Deep Dive

Apple hobbled much of the digital ad industry in the name of privacy, conveniently kneecapping rivals like Meta in the process. But after Google, the US Justice Department is coming for Apple – and it alleges those claims of privacy are nothing more than “an elastic shield that can stretch or contract to serve Apple’s financial and business interests”. The DoJ pulls no punches, claiming: “Apple wraps itself in a cloak of privacy, security, and consumer preferences to justify its anticompetitive conduct … In fact, many alternative technologies that Apple’s conduct suppresses would enhance user security and privacy,” per the filing. “Apple is also willing to make the iPhone less secure and less private if that helps maintain its monopoly power. Similarly, Apple is willing to sacrifice user privacy and security in other ways so long as doing so benefits Apple.” A conga line of US states have joined the action, spearheaded by the same antitrust chief that convinced a federal court this month that Google is indeed a monopolist. Here’s what Apple’s accused of and must now defend against.

Part Two: After last week's instalment with S4 Capital's founder and former WPP boss, Sir Martin Sorrell – in which he explained why the market cap of his next generation marketing services firm had plummeted from £5 billion to £300 million in the past three years – he's back for part two. We cover the consolidation of the $700 billion global digital ad market down to a handful of global tech media players. Is that dangerous for brands and the broader marketing supply chain? Maybe, but Sir Martin thinks they're only going to get bigger. Plus, we go deeper into AI and mass personalisation – Netflix style – along with the dodgy, inaccurate, but thriving online user data trade that was revealed a month or so ago by UM's former chief privacy officer, Arielle Garcia (which is now Mi3’s top podcast and story so far this year). For the record, Sorrell agrees with Garcia: “Garbage in, garbage out ... There are some murky parts of the market, but that's our role to expose that, not to be a part of it.” Either way, he thinks the platforms will only get closer to marketers at the expense of intermediaries – and there is little agencies can do to stop it. Plus, he says OpenAI chief Sam Altman, who reckons AI will displace 95 per cent of advertising jobs, is “directionally right”. The timeframe? “Three years,” per Sorrell. “It’s going to be uncomfortable.” Conversely, Sorrell says the big platforms won’t be shrinking any time soon. On a GDP basis, “these are countries, they are not companies anymore.” He thinks that means regulation, unless co-ordinated globally, is ultimately powerless.

Part One: It's been three years since Sir Martin Sorrell was last on the Mi3 podcast – he declared then a mea culpa of sorts: he didn't, and couldn't, transform WPP, the giant marketing services holding company he founded in the 1980s, fast enough because it was listed, hampering transformational efforts that would likely spook the investment community. At the time in 2021, Sorrell’s next generation digital holding company, S4Capital, was firing with a market cap of circa £5 billion (AUD$9.6bn), just three years after a street fight with WPP’s board saw him exit and build WPP 2.0. He was bleak on the future of his old British firm, along with WPP’s French and US-based global holding company rivals. But since then S4Capital’s market cap has plunged more than 90 per cent to £300 million (AUD $582m) as the tech sector, representing 45-50 per cent of S4’s £1bn in revenues, slashed their own marketing budgets globally. But there’s more to it – another mea culpa even – and more of Sorrell’s scorecard on his big holding company competitors along with Accenture Song’s dive into media, a move peculiar to Australia, he argues.  

B2B buyers across 515 brands – including Tesla, PepsiCo, Delta, Pfizer, Hyatt and Comcast – add heft to a growing body of evidence that B2B marketing is literally missing half of decision-makers and losing trillions of dollars in deals annually as a result. The Bain-backed study, by LinkedIn-funded think tank The B2B Institute, suggests “hidden buyers” influence half of the buying process and have very different requirements from target buyers. They don’t care about features, it’s all about downside risk management, AKA backside covering. It means lead generation, measurement, KPIs and fundamentally, brand-performance strategies are all wrong. Those that flip the model and think of B2B marketing as “buyer group marketing” and brand as “deal risk insurance” will unlock massive upside, fast, say B2B Institute founder Jann Martin Schwarz and EMEA and LatAm lead, Mimi Turner. Schwarz is staking his reputation on it.

There’s little contention today that the pro-consumer privacy lobby is winning the war over industry on privacy reform – they’re informed on industry techniques, loaded with compelling consumer research and aligned entirely on the need for a clampdown on the collection and use of an individual’s online data trail. Former NSW Deputy Privacy Commissioner and Salinger Privacy boss Anna Johnston and Choice Consumer Data Advocate, Kate Bower, unpack what and why they expect a series of hard, industry-challenging privacy reforms to land in parliament next month - that’s less than six weeks away. Just how deeply the $25bn-plus marketing supply chain and tens of thousands of practitioners will be impacted will become clear as the reforms are tabled in Federal Parliament. Johnston and Bower think the updated Act will go harder than anywhere in the world. Hashed emails will be classified as personal information. Trading of geolocation data will be out. Trading of loyalty scheme data – the stuff that powers retail media and a vast targeting-attribution industry – will require companies to prove they have lawful consent to do so and they won’t be able to deny services to those that say no. But consent, says Johnston, is a very fragile thing – and companies might actually be best off concentrating on one of the legislation’s central tenets: Fair and reasonable use of data. In other words, says Choice’s Bower, does what you are doing with customer’s data pass “the privacy pub test?” If it does, meeting a very high consent threshold doesn’t apply. Right now, most are badly flunking the test. 

Former UM privacy chief Arielle Garcia knows the $700bn global digital ad industry is founded on trading “useless, garbage data” because a) she spent a decade in media ops and compliance and b) she’s accessed her own profile from adtech vendors. The result? 500 laughably contradictory audience segments where she is simultaneously woman and man, below and above the poverty line and works in food service and defence contracting. Now director at ad watchdog Check My Ads she’s going all out to prove to marketers the “fallacy” of the “precision illusion”, shine a light on warped priorities and incentives between advertiser, agency and big tech – and the industry associations she says have been “captured” – and help publishers survive an extinction level event as Google pushes deeper into AI powered search and ad placement. Garcia says everyone else – including holdco bosses – are “afraid” to speak out. She also wants some help on one tracking-specific question that nobody seems able to answer.

Google's quiet global rollout of "AI Overviews" in its search listings this year – in almost every market but Australia – has suddenly popped, turning 25 years of analytics and SEO on its head and likely to render the worth of much organic search activity a fraction of what it is currently. A new study commissioned and released today by an international syndicate of UK and US publishers –including MI3 and Future Media in Australia – the extent of AI Overviews being served by Google in its search results across thousands of keywords and compares referral traffic between search today and how Google is reshaping it for content discovery and monetisation with AI. The picture is not pretty. UK publishers, Hearst, Daily Mail and Trinity Mirror along with Press Gazette and Australia's Mi3 and Ricky Sutton's Future Media jointly commissioned software platform Authoritas to conduct the study. It shows top ranking links in countries where AI Overviews is live are tumbling down – and off – the page across all categories studied, and replaced by AI-created amalgamations. Worse still, referral links in categories that attract the highest audience yields for publishers appear to be most degraded. Here's a deep dive into what Australian brands and publishers are facing – when Google deems it a more palatable political and regulatory environment to launch. This piece also leads Ricky Sutton's Future Media edition today. 

Hyundai is the first brand to have signed on to the 36 Months campaign to lift the minimum age for social media accounts from 13 to 16, launched by Nova radio’s Michael ‘Wippa’ Wipfli and Rob Galluzzo, the boss of production company Finch. Galluzzo is “100 per cent certain” more brands will follow to help build and fund the programs that rebuild a physical social network for teens that isn’t manipulated by the anxiety-inducing algorithms that have made young teenagers the product. Which creates the perfect platform for brands to walk all the talk about ‘purpose’ and ‘showing up in the right way’. “A brand can go to its board, and ask ‘how do we want to show up for these kids, these families, the community?’ If they don't have an answer to that, they probably need to have a pretty big discussion about what they stand for as companies,” per Galluzzo. Now 36 Months is building out three crucial pillars to use the time reclaimed from the platforms to better prepare young Australians for physical and digital life ahead. Wippa and Galluzzo unpack where next, and how brands can help repair the fractured civics they have inadvertently funded.

Landing on attribution models to determine what marketing activities are working for a business – or if they're useful business metrics at all – can quickly turn to angry religious-type fights but after a decade away helming marketing at AWS, Oracle and start-ups, global President and CMO Ariel Kelman boomeranged back to Salesforce last year and found some challenges around all of that at the $200bn customer-tech giant. “We lost our focus on sales pipeline, and on marketing really being a vehicle for driving business results as the prime directive," he told Mi3. One year in Kelman has reset KPIs, overhauled metrics and re-engineered attribution away from last click to a “deep learning” model he thinks the rest of the B2B world is likewise adopting – while navigating those "angry religious fights" that attribution shifts can kick-off. It’s come too late for Salesforce’s share price, which last week plunged circa 20 per cent after the firm missed revenue guidance for the first time in two decades. But the rebound is already on and AI is playing a key role – and powering profit and productivity – for some firms jumping early. The hotels and resort portfolio of private equity giant Blackstone (which now includes Australia's Crown Casinos), as well as Gucci and Sonos are among them. Kelman sees competitive advantage from AI that is plugged in across disparate customer systems versus rivals with “rando” co-pilots that may end up causing trouble.