Media Minute with Minsky: Strong Earnings Reports, Olympic Fails, VAB vs. Nielsen

Quarterly Earnings Summary

Netflix

The streaming service beat the Street on subscriber additions (1.5mm vs 1mm) but missed on expectations of revenue per share which came in at $2.97 vs $3.16.

Netflix CEO Reed Hastings, in looking at the future in an era of increased competition, said that they are not seeing any greater impact from HBO or Disney than they have had in the past. "We think mostly all of streaming is a growth story competing from linear TV and that this will be true until streaming is 50%, 60%, 70% of viewing. Then there's going to be a shakeout," he said.

Shedding a little light on the recently acknowledged upcoming foray into videogames, Greg Peter, COO and Chief Product Officer stated, "It's a multiyear effort. We're going to start relatively small ... We are in the business of making these amazing worlds and great storylines and incredible characters. We know the fans of these stories want to go deeper. They want to engage further. We don't have to think about ads. We don't have to think about in-game purchases and monetization. We don't have to think about per-title purchases. We're finding that many game developers really like the concept and that focus and this idea of being able to put all of their creative energy into just great gameplay and not having to worry about those other considerations."

Snap

If you're an investor in Snap, you had a good week. With a 23% growth in Daily Active Users (DAUs) year over year (globally) and revenue doubling to $982mm with average eCPMs increasing 122% year-over-year in Q2.

In North America, DAU grew by 5mm or 6% year over year to reach 95mm. In North America revenue grew 129% year over year in Q2.

CEO Evan Spiegel focused on growth with their AR platform. "Over 200 million Snapchatters engage with AR every day on average, and over 200,000 creators use Lens Studios to build AR lenses for our community," he said. This quarter Snapchat released Cartoon 3D Style Lens, which uses machine learning to turn people into 3D-animated cartoon characters in real-time, which generated 2.8B impressions in the first week of its release on Snapchat alone.

Snap also revealed details about a Total Ad Ratings study that they conducted with Nielsen. The study analyzed over 30 cross-platform campaigns that reached people both on Snapchat and television. The analysis showed that Snapchat campaigns contributed 16% incremental reach (average) and over 70% of the Gen Z audiences that was reached by Snapchat was not reached by TV-only campaigns.

AT&T/WarnerMedia

CEO John Stankey updated analysts that HBO/HBO Max has added an additional 10.7mm subscribers in the past year, "transforming HBO from a $6B with no growth to an $8B run-rate company, with 40% growth in Q2 2021." In total, the company reported currently, there are 47mm domestic HBO Max and HBO subscribers and 67mm worldwide subscribers.

HBO and HBO Max led the Emmys nomination field with 130 nominations and an overall total of 180 WarnerMedia nominations.

Having beat subscriber expectations for HBO Max, the company is now revising global year-end expectations to 70-73mm global subscribers

For WarnerMedia, advertising revenues were up nearly 50%, driven by sports. The return of sports contributed to more than $400mm of advertising revenue.

Twitter

Twitter had a very strong Q2 2021 with total revenue of $1.19B +87% year-over-year. Daily active users have reached 206mm, +11% vs YAG.

Twitter is leaning into the idea of the internet having a native currency, aka Bitcoin. Founder/CEO Jack Dorsey said, "If the internet has a native currency, a global currency, we are able to move faster with products such as Super Follows, e-Commerce, subscription and TiPJAR. We can reach every person on the planet because of that, instead of going down a market-by-market approach ... I do think it allows speed, a lot more innovation and really up opens up entirely new cases for us."

Some interesting facts shared on the call:

As streamers (OTT services like Netflix, Disney+, HBO Max, Peacock, etc.) continue to grow their business and launch new shows, they are spending over 40% sequentially with Twitter.

Twitter is piloting a playable ad format for gamers, so you can play a game inside an ad.

Omnicom

Omnicom reported Q2 2021 earnings announced a return of organic growth of 24.4% globally and 19.9% in the U.S., with total revenue growth of 27.5%. Advertising and media growth were up 29.8%. Omnicom CEO John Wren said of the future of the company, "We expect our primary focus forward will be on pursuing accretive acquisition in the areas of precision marketing, digital transformation, commerce, media and healthcare."

Publicis

Publicis reported a 17.1% increase in organic growth globally with 15.2% in the U.S. and 13% in Asia. Driving that growth was a 31.1% increase in organic revenue at data company Epsilon which Publicis acquired in 2019. Digital transformation company Publicis Sapient was also a key driver of growth with an increase of 27%.

IPG

IPG reported global net organic growth of 19.8% which was also a 7.9% increase in growth over the pre-pandemic Q2 2019. U.S. organic growth was 17.4%. IPG indicated that auto and retail sectors were up more than 20%; consumer goods, tech, telecom and healthcare were up in the mid- to high-teens, and beverage and the financial services category were up in the low double-digit range.

In anticipation of a modified return to normal, IPG indicated that expenses in travel and office utilities would begin to return in Q4.

In going over their gain in operating expense efficiency from restructuring last year, Ellen Johnson, Executive Vice President and CFO, said, "As a reminder, these actions involve the elimination of certain positions, and resulting headcount reduction that will not return with revenue growth." However, she did also indicate that IPG's current headcount is 53,000 -- an increase of 1.4% from a year ago and up 5.2% from the beginning of this year.

Global CEO Philippe Krakowsky touted IPG's strength with Acxiom and Kinesso supporting McCann Worldgroup, Initiative and R/GA picking up the Cigna account win in what Krakowsky called Open Architecture 2.0.

In speaking about diversity, Krakowsky noted, "Key accomplishments on this front include IPG being recently named by Forbes to their top ten list of America's Best Employers for Diversity. During the quarter, we also created a new position, our industry's first Culture Officer, to focus on long-term thought leadership relating to a broad range of social justice issues for underserved and underrepresented communities."

IPG also took an active stance in the Environmental, Social and Governance (ESG) arena announcing a three part action plan which includes:

1) Committing to setting a science-based target
2) Sourcing 100% renewable energy by 2030
3) Joining the Climate Pledge co-founded by Amazon and Global Optimism

Finally, Krakowsky reiterated IPG U.S.'s pledge to allocate a minimum of 5% of client budgets in Black-owned media by 2023.

Other Media News

Perhaps it was the protests or the knowledge that there were no spectators allowed in the stadium, but it wasn't a great start in the ratings for the Olympics. Opening ceremonies tanked 36% in comparison to the 2016 Rio Olympics. I'm personally thrown by the constant reference to this as the 2020 Tokyo Summer Olympics proving, once again, that even seven months into 2021, 2020 will just never end. On the upside, streaming appears to be up on NBCOlympics.com and the NBC Olympics app by 76% compared to the last Winter Games and 72% from Rio.

The Video Advertising Bureau (VAB) has asked the Media Rating Council (MRC) to suspend Nielsen's accreditation citing issues with Nielsen's ability to correctly measure ratings delivery during the pandemic. According to the ten-page letter sent by the VAB, Nielsen violated at least five minimum standards "with the damage done to their largest subscriber clients still creating material negative impact into July 2021." The VAB has been vocal around this issue since calling for an audit of Nielsen back in April 2021.

Omnicom has named Karen van Bergen as Chief Environmental Sustainability Officer. She will oversee climate change initiatives and processes to reduce Omnicom's carbon footprint.

Congrats to Harold Geller and his team at Ad-ID as NBCUniversal will use the technology across its One Platform as a standardized cross-platform unique identifier.

Congrats to Carla Hassan who takes over the role of CMO at JPMorgan Chase. Hassan has previously been CMO at Citi and Toys"R"Us.

Enjoy the week. Go Team USA!