PARQOR is the handbook every media and technology executive needs to navigate the seismic shifts underway in the media business. Through in-depth analysis from a network of senior media and tech leaders, Andrew Rosen cuts through what's happening, highlights what it means and suggests where you should go next.  

In Q4 2022, PARQOR will be focusing on four trends. This essay focuses on the themes, "Linear channels seem doomed. What happens next?" and "There is no such thing as a CTV household, what happens next?"

One of the big themes of recent media earnings calls was the mix of softening demand and recessionary headwinds in advertising spend. Generally, the story from Q2 of softening demand scatter market continued in Q3, media companies expect it to continue in Q4, and they are planning for a big rebound in 2023. But, advertising holding companies are not projecting a dip in revenues in Q4 2022, and are projecting growth in 2023.

There is also the story of Apple’s Anti-Tracking Transparency (ATT) playing out in social advertising, and negatively impacting YouTube’s revenues year-over-year while Google’s search revenues remained flat (and both have tended to move hand-in-hand since Google started disclosing YouTube revenues). ATT is also impacting the likes of Meta, Snap and Spotify.

I argued two weeks ago that “focusing on bearish macro trends may be mistaking the forest for the trees”, and quoted GroupM’s Brian Wieser: “If an economy produces brands that are disproportionately likely to spend money on advertising to replace brands or companies that were proportionately less likely to spend on advertising, you get growth.”

His basic point was a pullback in spend is a signal for “something”, and his read is it’s a signal that the 200 “retail-cartel” investors are being disrupted by the 10MM smaller, e-commerce brands. But the question that has been growing is, what if that’s not the signal? What if the slowdown reflects linear advertisers rethinking their linear spend altogether?

Key Takeaway

The pullback in spend by advertisers reflected in media companies' Q3 earnings may be more nuanced and more significant than macro headwinds or fears of a recession.

Total words: 1,200

Total time reading: 5 minutes