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What’s ahead: Marketing implications of the economic outlook

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What’s ahead: Marketing implications of the economic outlook

With seemingly strange things happening in media from streaming struggles to advertising amid rampant inflation, marketers say there are no simple answers.

A recession in the near term is possible, but not probable

Everything is cyclical, and nothing more so than advertising and media. It’s an old adage but advertising is a bellwether for the economy, and with many of the large media companies catching a cold in the opening months of the year, you can almost guarantee that a recession is looming. 

Emphasis on the almost. That is to say, a recession isn’t necessarily around the corner. Consumer spending, investment and job growth remain healthy — for now at least. Still, marketers are feeling jittery. They know things are going to get worse before they get better. That’s an unavoidable truth of rampant inflation. More people are more price sensitive. But they’re not that price sensitive. Otherwise, some of the largest advertisers wouldn’t be so confident in their ability to pass price hikes on to retail customers directly and consumers indirectly. They said as much on recent earnings calls. 

Time and again CPG CEOs were questioned on whether the fact that the overall cost of gas, food and other everyday items is increasing at its fastest rate in more than 40 years would stunt their ability to grow, and each time they downplayed it. The view being that people are still prepared to pay those high prices even if they don’t like it.

No wonder marketers aren’t panicking just yet. Advertising budgets continue to be managed at relatively fixed percentage levels of newly increased revenues, leading to higher advertising budgets. Indeed, IPG’s Magna unit, one of the three principal advertising prognosticators among the agency holding companies, revised its growth estimate of total 2022 U.S. ad spend to be a slightly more sobering 11.5 percent compared to last year. That estimate would still put spending at $320 billion — marking the first time U.S. ad spend is expected to break $300 billion, but one percentage point less than the 12.6 percent it had forecast before Russia’s invasion of Ukraine. 

“There is doom and gloom but it’s not totally warranted,” said Brian Wieser, GroupM’s global president of business intelligence. “Last year was an unprecedented year of growth, and this year we’re likely to see what will almost be an unprecedented year of growth. The problem is a relative one because if the market decelerates from 25% in the U.S., or in the case of the U.K. from 40%, to something like 10% then that might feel bad but its way stronger than any other normal year.”

The question is how long can those price hikes continue to defy gravity? The income squeeze is getting tighter and there are fewer people by the day who are able to afford the level of borrowing they either want or need. Simply put, it’s the uncertainty that makes inflation hard to grapple with, not the actual thing itself.

A tough job just got tougher

Big profits are becoming even scarcer for the largest media businesses. How scarce? Enough to show that the bloom is off the rose for streaming. For all the excitement around the business model, it has not created any real free cash flow for its main stakeholders. On the contrary, it has incinerated billions of dollars with no end in sight. And yet investors were happy with this cash burn for years as long as it drove subscribers. So Netflix pumped billions of dollars into programming, playing it by the numbers, while its rivals tried to figure out a transition to the new era of consumption that would not break legacy media’s spine. Whether it can be done remains to be seen. But the signs don’t look good. That much was clear when media CEOs recently reflected on their struggles so far this year. Some fared worse than others, of course, but they’re all grappling with the same problem: the cost of content continues to soar as it becomes harder to hold on to subscribers. Or to put it another way, the momentum gained by streaming services during the pandemic is proving hard to sustain. 

The glass-half takeaway from these updates: these services should at least still continue to grow — just not as fast as they have done. A bleaker conclusion is that the business of streaming — and more broadly media — is becoming even less profitable. No wonder advertising is no longer as dirty a word as it has been in these circles. Netflix and Disney are both pursuing advertising models for their own respective services as a way to kickstart momentum.

“Our research indicates advertising will continue to provide improved consumer access and choice in where and how they consume media content and will remain an important part of the media and entertainment value chain,” said CJ Bangah, a partner at PricewaterhouseCoopers. “Advertising, and broader industry business models, will evolve in the coming years given the current environment. We forecast enhanced attention on ad relevance, performance, measurement and consumer centricity in the coming years that will transform the role advertising plays in the broader entertainment and media ecosystem.”

A window of opportunity

Downturns aren’t bad for everyone — especially in an economy as volatile as it is. Remember, this slowdown has been brought on by a glut of money that supported the world economies during the pandemic and the uncertainty that is now hitting markets due to political events, said Paul Coggins, CEO of mobile advertising firm Adludio. The current incumbent media leaders tend to capitalize on ad revenues and subscriptions for their investors, rather than investing huge amounts into innovation, he added. 

“So what we are likely to see from the upcoming recession is the next media challenger brands coming to the fore, which is ultimately good for competition, good for consumers and good for the advertising and media ecosystem,” said Coggins. “Web 3.0, for example, is the new frontier, yet there is no one business owning the hardware or delivering a solid consumer user case.”

Expect that to change sooner, not later, given the amount of money pouring into defining the metaverse. And whilst the likes of Facebook are already investing funds into this, the winner is actually likely to be an unknown startup, said Coggins.

https://digiday.com/?p=447528

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AMD CEO says 5-nm Zen 4 processors coming this fall

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Did you miss a session from GamesBeat Summit 2022? All sessions are available to stream now. Watch now.


Advanced Micro Devices revealed its 5-nanometer Zen 4 processor architecture today at the Computex 2022 event in Taiwan.

The new AMD Ryzen 7000 Series desktop processors with Zen 4 cores will be coming this fall, said Lisa Su, CEO of AMD, in a keynote speech.

Su said the new processors with Zen 4 architecture will deliver a significant increase in performance upon their launch in the fall of 2022. Additionally, Su highlighted the strong growth and momentum for AMD in the mobile market as 70 of the more than 200 expected ultrathin, gaming and commercial notebook designs powered by Ryzen 6000 Series processors have been launched or announced to-date.

In addition, other AMD executives announced the newest addition to the Ryzen Mobile lineup, “Mendocino;” the newest AMD smart technology, SmartAccess Storage; and more details of the new AM5 platform, including support from leading motherboard manufacturers.

“At Computex 2022 we highlighted growing adoption of AMD in ultrathin, gaming, and commercial notebooks from the leading PC providers based on the leadership performance and battery life of our Ryzen 6000 series mobile processors,” said Su. “With our upcoming AMD Ryzen 7000 Series desktop processors, we will bring even more leadership to the desktop market with our next-generation 5-nm Zen 4 architecture and provide an unparalleled, high-

performance computing experience for gamers and creators.”

AMD Ryzen 7000 Series desktop processors

The new Ryzen 7000 Series desktop processors will double the amount of L2 cache per core, feature higher clock speeds, and are projected to provide greater than 15% uplift in single-thread performance versus the prior generation, for a better desktop PC experience.

During the keynote, a pre-production Ryzen 7000 Series desktop processor was demonstrated running at 5.5 GHz clock speed throughout AAA game play. The same processor was also demonstrated performing more than 30% faster than an Intel Core i9 12900K in a Blender multi-threaded rendering workload.

In addition to new “Zen 4” compute dies, the Ryzen 7000 series features an all-new 6nm I/O die. The new I/O die includes AMD RDNA 2-based graphics engine, a new low-power architecture adopted from AMD Ryzen mobile processors, support for the latest memory and connectivity technologies like DDR5 and PCI Express 5.0, and support for up to four displays.

AMD Socket AM5 Platform

The new AMD Socket AM5 platform provides advanced connectivity for our most demanding enthusiasts. This new socket features a 1718-pin LGA design with support for up to 170W TDP processors, dual-channel DDR5 memory, and new SVI3 power infrastructure for leading all-core performance with our Ryzen 7000 Series processors. AMD Socket AM5 features the most PCIe 5.0 lanes in the industry with up to 24 lanes, making it our fastest, largest, and most expansive desktop platform with support for the next-generation and beyond class of storage and graphics cards.

And AMD said the “Mendocino” processors will offer great everyday performance and are expected to be priced from $400 to $700.

Featuring “Zen 2” cores and RDNA 2 architecture-based graphics, the processors are designed to deliver the best battery life and performance in the price band so users can get the most out of their laptop at an attractive price.

The first systems featuring the new “Mendocino” processors will be available from computer partners in Q4 2022.

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AMD’s Ryzen 7000 desktop chips are coming this fall with 5nm Zen 4 cores

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AMD’s Ryzen 7000 desktop chips are coming this fall with 5nm Zen 4 cores

AMD’s upcoming Ryzen 7000 chips will mark another major milestone for the company: they’ll be the first desktop processors running 5 nanometer cores. During her Computex keynote presentation today, AMD CEO Lisa Su confirmed that Ryzen 7000 chips will launch this fall. Under the hood, they’ll feature dual 5nm Zen 4 cores, as well as a redesigned 6nm I/O core (which includes RDNA2 graphics, DDR5 and PCIe 5.0 controllers and a low-power architecture). Earlier this month, the company teased its plans for high-end “Dragon Range” Ryzen 7000 laptop chips, which are expected to launch in 2023.

Since this is just a Computex glimpse, AMD isn’t giving us many other details about the Ryzen 7000 yet. The company says it will offer a 15 percent performance jump in Cinebench’s single-threaded benchmark compared to the Ryzen 5950X. Still, it’d be more interesting to hear about multi-threaded performance, especially given the progress Intel has made with its 12th-gen CPUs. You can expect 1MB of L2 cache per core, as well as maximum boost speeds beyond 5GHz and better hardware acceleration for AI tasks.

AMD is also debuting Socket AM5 motherboards alongside its new flagship processor. The company is moving towards a 1718-pin LGA socket, but it will still support AM4 coolers. That’s a big deal if you’ve already invested a ton into your cooling setup. The new motherboards will offer up to 24 channels of PCIe 5.0 split across storage and graphics, up to 14 USB SuperSpeed ports running at 20 Gbps, and up to 4 HDMI 2.1 and DisplayPort 2 ports. You’ll find them in three different flavors: B650 for mainstream systems, X650 for enthusiasts who want PCIe 5.0 for storage and graphics and X650 Extreme for the most demanding folks.

Given that Intel still won’t have a 7nm desktop chip until next year (barring any additional delays), AMD seems poised to once again take the performance lead for another generation. But given just how well Intel’s hybrid process for its 12th-gen chips has worked out, it’ll be interesting to see how it plans to respond. If anything, it sure is nice to see genuine competition in the CPU space again.

While Ryzen 7000 will be AMD’s main focus for the rest of the year, the company is also throwing a bone to mainstream laptops in the fourth quarter with its upcoming 6nm “Mendocino” CPUs. They’ll sport four 6nm Zen 2 cores, as well as RDNA 2 graphics, making them ideal for systems priced between $399 and $699. Sure, that’s not much to get excited about, but even basic machines like Lenovo’s Ideapad 1 deserve decent performance. And for many office drones, it could mean having work-issued machines that finally don’t stink.

All products recommended by Engadget are selected by our editorial team, independent of our parent company. Some of our stories include affiliate links. If you buy something through one of these links, we may earn an affiliate commission.

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Disney’s Disney+ ad pitch reflects how streaming ad prices set to rise in this year’s upfront

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Disney’s Disney+ ad pitch reflects how streaming ad prices set to rise in this year’s upfront

With Disney+, Disney is looking to set a new high-water mark for ad prices among the major ad-supported streamers. The pricey pitch is representative of a broader rising tide in streaming ad pricing in this year’s TV advertising upfront market, as Disney-owned Hulu, Amazon and even Fox’s Tubi are looking to press upfront advertisers to pay up.

In its initial pitch to advertisers and their agencies, Disney is seeking CPMs for Disney+ around $50, according to agency executives. That price point applies to broad-based targeting dubbed “P2+,” which refers to an audience of any viewer who is two years old or older (though Disney has told agency executives that programming aimed at viewers seven years old and younger will be excluded from carrying ads). In other words, more narrowly targeted ads are expected to cost more based on the level of targeting. A Disney spokesperson declined to comment.

At a $50 CPM, Disney+ is surpassing the prices that NBCUniversal’s Peacock  and Warner Bros. Discovery’s HBO Max sought in last year’s upfront market and that gave ad buyers sticker shock. The former sought CPMs in the $30 to $40 range, while the latter sought $40+ CPMs. By comparison, other major ad-supported streamers like Hulu, Discovery+ and Paramount+ were charging low-to-mid $20 CPMs that major ad-supported streamers charge. As a result, Peacock’s and HBO Max’s asks ended up being price prohibitive, with some advertisers limiting the amount of money they spent with the streamers because of their higher rates.

Unsurprisingly, agency executives are balking at Disney+’s price point. “They’re citing pricing that no longer exists, meaning Peacock and HBO Max recognized they came out too high and they’re reducing it. Disney+ is using earmuffs to pretend that second part didn’t happen,” said one agency executive.

However, Disney+ isn’t the only streamer seeking to raise the rates that ad buyers are accustomed to paying. Hulu is also seeking to increase its prices in this year’s upfront, with P2+ pricing going from a $20-$25 CPM average to averaging in the $25-$30 CPM range, according to agency executives. And during a call with reporters on May 16, Fox advertising sales president Marianne Gambelli said that the company will seek higher prices for its free, ad-supported streaming TV service Tubi in this year’s upfront market. It’s unclear what Tubi’s current rates are, but FAST services’ CPMS are typically in the low to mid teens, said the agency executives.

“We have to get the value for Tubi. Tubi has grown to a point — it’s doubled, tripled in size over the past couple of years. So we are going to obviously make that a priority and look for not only more volume but price,” Gambelli said.

Meanwhile, in pitching its Thursday Night Football package that will be streamed on Amazon Prime Video and Twitch, Amazon has been pressing for a premium on what Fox charged advertisers last year, according to agency executives. The e-commerce giant will be handling the games’ ad placements like traditional TV, meaning that it will run the same ad in each ad slot for every viewer as opposed to dynamically inserting targeted ads. “It’s streaming broadcast,” said a second agency executive.

An Amazon spokesperson declined to comment on pricing but did provide a general statement. “Thursday Night Football on Prime Video and Twitch is a purely digital broadcast, and we’re excited to bring fans a new viewing experience. There are 80MM active Prime Video households in the U.S. and, in a survey of our 2021 TNF audience, 38% reported they don’t have a pay-TV service – meaning TNF on Prime Video and Twitch enables brands to connect with cord-cutters and cord-nevers. Brands can also reach these viewers beyond TNF. Our first-party insights enable them to reengage TNF audiences across Amazon, such as in Freevee content.”

One of the agency executives that Digiday spoke to said the latest ask is for a plus-10% increase on Fox’s rates, though what Fox’s rates were are unclear and other agency executives said the premium that Amazon is asking for varies. Ad Age reported in February that Amazon was seeking up to 20% higher prices than Fox’s rates. “I don’t know if it is consistently plus-10, but it is definitely more. Which is crazy because Fox couldn’t make money on it, which is why they gave it up for this fall,” said a second agency executive.

“Someone was eating way too many gummies before they put the pricing together,” said a second agency executive of Amazon’s Thursday Night Football pitch.

Ad-supported streaming service owners also see an opportunity to push for higher prices as advertisers to adopt more advanced targeting with their streaming campaigns, such as by using the media companies’ and/or advertisers’ first-party data to aim their ads on the streamers. 

Said one TV network executive, “You’ll see premiums, especially as it relates to advertisers that really want to hook into [their company’s streaming service] and buy those targeted audiences across the platform and either use [the TV network’s] first-party data or bring their own data to the table. That’s the biggest business we’re in, and that’s where we see great growth from a pricing standpoint.”

https://digiday.com/?p=448869

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