When Banks Fail, Advertisers Panic: The Fallout from Silicon Valley Bank's Collapse The collapse of Silicon Valley Bank and Signature Bank has sent shockwaves through the ad industry,
leaving publishers, ad tech firms, and advertisers all feeling the tremors. While some companies have stepped in to offer relief payments and early payouts, the long-term implications of the collapse are still being felt. Financial discipline is becoming increasingly important, but this caution could lead to a tightening of economies, which never bodes well for advertising. Nevertheless, as the industry adapts to the fallout, one thing is clear - the ad industry is in for a period of upheaval
and uncertainty. But if there's one thing the industry is good at, it's adapting to change.
As the dust settles on the collapse of Silicon Valley Bank and Signature Bank, the ad industry is left wondering if this is the beginning of the end. The fallout from the banks’ demise has had far-reaching effects on the
industry, with publishers, ad-tech firms, and advertisers all feeling the tremors. In the aftermath of the collapse, unaffected companies have been stepping in to offer relief payments to publishers and paying out existing clients early. Supply-side tech companies Kargo and Adagio have also offered to pay their
publishers early to help mitigate dislocations. However, while the immediate panic may have subsided, the long-term implications of the collapse are still being felt. Cash flow concerns have led to a greater focus on liquidity in the supply chain, with ad executives now demanding quick access to cash.
The collapse of Silicon Valley Bank has also shaken confidence in the banking sector. Previously, few had considered the origin bank account of a customer or partner to be a risk vector, but now companies are doing more due diligence to understand the organizations of their customers across the banking sector. This shift in mindset is indicative of a wider change in the industry, with financial discipline becoming increasingly important. However, this could come at a steep price. Big banks have been overflowing with cash in the wake of Silicon Valley Bank, but they may become more cautious about how much they lend and to whom. This caution could lead to a tightening of economies, which never bodes well for advertising. Marketers, publishers, and ad tech execs remain wary of the fallout from Silicon Valley Bank, with concerns about the potential impact on funding for fledgling minority-led digital start-ups. Sequential liability clauses in ad contracts are also causing concern. If the company ahead of another in the flow of ad dollars doesn’t get paid, they don’t get paid. The pandemic made this all too clear for ad-tech bosses, and the collapse of Silicon Valley Bank has only heightened these concerns. Publishers are now doing more due diligence on their vendors, with the weaker companies continuing to be weeded out from the supply chain. This has contributed to a more consolidated supply chain, with the collapse of Silicon Valley Bank adding to the ever-growing list of events causing this consolidation. Ashwini Karandikar, EVP of media, tech and data at 4A’s, believes that the financial uncertainty and resulting volatility may result in a future slowdown in hiring or accelerated layoffs, particularly in the technology sector. He suggests that agencies should consider several precautionary measures moving forward, such as revisiting contracts and clauses with vendors, revisiting how they conduct due diligence with vendors, and ensuring that contracts and liability clauses
have specific end dates. Karandikar emphasizes that it is critical for agencies to ensure that sequential liability is in place with all vendors. Martin Sorrell, founder and executive chairman of S4 Capital, believes that the collapse of Silicon Valley Bank will place greater stress on the venture capital community to provide equity and loan capital. He believes that alternative sources
of loan and equity funding will develop as a result, but acknowledges that the collapse of the bank has added to uncertainty and recessionary fears. Nevertheless, Sorrell believes that there will be no reduction of interest in investing in areas such as AI, copywriting, and media planning and buying.
Brian Wieser,
principal at Madison and Wall, believes that the rapid action of the U.S. government to guarantee deposits likely limited the degree to which there might be any direct impact on sentiment among consumers and marketers in the U.S. However, he acknowledges that there could still be some risks that might yet play out, particularly with concerns around the financial system such as those seen this week with Credit Suisse. Nevertheless, Wieser does not believe that a “base case” assumption for how
2023 plays out should include negative consequences on the advertising industry because of these recent events. Despite the long-term implications, it’s hard to predict the full impact of the collapse of Silicon Valley Bank and Signature Bank on the ad industry. However, it’s clear that the industry is facing a
correction that was a long time coming. In a fractional banking system, companies’ money is not really at the bank – it’s being loaned out to others for various lengths of time and doesn’t have to be returned until that period is up. When things go sideways and people rush to take all their money back from a bank,
those same people are usually surprised to realize that it’s not actually there. The collapse of Silicon Valley Bank was a harsh reminder of this reality. And while the industry may have weathered the storm this time, there’s a growing sense that confidence in banks is all relative. As the industry continues to adapt to the fallout from the banks’ collapse, one thing is clear – the ad industry is in for a period of upheaval and uncertainty. However, if there’s one thing the industry is good at, it’s adapting to change. The coming months and years may be challenging, but the ad industry will likely emerge stronger and more
resilient than ever before. |
All the news you need today, in a format that isn't TL:DR, summarized for the busy executive.
Apple has launched a high-interest savings account for Apple Card users in collaboration with Goldman Sachs. The savings account offers an annual percentage yield of 4.15% and allows users to hold their cash-back rewards and deposit additional funds. The collaboration between the two companies was forged in 2019
and offers data on consumer spending through the card. While Goldman pays a lot for consumer deposits relative to traditional banks, it is inexpensive relative to other funding sources at hand, making deposits the cheapest way for banks to get funding. Optable, a software-as-a-service (SaaS) data collaboration platform and clean room solution
for the advertising ecosystem, has raised $20m in Series A funding from investors including Hearst Ventures, Brightspark Ventures, Desjardins Ventures, Deloitte Ventures, and asterX. The company will use the funds to expand its sales and marketing team to meet the growing demand for solutions that enable advertisers and publishers to securely compare and leverage audience data. Optable's founders, Yves Poiré, Vlad Stesin, and Bosko Milekic, previously founded AdGear, which was acquired
by Samsung Ads in 2016. Optable works with customers in Canada, the US, Europe, and Japan, and its clean room approach to collaboration aims to make it easier and more efficient for the advertising ecosystem. Fashion, luxury, and beauty brands can maximize their social media presence by optimizing their data, making it easier for customers to
convert, staying on top of trends, understanding that social is a two-way street, and measuring their efforts. Social media can enable brands to collect detailed customer data, build communities of shared relevance, and foster customer engagement. Brands like Sephora and Nike have successfully leveraged social media to drive revenue, build engagement, and foster communities of loyal customers. To achieve their marketing goals, CMOs must approach social media strategically and with a
deep understanding of their target audience. It's also essential for brands to stay informed about the latest digital trends and adapt their strategies accordingly to stay ahead of the competition. AudienceXpress, a Comcast Advertising company, has launched a new campaign analytics solution aimed at providing fully customizable audience segments
based on campaign objectives for cross-platform TV advertising campaigns. The solution, which utilizes data-driven insights from Comcast's aggregated viewership and ad exposure data, offers audience targeting based on viewing habits and brand ad exposure. The solution also provides in-depth insights on campaign reach, impressions, frequency, and performance against full-funnel business goals. AudienceXpress hopes this new solution will address the needs of advertisers for scale,
high-quality inventory, and real-time, data-driven insights. Chargebacks911, a company that provides businesses with software solutions for handling chargebacks and disputes, is facing legal action from Florida Attorney General Ashley Moody and the Federal Trade Commission (FTC) for allegedly hindering consumers' ability to dispute credit card
charges. The complaint alleges that Chargebacks911 and its owners, Gary Cardone and Monica Eaton Cardone, have been engaging in unfair and deceptive practices by sending false evidence to credit card companies on behalf of businesses to reject consumer credit card chargeback requests. The complaint also accuses the company of using a system to run numerous small-dollar transactions via prepaid debit cards to lower the percentage of charges disputed by consumers. Moody and the FTC are
seeking to stop the defendants' activities and order monetary relief. Horizon Media has won the media agency of record (AOR) account for the National Football League (NFL) after a six-month competitive review. The account includes all paid media, as well as working with the NFL on owned asset optimization. Horizon will lead the NFL's
global expansion and work with its affiliates in other key countries. The goal of the assignment is to deepen fandom and engagement with fans. The billings for the account were not disclosed. The incumbents for the account included OMD, Tinuiti, Mediacom, and Starcom. The Media Rating Council (MRC) has reinstated Nielsen's
national TV audience-measurement service accreditation ahead of the 2023-24 upfront planning and buying season. The MRC had pulled the accreditation 19 months ago due to non-compliance issues related to the degradation of Nielsen's panel and operations during the pandemic. However, the reinstatement does not include Nielsen's digital in TV ratings, local TV ratings, digital ad ratings, or Nielsen One cross-media measurement service, which all remain unaccredited, although they are in
various stages of MRC audits and reviews. PepsiCo Mexican Foods saw better performance targeting audiences without third-party cookies using Lotame's Panorama ID universal cookieless identifier in their campaigns compared to those that used third-party cookies. PepsiCo and Lotame have been collaborating since 2021 and announced the
results on Thursday, with media agency Anagram assisting in creating direct connections with consumers through data-driven targeting. Lotame created custom audience segments using a mix of demographic and interest data for Pepsico's Marias Gamesa and Chokis brands. PepsiCo's brand senior director Daniel Díaz noted that the shift to digital has been a key enabler in creating a closer relationship with consumers. |
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MUSK’S TWITTER FOLLIES: ALIENATING ADVERTISERS AND PUSHING PROFITS
DOWN Elon Musk, the eccentric billionaire and CEO of SpaceX and Tesla, is making headlines once again as he prepares to attend the upcoming MMA Global conference in Miami. This digital marketing trade association conference will provide Musk with an opportunity to address some of the top marketing executives in America, as he seeks to mollify advertisers in the wake of recent
controversies.. READ
ENTIRE STORY
EPIC GAMES’ VISION OF THE METAVERSE: AN OPEN AND INTEROPERABLE ECOSYSTEM The concept of the metaverse has been around for decades, but it wasn’t until recently that it gained mainstream attention. With the rise of multiplayer games, social networks, and virtual worlds, the metaverse has become a real possibility. Epic Games, the developer behind Fortnite, is one of the companies leading the charge towards this vision. In a recent interview
with GamesBeat, Tim Sweeney, CEO of Epic Games, talked about the company’s vision of the metaverse and how they plan to make it a reality. “The metaverse is the multiplayer aspect, the meaningful social play, the meaningful choices and meaningful participation,” said Sweeney. “It’s not owned by these institutions that make you play what they want you to play.”. READ MORE OF THIS STORY
LIES, DAMN LIES, AND ADVERTISEMENTS: FTC SENDS
WARNING TO GWYNETH PALTROWThe Federal Trade Commission (FTC) has issued a warning to advertisers, urging them to back up their product claims or face steep civil penalties. In notices sent to 670 companies, the FTC stated that companies are required to provide “reliable evidence” to back up their product claims, a requirement that has been in place for some time. However, many advertisers continue to make
unsupported statements and false claims about the evidence they have.. READ THE FULL ARTICLE
COLLABORATION IS KEY: UNLOCKING THE POTENTIAL OF FIRST- AND SECOND-PARTY DATA
STRATEGIES The age of relying on third-party data for media buying may be coming to a close, but don't count out the power of collaboration just yet. Data clean rooms (DCRs) have emerged as a popular avenue for brands to uncover valuable insights, but they're not the end-all-be-all solution to marketing strategies in the face of a looming recession. While a DCR can help match audiences and allow brands to... READ MORE
DAVE MORGAN’S CRYSTAL BALL: HOW NETFLIX’S AD TIER WILL SHAPE THE VIDEO AD
LANDSCAPE As Netflix dives into the realm of ad-supported streaming, it’s clear that the video advertising landscape is about to experience a seismic shift. With the streaming giant making its move, we sat down with Dave Morgan, CEO of Simulmedia, to discuss how Netflix’s new tier will impact the industry and what it means for advertisers,
long-form video content, and the advertising world at large. In light of the tough ad economy in 2023, Morgan believes that Netflix’s ad-supported tier is well-positioned to succeed. “It still has limited inventory as the ad tier just begins to scale. Thus, it doesn’t need huge
commitments from advertisers, just modest commitments from a number of the top brand advertisers, and it doesn’t need to trade piercing for volume like fully scaled players need to when budgets are under pressure,” he says. READ MORE
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