Speaker 1: Hello, and welcome to another episode of the Odd Locks podcast.
Speaker 1: I'm Joe Wisenthal and I'm Tracy Alloway. Tracy remember in
Speaker 1: like the two thousands or like the financial crisis and
Speaker 1: everyone you can barely remember last year but go on,
Speaker 1: and everyone said, oh, it's such a tragedy. People could
Speaker 1: have been curing cancer, but then they were spending their
Speaker 1: time coming up with like more and more complex derivatives.
Speaker 1: And then I feel like for the tens that more too.
Speaker 1: All the smart people could have been curring cancer, but
Speaker 1: they spent their time getting more ads onto like tiny
Speaker 1: phone screens and stuff like that. This is the whole
Speaker 1: like software sucking up the entire economy idea. But yes,
Speaker 1: I do remember that criticism. There was a lot of
Speaker 1: thought that went into how to best advertise on the Internet,
Speaker 1: and in fact, I think we had an episode at
Speaker 1: one point about how the Internet was actually powered purely
Speaker 1: by that's right, No, I mean it more or less
Speaker 1: seems to be. I mean, I guess people do pay
Speaker 1: for something. But it also feels like that era both
Speaker 1: sort of from a macro standpoint and maybe a micro
Speaker 1: standpoint is coming to a close again again another decade
Speaker 1: pivot because we have seen a lot of these Internet
Speaker 1: mega companies like meaningfully start to slow growth. The business
Speaker 1: models aren't firing on all cylinders as they want to are.
Speaker 1: And then just sort of like tech in general from
Speaker 1: macro reasons, uh, seems to be it had better days, right.
Speaker 1: Interest rates are going up and so a lot of
Speaker 1: the valuations of big tech companies are coming down. But
Speaker 1: also to the business model point, I think this is
Speaker 1: interesting because initially, you know, we talked about very smart
Speaker 1: people going to tech firms and venture capital and spending
Speaker 1: a lot of mental energy. They're trying to figure out
Speaker 1: the business model. But to some extent, it feels like
Speaker 1: the easy gains are kind of behind us, right. It
Speaker 1: was you create a product, you get everyone on your
Speaker 1: particular platform or using your product or whatever, and then
Speaker 1: you make a bunch of money. And now it feels
Speaker 1: like things are changing absolutely. I mean, look at a
Speaker 1: company like um Facebook for example, is just this. You know,
Speaker 1: they're really having to work for it, like their their
Speaker 1: their model is stressed right now, and there's the rise
Speaker 1: of TikTok and so forth. Every one of these companies,
Speaker 1: it feels like, to some extent, after creating a decade
Speaker 1: of like the best money vacuuming up machines that were
Speaker 1: ever created are not like they kind of have to
Speaker 1: really work for it now, yeah, and come up with,
Speaker 1: let's say, more creative strategies. And one of the things
Speaker 1: we've seen recently is something from Apple right. And so
Speaker 1: one of the stories is that Apple has this incredible
Speaker 1: position in the ecosystem because so many people own an
Speaker 1: iPhone and they pull out the first thing they interact
Speaker 1: with is the iPhone to get to the internet. And
Speaker 1: they have a lot of power over these other companies
Speaker 1: in terms of you know what shows up on that
Speaker 1: iPhone and how right, and and they're having to be
Speaker 1: more creative and making money off of those products. Right.
Speaker 1: The iPhone is getting more technologically advanced. You don't have
Speaker 1: to necessarily buy one every year. People are holding onto
Speaker 1: them for longer. So how do you rest more money
Speaker 1: out of that particular customer base. Such a tragedy. Companies
Speaker 1: are having trouble resting more money out of their customer base.
Speaker 1: What a terrible situation. Anyway, that further Ado, I want
Speaker 1: to talk more about online advertising this world, the challenges
Speaker 1: all these companies are facing. We're going to be speaking
Speaker 1: with our colleague Mark Bergen. He's a reporter here at
Speaker 1: Bloomberg and he is the author of a recently published book,
Speaker 1: Like Comment Subscribe Inside YouTube's chaotic rise to world domination.
Speaker 1: So Mark, thank you so much for coming on Odd Lots,
Speaker 1: and congratulations on the book. Thanks so much, Thanks for
Speaker 1: having me so First of all, why a book about YouTube? Now?
Speaker 1: Why don't wait? Why did you do this project? Yeah?
Speaker 1: YouTube is this kind of a sleeping giant and social
Speaker 1: media it's someone described it as like this iceberg that
Speaker 1: no one ever really talks about as much for a
Speaker 1: variety of reasons. I see YouTube as both the past
Speaker 1: and now future of social media. And it was the
Speaker 1: first company to pay online broadcasters and invented the creator economy.
Speaker 1: And now we're seeing with TikTok, Instagram, Snapchat, Twitch, you name,
Speaker 1: it are all moving in this direction. Social media is
Speaker 1: no longer your friends and family and your acquaintances. It
Speaker 1: is influencers, It is celebrity. It is a game built
Speaker 1: around in commerce. Uh. And this is a world that
Speaker 1: that YouTube very much creative. Should we be telling Odd
Speaker 1: Lots listeners to like, come in and subscribe other podcasts
Speaker 1: that an effective called action. All right, everyone like comment
Speaker 1: and subscribe on all thoughts wherever you find it. Okay,
Speaker 1: but you well, but we were talking in the intro
Speaker 1: about this idea that the sort of like easy gains
Speaker 1: are over for social media, and it is true. We've
Speaker 1: seen all these new issues also come up, like anti
Speaker 1: trust when it comes to Facebook and Google, um, content
Speaker 1: regulation when it comes to YouTube. Who should be the
Speaker 1: arbiters of what's true and what isn't? Are the easy
Speaker 1: days over for social media? I think? I mean YouTube's
Speaker 1: business has grown tremendously, uh and and part of it
Speaker 1: was because they really didn't kind of lock into their
Speaker 1: commercial success until so we only the only data we
Speaker 1: have available is beginning in seventeen there as business but
Speaker 1: I was around eight billion last year. It was close
Speaker 1: to uh, pretty phenomenal growth. They just took off their
Speaker 1: the pandemic um when the viewership numbers and we're all
Speaker 1: stuck at home watching there were studios, how them studios
Speaker 1: were shut down, like YouTube became the default media aesthetic
Speaker 1: and uh, you know a lot of kids, a lot
Speaker 1: of you know, yoga videos, just the hours of just exploded. Um.
Speaker 1: But that the business has been crippled I think you
Speaker 1: could make the argument more by Apple's changes than by
Speaker 1: any any regular from this far. Alright, let's jump right
Speaker 1: into it. So Apple, they say, oh, we're the defenders
Speaker 1: of privacy, and now I always get these alerts on
Speaker 1: my phone. It's like, do you still want to be
Speaker 1: broadcasting information to that app? It looks like maybe you
Speaker 1: haven't rethought this or something, which I imagine is not
Speaker 1: great for those apps when I click now. Yeah. I
Speaker 1: mean there were people in in Google and Facebook less
Speaker 1: so at Google, but they will gripe privately. Facebook started
Speaker 1: to do it publicly, like Apple is now building out
Speaker 1: a search advertising business. They're starting to hire more people
Speaker 1: like they have. This is a really savvy move. They
Speaker 1: marketed themselves as the privacy first company. They have restricted
Speaker 1: online cookies on iPhones and like kneecapped a lot of
Speaker 1: potential digital rivals. I think the one way to look
Speaker 1: at it is, you know this is they are making
Speaker 1: the They are driving this, this forced movement towards less
Speaker 1: behavioral and targeted advertising, this sort of foundation for the
Speaker 1: Internet economy of the last two decades. The cynical view
Speaker 1: is that they have found a pretty effective way to
Speaker 1: build out a competing business to Google without the world
Speaker 1: really knowing it. Well, Okay, so first of all, if
Speaker 1: you talk to Apple about this, they will say it's
Speaker 1: about privacy concerns. If you talk to their competitors like
Speaker 1: YouTube or Facebook, they will probably say, this is a
Speaker 1: revenue grap How are you thinking about it? And what
Speaker 1: are the sort of like clues or evidence on either side. Yeah.
Speaker 1: I think Google is a really interesting test case. It
Speaker 1: has this um friend of me relationship with Apple. They
Speaker 1: are competitors, certainly in obviously in smartphone markets, Google's kind
Speaker 1: of got after them a lot around an iPhone, but
Speaker 1: in their prime Google's primary business of search advertising, like
Speaker 1: Apples an extraordinarily convenient partner because for a long time
Speaker 1: Apple Google has been the default search engine for Apple,
Speaker 1: and now that it's a subject of an Apartment of
Speaker 1: Justice antitrust case. Uh. I think this is the chief
Speaker 1: reason why Facebook meta has been graping very publicly about
Speaker 1: what Apple has been doing, and you haven't heard a
Speaker 1: peep from Google. Uh. And in part because their search
Speaker 1: business is less affected like search business, search ads in
Speaker 1: general are less reliant on the kind of third party cookies. YouTube, however,
Speaker 1: is heavily reliant on the fact that they want to, like,
Speaker 1: they can serve much better and higher priced ads if
Speaker 1: they know all the videos that you've watched, all the
Speaker 1: other websites you visited, you know, all the sort of
Speaker 1: granularity that this, this entire complex machinery of online advertising
Speaker 1: is built upon. So can we actually take a step
Speaker 1: back and can you maybe explain exactly how the market
Speaker 1: operated before Apple's big switch, because this is not something
Speaker 1: that I am entirely familiar with, other than as Joe mentioned,
Speaker 1: you know, suddenly you get all these notices on your
Speaker 1: phone saying do you want to opt into data track? Yeah,
Speaker 1: I mean it it is. I think we're markedly similar
Speaker 1: to sort of financial markets in it's like complexity and opacity.
Speaker 1: Um Like there are effectively like two sided markets right
Speaker 1: there by side and the sell side where you have
Speaker 1: you know, publishers that are out there, like have a
Speaker 1: lot of online real estate and that's everything from Bloomberg
Speaker 1: dot com in the New York Times to like very
Speaker 1: popular mobile apps that that and snapchat Twitter right like
Speaker 1: Twitter has real estate and and and then there are
Speaker 1: a bunch of marketers that want to get in front
Speaker 1: of consumers. Google has the machinery on both sides, like
Speaker 1: they own both sides of the market, UM and Google
Speaker 1: has is the world's biggest digital advertising company. They have
Speaker 1: been for for decades now. The sort of primary way
Speaker 1: that public online publishers have monetized with Google AdSense. UH
Speaker 1: that basically ad Sense is the same exact model on YouTube,
Speaker 1: just taken over to video. So it is the world's
Speaker 1: biggest online video advertising service by far UH and effectively
Speaker 1: is a very easy and increasingly automated system where if
Speaker 1: I'm a marketer, I'm PNG PNGG spends you know, millions
Speaker 1: of dollars and billions of dollars of marketing. I'm gonna
Speaker 1: go to Google and I'm gonna kind of give them
Speaker 1: a chunk of money effectively goes through a bunch of
Speaker 1: ad agencies, and then Google kind of allocate that based
Speaker 1: on you know, we're going to get this into search
Speaker 1: in front of people whenever they type a keyword, We're
Speaker 1: gonna put this on display to put on the Bloomberg
Speaker 1: dot coms of the world, and we're gonna allocate this
Speaker 1: to to video, knowing that we can actually reach in
Speaker 1: this very hyper targeted way the consumers we want to
Speaker 1: reach other speculators who might be the equivalent of a
Speaker 1: hedge fund or trading desk cool by ad inventory just
Speaker 1: on the assumption that they can flip it and sell
Speaker 1: it for more than what that person was selling. I
Speaker 1: even heard of that one. There's certainly like all sorts
Speaker 1: of middlemen in the industry, and you know there are
Speaker 1: time in the era. I'm sure that still happens. But
Speaker 1: I used to go to all these advertising conferences and
Speaker 1: you know, all sorts of ad tech companies that you know,
Speaker 1: they've asked him what they do, and it's just you
Speaker 1: don't really understand where they sit in the stack. Right,
Speaker 1: There's just like all sorts of complexities and and they're
Speaker 1: programmatic advertising companies that just do one thing on mobile.
Speaker 1: And there was Bluetooth advertising was a big hot where
Speaker 1: you could actually like serve an add to a consumer
Speaker 1: right when they're in front of the coal gate at
Speaker 1: the aisle. Like this was, I mean, this was we're
Speaker 1: moving towards this world. And certainly before Apple stepped in
Speaker 1: of of incredible like they're geo fencing be able to
Speaker 1: get your cell your data and know your exact location
Speaker 1: and push alerts and um, I mean this is why
Speaker 1: it's under so much privacy and antitrust scrutiny is because
Speaker 1: it became quickly invasive and incredibly unregulated. So can you
Speaker 1: talk to us maybe about like how important data targeting
Speaker 1: or targeting of an audience actually is, because I think
Speaker 1: we hear these things like oh, it's it makes it
Speaker 1: harder for advertisers if they're not able to track your data.
Speaker 1: Why is so important? And like, can you maybe give
Speaker 1: us some numbers around how valuable a targeted ad is
Speaker 1: versus an untargeted one. I don't even know if untargeted
Speaker 1: ads exist on the Internet. Yeah, well, and just on
Speaker 1: to sort of add on to Tracy's question, like, let's
Speaker 1: say I go to golf dot com. Yeah, okay, the
Speaker 1: ads that I get, like, how much is it he's
Speaker 1: on golf but dot com he probably wants to be
Speaker 1: about golf as opposed to ads that I get that
Speaker 1: maybe you know the last ten sites I went to
Speaker 1: is like pets dot com or and so my like,
Speaker 1: how valuable is it for golf dot com to be
Speaker 1: able to know that? I also like pett I mean,
Speaker 1: there there's all sorts of open and unsolved questions about
Speaker 1: the value and x like precision of online advertising. The
Speaker 1: classic example is like you go and you buy a
Speaker 1: pair of sneakers, and then all you see are as
Speaker 1: for the same exact sneakers, Like it's following you around
Speaker 1: the internet, right, So I just bought these? Why do
Speaker 1: you like the world's biggest tech companies that supposedly know
Speaker 1: a lot about you, Like, can't solve that one pair
Speaker 1: of sneakers? I do, but I definitely don't need a second,
Speaker 1: uh stove, Yeah, I mean I think that to a
Speaker 1: certain extent. The like the you know, YouTube is a
Speaker 1: really interesting example in part like they have they built
Speaker 1: this very a fantastic targeting model where they can like
Speaker 1: show an add to a viewer. You mentioned, like if
Speaker 1: you watch about the golf channels, right, like you're if
Speaker 1: you're an advertiser, you're going to probably want to get
Speaker 1: in front of that you know, if you're if you're
Speaker 1: selling golf gear clubs, you want to get in front
Speaker 1: of that person that's watching all the YouTube videos. They
Speaker 1: have this feature, I'm sure, the skippable ad format, which
Speaker 1: is a major part of their success. It was because
Speaker 1: you know, if the consumers actually watching this, because they
Speaker 1: didn't click the skip button that's worth a lot more money.
Speaker 1: And if Nike runs an ad that didn't skip, Adidas
Speaker 1: is going to want to pay more in in this
Speaker 1: automated bidding system. And this is like Google Search kind
Speaker 1: of works really well with scarcity to where it's like
Speaker 1: they can drive up the cost per per mill or
Speaker 1: cost per click um pretty high in these scarce markets. Well,
Speaker 1: let's go back then to the Apple situation directly prior
Speaker 1: to this policy change. What was an iPhone user giving
Speaker 1: to various apps when they use them and when did
Speaker 1: the policy change and what are they getting now from
Speaker 1: those users? Yeah, I mean some of it is is
Speaker 1: really hard to trace. But you know, in if I
Speaker 1: was an iPhone user and I'm using maybe like a
Speaker 1: Chrome or even safari um, You're getting a lot of
Speaker 1: background data and like there's a lot of ad companies
Speaker 1: you've probably never heard of, or like serving a cookie
Speaker 1: on you on your um uh, your mobile browsing some
Speaker 1: of it. There are there are companies that have like
Speaker 1: invented ways to do um deep linking between when you
Speaker 1: bounce from an app to the web. Right, this is
Speaker 1: this has always been Google's fear of Apple in some ways.
Speaker 1: Is that Apple is only if your only experience on
Speaker 1: an iPhone is just moving from app to app, right,
Speaker 1: Like that is you're you're no longer going through the
Speaker 1: turnstile of the Internet, which is Google. Um, so certainly
Speaker 1: amount of data about the websites you visited, how long
Speaker 1: you link, like, what you click on all those sort
Speaker 1: of signals. Is my understanding is like that with now
Speaker 1: that they've kind of fully eliminated third party cookies, and
Speaker 1: Google is has said they're doing the same for Chrome,
Speaker 1: which is they own the crumb browser. Um it is
Speaker 1: actually this Google has pushed that timeline back several years
Speaker 1: I think now as they say, um and so the
Speaker 1: like basically like these third party sites that do the tracking, uh,
Speaker 1: will not you effectively will not be able to know um,
Speaker 1: your Internet history of like what you know if you
Speaker 1: visit golf dot com and then you got to ESPN.
Speaker 1: ESPN doesn't know that you lived at the golf dot com. Right.
Speaker 1: ESPN might just sees you as a sports fan. They
Speaker 1: don't see you as like a golf fanatic. What scope
Speaker 1: do companies have to sort of bypass Apples restrictions on this,
Speaker 1: Like is there a lot of leeway to still somehow
Speaker 1: track people even if they've opted out. This is I'm
Speaker 1: not an expert. Google and face Book have both sort
Speaker 1: of invented these machine learning models that can like walk
Speaker 1: in backwards right kind of exactly. They both have different
Speaker 1: like jargon e names for the for the services, but
Speaker 1: effectively that's it, like, Oh, we're gonna, uh, we're gonna
Speaker 1: put you in a group of people. I'm gonna keep
Speaker 1: going back to this golf example. We're gonna put you
Speaker 1: in a group of We don't know that that you,
Speaker 1: Joe are are actually visiting this, but we know that
Speaker 1: there's enough like golf fans doing this activity or using
Speaker 1: this app, and so we can approximate. I mean, the
Speaker 1: the real issue here is that there's Google and Facebook.
Speaker 1: You know, I have been in a duopoli in this
Speaker 1: world for a very long time. That is the third.
Speaker 1: The actual challenger now is Amazon, right, Like certainly not
Speaker 1: a small company like Amazon's as business has grown tremendously
Speaker 1: in the past few years. Uh, and they're less threatened
Speaker 1: by this because they also it's all in house. Right,
Speaker 1: Amazon's business is based on like the activity on on
Speaker 1: Amazon properties. Um, so that's one way that that that
Speaker 1: companies have got around it. The big push also that
Speaker 1: all the platforms, you see how much of ad tech
Speaker 1: companies have pivoted towards commerce, e commerce, especially during the pandemic.
Speaker 1: For what it's worth and for listeners. I don't even
Speaker 1: golf and I don't have a pet, so I don't
Speaker 1: know why I use those examples. I just needed to
Speaker 1: get that out of there. The ad is that I
Speaker 1: have been getting on Instagram lately have been absolute garbage.
Speaker 1: The worst target in Is that true? Okay? Because the
Speaker 1: ads that I've been getting on Instagram because I I
Speaker 1: experimented with this, because I got really interested. I was like,
Speaker 1: where are they getting this info from? It seems to
Speaker 1: be coming in through Google. It's like if you do
Speaker 1: a Google search, it shows up on Instagram. Yeah, there's
Speaker 1: the one that they always have the debunk, which is
Speaker 1: like if you're talking micro right. I tried that too. Yeah,
Speaker 1: my husband and I did baby carriages or not having
Speaker 1: a baby, but just as an experiment to see like
Speaker 1: what would show up? Nothing if you talk about them
Speaker 1: in front of Alexa, But if you Google search for it,
Speaker 1: they show up on Instagram. I mean Google, weird. Google
Speaker 1: for a long time we kept trying to keep They
Speaker 1: had like a state in church and state separation from
Speaker 1: like search and rest of display. Internet started changing, uh
Speaker 1: and and um. In part that was just about a
Speaker 1: financial concert, like they wanted to give more data that
Speaker 1: they add tech industry. It was just a bigger growth.
Speaker 1: But for a long time at least they said, and
Speaker 1: and and people I've talked to the early days like
Speaker 1: have this almost religious belief that like you're searching, I mean,
Speaker 1: you know, Google has our most intimate data, right, like
Speaker 1: the things we're searching for, we tell Google things that
Speaker 1: we wouldn't tell our spouses is going to write like
Speaker 1: uh and so like that search data is incredibly valuable
Speaker 1: to a marketer if they're you know, trying and selling
Speaker 1: pharmaceuticals or lawyers, right, Like those kind of those are
Speaker 1: the industries that typically have incredibly high search ads because
Speaker 1: there are people that are really in demand for for
Speaker 1: a particular thing. Instagram is I mean Facebook, because you know,
Speaker 1: it's so funny. People talk about how crappy the add
Speaker 1: qualities are. And yet like there as business certainly has
Speaker 1: been suffering because of Apples changes, but it's still that right,
Speaker 1: But like the one of the two kings of the industry. Well,
Speaker 1: then talk about what we've seen specifically. So when you
Speaker 1: say okay there, because this is the core of the
Speaker 1: whole thing when we talk about their businesses has started
Speaker 1: to suffer because of the policy changes that Apple has made.
Speaker 1: What are we seeing concretely in terms of how it's
Speaker 1: spilling over? Yeah, I mean, like the dollars. I think
Speaker 1: some of this was, you know the fact that they're
Speaker 1: like macroeconomic factors, and for marketing, there's the war in
Speaker 1: Ukraine and there's just the pandemic in general. But but
Speaker 1: in part you know, if you're an advertiser, in your
Speaker 1: choices are between say like television or Billboard ad and
Speaker 1: and Facebook. The argument for online has always been like
Speaker 1: you know that there's a joke about TV like I
Speaker 1: don't you put your ad up there? And you have
Speaker 1: no idea who's watching necessarily? And um, that's just sort
Speaker 1: of like brand advertising, right and and um in the
Speaker 1: industry there's brand and there's direct response. In the direct
Speaker 1: response as are the one where you want people to
Speaker 1: make it an immediate action, like you want them to
Speaker 1: install an app, buy a thing. Um. This so this
Speaker 1: is you know, Apple's changes have made it much more
Speaker 1: difficult to do that, and so there's they're getting you know,
Speaker 1: there have to be more reliant on on brand advertising
Speaker 1: that sort of contextual Just just to be clear, do
Speaker 1: we know like have they put a dollar amount or
Speaker 1: Facebook put it amount on there? Actually and I don't
Speaker 1: have it off the top of my head. Um. I mean,
Speaker 1: their market cap has taken a huge it and some
Speaker 1: of it is regulation, but have they really been regulated? Yeah,
Speaker 1: Like it's just there's kind of just the specter of regulation.
Speaker 1: It's not like Congress hasn't gone after Um. The only
Speaker 1: real big tech regulation and I talked about in the
Speaker 1: book is the FTC went after YouTube for illegally targeting
Speaker 1: kids with with collecting data on children under thirteen. Um.
Speaker 1: And and that's another area where like there's this whole
Speaker 1: online academy that then unregulated and and you know you're
Speaker 1: not allowed to collect data on children under thirteen, yet
Speaker 1: a lot of companies have done that. I mean, we
Speaker 1: don't know the numbers for YouTube, in part because they
Speaker 1: don't share their financial data. But what was what was
Speaker 1: meant as market drop valuation dropping the test? I don't know,
Speaker 1: but definitely I'll just say this I'm not. Let's say,
Speaker 1: actually the stock went from around three six one sixty
Speaker 1: and the market cap at the peak of was about
Speaker 1: one point six trillion, and now it's Facebook, So then okay,
Speaker 1: of that roughly half a trillion dollar market cap. Has
Speaker 1: anyone made an attempt to say how much can we
Speaker 1: ascribe this to Apple and the change that change in
Speaker 1: the online Facebook's business is primarily mobile advertising UM and iPhones,
Speaker 1: and there was a new stat I think recently that
Speaker 1: they're now that they just lead probably Android in the US,
Speaker 1: the most popular UH system. Apple has historictly been UH
Speaker 1: the Apple phones just to make a lot more money
Speaker 1: per user than Android phones do. And so we can
Speaker 1: assume that Facebook makes a lot more money on on
Speaker 1: iPhones than on Android, and so that is the bulk
Speaker 1: of their busines this and I think it's you could say,
Speaker 1: like a significant impact. So you mentioned antitrust a number
Speaker 1: of times, and also the sensitivity of like Google complaining
Speaker 1: about what Apple is doing, given that they have a
Speaker 1: slightly different relationship with Apple than something like Meta, and
Speaker 1: also given that they're under um antitrust scrutiny themselves. But
Speaker 1: what are the chances that we do get some sort
Speaker 1: of antitrust action when it comes to Apple and their
Speaker 1: transparency push, because it seems like it seems a little difficult.
Speaker 1: It's like, on the one hand, well, you you know,
Speaker 1: you own the product, you're making it a waltz garden,
Speaker 1: you're cutting people off from it. But on the other hand,
Speaker 1: you say you're doing it for privacy reasons. Right, that
Speaker 1: should sound good to regulators. Right. They've had more Apples,
Speaker 1: certainly him we're pressure around the app store and the
Speaker 1: accusation that they're running on like an app store monopoly
Speaker 1: or or and that you know, if you own an iPhone,
Speaker 1: you be're basically like Apple is the gatekeeper. Um and
Speaker 1: and and I think there's digital advertising, and there's certainly
Speaker 1: companies in the advertising space to complain about that, like Apple,
Speaker 1: one movement from Cupertino has single handed that like has
Speaker 1: huge ripple effects for this multi billion dollar digital advertising world.
Speaker 1: I think that as Furries, I understand, Apple has faced
Speaker 1: some in Congress and the epic lawsuit the creators of
Speaker 1: Fortnite is sued. Apple also sued Google, but they've really
Speaker 1: gone after Apple. Um about this is about app in
Speaker 1: store app fees for for Fortnite games. I think that,
Speaker 1: like for Google's case, the most likely outcome from any
Speaker 1: antitrust might be to kneecap some of their attack and
Speaker 1: and like the way the digital advertised worms, So what
Speaker 1: about for small businesses that I mean, this is the
Speaker 1: argument in favor of like hyper targeted advertising. That's like
Speaker 1: I can get like, are you looking for a new
Speaker 1: dentist in the east village or Chief Lightening or something
Speaker 1: like that could we have hyper targets? Oh my god,
Speaker 1: how did they know I need a Chief White? I'm
Speaker 1: doing video for odd lots now I'm doing I need
Speaker 1: Chief Lightening. You hear about these complaints, but sometimes you
Speaker 1: can't tell if it's like astroid turf, like some group
Speaker 1: that Facebook like may have like encouraged like how real
Speaker 1: is this? For the companies, they were able to find
Speaker 1: a model because they're really good at, like, you know,
Speaker 1: finding their exact potential customers and Facebook. Part of the
Speaker 1: success of Facebook and Google has been the long tail,
Speaker 1: like the mom and pop advertisers. Facebook has leaned into
Speaker 1: this a lot as a response to Google as well.
Speaker 1: They're going to as office and Congress and saying like,
Speaker 1: why are you trying to hurt small businesses right, and
Speaker 1: like that might be a compelling argument. Um, certainly it
Speaker 1: has politically like for a P and G, like everyone
Speaker 1: is going to buy laundry detergent or something, right, but
Speaker 1: its so for them, I don't know if they need
Speaker 1: as hyper targeting as like yeah, I mean like P
Speaker 1: and G level, they basically operated as like a they'd
Speaker 1: like and they have all these agencies that effectively operates
Speaker 1: consultancies and like they're looking at spread like they're running
Speaker 1: as with spreadsheets and algorithms and like moving the numbers
Speaker 1: around and so yes, Um, I think that is somewhat compelling.
Speaker 1: Um the fact that there and probably going to continue
Speaker 1: to like they know the argument that that Facebook and
Speaker 1: Google will make despite these changes around we lose some
Speaker 1: of our our targeting and richness. Um, the audience is
Speaker 1: still here like like relative this has been Like YouTube's
Speaker 1: argument for for over a decade now is like compared
Speaker 1: to television, there are so many more people and someone
Speaker 1: where hours spent on YouTube and that the amount of
Speaker 1: money marketing dollars spent on television is not proportionate. Like
Speaker 1: if you need, if you're like want to, if you
Speaker 1: want to challenge and there's been some challenger brands in CpG, right,
Speaker 1: like the challenge the real smart challenger brands will like
Speaker 1: be where the kids are and we'll be like get
Speaker 1: in front of the audience on digital and do like
Speaker 1: sponsored content deals and and like can lean into digital advertising.
Speaker 1: That's that's effectively worked, right, Like these companies have grown
Speaker 1: because that argument has worked and money is moving over
Speaker 1: from TV to the Internet. What exactly is Apple searching
Speaker 1: advertising business? Like there's an Apple search engine? Right? Like
Speaker 1: what exactly are we talk about when we say Apples
Speaker 1: really Like, I mean there is their Siri, which is
Speaker 1: an Apple search engine in some ways, right, Um, there's
Speaker 1: the app store, which I think is that's where the
Speaker 1: expect like if you look at the Tea leaves on
Speaker 1: where they're hiring and putting resources it is to run
Speaker 1: like effectively like a search advertising business in the store. Yeah,
Speaker 1: Like you want to promote um, I don't know, like
Speaker 1: you're searching for like Uber and lifts, Like I want
Speaker 1: to like spend money to be up the top result
Speaker 1: when you search for Uber and then people are going
Speaker 1: to click on lift. Right, So what's the sort of
Speaker 1: like game plan from the facebooks of the world or
Speaker 1: the YouTube's of the world, Like what can they do
Speaker 1: to actually try to offset this? And I guess a
Speaker 1: very extreme example, but you know, could I don't know,
Speaker 1: could Facebook like launch its own phone or something like
Speaker 1: if the idea is to get as close to a
Speaker 1: customer as possible. Well this, I mean Google has like
Speaker 1: I'm got a pixel Google Pixel in front of me,
Speaker 1: in part because it's a company I cover and and
Speaker 1: Google pickels. Pixel was a response because like they Google
Speaker 1: has Android open source software model. They give away their
Speaker 1: software for free to Samsung and like a galaxy of
Speaker 1: pun intended a galaxy of handset makers um and that
Speaker 1: they like for a long time. Like Google was like, okay,
Speaker 1: these will be rivals to Apple, and it hasn't really
Speaker 1: happened in Apple, like I said, has just premium, like
Speaker 1: people spend more money on iPhones. And then I think
Speaker 1: Google saw in part they're investing in Pixel because they
Speaker 1: saw this world. They're like, oh, our digital advertising model
Speaker 1: is not going to last for a long time. We
Speaker 1: need to own and operate the actual hardware. We reported
Speaker 1: on this quite a bit. Facebook has tried several times,
Speaker 1: looks like I mean their company is now pivoting towards
Speaker 1: like I think Mark Zuckerberg's bet is that we're going
Speaker 1: to stick a phone in our face and he's going
Speaker 1: to own that right and like, so that's there. They've
Speaker 1: renamed the company meta, like Facebook's existential crisis has always
Speaker 1: been like Google and Apple owned the operating systems where
Speaker 1: they make the most of their money. And so the
Speaker 1: movement the metaverses Facebook will why are we even recording
Speaker 1: this altogether at a studio? We could be like the
Speaker 1: Google and YouTube and and the rest of social media
Speaker 1: is commerce, like pushing commerce pretty aggressively. Um, and this
Speaker 1: looks like I think more ways to purchase directly, buy
Speaker 1: something directly on Instagram, for instance, UM, buy something directly
Speaker 1: in a YouTube video, Like I think they're running into
Speaker 1: like the the uncanny valley of how much do you
Speaker 1: want social media to look like the home shopping network?
Speaker 1: But the YouTube and part of the reason I wrote
Speaker 1: this book because it really fascinating, like they've built up
Speaker 1: the millions. There are about two million, over two million
Speaker 1: creators that make money on YouTube. That number is actually
Speaker 1: down from when the company had to make it a
Speaker 1: little bit harder, but that's a lot of that's just
Speaker 1: that's a whole economy. So many of them are now
Speaker 1: comfortable because the uh because of it's been harder and
Speaker 1: increasingly harder to make money and then to make now
Speaker 1: with with Apple's changes higher ad rates online. So they're
Speaker 1: moving towards and you can if you watch enough YouTube,
Speaker 1: you like a lot of them have sponsored content deals,
Speaker 1: right or they're just like trying to sell their merch
Speaker 1: and their merchandise like tabs and they're looking in the
Speaker 1: channel I think there are they're experimenting TikTok because also
Speaker 1: moving in commerce like that is a direct response to
Speaker 1: Apple into privacy regulation, um cutting out, carving out the
Speaker 1: like the profitability of about online ads, so you know,
Speaker 1: just less big picture. Did it feel like this is
Speaker 1: the end of you know, Tracy mentioned like if I
Speaker 1: don't remember when we did it three or four years ago,
Speaker 1: someone came on and talked to us about the extent
Speaker 1: to which the entire Internet is all adds And does
Speaker 1: it feel like the does this feel like a turning point?
Speaker 1: Because then and I don't want to even like talk
Speaker 1: about I don't even want to say the say the word,
Speaker 1: but like web three and this idea like there's gonna
Speaker 1: be like something else that's like we have to like
Speaker 1: buy coins. I'm actually surprised we've made it like no ads,
Speaker 1: we just like buy coins from market and reason in
Speaker 1: order the internet like that, Like is that is this
Speaker 1: a turning point? Is that the the possibility of web three nowithstanding,
Speaker 1: Like the criticism of the in Reasons of the world
Speaker 1: is like, look at this, this economy we built around
Speaker 1: them advertising is not the world we want. And like
Speaker 1: I think I was sharing an anecdote from the book,
Speaker 1: which is, you know YouTube started like a decade ago.
Speaker 1: YouTube was not making money. It was it was unprofitable
Speaker 1: um and they had they they were trying to after
Speaker 1: the financial crisis, They're like, Okay, we need to make
Speaker 1: money from this thing. And there was an ads manager
Speaker 1: who gave a presentation on stage about how they were
Speaker 1: going to do it, and Sergey Brenn, who this is
Speaker 1: not confirmed, but Sergey Brandon, my reporting brand is a
Speaker 1: founder of Google Worth, one of the world's wealthiest men,
Speaker 1: largely based on a search advertising business, made a joke
Speaker 1: about how you know how the YouTube ads were like
Speaker 1: he interrupted the speech being like ha ha, Like YouTube
Speaker 1: ads are interruptive disruptive and we five point seven billion.
Speaker 1: But like the founders of Google have never at that point,
Speaker 1: the founders have like notoriously never loved advertising as a
Speaker 1: business model, like it has clearly been successful for them,
Speaker 1: Like they will make a descript like a lot of
Speaker 1: them will be like search ads, search ads, You're delivering
Speaker 1: a thing that you really want and the rest of
Speaker 1: the ad is kind of icky, and like there's a
Speaker 1: sense it's this weird irony and the fact that they're
Speaker 1: the biggest online advertising company and yet a lot of
Speaker 1: people that work they're like don't love this. It's kind
Speaker 1: of sleazy market Like people in marketing names. I think
Speaker 1: they think of it as like old economy, right, like
Speaker 1: ad sales absolutely true, and so web web three whatever.
Speaker 1: Like I think that you can the sort of case
Speaker 1: inside Silicon Valley is like here's a chance for us
Speaker 1: to reinvent ourselves. In Google's history, like in the past decade,
Speaker 1: they've been just trying to find a business that's not
Speaker 1: reliant on as cloud computing is the main one. You know,
Speaker 1: YouTube has subscriptions, there's YouTube TV, there's common Like they
Speaker 1: have been always searching for ways to move past this
Speaker 1: um in part for all the reasons we talked about,
Speaker 1: in part because they don't love it, uh And but
Speaker 1: at the same time, like you know, YouTube was once
Speaker 1: it's competing with Netflix, Amazon Prime, Disney on original programming
Speaker 1: and subscriptions, they mostly dropped out there, like let these
Speaker 1: companies like bury themselves competing for subscribers, and We're just
Speaker 1: gonna continue to dominate a pretty good, marching heavy business
Speaker 1: even after after changes like on I askin remains a
Speaker 1: pretty successful business in Google's testament for that. Mark Bergen,
Speaker 1: congrats on the book, and thank you so much for
Speaker 1: coming on the podcast. Thanks for having me. So. I
Speaker 1: thought that was really interesting, Joe, and the whole transparency
Speaker 1: pushed by Apple was not something that was really on
Speaker 1: my radar other than I sort of like clocked it
Speaker 1: a little bit when I was using my phone, but
Speaker 1: I hadn't a thought of the impact on other businesses.
Speaker 1: I thought it was interesting what Mark was saying about
Speaker 1: this idea that for a lot of these big tech companies,
Speaker 1: like they want to get away from the business of
Speaker 1: ad sales. And it feels like that almost from inception,
Speaker 1: like there's almost an aversion to anything to do with
Speaker 1: media from the tech companies, even though ultimately they're in
Speaker 1: the business of selling media, right, Like, no one actually
Speaker 1: wants to be a content producer, at least YouTube does it.
Speaker 1: Um And when you you know, this idea of actually
Speaker 1: having to go out and sell ads, like it does
Speaker 1: seem kind of old fashioned. It does. And I remember
Speaker 1: thinking about that too, because when like Google came on
Speaker 1: the scene, it's like this sort of wow factor. It's
Speaker 1: like there's magical money machine because you tell the computer
Speaker 1: what you're looking for and then that's the most amazing
Speaker 1: form of ads. But then then a few years later
Speaker 1: and they probably have like whole teams internally dedicated to
Speaker 1: like taking ad sales buyers from Procter and Gamble to
Speaker 1: the US Open or like taking them out for wine
Speaker 1: and stuff. Is like, man, this is like this is
Speaker 1: kind of like old school. This doesn't seem very techy
Speaker 1: to me. Yeah, And I guess my other big takeaway
Speaker 1: from that conversation is we should be telling people to like,
Speaker 1: comment and subscribe, right, We should definitely be telling people
Speaker 1: to like, comment and subscribe, So please do that. Uh,
Speaker 1: if you're listening, you know, just one other thing, you know,
Speaker 1: it always seems and Mark was talking about like the
Speaker 1: sort of the incredible ecosystem of ad tech companies and
Speaker 1: how there's like nine middlemen, right, And I've always thought
Speaker 1: there was an interesting and I asked that question about speculators,
Speaker 1: like there's the interesting analogy between online ads and financial markets,
Speaker 1: whereas you might find an edge at some point like oh,
Speaker 1: this capacity space is really cheap here, or I found
Speaker 1: a really cheap way to get in front of these
Speaker 1: high dollar clients, and then everyone discovers it arbitrage really quickly.
Speaker 1: So it's like and then the search for the new one,
Speaker 1: and so you think, why is there this's like endless
Speaker 1: parade of ad tech companies and it's like everyone like
Speaker 1: trying to find that ORB. But look, if data is
Speaker 1: gonna be harder to come by, that's gonna people are
Speaker 1: gonna have to really put into more work. Yeah, and
Speaker 1: then the question is what is the new edge? Because
Speaker 1: people got so into targeted advertising, like what comes next?
Speaker 1: You know, we don't talk about like tech business a lot.
Speaker 1: Maybe we should talk about because it's just there's so
Speaker 1: you know, these companies are obviously so important in our
Speaker 1: entire life. For many many years, we haven't really had
Speaker 1: to talk about tech business. The share prices they just
Speaker 1: went up. They just went up. But uh yeah, Now
Speaker 1: I guess the question is is the future is like
Speaker 1: to use the internet. We got to buy a coin
Speaker 1: from from Jeris in Horwan's all right on that happy note.
Speaker 1: Shall we leave it there? Let's leave it there? Okay.
Speaker 1: This has been another episode of the All Thoughts podcast.
Speaker 1: I'm Tracy Alloway. You can follow me on Twitter at
Speaker 1: Tracy Alloway, and I'm Joe Wisn't Though. You can follow
Speaker 1: me on Twitter at the Stalwart. Follow our guest on Twitter,
Speaker 1: Mark Bergen, He's at m h Bergen, and check out
Speaker 1: his new book Like Comments. Subscribe inside YouTube's chaotic rise
Speaker 1: to world domination. Follow our producer Carmen Rodriguez at Carmen
Speaker 1: Armine and check out all of our podcasts at Bloomberg
Speaker 1: under the handle at podcasts. Thanks for listening.