Observed Signal · Aug 7, 2023 · Earnings Preview · Source: Quo Vadis News · Impact: 3/5 · Sentiment: Positive
Quo Vadis AdTech: 23Q2 Earnings Pre-Read
Quo Vadis provides a pre-earnings look at the adtech landscape ahead of Q2 results, focusing on the AdTech Core10 portfolio and its core constituents. The Core10 lineup comprises three DSPs (The Trade Desk, Criteo, Viant), two SSPs (Magnite, PubMatic), two Ad Verification firms (DoubleVerify, Integral Ad Science), two Made-for-Advertising platforms (Taboola, Outbrain), and one Data Provider (LiveRamp). The group holds about $3.8 billion in cash and equivalents. YoY net revenue growth for Core10 has declined from roughly 9.8% during Covid highs to under 1% post-Q1-23, with 1Q-23 quarterly growth around 3.7%. The piece notes Roku’s earnings beat, The Trade Desk’s leadership in AdTech18, and potential M&A activity as the sector rallies (2022 ended down ~55%; 1H23 up ~60%). It also cites a MediaMath bankruptcy auction estimate of $35–$70 million and PubMatic’s July MFA initiative, including a quote on MFA inventory removal.
Pre-earnings portfolio update highlighting core adtech players, macro trends, and near-term catalysts (M&A, Q2 earnings).
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Key Takeaways & Evidence Grounding
- AdTech Core10 comprises 3 DSPs: The Trade Desk, Criteo, Viant; 2 SSPs: Magnite, PubMatic; 2 Ad Verification: DoubleVerify and Integral Ad Science; 2 Made-for-Advertising: Taboola and Outbrain; 1 Data Provider: LiveRamp.
- Core10 cash and equivalents: about $3.8 billion.
- AdTech Core10 YoY net revenue growth fell from +9.8% (Covid peak) to <1% after Q1-23; 1Q-23 YoY quarterly growth ~3.7%.
- 2022 ended down 55% for the adtech sector; 1H23 saw roughly 60% gains.
- 2Q24: Core10 posted 17% YoY revenue growth and ~9% EBIT margins; Cadent acquired AdTheorent for $324M; MediaOcean acquired Innovid for $500M.
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German consumers prefer AI advice over AI advertising
A new study by Criteo, based on commerce data from hundreds of CPG brands and a survey of over 6,300 consumers across six markets, reveals that ChatGPT is increasingly driving traffic to product pages, with its share of entries averaging 60% higher than traditional search engines from January to July. In July, 86% of these clients recorded at least one transaction mediated by ChatGPT. However, German consumers are hesitant about automated reordering, with 39% rejecting AI assistants for this task, compared to a 32% average across markets. A separate survey by Censuswide for Verve among 2,000 German adults found that about two-thirds are open to purchasing based on AI chatbot recommendations, especially for travel, food, and fashion. Yet, reactions to AI-generated ads are polarized: 35% lose trust in the brand, while about 19% view such ads more positively. Younger consumers (18-24) are more critical, with 45% losing trust, but 30% responding positively.
Tubi and Roku Channel to Remain Separate After Fox Acquisition
Fox Corporation's planned $22 billion acquisition of Roku will not merge Tubi and The Roku Channel. Instead, both free ad-supported streaming services will continue to operate independently, preserving distinct brands, libraries, and user experiences. The key integration step is that Roku will take over ad sales management for Tubi, creating a unified sales structure across both platforms. This move is designed to offer advertisers a single point of contact for reaching both live-leaning and on-demand-leaning audiences. Fox cites different usage patterns – The Roku Channel focuses on live channels, while Tubi emphasizes on-demand movies and series – as the reason for keeping them separate. The deal is expected to close this year, pending shareholder and regulatory approvals, and the ad sales integration will only take effect after closing.
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