The programmatic tipster who sees the tide turn from walled gardens to the open web
Laura Martin, media and technology analyst at investment bank Needham & Company, opened her presentation at AdExchanger’s Programmatic I/O in Las Vegas this week by singing her own boardwalk music.
“I walked in like a wreccckkkkkiiiiinnnnggggg baaalllllllllll.”
Miley Cyrus’ single was a solid choice, as Martin came up with some bold, contrarian predictions.
For example, Martin believes the advertising revenue pendulum will swing back in favor of the open internet and programmatic ecosystem, rather than the walled gardens that have gobbled up so many advertising dollars over the past decade.
His optimism is partly due to the relative weakness of the open internet.
Needham estimates that Alphabet, which owns Google and YouTube, of course, Meta, Amazon and Disney combined, will recoup around $650 billion in advertising dollars in 2023.
By comparison, The Trade Desk earned just $1.2 billion in 2021, its first time crossing the $1 billion mark in a single year. Criteo, which Martin does not cover, also generates low billions in revenue, and even the other strongest programmatic companies earn hundreds of millions in annual revenue, which is peanuts by walled garden standards.
But “what that means is that a small change of 1% or 2% in the budgets of the big platforms could double or even triple” the pie for open programmatic, Martin said.
And these changes are happening. Meta in particular, she said, “loses and will lose” its current feud with Apple.
Last year, Facebook estimated $10 billion in headwinds to its expected revenue from Apple’s iOS 14.5 privacy changes. Presumably, at least some of those advertising dollars will go elsewhere. If just 10% of this bulk couch change managed to open programmatic channels, it would be a huge injection of spending into the category.
Apple’s privacy changes and other privacy-related upheavals, such as the phasing out of Google’s “at risk” third-party cookies, promote the open web, somewhat counterintuitively, because the return to Ad spend calculations enabled by third-party site tracking largely fall to platforms like Google, Facebook and, to a lesser extent, Snapchat, all of which have ubiquitous tracking pixels.
Martin refers to the impending disappearance of third-party cookies as a threat rather than a foregone conclusion, as she doesn’t believe Chrome will follow.
“Google will re-launch the box on third-party deprecation of Chrome,” she said.
And how’s that for a prediction? Martin expects Google to abandon cookies until an open industry solution such as the Unified ID 2.0 initiative reaches scale and Google can simply join this program, rather than forging its own solution. Anything Google develops as a tracking and measurement alternative would inevitably face lawsuits from regulators, she said, because any decision Google makes will disadvantage publishers, advertisers, and/or ad techs. competitors.
“Joining an outside industry solution” is the only way to avoid this fate, Martin said.
(Given Google’s stance on email-based IDs, wonder what the under/over that bet would be.)
Beyond walled garden woes, CTV advertising is another big potential driver of programmatic growth. Walled gardens dominate mobile advertising, but CTV is still a jumping ball, Martin said.
Martin is much more optimistic about CTV and programmatic CTV compared to other ad tipsters. EMarketer, for example, predicts that CTV advertising will grow between 5% and 10% per year over the next three years. Martin said she expects CTV to grow 50% per year 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 says, in the world of Wall Street investment banking, “you don’t need to be right, you just need to have an opinion.”