agency players versus an industry growing high teams now, not mid teams, but definitely some interesting dynamic there for Densu in the Americas, media, nearly flat, whereas creative down 23%. I mean, some of that is Densu's specific perhaps, but I think, uh, what, what's it out to you? Well, I think the bigger point is that, uh, when you look at the two of them and add them to the other agency groups, the fact that the industry is not the terribly worse. I know that this is the back end of complement of sorts to look at it. Considering that AI only gets better, uh, the fact that the agency industry is not worsening and if anything is probably improving slightly, is probably still about a 2% kind of growth rate this year is a testament to the idea that AI is not going to kill the agencies. Uh, again, there's opportunity out there for agencies that make the right investments, frankly, in growth. So that's it. Uh, we also did a bit of a review of Antek now that we had some of the last names, uh, reporting for the quarter loop. What, uh, what did you see in those? Yes, some interesting topics there. First was lift off, first quarterly results for lift off. Again, strong growth in the app space, 36%, but it's still so interesting that they have a huge breadth for their platform, 170,000 apps over a billion daily users. And yet they have about one ninth of the revenue compared to apploven on a similar basis of, you know, number of advertisers, a number of apps, and it just shows how important having that mature performance model is and being at the mediation layer in the app transaction. And then for next in solid growth, but everyone's trying a point to what do we have that's our special sauce that makes our platform work better than anything else for next in its, you know, a CR data from high sense and Toshiba TVs. But I think we're starting to see as ad tech as a sector continues to slow down as the open web turns back negative, whereas the wall gardens are accelerating that if ad tech companies weren't looking for the next leg of growth before they certainly are now. Yeah. And I think that there's a connected tissue between the points we've been making on agencies and on ad tech. Both are fundamentally bucketed under the non working spend from the market or perspective when they're paying for software or services. And this things we're seeing with the trade desk, I think we have to remember there's few factors at play here, right? One is that yes, there's a market saturation element. There's a slightly higher level of competitive intensity from some of the smaller competitors they've got to face. But at the end of the day, marketers are really focused on containing their costs of that like, but like marketer wants to reduce what they're spending if it's not tied to the media and the inventory when it's bundled together, then it's a lot easier to drive growth. And that's not how most ad tech companies are perfectly going to market these days. No, and we do see some of that with Vient where they talk about their AI platform they call Lettuce as a do it for me solution. That's kind of the the Pmax advantage plus for the open web. I think Vient's been reading our pieces because that's exactly what we say, you know, best practice for ad tech should be. So any place where you can have a platform that bundles costs that adds convenience for advertisers that really seems like what they're gravitating towards. Absolutely. And RTL reported it for our corporate subscribers who have access to our global product. We did an updated analysis of what's going on in global non-US markets. Luke with RTL TOS. RTL told us that pressure on TV is increasingly global. So your TV ad revenues down a little bit, digital ad revenue, slowing sequentially, not enough to offset the declines in linear. And so some of that has to do with World Cup rights. They had some exposure in France through MCs and RTL radio. But it just highlights this dynamic of sports is everything for TV. And if you don't have sports, it's really a struggle because the underlying backdrop is pretty weak. Yeah. And I have to say listen to their earnings column. So amused that they're so companies and a lot of them by the way that tried to talk about well advertising meaning linear TV advertising or traditional form is negative. But our digital business implied and articulated including advertising and non advertising businesses is up a lot. And the reality is they need to tell us what the total comprehensive advertising number is. And it's not going to look that pretty. But that it's nice to have a better growth story when you put the digital numbers together. At the end of the day, the trends that we're seeing in Europe really aren't that different than what we're seeing in the US when it comes to this. So that's that. Well, I was going to say the last thing that stood out to me interesting this week for for my heart was they called out financial services as one of the weak categories for them. Whereas every other seller has said that's one of their biggest strengths. We think it's going to be the top performing category this year. And potentially highlights the difference between those performance focused digital channels for a category like financial services. Maybe audio, not thought of in that same bucket. That's a really good point. I especially pushing the credit cards as they are and other products. It's a digital channel for certainly benefiting. All right. So what didn't you get to that you wish you got to this week? Well, we got upfront results from the trades and from media dynamics. So it'll be interesting to dig into that a little bit and see your broadcasters own surprising. We say they crushed it as they do every year. You how correlated that is to the real results. What do we think it means for the TV market? No spoilers. That's what our spoilers would be. Yeah. And I think measurement was something I was really curious to dive into, which I think we'll do some more work on for next week as well. Because there's a lot going on in the measurement space. So we'll have to talk more about that. And next week when we return. I have nothing to look for. Alright, have a good week. Have a good one. (upbeat music)