Good morning, AdLand. Here's what you need to know today:
A new ad for Fiat starring Godzilla <a href="https://www.youtube.com/watch?v=QKpzU2GSVC0">has more than 5.4 million YouTube views</a> since being posted May 3. The video, made by The Richards Group and production company MPC creative shows Godzilla swallowing cars left and right. That is, of course, until he comes to a Fiat.

AT&amp;T <a href="http://www.businessinsider.com/att-buy-directv-2014-5">announced a deal to purchase DirecTV for $95 per share</a>, in a proposed acquisition valued at almost $50 billion ($48.5) and about $67 billion with debt.
The <keyword id="35666" type="COMPANY" weightage="100" keywordseo="advertising">advertising</keyword> expenditure tax deduction <a href="http://adage.com/article/news/kids-food-marketing-latest-ad-tax-deduction-target/293261/">has once again caught the eye of lawmakers</a>. Democratic U.S. senators Tom Harkin and Richard Blumenthal introduced a bill entitled "The Stop Subsidizing Childhood Obesity Act," which would ban companies from writing off the money they spend advertising foods with poor nutritional qualities to children.
Darden Restaurants <a href="http://dealbook.nytimes.com/2014/05/16/darden-to-sell-red-lobster-for-2-1-billion/">is selling Red Lobster</a> to private equity firm Golden Gate Capital for $2.1 billion.
Google hired Art.com chief marketing officer Ivy Ross <a href="http://adage.com/article/digital/art-cmo-gap-veteran-ivy-ross-lead-google-glass/293246/">to run its Google Glass division</a>. Ross has previously worked as executive VP-marketing for Gap and as chief creative officer for The Disney Store.
Droga5 Europe executive creative director Thiago de Moraes <a href="http://www.brandrepublic.com/go/agency/article/1294703/thiago-de-moraes-leaves-droga5/">is leaving his full-time position</a> with the agency to write a children's book for which he has recently been given a publishing deal. He will continue to do freelance work for the agency as time allows.
DDB China <a href="http://www.adobomagazine.com/global-news/ddb-china-appoints-twelve-tong-vp">hired Twelve Tong</a> to be vice president in charge of new business expansion. Tong was previously business director at Saatchi &amp; Saatchi's Shanghai office.
Kraft <a href="http://adage.com/article/news/lunchables-targets-lucrative-teen-market/293263/">is beefing up marketing for Uploaded</a>, its larger-portion product that is basically Lunchables for teens. Uploaded made $125 million in sales in its first year.
Previously on Business Insider Advertising:
<ul>
<li><a href="http://www.businessinsider.com/facts-about-subway-food-blow-your-mind-2014-5">13 Facts About Subway That Will Blow Your Mind</a></li>
<li><a href="http://www.businessinsider.com/digital-video-advertising-aggressive-spending-and-increased-ad-availability-is-putting-ads-on-every-screen-2014-5">The Digital Video Advertising Report: Growth Forecasts And Viewability Scandals</a></li>
<li><a href="http://www.businessinsider.com/vintage-mad-men-emmy-campaign-2014-5">We Love These Vintage Ads Promoting Mad Men's Bid For A New Emmy</a></li>
<li><a href="http://www.businessinsider.com/samsung-heathrow-terminal-5-2014-5">Samsung Is Going To Turn One Of The Busiest Airports In The World Into A Giant Ad For The Galaxy S5</a> </li>
</ul>

People Love This Fiat Ad Starring Godzilla [THE BRIEF]

<div class="KonaFilter image-container float_right"><div class="image on-image"><a href="http://www.glassdoor.com/Photos/IBM-Office-Photos-E354_P2.htm">Glassdoor</a></div></div>Good morning, AdLand. Here's what you need to know today:
<keyword id="10875" type="CITY" weightage="60" keywordseo="IBM">IBM</keyword> <a href="http://mashable.com/2013/11/08/ads-determine-personality-through-twitter/">is testing technology that will analyze consumers' Twitter feeds</a> to determine their emotional profiles so that retailers can more successfully target their <keyword id="35666" type="COMPANY" weightage="100" keywordseo="advertising">advertising</keyword> pitches to them. According to a report from Mashable, the tech giant has created a software program that looks at a <keyword id="6354616" type="CITY" weightage="60" keywordseo="Twitter">Twitter</keyword> user's recent messages and scores them on the "big five" traits used in psychological research: extroversion, agreeableness, neuroticism, conscientiousness, and openness to experience.
Cheil USA chief creative officer Lars Bastholm <a href="http://www.mediabistro.com/agencyspy/lars-bastholm-assumes-global-cco-role-at-rosetta_b56304">has left the agency</a> to take the same position with the Publicis Groupe customer engagement agency, Rosetta.
The chairman of the House Ways and Means Committee <a href="http://www.adweek.com/news/advertising-branding/advertising-biz-stunned-draft-proposal-cut-ad-deduction-153698">is proposing to cut the tax deductions advertisers are allowed to make for advertising expenditures</a>.
WPP <a href="http://www.mediapost.com/publications/article/213094/wpp-lights-mobile-fuse-acquires-bottle-rocket.html">acquired the mobile shop</a> Bottle Rocket, which built the NPR News app among other projects.
In an attempt to keep viewers engaged during advertising breaks, The Weather Channel <a href="http://adage.com/article/media/weather-channel-air-forecast-24-7-commercials/245199/">will display forecasts</a> in a scroll across the bottom of the screen 24/7. 
Commonground <a href="http://www.mediabistro.com/agencyspy/commonground-opens-up-shop-in-nyc_b56274">announced it has opened a New York office</a> to service clients like Verizon Wireless and PrimaLoft. It is the agency's third office after Chicago and Houston.
Adweek looks at <a href="http://www.adweek.com/news/technology/retailers-hope-bag-rivals-customers-twitter-153734">how retailers will use Twitter to steal customers from each other this holiday season</a>.
Ad Age crunched the numbers and found that <a href="http://adage.com/article/special-report-the-awards-report/presenting-2013-awards-report/245139/">Unilever was the most awarded advertiser of 2013</a>, powered largely by its Dove Real Beauty Sketches, and McCann Melbourne was the most awarded agency for its "Dumb Ways To Die" campaign for Metro Trains.
Translation senior art director Pablo Velez <a href="http://www.mediabistro.com/agencyspy/velez-translation-part-ways_b56352">has left the agency</a> after more than two years in the position, AgencySpy reports. 
The Mail Online <a href="http://digiday.com/publishers/video-content-mail-online-break-com/">is selling pre-roll ads in conjunction with video content it doesn't have the rights to,</a> Digiday said in a story on online video copyright theft. The Mail Online denied Digiday's allegations.
Mashable <a href="http://www.adweek.com/videowatch/mashable-partners-collective-video-production-153704">will co-produce three or four web video projects with Collective Digital Studios</a>, the firm behind YouTube stars like Freddie Wong and the Annoying Orange.
Previously on Business Insider Advertising:
<ul style="line-height: 1.5em;">
<li>
<a href="http://www.businessinsider.com/15-completely-ridiculous-minor-league-sports-logos-2013-11">15 Completely Ridiculous Minor League Sports Logos</a>
</li>
<li>
<a href="http://www.businessinsider.com/jaguar-announces-first-super-bowl-ad-2013-11">Here's A Taste Of What Jaguar's First Ever Super Bowl Campaign Will Look Like</a>
</li>
<li>
<a href="http://www.businessinsider.com/all-of-britain-has-waited-an-entire-year-so-it-can-burst-into-tears-in-front-of-this-one-tv-commercial-2013-11">All Of Britain Has Waited An Entire Year So It Can Burst Into Tears In Front Of This One TV Commercial</a>
</li>
<li>
<a href="http://www.businessinsider.com/home-depot-responds-to-racism-accusations-2013-11">Home Depot Dedicates Twitter Feed To Apologies And Terminates Social Media Agency After Racist Tweet</a>
</li>
<li>
<a href="http://www.businessinsider.com/nbas-crazy-new-christmas-day-jerseys-hint-at-the-future-of-uniform-advertising-2013-11">NBA's Crazy New Christmas Day Jerseys Hint At The Future Of Uniform Advertising</a><a href="http://www.businessinsider.com/nbas-crazy-new-christmas-day-jerseys-hint-at-the-future-of-uniform-advertising-2013-11"></a>
</li>
<li>
<a href="http://www.businessinsider.com/instagram-bans-a-bunch-more-hashtags-in-hope-of-evicting-its-criminal-underbelly-as-advertisers-move-in-2013-11">Instagram Bans A Bunch More Hashtags In Hope Of Evicting Its Criminal Underbelly As Advertisers Move In</a>
</li>
</ul>

Here's How IBM Will Use Your Twitter Feed To Figure Out How Neurotic You Are [THE BRIEF]

<ul class="summary-list"><li>Amazon's cash balance is expected to reach almost $400 billion by 2027, far outpacing tech rivals.</li><li>This cash gusher stems from record profits, cost-cutting, and success in cloud and advertising.</li></ul><a target="_blank" class="" href="https://www.businessinsider.com/amazon-could-cut-managers-save-3-billion-analysts-2024-10">Amazon</a>'s ballooning cash balance is drawing Wall Street's attention.The company is on pace to have $127.4 billion in cash and short-term investments by the end of this year, tripling the amount from 2018 and surpassing $100 billion for the first time, according to consensus estimates compiled by S&amp;P Global Market Intelligence.That would give Amazon more money than rivals <a target="_blank" class="" href="https://www.businessinsider.com/google-cfo-analysts-ai-subscription-growth-2024-9">Alphabet</a> and <a target="_blank" class="" href="https://www.businessinsider.com/microsoft-spreadsheet-shows-pay-engineers-2024-8">Microsoft</a>, each expected to have about $112.8 billion and $108.1 billion in cash by that time, respectively. The data showed that even Apple, which puts some of its cash in long-term securities, would fall behind Amazon by next year.By 2027, Amazon is forecast to have almost $400 billion in cash, far outpacing its Big Tech rivals.This is an astounding transformation for a company that is famous for running on thin margins, reinvesting most of its profits, and holding relatively little cash compared to peers. Wall Street is closely following this and questioning whether Amazon plans to return some of its cash in the form of buybacks or dividends. When cash balances surged at other Big Tech companies in the past, the pressure mounted and they started returning some of the money to shareholders.Mark Mahaney, a tech analyst at Evercore, said he has asked Amazon about shareholder returns for years, but it doesn't appear to be a "near-term priority" at this point.Still, he was struck by the sheer size of the company's growing cash hoard."It's hard to see why Amazon would need THAT MUCH cash on its balance sheet," Mahaney wrote in an email to BI. An Amazon spokesperson declined to comment.<h2 id="bd05e4c2-f723-404d-af01-e33b0ba9876c">Pressure to return</h2>Amazon's cash increase is largely being driven by <a target="_blank" class="" href="https://www.businessinsider.com/amazon-andy-jassy-wall-street-analyst-praises-turnaround-effort-2024-7">record profits</a> from cloud computing, advertising, and improved efficiency, including cutting costs.The company's free cash flow is expected to nearly double from $36.8 billion last year to $70.8 billion in 2025, according to estimates compiled by S&amp;P Global Market Intelligence.Hopes for an Amazon dividend or at least more share buybacks gained traction in recent quarters after other tech companies, including Alphabet, Meta, and Salesforce, started returning more of their cash to shareholders earlier this year. Apple and Microsoft have paid dividends for years.Evercore's Mahaney said the chances of an Amazon dividend are "pretty low" for the next 2 to 3 years. He thinks a sustained share buyback program is more likely to happen first. Amazon approved a $10 billion stock repurchase plan in 2022, but hasn't added to this since.Mark Shmulik, an analyst at Bernstein, told BI that Amazon's expected free cash flow for the next few years is "significant," and investors are "certainly asking" for some type of return.Morgan Stanley, in a note published this week, also said Amazon's growing cash balance "creates a higher probability of capital returns" next year.Gene Munster at Deepwater Asset Management told BI that demands for shareholder returns will likely increase next year when he expects investors will become more confident about Amazon's ability to maintain its pile of cash. Despite the "remarkable" growth in Amazon's cash balance, the company hasn't been as aggressive as other tech companies in rewarding shareholders, he noted."A year from now, I think there'll be a lot of pressure for Amazon to do more," Munster said.<h2 id="0607f36d-1e3f-4cbc-8c90-93d4f205247c">AI is the wild card</h2>Investors have reasons to be happy about Amazon's performance. Its stock is up roughly 40% in the past year, outpacing the broader market. CEO Andy Jassy's <a target="_blank" href="https://www.businessinsider.com/amazon-andy-jassy-wooed-wall-street-overhauled-bloated-tech-giant-2024-7">turnaround efforts</a> have resulted in record profits and renewed investor confidence.During an April call with analysts, Amazon CFO Brian Olsavsky addressed the question about shareholder returns. He said the company had nothing to say at that point, adding the priorities are growth opportunities and long-term investments, as well as debt repayment. Jassy wrote in his annual shareholder letter that Amazon will continue to invest in artificial intelligence, its nascent Kuiper satellite network, and Prime Video content.Any large acquisition may be off the table for now, given the tough regulatory environment. The Federal Trade Commission, for example, terminated Amazon's proposed acquisition of iRobot earlier this year.Artificial intelligence could be a wild card. Amazon is in an arms race for AI supremacy against Microsoft, Alphabet, OpenAI, and Meta, putting more pressure on the company to invest in the space. In August, Olsavsky said capital expenditures will increase in the second half of this year -- up from an eye-watering $30.5 billion in the first half of 2024.Deepwater's Munster said depending on how the AI battle plays out, investors could give Amazon more room to invest, rather than rewarding shareholders. AWS's growth rate has bounced back in recent quarters, and competition with Microsoft is only intensifying, he added."If AWS continues to accelerate growth, investors will say, 'Let's keep funding this,'" Munster said.Do you work at Amazon? Got a tip?Contact the reporter, Eugene Kim, via the encrypted-messaging apps Signal or Telegram (<a target="_blank" rel="noopener noreferrer nofollow" class="c-link">+1-650-942-3061</a>) or email (<a target="_blank" href="mailto:ekim@businessinsider.com">ekim@businessinsider.com</a>). Reach out using a nonwork device. Check out Business Insider's <a target="_blank" rel="" href="https://www.businessinsider.com/insider-guide-to-securely-sharing-whistleblower-information-about-powerful-institutions-2021-10">source guide</a> for other tips on sharing information securely.

Amazon is becoming Big Tech's king of cash, and Wall Street wants a piece of it 

<ul class="summary-list"><li>Meta reported having 3.27 billion daily active users across all of its platforms.</li><li>That puts the company in a good position to have those users frequently interacting with its AI tech.</li></ul><a target="_blank" class="" href="https://www.businessinsider.com/mark-zuckerbergs-style-evolution-in-photos-2024-6">Mark Zuckerberg</a> looks poised to dominate the AI adoption race thanks to a technicality: Meta has three billion-plus captive users who have no choice but to use it.The billionaire has spent more than <a target="_blank" class="" href="https://www.businessinsider.com/mark-zuckerberg-files-documentary-depicts-facebook-meta-ceo-life-2024-1">20 years building his Harvard dorm project</a> into a globe-spanning social media empire. He now looks set to make Meta a clear frontrunner in the race to make AI a part of consumers' lives by simply cornering them into using it.As the <a target="_blank" class="" href="https://www.businessinsider.com/meta-ai-spending-more-mark-zuckerberg-investors-stock-price-2024-7">company reported second-quarter earnings on Wednesday, </a>Zuckerberg gloated about Meta AI — its AI assistant rolled out earlier this year — being "on track to achieve our goal of becoming the most used AI assistant by the end of the year."There's good reason Zuckerberg is sounding so confident about that.Meta reported having 3.27 billion daily active users across all of its platforms — including Facebook, Instagram, Facebook Messenger, WhatsApp, and Threads — for the second quarter of 2024, giving it a user base that no one else can rival.It's also a user base that has remained close to Meta's family of apps over the years. The company's daily active users grew 7% year-on-year in June, while Facebook, WhatsApp, and Instagram users continue to <a target="_blank" href="https://www.oberlo.com/statistics/average-time-spent-on-social-media">sink more than 16 hours of screentime into the apps</a> each month.In effect, then, that gives Zuckerberg a lot of engaged users to introduce AI-powered technology to. But instead of giving users a choice, Meta is implementing a strategy that provides users with no option to opt-out of using its AI.This puts it in a unique place to roll out new AI features, the same way it rolled out the Facebook Wall in 2004 and had users adopt it. In contrast, users of <a target="_blank" class="" href="https://www.businessinsider.com/openai-gpt5-gpt4-expectations-ai-2024-7">competitors like OpenAI</a> or Anthropic have to learn about the product and seek it out.This hasn't been lost on analysts. After earnings, Mike Proulx, vice president and research director at Forrester, said, "It's a smart move by the company to, effectively, introduce Meta AI to its users by forcing them to use it.""While Meta boasts about Meta AI being on track to be the most used AI assistant in the world, users of Instagram, Messenger, and WhatsApp can't not use it as it's literally the search bar on those apps," he said.<div type="image" title="Meta's Instagram, Facebook, and WhatsApp apps displayed on a smartphone." height="1500" width="2317" msid="112195666" hostid="261" sizebytes="107548"></div>There are probably a few reasons Zuckerberg is taking this approach.For one, Meta is spending billions of dollars on AI, so leaving adoption in the hands of users who might not be sure if the tech is something they need in their lives could make all its investment a waste.As Meta CFO Susan Li noted on <a target="_blank" class="" href="https://s21.q4cdn.com/399680738/files/doc_financials/2024/q2/META-Q2-2024-Earnings-Call-Transcript.pdf">Wednesday's earnings call</a>, the company's full-year capital expenditures by the end of 2024 are forecast to be between $37 billion and $40 billion, with "significant capex growth" expected in 2025 to support AI research and product development.Zuckerberg also seems intent on showing users that AI can inherently make their experience of his apps vastly better.The CEO said on the call that the technology is improving the quality of recommendations and driving engagement on Facebook and Instagram. He said AI will soon be used to provide better-targeted advertising services, too."In the coming years, AI will be able to generate creative for advertisers as well and will also be able to personalize it as people see it," Zuckerberg said.<a target="_blank" class="" href="https://www.facebook.com/watch/?v=462976706597534">Meta's boss has criticized</a> others for adopting this cornering approach before. He recently he took aim at Apple for keeping users locked into its ecosystem.Apple will roll out <a target="_blank" class="" href="https://www.businessinsider.com/apple-intelligence-delay-wont-hurt-new-iphone-sales-analysts-2024-7">Apple Intelligence</a> to its users later this year via a software update that will bring AI into the lives of users with compatible devices. However, it is giving users the option to opt in to a ChatGPT service introduced as part of a deal it announced with OpenAI in June.Meta's users won't have that luxury, which means AI will become a familiar feature in their lives — whether they like it or not.

Mark Zuckerberg has brilliantly cornered us

What a difference three months makes.At the end of 2023 and the start of 2024, it appeared that the US was on a glide path to what I termed "<a target="_blank" href="https://www.businessinsider.com/2024-outlook-us-economy-stock-market-jobs-inflation-interest-rates-2023-11">economic nirvana</a>": Growth would stay steady, if not spectacular, as inflation cooled off to a more manageable pace. This combination would not only let America continue its four-year expansion but also allow the Federal Reserve to ease up on its attempts to rein in the economy — and maybe even cut interest rates.The data released over the past couple of months has forced me to reconsider my expectations for that nirvana, or at least the timing of its arrival. Recent signs point instead to an inflationary boom: a <a target="_blank" href="https://www.businessinsider.com/fed-interest-rate-cuts-jobs-growth-low-inflation-paul-krugman-2024-2">slightly hotter economy</a> in which growth has stayed strong while inflation has sped back up. The labor market has been resilient, with recent jobs reports mostly coming in ahead of expectations and the Employment Cost Index, a widely followed measure of employee-compensation growth, picking up.But perhaps the most eye-catching development has been the persistence of inflation, which caught economists, analysts, and, most importantly, members of the Federal Reserve by surprise. The core personal consumption expenditures index — the Fed's favored inflation gauge that excludes volatile categories such as food and energy — has accelerated, undoing much of the progress from the previous six months. This inflationary-boom dynamic has pushed out expectations for rate cuts, <a target="_blank" href="https://www.businessinsider.com/stagflation-recession-us-economy-outlook-gdp-dimon-inflation-rate-cuts-2024-4">caused some more alarmist analysts</a> to suggest that the US is about to be gripped by <a target="_blank" href="https://www.businessinsider.com/stagflation-us-economy-gdp-growth-outlook-recession-forecast-inflation-rates-2024-4">another bout of high inflation</a>, and left some wondering whether the <a target="_blank" href="https://www.businessinsider.com/when-will-fed-cut-interest-rates-powell-fomc-inflation-relief-2024-4">Fed's next move will instead be to hike rates</a>.It is, of course, fair to <a target="_blank" href="https://www.businessinsider.com/top-economist-us-economy-recession-federal-reserve-interest-rates-inflation-2022-7">reevaluate one's expectations when new data</a> is presented. Sticking with one's projection <a target="_blank" href="https://www.businessinsider.com/wall-street-scaremonger-economists-stock-market-analysts-cost-investors-money-2023-2">just to avoid being wrong</a> is a sign of poor analysis. But after carefully examining the underlying inflation dynamics that have driven the recent freak-out about renewed overheating, I estimate the worries are overdone.In the lead-up to 2024, the pace of <a target="_blank" href="https://www.businessinsider.com/inflation-consumer-price-index-economic-outlook-food-gas-prices-october-2023-11">price hikes was falling back to earth </a>— or at least the Fed's goal of 2% year over year. Core PCE rose at an annually adjusted rate of 1.9% in the six months ending in December. It seemed like "mission accomplished." But in the first three months of this year, the measure heated back up: Core PCE surged to 4.4%. Typically, price increases are a slow-moving process, so it is rare to see core <a target="_blank" href="https://www.businessinsider.com/inflation-cpi-consumer-price-index-food-gas-housing-prices-february-2024-3">inflation accelerate this much this quickly</a>. When I started digging into the data, however, I had a hard time explaining the reversal based on the fundamentals.I think of inflation as a triangle: Each leg helps explain our overall price picture. The first leg is expectations — various surveys help gauge the degree to which inflation has become embedded in the minds of consumers and businesses. If these expectations start to creep up, that could be an indication that inflation is soon to follow. The second element is aggregate demand: If people suddenly have more to spend, that can push up spending and cause prices to rise along with it. One way to measure this is unemployment — if there is a sudden surge in Americans getting new jobs, demand is likely to jump as well. The final piece is supply shocks: How much have one-off disruptions helped raise prices on things like imported consumer goods or oil? Using this framework, it's difficult to pinpoint why inflation has strengthened so much.The Survey of Professional Forecasters has found longer-run expectations for inflation have leveled out at 2% — the Fed's target. The <a target="_blank" href="https://www.businessinsider.com/job-market-layoffs-recession-outlook-us-economy-hiring-unemployment-slowdown-2024-4">unemployment rate is up modestly</a> from 12 months ago, which suggests that price hikes aren't being driven by a sudden surge in consumer or household demand. And there have been no widespread supply bottlenecks to speak of. The ISM vendor-deliveries index, which measures the amount of time purchasing managers have to wait to get the goods they need, indicates that the supply chain is running smoothly.On a deeper level, it appears that the acceleration in inflation is somewhat random, with much of the recent pickup being driven by industry-specific factors as opposed to overall economic conditions. Healthcare-services inflation is a notable example. PCE inflation includes both what consumers pay out of pocket for their care and payments made on behalf of individuals by employers or the government. Well, because of government rule adjustments in the first quarter, Medicaid payments surged, helping to drive up the overall index. Similarly, the cost of financial services went up as fees paid to financial advisors increased, but this is simply a lagged response to the <a target="_blank" href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-ai-inflation-federal-reserve-rally-bull-market-2023-12">strong performance of the stock market</a> at the end of 2023. Since fees are a set percentage of a person's portfolio, the big run-up in equities at the end of last year meant that people may have paid more in total dollars to their advisor, but that's only because the value of their investments was also soaring.These one-offs have had an outsize impact on the overall inflation picture. Ahead of 2024, the contribution from acyclical components to core inflation was essentially zero. Over the past three months, it has swelled to 4.4%. By contrast, the impact of cyclical components — those elements that are correlated to the overall health of the economy — on inflation has slowed marginally since last year.Given the nature of the recent hot inflation readings, the fundamental case for a return to the path of nirvana is strong.For one thing, economic growth is not getting away from the Fed. If growth were materially accelerating, it would drive up the demand leg of the inflation stool, increasing prices as Americans went out and threw around their newfound cash. But that's not what's happening. Real GDP rose at a 1.6% annualized pace in the first quarter, with private demand — which excludes company inventory buildups, government spending, and net exports — climbing 3.1%. The strong growth in private demand suggests that second-quarter GDP could be even more robust. Rather than a sudden reignition of the economy, the under-the-hood data suggests that this is simply the US settling into a steady-state economy. For one, investments in residential real estate surged, adding half a percentage point to GDP in the first quarter. But with borrowing rates rising and building permits declining, that kind of housing contribution is unlikely to repeat. Second, the rise in consumption over the past two months was driven almost entirely by declines in the savings rate. Put another way, Americans were fueling their purchases by dipping into their cash reserves. I would not expect households to dip into their savings quite as much going forward, especially since wage growth is still moderating. The Indeed Wage Tracker, a measure of changes in wages and salaries advertised in job postings on Indeed, <a target="_blank" href="https://www.businessinsider.com/goldilocks-job-market-openings-quitting-unemployed-wage-growth-job-seekers-2024-4">has been steadily slowing</a> — down to 3.1% growth over the past year. This measure tends to move ahead of the more widely followed Wage Growth Tracker from the Atlanta Fed by roughly eight months. Add all this up, and it paints a picture of a resilient but certainly not red-hot economy.I've been surprised at how quickly equity markets have shrugged off the inflation news. If inflation persists as it has, it introduces real downside risks to growth. Real incomes will slow as inflation remains strong, which will weigh on household consumption and, in turn, corporate earnings. This is not like last year. The labor markets are not in the same place. Thus, instead of reinforcing the inflationary-boom narrative, stronger inflation today implies more of a downside risk to the economy.The good news is that there are strong reasons to expect the recent pickup in US inflation to fade. Expectations are steady, labor-market turnover remains low, and inflation continues to moderate in many parts of the developed world.In terms of an outlook for the market, the upshot is that if my analysis is right, the slowing in core inflation and stability in economic growth ought to renew some of the enthusiasm for the prospects of a soft landing. If that's right, I'd take bonds over stocks for the time being, though they should both do well.Bringing inflation down from multidecade highs was never going to be a simple or straightforward task — the start of the year has proved as much. Expecting inflation to continue its downward trend is not a matter of keeping the faith. It's a clear reading of what the data is really telling us: Nirvana is still possible.<a target="_blank" rel="" href="https://www.businessinsider.com/author/neil-dutta">Neil Dutta</a> is head of economics at Renaissance Macro Research.

We've entered a world of zombie inflation. Wall Street is scared witless.

<keyword id="46161" type="General" weightage="20" keywordseo="disney" source="Orion">Disney</keyword> said it would cut 7,000 jobs from its global workforce, part of a multibillion-dollar cost-cutting initiative aimed at streamlining the company's operations in a period of media industry turmoil, CNN Business reported. Disney had about 220,000 workers as of October 1, of which approximately 166,000 were employed in the US. A cut of 7,000 jobs represents about 3 per cent of its global workforce. "While this is necessary to address the challenges we're facing today, I do not make this decision lightly," said CEO Bob <keyword id="119090" type="General" weightage="80" keywordseo="iger" source="Orion">Iger</keyword>, who returned to lead the company in November when the board fired Bob Chapek as the company's leader. "I have enormous respect and appreciation for the talent and dedication of our employees worldwide, and I'm mindful of the personal impact of these changes." Iger also took steps to reward shareholders, while Disney employees will feel pain from the job cut announcement, CNN Business report said, adding that the company had suspended its dividend payments during the pandemic. Iger announced it expects that to return. "Now that the pandemic impacts to our business are largely behind us, we intend to ask the board to approve the reinstatement of a dividend by the end of the calendar year," he said. "Our cost-cutting initiatives will make this possible. And while initially, it will be a modest dividend, we hope to build upon it over time." The job cuts come as part of a cost-cutting effort also announced Wednesday. According to CNN Business, Iger said the company is aiming for USD 5.5 billion of cost savings across the company, with USD 2.5 billion of that coming from annual savings in "non-content" operations. Content operations refer to business units such as movies and television shows. According to CNN Business, the company said 50 per cent of the cost savings would come from marketing expenses, 30 per cent from labour savings and 20 per cent of the cost savings would come from less spending on technology, procurement and other expenses. Since Disney is a major advertiser, a USD 1 billion reduction in annual marketing expenditures signals more difficulties ahead for other media, as well as tech companies. The sweeping job cuts were announced by Iger after the company released better-than-expected financial results for the fourth quarter of 2022. According to CNN Business, Disney revenue in the quarter rose 8 per cent to USD 23.5 billion, edging past estimates of USD 23.4 billion from analysts surveyed by Refinitiv. Earnings per share, while slightly lower than a year ago, shot past forecasts, coming in at 99 cents excluding special items. That's down from the USD 1.06 per share it earned on that basis a year earlier, but far better than the forecast of 78 cents a share, according to CNN Business. (ANI) SEE ALSO: <a href="https://www.businessinsider.in/business/auto/news/after-an-ather-450x-catches-fire-the-company-says-its-battery-is-safe-fire-was-due-to-a-wiring-harness-issue/articleshow/97733364.cms">After an Ather 450X catches fire, the company says its battery is safe — fire was due to a wiring harness issue</a> <a href="https://www.businessinsider.in/finance/news/india-is-launching-a-upi-based-coin-vending-machine-pilot/articleshow/97720261.cms">Cold drinks, candy &amp; now 'change': India to test coin vending machines that use UPI</a> <a href="https://www.businessinsider.in/tech/apps/news/after-chinese-apps-the-indian-government-cracks-down-on-indian-betting-and-quick-loan-appsheres-why/articleshow/97690062.cms">After Chinese apps, the Indian government cracks down on Indian betting and quick loan apps—here’s why</a>

Disney plans to cut 7,000 jobs and reward shareholders

<ul class="summary-list"><li>Mark Zuckerberg said Wednesday he was "pretty confident" Meta is heading "in a good direction."</li><li>He spoke after Meta's third-quarter earnings missed Wall Street's forecasts and its stock crashed 20%.</li></ul>Meta CEO Mark Zuckerberg said Wednesday he was "pretty confident" his company is heading "in a good direction" as its stock cratered 20% on the back of a worse-than-expected third-quarter earnings report."We've been through a couple of these cycles before already, and I'm pretty confident this is going in a good direction," Zuckerberg said in a call with analysts after the report was published. He added: "And while we continue to navigate some challenging dynamics – a volatile macroeconomy, increasing competition, ads signal loss, and growing costs from our long-term investments – I have to say that our product trends look better from what I see than some of the commentary I've seen suggests."Meta's third-quarter net income crashed <a href="https://investor.fb.com/home/default.aspx">52%</a> year-on-year, to $4.4 billion, as R&amp;D costs jumped 45% largely because of the company's investments in the metaverse. Meta stock <a href="https://www.nasdaq.com/market-activity/stocks/meta/after-hours">fell almost 20%</a> in after-hours trading Wednesday, to $104.30, its <a href="https://www.businessinsider.com/facebook-doubles-down-on-metaverse-spending-despite-calls-cut-costs-2022-10">lowest level since 2016</a>.The scale of Meta's metaverse investments are being closely scrutinized by investors who are concerned they're detracting from the company's core social-media businesses, such as Facebook and Instagram.Zuckerberg was grilled on Wednesday's earnings call by analysts keen to know more about the company's metaverse plans, engagement levels for TikTok competitor Instagram Reels, and shrinking digital advertising revenue.Zuckerberg insisted Meta's work on the metaverse would be "of historic importance."He acknowledged that, in terms of revenue, "we're still behind where I think we should be," but said the company should return to "healthier" revenue growth next year. For the second quarter of 2022, Meta posted its <a href="https://markets.businessinsider.com/news/stocks/meta-stock-price-2q-earnings-first-revenue-drop-reels-privacy-2022-7">first-ever</a> year-on-year revenue decline, of 0.9%.Meta splits its business into two main segments. Reality Labs, which handles Oculus and everything metaverse-related, reported third-quarter revenue of just $285 million – a drop of almost half compared with the same period in 2021. The segment has lost $9.4 billion so far this year, including $3.7 billion in the fourth quarter – and <a href="https://www.businessinsider.com/facebook-doubles-down-on-metaverse-spending-despite-calls-cut-costs-2022-10">its expenses will "increase meaningfully" in 2023</a>, Zuckerberg warned.On Tuesday, Brad Gerstner, whose fund Altimeter Capital owns hundreds of millions of dollars' worth of Meta shares, <a href="https://www.businessinsider.com/meta-mark-zuckerberg-metaverse-losses-facebook-brad-gerstner-open-letter-2022-10">urged the social-media company to cut back on its metaverse investments and reduce its headcount by at least 20%</a>. The company has "lost the confidence of investors," he wrote in an open letter.Net income from Meta's social-media segment also crashed, falling by more than a quarter to $9.3 billion in the three months to September 30. But Zuckerberg said engagement with its apps was still high, with the number of daily users on Facebook "the highest it's ever been," and more than 2 billion people using WhatsApp each day.While expenditure on metaverse projects is set to rise, Meta is cracking the whip in other departments. The company has "increased scrutiny" on all areas of operating expenses, CFO David Wehner said, including <a href="https://www.businessinsider.com/meta-office-space-employees-remote-work-from-home-zuckerberg-2022-10">reducing its office footprint</a>.Wehner also said that Meta was freezing hiring in some teams and <a href="https://www.businessinsider.com/facebook-managers-are-warning-employees-of-impending-layoffs-meta-2022-10">"shrinking" headcount</a> in others, with hiring limited to the company's "highest priorities." Meta said that it had increased its total headcount by 28% year-over-year to 87,314, and Wehner said that he expected it to remain roughly flat until the end of 2023.Correction: October 27, 2022 — An earlier version of this story incorrectly attributed some quotes in the final two paragraphs. Comments made about "increased scrutiny" and hiring policy changes were made by CFO David Wehner and by the company in a press release, not by Mark Zuckerberg.

Mark Zuckerberg says he's 'pretty confident' Meta is heading in a 'good direction' as stock crashes 20% after huge earnings miss

<ul><li>If an industry can flourish during a global pandemic and one of the worst economic crises we had to face, it can survive through any challenges that come in its way.</li><li>Digital media has proven time and again how integral it is to the advertising industry’s survival and growth.</li><li>However, every year brings with it a set of challenges different from the previous one. So, in our second year-ender, we look at digital marketing, its growth trajectory and look at what lies ahead.</li><li>Experts are optimistic that 2022 will be a game-changer that will help them redefine a lot of rules in advertising, with smarter marketing techniques.</li></ul>The digital marketing industry in India not only managed to weather the pandemic’s impact but also flourished gracefully in 2020. It accelerated at an unbelievable speed, exceeding all predictions and expectations. Brands were quick to adapt, pivoting aggressively from traditional mediums to invest in digital. Digital media became one of the most effective mediums to reach out to people locked inside their houses and stuck to their phone and tablet screens. This trend of increased smartphone consumption is only expected to amplify as more people, especially in Tier II and III cities, engage more digitally and make purchase decisions through websites, apps, social media platforms. Apps have undoubtedly become the most popular destination for consumers and marketers are capitalizing on this trend to engage with them. As per GroupM’s TYNY report, global digital advertising should account for 64.4% of total advertising in 2021, up from 60.5% in 2020 and 52.1% in 2019. Zenith also estimates that global adspend will reach $705 billion in 2021, up from $634 billion in 2019, and will rise to $873 billion by 2024. Digital marketing in India is also at the cusp of a massive revolution as brands explore options beyond <keyword id="640850" type="General" weightage="20" keywordseo="social-media-marketing" source="Orion">social media marketing</keyword> within the digital ecosystem and look to expand their presence across regional markets. RedSeer predicts that India’s digital ad expenditure will grow 10 times over the next decade and will likely account for 70-85% of the total ad market, which currently stands at 33%. It is expected to touch $25-35 billion by 2030 from $3 billion in 2020. So, without a doubt, digital marketing is the future of advertising and the only way brands can grow is by harnessing various digital tools. From buying medicine to groceries or shopping for a wedding, many consumers who would otherwise prefer to browse and purchase in person, have moved to online shopping due to the limitations that the pandemic threw at them. This quick change in consumer behaviour, accelerated by the pandemic, gave a push to e-commerce, performance marketing, augmented reality, mobile marketing, digital animation, video content, voice search, audio advertising and influencer marketing. In this last year, Instagram has also moved beyond just a discovery platform and influencer-led commerce has arrived earlier than expected. According to WARC, Instagram grew to become the largest social media platform globally in 2021 after overtaking the core Facebook platform for the first time. Instagram is forecast to grow to control over a third of the global social media market in 2023. Apart from social commerce, Instagram’s parent company’s Metaverse was the hot topic and trailblazer of 2021. In 2022, more brands will prepare for the next phase of the internet, include Metaverse in their marketing strategy and experiment with AR and VR. As we enter a new year and it brings a new set of challenges, different from the previous one, we speak to digital marketing experts, discuss the industry’s growth trajectory and look at what lies ahead. Here’s what experts had to say about digital marketing’s future in India: Neena Dasgupta, CEO and Director, Zirca Digital Solutions: The dominant trend that seems imminent and set to grow is the cross media measurement. The customer connect is critical given the significant shift in consumption patterns. Understanding the impact of the mediums and planning connect basis that is an inevitability. This would require customer segmentation by cohorts, enablement of linking these cohorts between brand and publisher (any medium) and tracking response and measuring attribution using data integration at a CRM level. The entire system is data and tech driven supported by psychometric tools for the purpose of cohort creation and mapping. All in real time. Single source panel is the need of the hour. And there are multiple measurement organisations working together on this. More importantly it’s critical that a brand understands trading needs to be made more efficient by enabling customer segmentation in real time that can be activated using programmatic means, also in real time. The data pool and nodes will take some time to build as in any data led ML, and eventually it’s data science and creativity at work to engage prospects. Harshil Karia, Co-founder and Managing Director, Schbang: I think two big trends will dominate marketing: 1) More and more brands using a combination of technology to enrich what they do at last mile conversion, data management, and using the marketing data as signals to business and sales teams more effectively. Expect more martech being deployed. And expect more people to learn martech and it's capabilities and the ability to learn and unlearn the same. 2) The use of automation will start to affect creativity. One ad can be delivered in a 100 ways using video Ai and voice. One copy can be written in many ways customised to context. The writers to can work well with an Ai and make it their friend will do well. An Ai works as well as the instructional data it recieves. The factor that will help drive this is increased demands from CEOs to integrate the marketing function into large scale business processes and have the vision to see the value it can unlock - a push but also some patience. The automation allows marketing to now affect at scale far more parts of the organisation than they already have. Marketers and creators will do well to be curious and have a learn it all attitude while knowing and deepening their craft on copy and design." Prashant Puri, Co-Founder &amp; CEO, AdLift: We’re entering the organic first age where prioritizing organic search becomes paramount. We see content playing a vital role here, be it optimizing for voice search or improving user experience via engaging content across all brand touchpoint. We estimate influencer marketing spends to catapult to $150 to $225 in 2022 with brands doubling down on influencer led marketing campaigns across nano, micro and macro influencers - capturing 7 to 9% of overall digital marketing spends in India. Chandni Shah, Founder and COO, Kinnect: The one trend I see dominating 2022 is Social Commerce. The e-commerce industry experienced accelerated growth with the pandemic, and social commerce emerged as the 'flavour of the year'. Social media platforms too joined the bandwagon and introduced features and tools to enhance the consumer journey - from product discovery to purchasing them on/through the platform itself. Covid-19 pandemic in 2020 contributed significantly to the new era of online social retail. In 2020, Facebook introduced Instagram shops, integrating e-commerce and the world's most popular social media platform. In the Covid-19 pandemic, the worldwide social commerce market is anticipated to increase at a whopping <a href="https://www.researchandmarkets.com/reports/5140143/social-commerce-global-market-trajectory-and?utm_source=GNOM&amp;utm_medium=PressRelease&amp;utm_code=rm7g2f&amp;utm_campaign=1434938+-+Global+Social+Commerce+Market+Worth+%24604.5+Billion+by+2027+-+COVID-19+Updated&amp;utm_exec=joca220prd" target="_blank">31.4</a>%. By 2021, social commerce will continue to expand as consumers stick to digital habits, whilst e-commerce and conventional retailers adjust to the post-Covid-19 reality. Combining e-commerce with social media can be highly valuable; it allows consumers to look for brands via social media platforms and search for products they wouldn't usually look for on an e-commerce website. Brand hunt, influencers, and mobile payments are examples of social commerce in action. Thanks to AI, marketers can now gather real-time data on consumers and transform it into actionable insights. The upcoming year will see more users turn into buyers and make purchases through social commerce. Brands that haven't explored the opportunity yet will be quick to jump onto this trend. To sum this up, the shorter the buyers' journey will be, the lesser chance of them abandoning products in their cart. Hareesh Tibrewala Joint CEO of Mirum India: Covid has taught us that every business, big or small, B2B or B2C, irrespective of the category -- needs to have a way of reaching out to the consumers online, be able to showcase ones products and services, collect payment and make delivery. We will see e-commerce driving investments in the area of technology, content creation and media. We will see continued expansion of market places as well as emergence of D2C brands. Within ecommerce we will see movement towards voice-based ordering as well as conversational commerce Harsh Shah, EVP, Business- North and West, Dentsu Webchutney: 2022 is going to be the year of alternate digital realities. Yes, the metaverse! That moment in time where our digital life seamlessly co-exists with our physical life. That year, where our virtual possessions are of as much worth as our real-life possessions. Bank accounts and crypto wallets. Art works and NFTs. One of the key outlooks for brands should be to see how they can use 2022 to prep themselves to be not only present in the metaverse but also for immersive storytelling. With growing interest in the concept and it being part of popular culture, will accelerate adoption. It will outgrow the internet in adoption. Also, with 5G hitting the market, it can act as a great platform to drive that initial burst of growth. Shradha Agarwal, COO and Strategy Head- Grapes: In my opinion, AI will play a crucial role in the digital marketing ecosphere. We have witnessed that from data collection to geo-fencing, AI has been helping businesses grow extensively. The technology comes with such a great combination that it has been used widely in certain aspects such as content creation, chatbots and search engines. Sectors like retail, e-commerce, banking, healthcare, gaming and others are already backed upon on artificial intelligence as it helps them recognize consumer behaviour, search patterns and it also helps businesses understand how customers find their products and services. In the coming time, we would see many others sectors trying their hands on the tool marketers want good sales and better ROI through their marketing strategy. Therefore, AI applications can predict what customers are likely to buy in the future based on their past purchases and browsing history. With this approach, it becomes easier for them to target their users. Also, AI use is becoming of utmost importance for those companies whose business depends on smartphones and drive sales through social media. Hence, AI as a market will grow exponentially. Raman Mittal, CMO and Co-Founder, TO THE NEW: I believe the dominant trend of 2022 will be Contextual Targeting. Contextual targeting isn’t something new, but for a while it was in the shadows because it’s performance was lower than Behavioral Targeting that used cookies. But in this cookie-less world, the modes of serving personalized ads to the audience have shrunk and marketers are moving back to contextual targeting. Whether it is category, keyword, or semantic contextual targeting, it will be exciting to see future developments in this arena. Mohit Gyanchandani, Head, media planning and growth, DCMN India: For several years, the marketing industry has witnessed an ongoing contest between performance and brand marketing in terms of budget, resources and impact. But in 2022, we predict that the old dichotomy between the two will become increasingly blurred. This is in part due to the impact of COVID on businesses. After a volatile 18 months, many organisations are re-evaluating their goals and moulding themselves to survive and thrive in this new economy. Above all, companies know that to succeed, they need to build brand salience. We’re already seeing that for many of our clients, it’s not simply about brand versus performance anymore: the two need to work in tandem. That means bringing both sides of marketing even closer together and building fully integrated, 360 degree campaigns that power growth and build brand recognition across online and offline channels. Marketers will also start looking at results more holistically. Instead of just looking at one specific channel and its impact on direct KPIs, they will look at results through a broader lens: for example, the impact that a TV campaign might have on digital channels like search or retargeting. This doesn’t mean that pure performance-driven campaigns are going away completely. The best approach for a brand will always depend on the company’s stage of growth and their overall marketing goals. But for companies looking to scale, taking a fully integrated approach will be key to achieving cut-through in an increasingly competitive industry." Ankur Gattani, VP - Growth and Marketing, WebEngage around MarTech: Majority of Indian organizations have been using a mix bag of first-party (1P) and third-party (3P) data for marketing and advertising. However, the usage and impact of 1P data are expected to amplify in 2022 in a big way. This trend will dominantly be driven by the legal framework that will prohibit the usage of 3P data and force the adoption for 1P. Organisations like Amazon and Netflix have spoilt the customers with their personalisation mechanisms. What this means is that customers expect personalisation from the websites and apps that they visit. Marketeers will have to make optimal use of data and analytics to bring that level of experience for their customers. Reports suggest that over 80% of marketeers see benefits in leveraging consumer data for marketing. At WebEngage, we work 100% on 1P customer data and we believe this trend will not only help our clients engage with consumers in a meaningful manner but also improve their business ROI. Shivani Kamdar - Associate Creative Director, SoCheers: 2020 &amp; 2021 showed us how content is still the centrepiece of every marketing communication and how brands went the extra mile to establish a better connection with their audience. The coming year is going to be no different, in fact "Localisation of Content" is the need of the hour. A marketing technique for product promotion leveraging the local culture of the target areas by studying their preference, likes, dislikes. The customer begins to relate with the content at a subconscious level which in turn not only helps aid their purchase decision but in the long run, also helps forge a better recall for the brand. One of the key factors that will help drive this trend home is ground research - an intense focus on understanding the consumer intent by renewing SEO efforts. The other is the medium of communication. Building the right story is not enough; finding the most compelling way to sell it will do just the right thing. Will that copy be more relatable as a video or will adding audio to this help enhance the user experience? Consumers are craving interactive, consumable, entertaining content be it on mobile or across social channels; question is, will you give it to them? Dia Kirpalani, VP, Head of Strategy, Blink Digital: As we move into 2022 and beyond, we believe that both marketers and consumers will increasingly seek a clearly demonstrable line to value. To achieve this, marketers will need to harness the ability of end-to-end measurement, with an eye on their north star metric. India is moving online more than ever. With everything from shoppable content on social media, to conversational commerce bringing India's smaller towns further into the fold, this measurement is progressively important to assess where and how to communicate. Meanwhile, consumers will seek value and authenticity from their brands. Brands that win consumers' hearts will meet consumers where they are with content that has real relevance, whether they access it through voice, video or vernacular. Brands will need to also provide consumers an exceedingly easy content consumption or shopping experience through hiccup-free, friendly interfaces. Importantly, content will also need to authentically reflect evolving consumer values, and this will help determine what brands should communicate. For brands looking to scale up further, this combination of multiple elements is what will ultimately drive value. Rahul Nanwani, Co-founder &amp; CEO of ImageKit: It is predicted that globally, 82% of consumer web traffic in 2022 would be from videos. With India’s video market set to touch $18 billion by 2026, it will soon play a dominant role in digital marketing as well. Short-form videos have already attracted the attention of many Indians and the market is predicted to reach 650 million users by 2025. Thus, if brands need to reach a wider audience in the coming year, they need to utilize tools that will maximize their outreach through videos. Video optimization and media management tools help improve internal collaboration for teams creating the videos and then ensure that those high-quality videos can load quickly on a user's device. With several advancements being made in this field, brands will be able to provide better customer experiences and ensure their messaging reaches them through videos.

Metaverse, social commerce and personalisation in a cookie-less world: Here’s how digital marketers are preparing for the future

Chinese tech giant Tencent is staking its claim as the main gateway into China for Western brands. The company recently <a href="https://www.fastcompany.com/40470793/wechat-china-opens-to-us-brands-advertisers">opened up its advertising tools</a> to brands in the US - building a bridge between the world's largest and second-largest advertising markets, and equipping brands with new capabilities to reach Chinese audiences across its marquee messaging apps WeChat <a href="http://www.scmp.com/business/companies/article/2113814/chinas-tencent-taps-us-advertising-boost-wechat-revenue-growth">and QQ</a>.To make its case to global brands and marketers, Tencent attended Advertising Week New York, the ad-industry summit held every fall, for the first time this year to share how its technology and content are transforming business in China. BI Intelligence sat down with Steven Chang, Corporate Vice President at Tencent Online Media Group (OMG), to discuss Tencent's philosophy for wooing brands onto its platforms.<div class="KonaFilter image-container display-table"><div><div class="image on-image">BI Intelligence</div></div></div>According to Steven, Tencent's overarching strategy can be summarized in two words:<ul><li>Connector - of people and businesses in China. A self-described platform with "social as its DNA," Tencent owns China's top instant messaging and social networks - WeChat (or Weixin, as it's known locally) and QQ. Each of these apps, but especially WeChat, functions as a nexus of internet activity that connects consumers to other online and offline services in China. In general, WeChat attracts Chinese internet users of all ages, while younger users tend to gravitate toward QQ. Tencent also holds China's second-biggest online payments platform, Tenpay, and is the biggest shareholder in the country's second-largest online retailer, JD.com. </li><li>Content - an ecosystem to draw and retain users. Tencent's other competitive advantage is the breadth of content and intellectual property (IP) featured across its apps. Its Games, News, Video, and Music products are hugely popular - it's the largest online gaming company in the world by revenue, and is also heavily invested in digital video, film and TV, literature, comic books and animation, music, and news, among others. Tencent has market-leading positions (among the top three) across each of these content categories in terms of penetration in China.</li></ul><div class="KonaFilter image-container display-table"><div><div class="image on-image">BI Intelligence</div></div></div>Because its nucleus is social networking, Tencent arguably offers the strongest combination of "connection" and "content" among any of the big Chinese tech companies. This is unlike Baidu, whose core product is a search engine, or Alibaba, whose specialty is online retail. And Tencent's prowess in building connections and community among Chinese consumers is evident in the staggering reach of its platforms:<ul><li>Its apps reach 98% of Chinese netizens, accounting for 55% of mobile time spent online. WeChat accounts for 30% of total mobile time spent online in China - the most of any single Chinese tech platform by a long shot - but it would be remiss to not mention the popularity of other Tencent-owned apps. For example, the karaoke app WeSing (Quanmin K Ge) had 460 million registered users in August 2017, 76% of which were monthly users, and the mobile gaming sensation Honor of Kings boasted 200 million players - 55 million played the game daily, and 45% of all players were female.</li><li>WeChat and QQ have 968 million and 850 million monthly users, respectively. WeChat alone had 877 million daily users in June 2017, and 10 million Official Accounts (which are similar to Facebook Pages and allow for businesses to connect with consumers on the app) at the end of 2016. These two messaging apps dominate the messaging and social networking space in China. Their user numbers dwarf the next biggest social platform in the country, Sina Weibo, which counted 367 million monthly users at the end of Q2 2017.</li><li>And Tencent can lead brands toward some 135 million Chinese users outside of China. The company recently began the first phase of its <a href="http://www.westoeast.com/wechat-ad/the-moment-to-act-wechat-moment-ad-is-now-available-to-overseas-advertisers/">international rollout</a> of Moments ads, which are akin to Facebook News Feed ads, giving global brands the ability to target outbound Chinese tourists and expatriates. China is the world's largest outbound tourism market: In 2016, its international tourism expenditure increased by $11 billion to reach $261 billion, while the number of outbound travelers increased by 6% to 135 million, per the <a href="http://media.unwto.org/press-release/2017-04-12/chinese-tourists-spent-12-more-travelling-abroad-2016">United Nations World Tourism Organizations</a>. </li></ul><div class="KonaFilter image-container display-table"><div><div class="image on-image"></div></div></div>Touching upon the company's other core strength, Chang described how Tencent helps brands and broadcasters get the most out of its content ecosystem by:<ul><li style="font-weight: 400;">Reaching large and diverse audiences, both at scale or in niche groups. As alluded to above, Tencent's reach extends far beyond its messaging apps. Tencent News leads the industry in terms of daily users, and Tencent Video ranked first in China in terms of mobile video views, while its online literature platform counted approximately 2.5 million daily paying readers at the end of last year. Another piece of programming that demonstrates the sheer scale of Tencent's platform has been its NBA content, as described below...</li><li style="font-weight: 400;">Providing access to massive live audiences, as with its NBA broadcasts. In 2015, Tencent and the NBA signed a five-year agreement, naming Tencent the NBA's exclusive digital broadcasting partner in China. After a year, Tencent NBA reached 370 million unique users in the 2016-2017 season. Over 100 million of those users watched live games, and the core Tencent NBA audience grew 200%. At the end of the 2016-2017 season, views for the NBA Finals on Tencent exceeded 175 million, setting a world record in online live streaming, according to Tencent. </li><li style="font-weight: 400;">Testing IP in new content categories, and creating custom campaigns. Maybe more interesting than Tencent's reach is the opportunity to use its content for native and bespoke ad campaigns. Tencent can take a successful piece of content from any of its categories and spin it off. For example, a popular game can be translated into a movie or TV show, opening up possibilities for brand integrations or other forms of native advertising. This opportunity for brands to harness Tencent IP will only widen as the tech company continues its investments into original content.</li></ul><div class="KonaFilter image-container display-table"><div><div class="image on-image">BI Intelligence</div></div></div>In terms of digital advertising revenue, Tencent still has room to catch up to its local rivals Baidu and Alibaba - and, further in the distance, global juggernauts Facebook and Google. Even though WeChat has close to half of Facebook's 2 billion monthly active users (MAU), its ad revenue is still only about one-fifth of what the American social media company takes in, as noted by the <a href="https://www.ft.com/content/23a7ac22-83b8-11e7-94e2-c5b903247afd?mhq5j=e5">Financial Times</a>. With approximately <a href="https://www.groupm.com/news/groupm-publishes-this-year-next-year-september-edition-">$188 billion expected</a> to pour into digital advertising globally this year, per GroupM, focusing on attracting international brand spending can help Tencent make up the gap. And for the majority of Western brands, the prospect of entering China is highly attractive because the opportunity there is massive: <ul><li>Over <a href="https://www.groupm.com/news/groupm-publishes-this-year-next-year-september-edition-">$80 billion in ad spend</a> is projected to flow to China in 2017, according to GroupM. For comparison, the US is forecasted to reach $182 billion in ad spend this year, but as illustrated in the next bullet, the gap in digital ad spend between the two countries is actually a lot closer. </li><li>Nearly $47 billion (58%) of total ad spend will flow into digital, representing 15.7% growth from 2016. In the US, nearly $57 billion is expected to go toward internet advertising this year. Next year, the gap between the two countries is forecasted to narrow slightly, with China reaching $53 billion and the US hitting $62.5 billion. </li><li>The internet accounts for 55% of total media time in China, according to the <a href="http://www.kpcb.com/internet-trends">2017 Internet Trends</a> report. Mobile is the largest driver of time spent; it accounts for nearly 30% of media consumption, surpassing TV at just north of 25%. </li><li>Over <a href="http://www.caixinglobal.com/2017-08-07/101127296.html">96% of China's 751 million</a> internet users are on mobile. According to the China Internet Network Information Center, 724 million people in the country access the web through their phones. And in the first half of 2017, China added 28.3 million new mobile internet users.</li></ul><div id="categorypromo"></div>

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