Episode Transcript: Marcus Johnson:Join eMarketer on November third, that is tomorrow, for our subsequent digital occasion, Attention! Trends and Predictions For 2024. Our main analysts and executives from manufacturers like Pepsi, Colgate, Palmolive, and Kendra Scott will discover developments like generative AI, retail media, and extra to assist professionals to plan for the yr forward. You can go to insider intelligence.com/occasions/summit to register in the present day.Max Willens:Even although I feel the variety of individuals which are dissatisfied with Google’s core merchandise grows yearly, albeit from a low base, it is a factor that folks essentially belief, and so I feel that that is one thing that is going to be very tough to form of untangle or unwind.Marcus Johnson:Hey, gang, it is Thursday, November 2nd, Max and listeners, welcome to the Behind the Numbers Daily and e-Marketer podcast. I’m Marcus. Today I’m joined by considered one of our senior analysts protecting every little thing digital promoting and media-based, in Philadelphia is Max Willens.Max Willens:Yo.Marcus Johnson:Hey fella, in the present day’s… Oh, no Facts. Today, it is the shock query giveaway. So in in the present day’s shock query giveaway, we’ve got free stuff to offer you. It’s a water bottle, and if you happen to reply this query and ship us a screenshot of your evaluate of this podcast, then you definately get to win it. So the query is, bestselling music artists of all time, the Beatles, primary, Garth Brooks in second. Shout out. Elvis is third. The query is, what was the official debut single of the Beatles? What was the official debut single of the Beatles? Max, have you learnt?Max Willens:I do, however I’m not going to spoil it for the listeners.Marcus Johnson:You can say it and then we are able to bleep you out.Max Willens:Oh, I used to be bluffing. I truly did not know.Marcus Johnson:Oh, okay.Max Willens:I’ve a guess.Marcus Johnson:Unbelievable. Sham. Have a guess.Max Willens:Is it not She loves you?Marcus Johnson:No. No, it is not. So that is one tune you guys can scratch out of your record if you happen to’re considering of that. It’s not that. But you have been saying… What’s in the present day? You mentioned one thing else Beatles-related.Max Willens:So November 2nd occurs to be the day that the time period Beatlemania was coined. It got here up in a evaluate of a efficiency that they gave whereas they have been nonetheless in England. I really feel like lots of people consider it, and by lots of people, I imply ugly Americans like me, consider it as being a time period associated to their arrival in the US, however Beatlemania was effectively underway earlier than they got here to America.Marcus Johnson:Nice. I used to be on the lookout for this shock query, giveaway query for hours, and then Max was like, “Oh, in the present day occurs to be…” Where was that earlier? Could have saved myself numerous time. But sure, coincidence that that’s in the present day and the query is Beatles-related as a result of I had no thought till Max advised me seconds earlier than the present began, however that is the query. So if the reply to what was the official debut single of the Beatles, ship your reply, right reply plus a screenshot of your evaluate of this podcast into podcast emarketer.com. Or you may DM us at Insider Intelligence, one phrase, on Instagram. Today’s actual subject, Google quietly easing itself into fourth gear.In in the present day’s episode, first in the lead, we’ll cowl some Google tales. Then for an additional information, we’ll talk about why Maps is changing into extra like search and the most interesting trend in affiliate advertising. We begin with Google. Max, let’s begin by taking a peek at what is going on on in the case with the DOJ. So let’s test in on that. DOJ versus Google. It’s the antitrust trial that is happening proper now. We’ve identified for some time that Google was paying Apple to be the default search engine on Apple telephones, tablets, and computer systems, which is a centerpiece of this trial. But the New York Times not too long ago reported that the precise determine in 2021 at the least was $18 billion. $18 billion. The deal offers Google prime placement on Apple gadgets, however has additionally deterred Apple from investing in its personal search capabilities in accordance to testimony from a former Google govt who now runs machine studying and AI Apple. Max, what’s your take now that we’ve got an precise determine?Max Willens:Well, I feel that the guys at Bernstein deserve numerous credit score for placing figures out about this years in the past, and I feel that they are fairly shut to being proper. I imply, I feel what’s so interesting about that is there’s been all this speak about how this enterprise deal deterred Apple from moving into the search enterprise and quashed numerous competitors. But I feel what’s actually notable is that we’ve got reached some extent now the place Google has simply form of a very form of an unshakeable maintain on this core form of client search performance. I feel a very essential level of comparability right here can be simply taking a look at Europe. So after the European Commission, I feel, fined Google about 5 billion euros, Google principally, in an try to mollify them after paying that high quality, they modified issues round inside their Android telephones and gave prospects an choice once they booted them up for the first time.Which search engine would you like? You can use Google, which we’ve got right here, however it’s also possible to use DuckDuckGo or Yandex or Bing, or no matter it occurs to be. Google would usually form of swap in options, and this providing actually did not make a lot of a distinction to their market share in Europe. They nonetheless have over 90% market share in Europe. It’s down from 97%, nevertheless it’s nonetheless a stranglehold successfully. And so whereas we all know this quantity, and it speaks to how helpful Google appears to view this placement and this partnership, I do suppose we have form of damaged previous any level of shoppers meaningfully altering what they resolve to use when it comes to this type of primary client search. As I’m positive we’ll get into later, there’s numerous completely different sorts of searches that folks do now, and in order that’s why you see issues like Amazon and Walmart search revenues skyrocketing, however the actuality is that Googling continues to be a verb and it is going to keep that means for the foreseeable future, I feel.Marcus Johnson:Right. It’s simply develop into so entrenched now. I imply, had they accomplished that 10, 15, nevertheless a few years in the past, perhaps individuals would’ve mentioned, “Yeah, I’ll give this different one a strive,” however the habits is so entrenched, it nearly looks like it is not even that honest to say, “Oh, effectively, we’ll give individuals the likelihood now or the selection now,” as a result of they are going to default to Google, lots of people, as a result of they have been utilizing it for therefore lengthy. It’s what they know. Part of the case right here is the DOJ saying, “Okay, effectively if it is really easy for individuals to swap,” which Google argues, “Why are you paying $18 billion a yr in hopes that they will not?” Which is form of a centerpiece of the argument.Microsoft, they mentioned in testimony that they’ve tried practically yearly to persuade Apple to swap to its search default to Bing, failed. DuckDuckGo saying it is practically unattainable for shoppers to uncover rival serps due to Google’s default agreements. The of us calling this considerably of a peace treaty between Google and Apple. You make us the default and we can’t take away any of our apps as a result of it has a bunch of different apps that are actually essential, particularly for individuals who have iPhones, Gmail, Maps, YouTube, issues like that.Max Willens:Yeah, completely. I imply, I feel it is simply form of gotten to the level the place Google has successfully created… The ecosystem that they’ve spent years constructing has survived and thrived to the level now the place individuals really feel some hesitation to depart it. Inside of this ecosystem, this platform that they’ve constructed, you’ve video, you’ve search, you’ve native enterprise outcomes, you’ve evaluations, you’ve buying. And although I feel the variety of individuals which are dissatisfied with Google’s core merchandise grows yearly, albeit from a low base, it is a factor that folks essentially belief. And so I feel that that is one thing that is going to be very tough to form of untangle or unwind if the aim right here is admittedly to form of deliver some degree of parity to the search market.Marcus Johnson:So Google not too long ago reported Q3 earnings. They mentioned they made 60 billion from advertisements, 60 billion from advertisements. That’s up practically 10% year-on-year. Its search enterprise grew 11%. That accounts for 75% of that total advertisements enterprise. Max, what was your largest takeaway from Google’s Q3 efficiency?Max Willens:Well, to me, it simply alerts the way it touches on what we have been speaking about already, which is simply how form of dominant and omnipotent their search advertisements companies. I imply, I feel it is form of hilarious that they beat the Wall Street estimates for income. They had a bounce again yr, albeit on weak comps, and buyers dinged their inventory as a result of their Cloud enterprise failed to hit. They missed their estimates by 2.6%, which I feel is simply form of hilarious, particularly as a result of Cloud is such a lumpy enterprise relative to search promoting. And so it is not stunning actually in any respect that they could not… I imply, it is stunning a bit of bit, nevertheless it’s not a shock that they ever so barely missed this goal that they’ve set out.And I feel, too, the bounce again in their search enterprise amid all the competitors they’re dealing with from issues like Amazon or Walmart or different search suppliers being even, it speaks a bit of bit to, it is form of like a corollary to one thing that’s form of an axiom about promoting and advertising, which is simply that in occasions of turbulence, advertisers go to what works. And I suppose you can say to a sure extent the outcomes that Google laid out present that the shoppers do the identical factor. They’re not going to abandon the searches that they carry out on YouTube or on Google.Marcus Johnson:Two issues jumped out to me. One, progress accelerating 10%. Google advert progress is the quickest it is grown in the final 5 quarters, and it is gotten sooner and sooner every of the final 4. So it is continued to get sooner and sooner. And then the second factor was internet revenue practically set a document, practically reached $20 billion, grew over 40% year-on-year. You talked about these weak comps, however nonetheless 20 billion is simply shy of the precise document. Max, in the present day, Google… You talked about a few of its opponents there. Today, Google has a number one 27% share of the US digital advert pie. That’s 14 factors extra… It’s adequate for first, and 14 factors greater than Amazon, presently in third. In two years time, although, that hole will go from 14 level share hole between Google and Amazon to 10. So from 14 to 10. Google goes to lose two factors. Amazon’s going to acquire two. How involved ought to Google be about Amazon’s rising share of the digital advert pie in the US?Max Willens:Well, in all probability fairly involved, however I additionally really feel like there’s not a complete lot they’ll do about it. One of the fundamental drivers of Amazon’s… Well, two issues which are actually fueling Amazon’s promoting progress. One is simply onsite advertisements. People extra and extra are simply turning to Amazon in the event that they know, “Oh, I want to purchase kitchen towels,” or I’ve to purchase just a few form of mundane banal good that they know that they’ll get shipped free to their home. And so they simply go to Amazon and that offers them a possibility to serve up a recent batch of advertisements to individuals. And the different piece of it’s simply Amazon’s increasing offsite ambitions, them turning advertisements on in Prime video, for instance, and the offers that they are forging with folks to enable their consumer knowledge to be the form of backbone for promoting throughout a complete bunch of various surfaces.And there’s actually nothing that Google can do about that. I imply, considered one of the issues that is form of powered Google’s enterprise above and past the primacy of their search engine is their consumer knowledge. And Amazon’s consumer knowledge is… It’s distinct from Google’s, nevertheless it’s in some methods form of unparalleled as a result of there’s the number of issues which you can purchase on there and eat by way of their merchandise is form of unparalleled. And so there’s not a lot that Google can do about this, actually.Marcus Johnson:Yeah, it is positively one thing to watch as a result of Amazon, it has been overtaking of us quietly, you may argue, for some time now. Amazon shot previous Instagram in phrases of share of the US advert pie again in 2020. This yr, Amazon overtook standalone Facebook in phrases of share the US digital advert pie. Now, they’re clearly mixed into Meta, and Meta continues to be larger than Amazon for now. But yeah, Amazon is admittedly rising and rising in phrases of share and in a few years getting actual shut to Meta. And then you may clearly see if you happen to extrapolate that out the comparable path, it is beginning to hedge nearer to Google. Let’s speak about one other a part of Google’s enterprise, YouTube. That noticed double-digit progress for the first time in six quarters, rising practically 13%. What stands out to you about how YouTube is getting on?Max Willens:So I feel that it is essential to form of view the bounce again that that they had with a pinch of salt in that they’re, as you level out, they’ve had form of a tough go of issues not too long ago, so that they’re bouncing again in opposition to a form of weakish comp. But I feel the factor that basically leapt out to me was in the, I suppose it was perhaps simply in the 10-Q that they put out, Google acknowledged that the bounce again was pushed extra by model promoting than by direct response promoting. And I feel that that may actually be tied to simply how a lot part of individuals’s large display screen TV time YouTube has was. There’s over 150 million households the place individuals are watching YouTube on a giant tv each month.And that is simply excellent scale and it additionally is admittedly going to afford them an enormous alternative to form of proceed to courtroom model advertisers, although numerous their enterprise is pushed by direct response. Being in a position to entice model {dollars} is large for them. I additionally was struck by the absence of a brand new shorts consumer progress quantity. They’ve been very eager to form of speak about what number of billions of individuals watch shorts all the time, and they did not supply a brand new quantity in this most current quarter. They did supply an elevated variety of shorts consumed, however that to me isn’t as notable as a result of that is a knob that they’ll fiddle with much more simply than a consumer quantity.Marcus Johnson:Yeah, 70 billion every day views up from 50 billion at the begin of the yr. But to Max’s level, yeah, it is not individuals, particular person individuals. Final factor right here, Max, staying on YouTube, they’re making it simpler to purchase creators merchandise in accordance to our senior retail analyst, Zach Stanbor. Zach not too long ago wrote about two new options that purpose to make it simpler for creators to market merchandise by way of movies on its platforms as per TechCrunch. One, YouTube’s rolling out a function that lets creators make a buying button seem at related factors in their movies. Think about demonstrating a magnificence product. YouTube’s take a look at in the US apparently drove of us who noticed the timestamps to click on on tagged merchandise about twice as typically. And the second factor right here is YouTube is permitting creators to tag affiliate merchandise in bulk throughout their video libraries primarily based on merchandise added to the video’s description. How a lot do you suppose these transfer the social commerce needle for them?Max Willens:I might say it is form of robust to say. I imply, YouTube has form of taken stabs at issues like this in the previous and partnering with corporations like Spring. But I feel a part of the purpose that they have not actually taken root in the previous is that there wasn’t essentially a scaled inhabitants of creators trying to become profitable in this manner. And now that is changing into more and more extra frequent, particularly as you go additional out on the lengthy tail into the form of micro and nano influencer a part of the ecosystem. And in order extra and extra of these individuals begin on the lookout for methods to form of monetize their followings extra successfully, I feel you can begin to see this work out, nevertheless it’s not a given to me that that is going to form of turbocharge their place in that market.Marcus Johnson:All proper, that is it for the lead. We skip the halftime report. We’ll go straight to the second half of the present in the present day. In different information, Google Maps is changing into extra like search. And how affiliate advertising is stretching the funnel to discover progress. Story one, Google Maps is changing into extra like search thanks to AI thinks Andrew J. Hawkins of the Verge. He notes that Google is including new AI-powered options to Maps like extra immersive navigation, higher driving instructions, and extra organized search outcomes, finally reminding many customers of Google search. And that is the plan. Mr. Hawkins explains that in addition to common Maps queries in espresso outlets, Google desires of us to have the option to enter imprecise queries like fall foliage or issues to do in Tokyo and get a ton of helpful hits. Max, the most interesting sentence in this text about Google Maps changing into extra like search is what and why?Max Willens:So I’m going to be a bit of bit cute right here and say that the most essential sentence is definitely a touch upon the story. One of the individuals studying it wrote, “Today, Google Maps urged I simply flip off the interstate to an handle that was subsequent to the freeway, like simply drive proper off the bridge.” And to me, that is essential as a result of I feel that numerous what Google is doing with Maps makes numerous sense as a result of this can be a playbook that labored for search, nevertheless it does appear to be it is coming at the expense of the core product. It’s one thing that is form of very tough to measure independently. But the story was replete with feedback of individuals saying the precise maps a part of Google Maps is horrible now.It’s filled with sponsored search outcomes that are not that related. It tells me to do issues that aren’t protected. It’s mapping of the streets that I want to use for navigation has gotten worse. And I feel that it is an essential factor to not lose sight of as we watch this firm proceed to form of search for pockets of progress, is that that progress does come at the expense of the consumer expertise. And that is one thing that is, I suppose, we’re keeping track of.Marcus Johnson:Story two. Max, you wrote that affiliate advertising is stretching the funnel to discover progress, noting that high line spending in affiliate advertising appears flat-ish up to now in 2023, however that businesses have satisfied shoppers that affiliate advertising can be utilized to drive outcomes up and down the funnel, a major win for a channel sometimes considered as performance-focused. But Max, what to you is the most interesting discovering out of your current report on associates and why?Max Willens:Well, I’m so glad you requested, Marcus. There was lots in this report. It’s a really diffuse ecosystem, so I strive to form of tag as a lot related stuff as doable. But I actually do suppose that the most interesting factor is sadly one thing that is form of lurking on the close to time period horizon, which is what Gen AI’s position in affiliate goes to be. Obviously, anyone that listens to this present or reads all the stuff that eMarketer and II places out is aware of that Gen AI has been an enormous subject of dialog round media this complete yr. But I feel that affiliate in specific is form of uniquely weak to disruption at the palms of this know-how. And to be clear, the individuals which are in it are positively form of rolling their sleeves up and making an attempt it out. The Performance Marketing Association, which helps cowl affiliate, polled its customers twice this yr. And I feel in the most current ballot they’d accomplished, over 90% of respondents mentioned that they have been utilizing Gen AI in someway already, which to me is fairly wild.But there is a model of the future the place individuals actually do form of come to settle for the solutions from an Amazon search or a Google search the place you simply open up their search bar and say, “I’m going tenting for the first time. What’s the greatest array of stuff that I can purchase by spending underneath 500 bucks?” And simply trusting what the reply is and simply going… Oh, and then at the backside, there’s only a button you may click on to purchase all of it from REI or from Amazon or no matter it occurs to be. And that probably simply utterly wrecks or blows up that total business, or at minimal simply utterly transforms the way it’s considered and utilized by entrepreneurs. And so I feel that simply… I’m going to be watching Gen AI. I’ve numerous angles in the yr to come, however I feel I’m going to be watching that particularly intently as a result of the implications are fairly profound.Marcus Johnson:Yeah, it is a very interesting level. That’s what we have time for this episode. Max, thanks a lot for hanging out in the present day.Max Willens:Always a pleasure, Marc.Marcus Johnson:Yes, sir. Pleasure’s all mine. Thank you to Victoria who edits the present. James, who copy edits it. Stewart, who runs the workforce. Sophie, who runs our social media. And thanks to everybody for listening in. As we talked about at the high, shock query giveaway. If the official debut single of the Beatles, then ship us that reply in to [email protected], or DM us at Insider Intelligence, one phrase, on Instagram. If that reply, ship it in with a duplicate or a screenshot of your evaluate of this podcast and you can win a free Behind the Numbers branded water bottle. We hope to see you tomorrow although for the Behind the Numbers weekly hear and eMarketer podcast. That’s how the music goes.Max Willens:The theme tune wants work.Marcus Johnson:I really feel like I nailed it, however okay.
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