Global Marketing Monitor: Trends From This Week

amp8226 New economic data for the US and Europe shows moderating declines but declines that are nonetheless historicamp8226 Media owners reporting ad revenue trends this past week showed significant improvements from growth observed in the prior quarter and rapid growth for many of the largest digital companiesamp8226 Regulations or changes to laws related to social media companies39 safe harbor protections probably won39t change total available advertising budgets but probably will lead to shifts among media ownersWe monitor earnings results and public information related to marketers and media owners along with government data and economic releases from countries around the world We do this to better understand consumer trends as well as advertising and digital transformation issuesquotThis year I invested in pumpkins They39ve been going up the whole month of October and I got a feeling they39re going to peak right around January Then bang That39s when I39ll cash inquot amp8212 Homer SimpsonGDP growth remains weak when viewed on a yearoveryear basis Sequential growth within a given period of time can often provide a misleading sense of health when compared to looking at trends on a yearoveryear basis and then comparing those figures to yearoveryear trends from prior periods And so it is with many headline measures related to economic activity which are often referred to in sequential annualized trends and which are intended to provide users of the data with a sense of momentumWhile it39s true that data released on Thursday showed that during the third quarter of 2020 the US economy grew on a sequential and annualized basis amp8211 meaning growth from the second quarter to the third quarter to the power of four amp8211 by a record 33 on a yearoveryear basis On an annual basis the decline was actually 29That would mark the third quarter of 2020 as the fifth weakest quarter since 1947 when the US Census Bureau began tracking quarterly data Three of the quarters that were weaker occurred during the global financial crisis and of course the weakest of all from this 63year period of time was the second quarter during which the economy fell 90The US and Europe both experienced meaningful declines in the third quarter Of course we can compare the US which has more than 330 million people and approximately 230000 official deaths from COVID19 to many other parts of the world and see that it wasn39t alone in experiencing both negative economic consequences alongside the negative health impact of the pandemicPreliminary headline data released on Friday for the EU39s 27 member states where the official COVID19 death toll now collectively exceeds an official count of 170000 among a population of more than 447 million indicates a 39 real decline across Europe in the third quarter This followed on an 114 decline in the second quarterEconomic health versus public health was arguably a false choice Such consequences were not inevitable We also saw earlier in the week that South Korea reported third quarter real GDP growth of 19 to follow on the second quarter39s 32 decline and the first quarter39s 13 fallTaiwan grew 33 in the third quarter after falling less than a percentage point in the second quarter and growing 22 in the firstAs is reasonably well known neither economy has experienced a meaningfully negative public health impact on a relative basis because of the actions taken by governments and people within those societies they have had 463 and seven deaths among populations exceeding 51 million and 23 million respectivelyIn parts of the world where the pandemic was managed well the choice between public health and economic growth was arguably a false oneEconomic data suggests Kshaped recovery Looking at the US data in a bit more detail we can see the quotKshapedquot nature of the recovery given the differing employment characteristics of different parts of the economy especially given the weakness in many services sectorsFocusing on Personal Consumption Expenditures which was down by 17 yearoveryear in nominal terms an improvement from the 97 decline of the second quarter spending on durable goods was up significantly rising by 129 with motor vehicles and parts up by this rate Recreational vehicles and parts were up 184Nondurable goods spending was also up significantly growing by 34 including food and beverage spending offpremises up 104 offset by declines in spending on clothing and footwear by 81By contrast spending on services 45 of GDP and 66 of PCE was down 55 with spending on transportation services falling 252 recreation services falling 301 and food services falling 181More positively housing and utility services were up 39 and financial services spending by consumers was up 23Within these numbers we note our prior analysis of mortgage refinancing data which suggests massive increases in capital raising by consumers this year a substantial portion of which is likely driving spending growth where it is occurringDespite reduced levels of spending by consumers advertising appeared to be relatively healthy during the third quarter at least for the world39s largest digital media owners During the past week we saw growth in advertising from Alphabet up 94 Facebook up 22 and Amazon probably up more than 50Many smaller digital businesses had muchimproved results too Twitter was up 15 Pinterest rose 58 and LinkedIn39s advertising revenues grew 40 although Microsoft39s search business did decline by 10 in the quarter as did Criteo on a net basisTelevisioncentric media owners who reported did okay as well at least relative to prior expectations Comcast saw companywide ad revenues fall by slightly more than 2 or perhaps midsingle digits organically and excluding political advertising France39s M6 and TF1 grew their TV advertising businesses by 3 and 9 respectively Mediaset Espaamp241a saw a 5 decline which followed on Spain39s other leading broadcaster Atresmedia posting a 1 ad revenue decline The European results were particularly noteworthy considering that declines were in the 4050 range during the second quarterLooking forward regulation amp8211 or changes to existing regulations and laws amp8211 is one factor that could impact future growth trends Forward looking elements for several digital media owners were on display earlier in the week as the US Senate39s Commerce Science and Transportation Committee had a hearing with the CEOs of Alphabet Facebook and TwitterThe focus was on the Communications Decency Act39s quotSection 23039s Sweeping Immunity Enables Big Tech Bad Behaviorquot The regulation in question along with its equivalent in Europe the EU39s eCommerce Directive was created among other reasons to provide quotsafe harborquot to essentially exempt providers of internet services from liability due to most illegal activity that occurs on their platformsIn recent years and especially recent months many politicians in the United States from both the Republican and Democratic parties have been focused on this particular regulation either because social media platforms have been deemed too tolerant of problematic activities or because they have been deemed too restrictiveRevocation of Section 230 or tighter application of intended rules could impact media budget allocations Regardless of the motivation behind the political interest it seems relatively clear that revocation of Section 230 or a narrower interpretation of platforms39 obligations or other nonregulatory actions designed to have a similar effect would lead to more restrictions on those platforms rather than fewerPutting aside whether such restrictions would be net positive or net negative for society which is arguably the most important consideration if a very complex one any tightening of how Section 230 is interpreted or any outright elimination would probably help most large brands and consumers think of social media platforms as safer Consumers would fear toxic content less and brands would fear association with that content less This might encourage more consumption and a shift of existing budgets toward the platformsAt the same time those gains might be offset by some reduced usage because the platforms would curb the worst often very viral content and some consumers would reduce usage because they believe they will be censored Some consumers would leave the platform for tertiary social networks as a result Messaging services might also experience incremental growth in usageThese factors would have some negative impact on the tonnage of inventory social media platforms have to sell This might on the margins negatively impact performanceoriented brands that don39t particularly care about content or brand safety because pricing would likely rise amp8211 social media platforms would have more demand but less inventoryPremium media publishers might see some negative impacts The aforementioned shift of spending toward social networks by large brands would also unfortunately probably have a negative impact on premium media publishers which are otherwise viewed as the safest digital environments for large brands to run their adsAt the same time the longtail of digital publishers including gaming developers might benefit if performancebased advertisers incrementally shifted their budgets out of social media as we outline above This only considers the impact of a revocation or of restrictions related to Section 230 in a vacuum Issues such as the quotdeath of cookiesquot and restrictions on targeting on Apple39s iOS will generally favor premium publishers because of their firstparty data relative to the longtail Those events will probably generally favor social media networks as wellPremium publishers will still be able to compete and grow but doing so will require ongoing investments in their own brands and ad products along with ongoing efforts to improve the quality and quantities of their own audiencesInvesting in producing a betterinformed population amp8211 and especially one aware of what39s possible in the world and how to make the most of a society amp8211 will result in healthier premium publishers as well as a healthier population and a healthier economy tooCopyright and Republished with permissionClick the social buttons to share this story with colleagues and friendsThe opinions expressed here are the author39s views and do not necessarily represent the views of MediaVillagecomMyersBizNetamp160

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Global Marketing Monitor: Trends From This Week

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Brian Wieser

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Global Marketing Monitor: Trends From This Week

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