Elon may be a terrible platform proprietor but he's got a point in his court case against advertisers
Elon may be a terrible platform proprietor but he's got a point in his court case against advertisers
Welcome to an end-of-week update from Unmade.
Today: Elon Musk’s decision to sue former Twitter advertisers is laughable, but the legal case raises a real issue about brand safety doctrines. And Enero falls below a $100m market capitalisation for the first time since Covid.
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Taken to the farm: GARM harm
If Elon Musk was listening in on this morning’s investor call with News Corp’s global boss Robert Thomson, he’ll have been delighted.
At the top of his address, Thomson took aim at “GARM harm”. The Global Alliance for Responsible Media is the central target of the lawsuit filed by Musk’s X.
Musk’s court case has been presented this week as him petulantly suing advertisers who walked away because X - the evil twin of what was once Twitter - is a sewer.
Choosing not to advertise on X is an entirely rational thing to do, by the way. Indeed, continuing to advertise on X is the dumber move for most brands. It’s only months since Musk told advertisers to go fuck themselves.
This week’s race riots in the UK, fuelled by misinformation spread on X, TikTok and Signal in particular, are a good example of why individual brands would be sensible to consider their own brand safety. In the case of X, this isn’t fringe activity; Musk has been personally amplifying the unrest in his own postings.
However, reading the case as it was actually filed, reveals a more nuanced argument: That under the banner of GARM, members of the World Federation of Advertisers (which is most of the world’s big consumer companies) have been acting like a cartel, by agreeing en masse not to advertise on that awful platform.
This morning, news broke that WFA is closing GARM as a result of the X lawsuit. The association presents the move as being about GARM lacking the resources for the fight, rather than accepting Musk’s argument is correct.
For the advertising ecosystem the end of GARM may be no bad thing. Serious news publishers often miss out on advertising in the name of brand safety. Yet there’s a world of difference between a Mercedes message appearing on a responsible Guardian article about the rise of the far right, versus next to an Elon Musk repost of lies from race baiter Tommy Robinson.
On LinkedIn this week, Schwartz Media boss Ben Shepherd covered the downside of brand safety tools
Lazy buying practices by media agencies can exclude a lot of advertising from the news ecosystem in the name of overly cautious brand safety.
In the US, GroupM CEO Christian Juhl told a federal hearing that “brands prefer to avoid advertising” next to the news. He said that not much more than 1% of his client budgets go into online news environments. He went on: “This is because brands prefer to avoid advertising alongside common news content, war, scandal, political division, and also because they do not need to advertise there to reach their target audience. Alternatives such as sports and entertainment provide a better way to reach these same consumers.”
As Shepherd correctly wrote: “News adjacency has NO reputational or brand metric risk even in the areas considered by some as divisive.”
He added: “What we have here is a global media group CEO asserting that the entire media agency world is removing itself from news based off an incorrect assertion. Is this move really client driven? Is it true marketers have mandated their agencies to avoid news at all cost, or at best throw it a collective 1.2% of the budget? And if so, is it time to challenge this?”
Avoiding such a big category limits brands’ reach and drags down return on investment. Agency laziness of avoiding all news, not just the much smaller category of places where there’s a genuine risk of brand damage, costs their clients money if they have to pay more to be elsewhere.
Shepherd asks the correct question. Yes. Yes, it is time to challenge it.
And the media needs a more credible representative than Elon Musk.
Enero loses a zero
Enero Group - owner of creative agency BMF, PR agency Hotwire, tech agency Orchard and the soon-to-be-sold online ad network OB Media - yesterday saw its market capitalisation fall back below $100m for the first time since the start of the Covid market panic.
Shares in Enero fell by 5.6% to land the company on a $99.4m valuation. Enero will share its annual results next Thursday.
Shares in Seven also drifted down by another 2.9% to a new post-Covid low.
Thanks to positive moves from larger stocks including Nine and Ooh Media, the Unmade Index finished flat for the day on 477.8 points.
Time to leave you to your Friday.
I’ll be back with Best of the Week tomorrow. Lots to think about, including this morning’s revelation that Foxtel is in play, as part of News Corp’s update on its full year results, and another rough week ahead for Seven West Media.
Have a great day.
Toodlepip…
Tim Burrowes
Publisher - Unmade
tim@unmade.media
Perhaps most of the reputational damage occurs from appearing next to Musk . . .