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 is on the theme, "There is no such thing as a CTV household, what happens next?” 

Also, my newest monthly opinion piece on The Information is now live: “YouTube and TikTok Creators Are Tearing Up Netflix’s Streaming Rulebook”. I argue as Netflix readies its Basic with Ads tier, it’s staring down an existential threat from the likes of TikTok and YouTube, whose “premium” creator content competes for the same advertiser demand.

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I have previously described the video advertising marketplace as “four-dimensional chess” because an executive at the IAB Video Leadership Summit described it to me that way back in June, and it makes sense. I’ve also previously highlighted the Interactive Advertising Bureau’s framework of 200 “retail cartel” advertisers (brick-and-mortar retailers who have historically bought from linear networks) and 10MM e-commerce advertisers (new direct-to-consumer (DTC) brands that leveraged the Internet as the primary channel of reaching consumers) competing for the same inventory in connected TV advertising. 

YouTube’s surprising earnings miss captures this dynamic well. It saw its ad revenues decline for the first time since Alphabet began reporting the unit’s financial performance in 2020. But, at the same time, Alphabet shared users are shifting towards YouTube on Connected TVs: in addition to highlighting Nielsen’s most recent The Gauge — where YouTube captured 8% of TV viewing in September compared to Netflix’s 7.3%, after having tied at 7.6% in August — Schindler also shared that on average, global viewers are watching 700 million-plus hours of YouTube content on TV daily. 

Google Chief Business Officer Philippe Schindler summed up the dynamic perfectly on the earnings call: “There’s no question we’re operating in an uncertain environment, and that businesses big and small continue to get tested in new and different ways, depending on where they are in the world.” YouTube is capturing both brand spend (the 200) and direct response spend (the 10MM), so why is it losing money?

Key Takeaway

Even as bearish macro headwinds (a strong dollar and inflation) continue and certain major advertisers pull back spend, the advertising marketplace may be sprouting green shoots of growth.

Total words: 1,900

Total time reading: 8 minutes