*** Editor’s Note:  Today will be the last Daily Gabe post of 2017.  The blogging will resume on Wednesday, January 3^rd.  In the meantime the DG staff would like to wish you a happy holidays and a prosperous new year!  ***

Instead of the usual format I like to use the last post of the year to provide some inspiration you can carry forward into the new year.  Some of you diehard DGers may remember 2016’s year ending post ‎, where I called for a recommitment to truth and offered some simple tips to become better at life.  While neither goal will ever have an official finish line, I think our industry has made some of these improvements throughout 2017 which will benefit all of us moving forward.  Now on to my 2017 send off . . .

THE IMPORTANCE OF DETERMINATION:  Unless you’ve been living under a rock this whole year you know digital media is getting harder and harder.  Industry consolidation, automated transacting, transparency demands, and prove-it-or-die attribution requirements are pushing each of us to the limit.  Given all this headwind how can we hope to succeed moving forward?  What we’ll need more than ever is a little thing called Determination.  It’s the switch inside each of us that must be flipped when the going gets tough to persevere the hardship and move forward.  And the role model we can use to release our inner determination is the infamous story of the Winklevoss twins.

You may remember the identical twins Cameron and Tyler Winklevoss depicted in the 2010 movie “The Social Network”.  They were dorm mates with Mark Zuckerberg at Harvard who were involved in the initial iterations of The Face Book (which it was called at the time).  As FB grew their involvement was marginalized, which created a rift between Zuck and the twins.  The relationship ended in a lawsuit which resulted in the Winklevoss twins being awarded a $65M settlement but receiving no ownership stake in FB.  Even after the lawyers’ fees the settlement was a decent chunk of change – about $22M per twin.  For most of us that amount might have been enough to call it a day.  However, to the Winklevoss’s the settlement was just pennies on the dollars the other FB founders were worth, and their portrayals as all looks/no brains tech neophytes added insult to injury.

This is where the determination kicked in.  As chronicled in the attached NYT article, instead of feeling sorry for themselves or being bitter about what could have been, the Winklevoss twins started from scratch with an even more risky and audacious idea . . . Bitcoin.  To be clear the Winklevoss’s didn’t invent Bitcoin, but they were the first to go all in on the fledgling cryptocurrency by investing most of their FB cash.  Everyone from tech experts to financial advisers thought they were bat shit crazy for doing this.  But in the words of Tyler Winklevoss, “We’ve turned that laughter and ridicule into oxygen and wind at our back.”  Today the Winklevoss twins’ $30Mish investment in Bitcoin is now worth over $1.6B.  Once again most of us would be tempted to cash out at this level success, but the Winklevoss’s are determined to double down yet again.  According to Tyler Winklevoss, “We still think it is probably one of the best investments in the world and will be for the decades to come.  And if it’s not, we’d rather live with disappointment than regret.”

So what’s the lesson in all of this?  First, appreciate the determination required to pick yourself up from a humiliating defeat and start from scratch with another moonshot concept.  Do you have it in you to do the same?  Then challenge yourself to try something bold (even if you fail), instead of living with the regret of maintaining the status quo.  And finally, save this post and reread it a year from now.  Only then will you know just how determined you were to make 2018 your best year yet!

Have a great holidays guys – see you in 2018!!!

DIGITAL’S UNWAVERING GROWTH:  Yesterday the IAB and PwC released an analysis of digital ad spending from the first half of 2017, as reported in the attached AdExchanger link.  Despite all the hoopla over digital ad fraud and measurement transparency, and the reported retreat to the safe harbor of traditional media, ad revenue is still flooding into Digital.  During 1H’17 US digital ad rev rose another 23% to $40B.  You’d think digital’s growth % would start to flatten out given the “law of large numbers”, but the growth rate is actually accelerating – that +23% is the largest increase the IAB has calculated since 2011!  Digital’s growth came from just about everywhere, with mobile (+40%), digital audio (+42%), digital video (37%), and even humble display (+28%).  One of the key drivers for digital now appears to be Local businesses.  According to the IAB 9M SMBs are spending 75%+ of their ad budgets digitally, which is a much higher allocation rate than even the National spenders.  With local spenders on board it seems like the digital media freight train won’t be slowing down any time soon.

. . . AND RADIO’S REACTION:  Speaking of Digital ad spending, I also found this sadly ironic article on the same topic in Radio Ink this morning.  Check out the title – “Despite Wishful Thinking … Digital Revenue Continues To Explode”.  That statement tells you everything you need to know about the Radio industry.  Are they so stuck in the past that they’re actually rooting for Digital to decline so advertisers come back to traditional media types like Radio?  And what does that say about their own product strengths and monetization strategy?  In all my years of media sales I’ve never found hoping someone else will fail to be a sound strategy to grow your own business.  Sad stuff, Radio Ink.

THE NFL IS OFFICIALLY TV’S TALLEST MIDGET:  It’s true, the NFL’s TV ratings are down this year.  So you’d think rates for in-game ads would also be down.  But in the alternate universe of live sports rates for NFL TV spots are actually up 5% this year, according to SMI in the attached AdWeek link.  How could this be?  First, let’s admit that some brands buy in to sports for the association value and not just the CPM efficiencies the rest of media is held to.  I also think this is a symptom of a broader problem for TV.  While the NFL’s ratings are down a little, overall TV ratings are down much more.  So if brands are looking for a place to park their existing TV budgets the NFL starts to look like the best bad option.  That’s good news for the NFL in the short run, but another sign of the building storm on TV’s horizon.

BAD SANTA SKILL:  iHeart is up to some seasonal hijinks with the use of its new Santa Skill on Alexa.  I’ll have to admit this one’s pretty creative.  According to the attached Inside Radio link, when Amazon Echo users say “Alexa, talk to Santa” they’ll activate an iHeart skill to play holiday music, tell reindeer jokes, etc..  The only downside I can see is their only response is playing music.  I can just imagine kiddies all over the country trying to communicate with Santa through their family’s Echo to ask for certain toys, only to be greeted with a cruddy joke about an elf and the umpteenth version of “Feliz Navidad”.  How bad will the blowback be from Kid Nation?  I guess we’ll find out on the 25^th.  In the meantime, this brings up a broader question about skill hijacking.  Imagine Coke swiping a “how do I make cheeseburgers” skill and serving a burger-themed ad for an ice cold Coke when users make the burger ask.  The potential for abuse here is pretty much endless, which could create the need for Amazon, Google, etc. to begin skill vetting.  Maybe I could become a Skill Cop if this blogging thing doesn’t work out . . . hmmm.

Have a great Thursday guys!

IT’S DIGITAL’S WORLD AND WE’RE JUST LIVING IN IT:  It happened in the US in 2015, and now the rest of planet has finally caught up.  According to Magna Research in the attached Recode link, global ad revenue for Digital has surpassed traditional TV spending in 2017.  This year Digital ad spending will total $209B which is 41% of the total WW media spend, compared to TV’s $178B/35%.  Magna is forecasting Digital to cross the 50% threshold of total media spending by 2020 . . . which is pretty shocking for us old timers to wrap our minds around.  One important asterisk to these totals is the role Digital Video plays in this shift.  Since OLV is technically calculated as Digital it makes the migration from TV look even more pronounced.  But as any self-respecting traditional TV Network will tell you, selling digital extensions of the same content is still TV.  Regardless of what side of the blurry line you put Digital Video on, the chart below proves once and for all we’re living in a digital-first media world.

ON THE OTHER SIDE OF THE COIN . . . TV’S RATINGS TUMBLE:  Now that we know Digital is surging, you might be asking yourself about the state of Traditional TV.  It turns out things aren’t so sunny on the Broadcast/Cable side of the street.  According to the latest Moffett Nathanson research, as noted in the attached Inside Radio link, Traditional TV’s “C3” ratings are in a free fall.  For a level set C3 is the aggregated viewership from the time a show airs through the next three days of DVR-recorded viewing.  The ratings pain is being felt across the proverbial dial.  Since September Cable’s C3 monthly ratings have declined by double digits compared to 2016.  And the Networks are in even worse shape with NBC “winning” at -11%, ABC at -13%, CBS at -15%, and Fox dropping a cringe-inducing -35%.  Some of Fox’s decline can be attributed to the viewership spike from last year’s World Series, and all the networks received a one-night kiss in 2016 from the Presidential election coverage.  But those one-off comp bumps don’t explain month after month of significant ratings erosion this year.  The simple, painful explanation is that people just aren’t sitting in their living rooms watching set top TV the way they used to.  And as we saw in the previous article, as media time shifts from couches to mobile devices so too does the ad revenue.

YOUTUBE GETS CLOSER TO FULL MUSIC LICENSING:  Staying with today’s video theme, there’s been progress towards a more harmonious relationship between YouTube and the music industry over performance royalties for the music videos it plays.  According to the attached Billboard link, YouTube (aka Google) has inked a direct licensing agreement with Universal Music Group (UMG), which is similar to the one they signed with Warner last month.  There are also reports that a Sony deal is about to finalized, which would give YouTube rights to all three of the major labels’ music.  One notable provision in the UMG deal is the ability for YouTube to take their videos behind a paywall – which means more content for its existing subscription platform, YouTube Red.  There’s even speculation in the industry that once YouTube has direct licensing rights from all the labels in a subscription environment they’ll relaunch Red as more of a full service, ad free music video platform.  This would mean even more competition in both the Digital Video and Digital Audio spaces, all in one.

Have a great Wednesday guys!

WILL AMAZON MAKE IT A TRIOPOLY IN 2018?:  One of the biggest problems facing the digital media industry is that so much audience scale, ad revenue, and market power is consolidated between the so called Duopoly of Google and Facebook.  A year ago industry experts were betting Snapchat could become the third horse in the race, but they’ve started to fade thanks to an unorganized business strategy and stalled user growth.  Now it’s looking more likely than ever that the true third member of a new Triopoly will be Amazon.  Digiday lays out the case for Amazon’s ascension into the upper echelon of digital publishers in the attached link.  The sheer velocity of Amazon’s projected ad revenue growth over the next few years (image below) is astounding.  What’s even more telling is the percent of advertisers who plan to increase their spending on Amazon in 2018 (63%), and the percent of users identifying Amazon as the site they’ll most likely visit for information before making a purchase (72%).  Becoming the go to site for users who have an intent to purchase is the retail equivalent of knowing where lightening is going to strike ten seconds before it does.  Now Amazon is harnessing that power for ad monetization.  Will it be enough to challenge the Duopoly in 2018?

DIY OMNICHANNEL?:  Client side DMPs in the Retail sector are nothing new.  Major retailers like Walmart, Kroger, and Target have invested millions of dollars to create their own proprietary databases of customer info which they use for off platform marketing.  But what if the data set was so good, so detailed, and so complete that the retailer could flip the script and sell manufacturers access to its own DMP?  That’s exactly what The Home Depot (THD) is trying to accomplish with its new One Home Depot omnichannel platform, as described in the attached RIS News link.  THD’s goal is to harness the 1.7 trillion (yes, that’s a “T”) weekly data points collected on its 50M+ consumer DMP to create custom audience segments it can sell to brands.  These analytics could even be tied to advanced real-time data like store-level inventory of particular items or weather triggers in that neighborhood.  THD is betting these precision analytics will improve their own digital marketing effectiveness, and also become a valuable data play for brands looking to sell goods in their stores.

DIGITAL VIDEO DOOMSDAY:  It seems like every brand has OLV baked in to their media plans these days, so how could the digital video sector be in trouble?  As it turns out there are some underlying factors lining up to squeeze many digital video publishers out of the market over the next year, as chronicled in the attached AdWeek link.  Two problems with digital video have to do with deal economics.  Programmatically transacting OLV has commoditized the market to the lowest bid price for standard viewable ad units, which has squeezed out super-premium products like native content integrations and takeovers.  As buyers have gotten used to buying OLV on the cheap it’s become economically unfeasible to monetize digital video – because it simply costs more to produce the content than publishers can recoup through ad sales.  Even if you can overcome these monetization hurdles there are two new content must haves to deal with.  First, to be successful moving forward video publishers’ content must be squeaky clean.  That means no user-uploaded objectionable content and/or inaccurate reporting.  In 2017 even dominant video platforms like YouTube and Facebook have been hurt by not policing their platforms, so you can imagine how much harder the smaller guys have to work to stay clean.  And now this standard even applies to who’s starring in and/or producing the videos in the first place.  The long overdue housecleaning now occurring in Hollywood around the #metoo movement will have a ripple effect from the big screen to the small screen to the third screen, which will give digital video publishers one more thing to be watchful of moving forward.  So with all that headwind are you still feeling bullish about digital video as a business model in 2018?

Have a great Tuesday guys!

TOP DIGITAL STATS:  AdWeek is out with another round of the Top Digital Stats from the past week in the attached link.  This edition has a flurry of year end activity, including 6.) Bloomberg’s launch of a new around the clock Twitter news feed called TicToc, and 7.) T-Mobile’s purchase of an OTT network service called Layer3.  There are also plenty of scale glory stats to choose from, including 1.) 1 trillion photos being taken on Snapchat this year, 5.) 17B videos being shared on FB this year, and 4.) 38M Facebook followers for the WWE – that’s more following professional wrestling than the NFL or NBA, proving once again that Hulkamania is still as strong as ever!  Perhaps the most notable stat this week is 8.) with the graph below comparing the QoQ revenue growth of Google, FB, the Asian Techs, and everybody else.  Can anyone say rich getting richer?

CRB SPIKES SATELLITE’S STREAMING RATE:  On Friday the CRB announced the new performance royalty rate package for satellite distribution of music, as reported in the attached RAIN link.  Satellite really only has one player (Sirius XM), so this ruling primarily impacts them.  Unlike Streamers who are charged fixed royalties on a per song played basis, Satellite pays a variable % of overall gross revenue which is then subdivided among the artists based on whose songs were played.  Satellite currently pays 11% of gross rev, but per the new CRB ruling that number will jump to 15.5% from 2018 through 2022.  That’s a 40% increase which jolted Sirius’s stock on Friday.  When you consider the Streamers are paying 40%-70% of gross revenues in performance royalties, 15.5% doesn’t seem like that big of a deal.  However it’s still a very large jump to absorb all at once.

TOP 10 GOOGLE SEARCHES OF 2017:  Finally today, TechCrunch is out with a tally of the Top 10 Google searches from 2017 in the attached link.  Because it’s TechCrunch they’ve highlighted the top tech-related searches on the right side of the image below.  8 of the 10 top tech searches were for smartphones/watches and the remaining two were for gaming devices.  For me the top 10 overall US searches on the left side is more interesting because it’s a direct reflection of our cultural zeitgeist.  Unfortunately two hurricanes made the list, including Irma at #1.  There was also interest in two sporting mega-events, the passing of a rock icon, the downfall of a Today show anchor for sexual misconduct.  But if you’re looking for a statement about this year through our Google searches consider this – the ever-obnoxious fidget spinner made the list at #10, but nothing about politics, including President Trump’s inauguration in January, made the top 10.  The fact that we’d rather be fidget spinning tells you how fed up we all are with the state of politics in our country.

Have a great Monday guys!

HITTING THE VALUE EXCHANGE SWEET SPOT:  Up until now the audio streaming category has been bifurcated into two camps – ad supported free streaming (like Pandora), and subscription-based ad free streaming (which is pretty much every other streamer).  But those well-defined swim lanes are starting to blur thanks to new value exchange-based ad products.  Yesterday Pandora announced the latest chapter in this evolution with the introduction of its new Premium Access product, as described in the attached AdAge article.  Here’s how it works . . . listeners will be invited to watch :15 videos through completion and in return receive Pandora Premium functionality during their listening session.  Through Premium Access listeners can select songs on demand, skip, replay, etc. – which is basically all the functionality you’d get with a paid subscription, but without ever having to whip out the old credit card.  There’s also a huge benefit to sponsoring brands, whose videos must be engaged with in order to unlock the Premium functionality (can anyone say viewability and completion rates?)  With this convergence of listener and advertiser benefits Pandora may have just found that marketing promised land, where what’s good for the listener is also good for the advertiser.

END OF THE ROAD FOR NET NEUTRALITY:  In the end it went down the way we all expected it to.  Yesterday the FCC voted 3-2 along party lines to eliminate Net Neutrality, according to the attached Tech Crunch link.  By deregulating the speed data is transmitted across the internet, ISPs (think Cable operators and Telcos) will be able to throttle up/down the delivery speed of digital publishers.  It’s widely expected that the ISPs will begin creating premium high speed data lanes which they’ll charge publishers to use.  These charges, of course, will be passed on to consumers in the form of higher subscription fees and/or more advertising on sites which use the high speed lanes.  This will inevitably take us to a place where the internet will stop being “free”, and will become a pay as you use experience.  Happy day for the ISPs to be sure, sad day for the rest of us.  (Editor’s Note:  And one other thing – why was FCC Commissioner Ajit Pai drinking out of a larger than life coffee mug during yesterday’s hearing?  Does he just love coffee that much?  Did Reese’s pay him a placement fee to use that mug?  And how many times was the hearing paused for a bio break?  I know these are petty questions, but the dude is on my S-list for killing NN, so this is my way of striking back!)

DISNEY ACQUIRES 21^ST CENTURY FOX:  The other big headline yesterday was Disney’s acquisition of 21^st Century Fox for $54B in an all-stock deal, according the attached Mashable link.  So what does The Mouse receive for $54,000,000,000?!?  First they get content in the form of the 21^st Century Fox movie studio, FX, and the National Geographic network.  Perhaps more importantly they also get distribution through Sky TV (European Cable co) and especially Hulu – which Disney will use to distribute its content OTT when it pulls off Netflix in 2019.  The deal does not include the Fox TV network, Fox Sports or Fox News, which will remain a separate media company.  Disney’s overarching strategy with this move is to vertically integrate the entire entertainment media chain from content creation through distribution, especially on the digital side.  Disney is wise to recognize if they secede digital distribution to Netflix, Amazon Facebook, etc., they’ll lose the ability to control their own destiny in coming years.

Have a great weekend guys!

DIGITAL MEDIA IS GETTING ITS ACT TOGETHER:  In January P&G CMO Marc Pritchard called on the entire digital media industry to improve its transparency and accountability.  Mr. Pritchard pointed out three areas of deficiencies:  1) Ad Fraud which devours impressions and precious marketing dollars, 2) a lack of Billing Transparency which allows agencies and 3^rd party middlemen to tack on hidden upcharges, and 3) lax Brand Safety standards which place innocent brands next to controversial content.  So how has the industry responded during 2017?  According to Mr. Pritchard, in the attached Digiday link, we’re about 80% to goal on these improvements.  Most publishers have accepted 3^rd party tracking and measurement which has reduced ad fraud.  Brands are using fewer agencies and forcing those left standing into transparent billing practices.  And media platforms like Facebook and Google have implemented filters to weed out bad content.  So far so good for our industry, right?  But what’s next for 2018?  In Marc Pritchard’s own words . . . “Complete the task on transparency.  Then, use the data we have to do much better planning across our platforms.  And raise the bar on the quality of the creative so it’s more effective.  The other thing is we’re pivoting now to data-driven, mass one-to-one marketing.  That’ll be a major push over the course of next year.  It’s also time for looking at agency models and figuring out what the next generation is of agency work.” I think this is a good road map to stay focused on as the digital media industry continues to raise the bar.

SPORTS’ MEDIA RIGHTS TO TOP TICKET REVENUE 2018:  As a follow up to yesterday’s post about the NFL securing a $2.25B/5-yr deal with Verizon to stream it’s games, PwC is out with some pretty amazing stats on the US Sports Industry’s total revenue picture.  According to PwC in the attached Inside Radio link, by 2018 total US Sports Media Rights revenue (which includes broadcast airing and digital distribution) will total $20.1B, compared to Sports Gate revenue (aka ticket sales) at $19.2B.  Anecdotally this makes sense, because for every fan in a seat watching a game there could 10, or 100, or even 1,000 watching on TV, listening on Radio, or consuming on a connected device.  And now it looks like the revenue is finally flowing to where the scale is.  My guess is this trend will continue in perpetuity.  Could you even imagine a day when tickets to a live game are almost the afterthought for the leagues and their teams, because the real money is being made through the Rights fees?  I think it could happen.

WHY CELEBRATING FAILURE IS A GOOD THING:  Finally today, I’d like to share a response from an article I posted on LinkedIn.  The post was about AdWeek’s biggest marketing failures of 2017 and what they can teach us.  The comment I received was from a business consultant named John Orofino.  In Mr. Orofino’s own words . . “One of my favorite philosophies is fail fast and make sure you apply those learnings just as fast to your next opportunity.  Also, have you seen the Astro Teller TED talk on the unexpected benefit of celebrating failure?  It’s a great one.”  Heeding Mr. Orofino’s advice I watched the TED Talk, and am so thankful that I did.  Astro Teller (real name) is the head of “X” (formerly called Google X), which is an amazing tech innovation lab.  Mr. Teller’s TED Talk focused on the value of failing fast, which can be paralleled to mistakes marketers’ make.  Examples of the projects X has dreamed up and then cancelled due to unsolvable obstacles is mind blowing.  But instead of sulking in their failures, X employees are rewarded for killing an idea.  Because it’s better to know early if a new idea won’t work than it is to find out later after you’ve sunk more time/energy into something that was never going to work in the first place.  Promise yourself that you’ll find 15 minutes to watch this – totally worth it!

Have a great Thursday guys!

THE NFL GOES ALL IN ON STREAMING:  We’ve officially hit “priiime tiime” (using your inner-Chris Berman voice) for live sports streaming with yesterday’s announcement that the NFL and Verizon have reached a five year distribution agreement.  According to the attached CBS Sports link Verizon will pay $2.25B for the rights to stream all NFL games for the next five years, beginning with the 2018 postseason in January.  This is a major step forward for the NFL who initially dipped their toe in the streaming waters with Twitter at $1M/game in 2016, and then with Amazon this year at $50M to stream 10 Thursday night games.  Besides the whopping price increase (at $450M per season), the deal increases the scope of NFL streaming by carrying all games on any device with a 7 inch or smaller screen – the previous deals were for smartphones only.  Verizon customers will be able to access the NFL through their go90 platform and non-Verizon customers can go through Yahoo Sports.  It’ll be interesting to see how this deal impacts the bid prices from the traditional networks in the next round of TV broadcast contracts, which start coming up in 2020.  Conventional wisdom says with viewership migrating from living room TVs to connected devices the cost for TV rights will start to come down.  But then again this is the NFL we’re talking about.  If anyone can have their licensing cake and eat it too it will be King Football.

VISA GETS INTO THE SONIC LOGO GAME:  As we enter the Age of Voice, when we’ll spend more and more time on connected devices which don’t have a screen, the concept of the Sonic Logo will become more important than ever.  Sonic Logos are simply audio identities, like a jingle but much shorter and without lyrics.  It’s the three-note chime to let you know you’re watching NBC or even the one note ding to tell you when it’s time to buckle up for that Southwest flight.  Sonic Logos are all around us, but have you ever wondered how they’re created?  The attached WSJ link chronicles the year long process Visa’s marketing team just underwent to come up with their own Sonic Logo.  The final product is HERE . . . it’s really short so click and pay attention.  Visa will begin tagging all of their video and audio creative pieces in 2018 with their new Sonic Logo, with the goal of establishing an audio-based brand identity over time.  This seems like a smart proactive move for a brand which is looking to stay relevant in tomorrow’s audio-first landscape.

LEARNING FROM OUR MISTAKES:  Everyone makes mistakes, no matter if you’re a person, business or consumer-facing brand.  In fact mistakes are so common that it’s not really about making the mistake in the first place.  It’s what we learn from our mistakes which defines our character.  And yes, this rule applies to marketers too.  Every year brands make advertising mistakes they must learn from, and which also serve as cautionary examples for other advertisers to avoid.  AdWeek has highlighted the top (bottom?) five from this past year, along with the lessons each one teaches, in the attached link.  Some of these seem like non-starters.  No, it’s never a good idea to feature Kendall Jenner solving race relations with a can of Pepsi, or a Mark Zuckerberg avatar showing off FB’s new VR app by touring hurricane devastation in a virtual Puerto Rico (I can’t make this stuff up).  But there were also more subtle errors of context which befell Dove with its race-changing creative or McDs with its deceased father TV ad.  These examples didn’t start as bad ideas, they just came across as tone deaf and unseemly.  And perhaps most interesting of all is the case of Uber.  It wasn’t one piece of bad creative that did Uber in during 2017.  Instead it was the entire corporate bad guy image earned through a series of self-inflicted mistakes and an internal culture of misbehavior.  Each of us should pay attention to these missteps – we’ll all be better for it in 2018.

Have a great Wednesday guys!

LET THE SELL OFF BEGIN:  Yesterday iHeart announced its intention to sell of their wholly-owned ClearChannel Outdoor division in an effort to pay down its overall debt, as reported in the attached Radio Ink link.  If sold CC Outdoor is expected to net iHeart roughly $450M in cash.  That seems like a decent chunk of change, but it would only pay down about 2% of iHeart’s overall $22B debt.  The cash from an Outdoor sale could be enough to pay interest payments and maturing loans in 2018, which would buy iHeart some time for future debt restructuring.  But they’ll still have the small issue of $8.4B in loans due in 2019, which would take a heck of a lot more than Outdoor’s liquidation to pay down.  So who’s ready to burn some furniture?!?

MARRYING CONTENT WITH COMMERCE:  Did you ever think you’d go shopping for Buzzfeed products at Walmart?  That’s essentially what you could be doing later this week, according to the attached Business Insider link.  To be specific Buzzfeed’s viral recipe app Tasty will begin featuring direct links to Walmart.com and Jet.com, where viewers can buy products featured in their cooking videos.  Need a lemon zester to complete that scallopini dish?  Jet has you covered.  Or how about the groceries to cook the meal itself?  Just one-touch Walmart.com.  It’s the embodiment of a new strategy of converting Content to Commerce, and it seems so brilliantly simple.  Walmart gets incremental traffic from Tasty’s 91M FB followers, and Tasty gets a way to monetize its existing content (via rev share) without getting into the kitchen utensil/grocery delivery game.  I’d expect to see more “C2C” partnerships in the near future.

TO OFFICE OR NOT OFFICE . . . THAT IS THE QUESTION:  Finally today, the attached article from Digiday caught my eye because I’ve experienced both setups in my career.  The question is whether it’s better for office culture and productivity to have an open floor plan where everyone sits together in cubes or a more traditional space of segregated offices.  Open seating setups are already common with publishers and agencies, and are now becoming the norm within clients’ marketing departments.  Obviously making the transition to an open office can have a massive impact on workplace culture – but is it a good or bad thing?  The benefits include cost savings for the org (you need less square footage per employee so lease costs goes down), and better communication/collaboration among employees who are within earshot of one another.  The downside can be the distraction factor since its harder to concentrate and get things done with office noise all around you.  But perhaps the biggest downside is the feeling that employees who used to have offices are somehow being demoted into the dreaded cubicle farm.  This is compounded even more if higher level managers get to keep their offices.  As quoted in the article . . . “We have a lot of issues with it — people hate it,” said the head of marketing at a U.S. brand. “They feel like they can’t get work done. Meanwhile, the CEO and higher-ups get to keep their privacy.”  As I mentioned, I’ve experienced both setups and can tell you having the big comfy office is over rated.  It’s better if everyone (including the bosses) check their egos at the door and embrace sitting with one another as a team.  It’s so much better for collaboration if implemented correctly.

Have a great Tuesday guys!

APPLE MAKES ITS PLAY FOR SHAZAM:  On Friday news broke that Apple had reached an agreement to acquire Shazam, as reported in the attached Tech Crunch link.  The acquisition is estimated to be around $400M, which is a relatively small value compared to other tech publishers.  On the other hand Shazam doesn’t really have a stable, scalable revenue stream, so is $400M too high of a price?  The answer to that question may be revealed when we see what Apple plans to do with its new asset.  Shazam has led the industry in sound recognition tech for years.  But thanks to the industry’s AI advances it’s key differentiator from the competition is starting to dwindle.  My guess is that Apple wants to incorporate Shazam’s AI to make Siri more intuitive so it can better compete with Amazon and Google.  You also have to wonder if this purchase is in any way connected to Apple’s delayed launch of its Home Pod line?  If they didn’t have Home Pod’s voice-recognition AI up to standard could something like Shazam be plugged in to fill the gap?  I guess we’ll find out sooner than later.

OTT HEATING UP:  2017 might end up going down as the Year of OTT (Over The Top) video streaming services.  Netlfix has been the early leader in this sector, but as reported in the attached WSJ article, the competition is ramping up.  Traditional TV players are beginning to consolidate to better compete with OTT by linking content and distribution under one umbrella.  Examples of this include AT&T/Time Warner (if the deal ever gets DOJ approval), and a potential tie-up between Disney and 21^st Century Fox.  One of Fox’s assets is Hulu, which Disney would love to own in order to have an alt OTT distribution channel when it pulls its content from Netflix in 2019.  Confused yet?  The graphic below shows how the major OTT players are getting organized by content category.  It would be interesting to see this chart updated in a few years.  I’m thinking we’d see many more traditional TV players buying their way into the OTT game.

SPOTIFY-TENCENT TIE UP:  A few weeks ago rumors started to surface that Spotify and Tencent Music Entertainment (known as TME – Tencent’s music arm), were in negotiations to swap stakes in one another.  Late Friday the deal was confirmed with a mutual announcement, as reported in the attached RAIN link.  The terms of the arrangement are pretty straightforward – both companies are using cash to buy 10% of one another.  Since neither company is public the exact prices for each’s respective 10% aren’t being disclosed, but the companies’ valuations are estimated to be around $10-15B.  So a 10% stake of each would be in the $1-1.5B range.  For Spotify the stake swap gives them diversification ahead of a potential IPO.  For Tencent this move is about expansion into the music streaming sector.  TME is the new digital music division of the much larger parent Tencent, and the Spotify stake gives them a toe hold in the space.  I’m not exactly sure how either company will leverage their new acquisitions, but it’s worth keeping an eye on.

Have a great Monday guys!