The Google antitrust trial allows for a great deal of cynical theater. Microsoft CEO Satya Nadella testifies with, of course, exactly what Microsoft wants from the trial. Sridhar Ramaswamy, former Google search product chief who started an ads-free search engine, gets to speak his piece on why ad-supported search is bad.
But one thing that’s come up, Digiday reports, is how search ads have separated from other digital advertising channels – the other biggie being social media – as a must-have media with the power to compel advertiser behavior.
Back in the social media heyday of 2021, Snapchat’s market cap hit a peak of $130 billion, while Facebook was briefly a trillion-dollar company. Meanwhile, Google was mocked for trying and failing with its own social media (aside from YouTube).
But Google Search has proven its mettle even though social media did not stand the test of time.
A year ago, an investor asked Alphabet CEO Sundar Pichai to explain his confidence in Google’s ad biz while Meta, Snapchat, Pinterest, TV broadcasters, news and other ad-supported media (except Amazon) were getting hammered.
The DTC Growth Paradox
Many DTC brands blew up in terms of popularity and name-brand collaborations but sizzled out like a match when that goodwill never turned into profit.
Underwear brand Parade ended up in a liquidation sale despite high growth rates and deals with the likes of Coca-Cola and Swarovski, The Information reports.
Revenue grew well, but 60% of that net revenue was going to paid media. The company was spending as much on ads to convert a sale as the average price of the purchase.
Clearly, this situation wasn’t tenable for Parade. Although, many DTC startups find themselves in similar situations because of investors who bet on outside potential gains in the future, which can come at the expense of a sensible business model.
Often, too, a DTC brand takes a strong philosophical position on a topic like sustainability (Allbirds, anyone?), accessibility (Parade touted itself as the not-Victoria’s Secret underwear) or equity (like women’s shaving brand Billie). But then they have to beat legacy brands on their home turf – the store shelf – while rationalizing out-of-control online acquisition costs.
Credit: https://www.adexchanger.com/daily-news-roundup/monday-09102023/