|Should Digital Media & Ad Tech Workers Fear for Their Jobs?
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|Tech workers who managed to dodge layoffs in 2023 aren’t out of the woods yet. Reports of layoffs are still coming, and as of January 17, 51 tech companies have laid off more than 7,520 workers in 2024. The digital ad tech space is feeling the heat; even Google is laying off staff in its enterprise ad sales teams. But does that mean our industry is in peril?
Media companies have taken massive hits in the past year. Morning Brew reports, "2023 saw the most media job cuts in the last 20 years, outside of recessions.” In 2024, there’s already cause for concern for medialand, with Paramount Global, Business Insider, Forbes, Condé Nast, The Los Angeles Times, and Sports Illustrated all announcing staff cuts.
Last November, Insider Intelligence reported that hiring was “soaring” in the advertising space due to anticipated growth in advertising in 2023. Experts predict digital advertising will grow 6.5% in 2024, reaching $442.6 billion, indicating health in the sector, even M&As in the sector, which was anemic in 2023, with LUMA partners predicting a 14% increase this year. But the industry is changing, which reflects the types of jobs lost and gained. For instance, spending on retail media is on the rise, and so is the number of job postings on Indeed, ZipRecruiter, and LinkedIn in the retail media space. The job market — layoffs and hiring — reflects an industry in flux. – SS
|Netflix Takes a Victory Lap
|In a recent letter to investors, Netflix co-CEOs shared some good news with investors: the company had achieved its vital financial objectives for 2023. Subscribers are up, as is revenue. Its ad business is still nascent but growing. Goals for the upcoming year will be to expand content, crack down on password sharing, increase the subscriber base through live content (AdExchanger calls this "appointment AVOD"), and improve its ad products for advertisers.
There's a lot to unpack here. First, ever since the pandemic ended and consumers began canceling subscriptions, we've read that streaming services have struggled with profitability. Netflix (and Hulu) are bucking the trend. According to its earnings report, Netflix's revenue growth has been healthy, growing 12% in 2023, up from 6% growth in 2022, and surpassing Wall Street's expectations. Moreover, the future looks bright, "We enter 2024 with good momentum. We expect healthy double-digit revenue growth for the full year 2024."
Part of that growth is thanks to its growing AVOD subscription base, which grew from 15 million active users in November to 23 million today and now accounts for 40% of new subscriber signups. Netflix plans to continue adding new subscribers by focusing on live content, and to that end, the company announced a 10-year deal (valued at more than $5 billion) to stream WWE's flagship program, Raw, beginning next year.
Content is king, and to Netflix, the more, the better, as the co-CEOs pointed out in their letter. "Choice and control are the price of entry in modern entertainment, and that is streaming. It's what consumers want, and we believe it's the best way for our industry to stay relevant and growing. As Netflix has shown, it can also be a very healthy business. Since our global launch in 2016, we've been able to invest heavily in our slate — with content amortization up almost 3X from $4.8B in 2016 to $14.2B in 2023 — while steadily increasing our operating margins."
The company will also improve its ad products to attract more advertisers. "We're focused on the additional work that we can do in that space," Greg Peters, co-CEO of Netflix, said in the earnings call. "That means making the ads plan more attractive. We've added streams, higher resolution, and downloads, which means engaging partner channels. You'll see us do more than that." To support this part of the business, Netflix is hiring for its sales and ad operations business. – SS
|If It’s Up to the FTC, Maybe the Kids Will Be Alright With COPPA
|To protect children's online data, the Federal Trade Commission proposes a set of updates to the Children's Online Privacy Protection Act (COPPA). For those who don't know, COPPA requires websites and online services to get parental consent to access children's online data. These new updates address how minors' personal information is collected, used, and monetized. Here are the proposed updates:
1. The FTC wants to update the definitions of "online contact information," "personal Information," and "website or online service directed to children."
2. Online services must clarify when verifiable parental consent is required.
3. They want to reinforce the ban on collecting more personal information than is reasonably necessary from a minor to participate in an online activity.
4. Limits to encouraging minors to excessive online use.
5. Further restrictions on collecting minors' data collections for educational purposes.
6. Web operators must establish written guidelines with safeguards based on the sensitivity of children's data.
7. Children's personal information could not be retained indefinitely, only for the time necessary to fulfill the intended purpose of the data.
8. An FTC-approved COPPA Safe Harbor program's assessments must include comprehensive reviews of an operator's privacy and security policies.
While COPPA is a pretty comprehensive law, there is a consensus among some privacy experts that federal regulators need to do more. Especially since we just had a major player like YouTube face COPPA backlash.
As Vikrant Mathur, Co-Founder of Future Today, said, "As an industry, we need to create more safe spaces for kids to engage and learn while ensuring that the law continues to support the various business models that publishers can use to create long-lasting services; these proposed enhancements to COPPA seem like a reasonable step in that direction." – AB
|Epic Games CEO Slams Apple’s EU App Store Changes
To comply with Europe's Digital Markets Act, Apple will allow alternative app stores and other new options for app developers on its platforms. The law, going into effect March 7, requires Apple to loosen the rules that required developers to rely on the App Store for distribution and payment processing. Previously, Apple tried to restrict this expansion, alluding to privacy and security concerns. Others see it as a loosening of the "walled garden system."
Although the updates have not worked for every customer, Tim Sweeney, CEO of Epic Games, was unsatisfied with Apple's updates. He asserted this was just another "malicious compliance" case and said the tech company filled the process with "junk fees." For example, Apple will charge fees on "sideloaded apps" — apps and games downloaded outside its App Store. These are the apps Epic Games plans to offer. – AB
|The Follow Up
|The Privacy Sandbox has launched a heated debate in the ad tech industry. To test or not to test? That is the question. Here are some updates on the ongoing post-third-party cookie debate:
1. Paul Bannister, Chief Strategy Officer, Raptive takes a deep dive into three weeks of testing with advertisers that you'll want to read.
2. Criteo rolls out a timeline for their main testing stages over the next six months.