The Googleplex hits peak hubris; ARN, SCA and Vinyl hit valuation convergence
Welcome to a midweek update from Unmade. Today: Why is Google behaving with such arrogance? Because it can. Plus SCA, ARN Media and Vinyl Group land on near-identical valuations.
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It’s hard to be humble when you’re Google
It’s hard for dominant players in media to hide their arrogance.
Back when Nine was The One under Kerry Packer, it was an unavoidable trading partner for any media agency. And the sales team had a reputation for operating that way.
One of the big achievements during Michael Stephenson’s time as sales chief at Nine was to instil in his team a greater degree of humility.
And this week, former WPP executive Ivan Fernandes wrote a fascinating LinkedIn post about the way media agency WPP operated in a similar way, back when it could:
When I worked at WPP, we were at the top - GroupM; MediaCom; the crown jewels of the empire.
“We called the shots. Clients bent their models to match ours. Partners queued just to get in the room.
“We lived in a fortress… Powerful; confident; untouchable. And we liked it that way. We set the tone for the entire industry.
“And we were fully aware of how others perceived us: Arrogant; closed off; controlling”
For a time, Google managed to avoid falling into the hubris trap. Even when it was quietly becoming the world’s biggest media company, Google played the PR game well. It did deals with publishers. It contributed to the media ecosystem with things like the Google News Initiative. It employed nice people who were pleasant to deal with.
In much the same way when the public are surveyed about banks, they hate them as institutions but like their local branch staff, even publishers who have a problem with Google’s power, talk about how nice Nic Hopkins and the rest of the GNI team are. They used to say the same thing about Facebook’s Andrew Hunter too.
When Facebook unfriended Australia over the News Bargaining Code, Google played nice and let Meta take the heat. And when Facebook cancelled its publisher deals, Google signed new deals, albeit shorter and at lower values.
It was good business. Playing the game meant there has been less urgency from the government about the very large amount of revenues (maybe $10bn) that Google books offshore without paying local tax.
But gradually Google seems to be trying less hard to be seen as a good citizen. Stronger signs came at its version of the YouTube upfronts, Brandcast, in 2023.
They directly pitched to take even more money from the TV industry, posting some dubious data comparisons on screen. The photograph I took of Google boss Mel Silva standing in front of those numbers was at odds with the cosier official images they released from the event. And it alerted the wider traditional sector to just how directly Google was trying to take their lunch.
YouTube is Australia’s most profitable video company. It wants even more TV dollars
YouTube has eaten the TV industry’s breakfast and lunch. Tonight it will be eating its dinner
Certainly that was when I began to wonder about how tolerant Google is of its critics. It proved to be the last Google industry event I was invited to, I’ve come to suspect, not by coincidence. In subsequent years they said afterwards that they’d assumed I wouldn’t want to travel from Tasmania (I’m actually in Sydney most weeks; I’ll be at News Corp’s All Screens for All Australians event tomorrow, for instance). And even since rejoining Mumbrella, the invitations to Google events have not resumed.
Incidentally, that lack of engagement kind of suits me. It’s psychologically more challenging to go hard against somebody who’s taken the trouble to explain where they’re coming from.
Wondering if this was a narrow experience, I asked a friend closer to the trading side of the industry his take. His reply: “Google haven’t changed. They never gave a fuck about anyone else.”
And the tables have turned somewhat. Meta, once the pantomime villains, have been the ones in outreach mode. Managing director Will Easton joined Mumbrella’s editorial director Hal Crawford and I for a podcast interview without preconditions. We asked tough questions, and he gave crafted answers. Nobody died.
But the self-interested whinge of being ignored is one thing. The mask has been slipping in much more relevant ways.
Over in the UK, YouTube has withdrawn from Barb, the local version of OzTAM, because it doesn’t like the metrics being used by the rest of the industry. It’s gone back to marking its own homework.
As Justin Lebbon, curator of the global Future of TV Advertising conference, wrote on LinkedIn this week:
“YouTube is aggressively chasing TV ad money while simultaneously pulling out of BARB. It clearly has no desire to be measured like TV. Meanwhile, broadcasters around the world are spending millions ensuring transparency and third-party oversight.
“Globally, I’m not aware of any market where YouTube has voluntarily submitted to the same standards. It’s time JICs [joint industry currencies] stopped courting them. Let them in when they agree to be measured like everyone else. This dance has gone on for years, and it’s not ending the way broadcasters or advertisers hoped. Time to move on.”
And at the weekend came the biggest signal yet: Google threatened to sue the Australian government if it was included in the age restrictions.
The Albanese government has itself to blame for leaving the door open to this. Last Parliament it was successfully lobbied by Google to be exempted, and inexplicably accepted the argument, before finding itself in an unsustainable position. The U-turn officially happened last night.
For Google more might be at stake than you’d think. As Spinach’s Ben Willee told today’s Mumbrellacast, it may lose out on hundreds of millions of dollars of revenue. Most brands wanting to reach tweenagers make YouTube their first choice.
Don’t feel too bad for Google, by the way. In last week’s quarterly financials, Google revealed that global advertising revenues were up by $5bn to $71.3bn for the quarter. Yes, billion. Yes, just for the quarter.
And just as important to Google is the precedent the move might set globally. That was the thing Meta and Google hated about the aftermath of the News Media Bargaining Code.
Google’s argument that YouTube is not a social platform is a weak one, by the way. Even Google’s AI Overviews - another way Google is undermining the publishing ecosystem by taking publishers’ content without delivering clicks in return - doesn’t buy the argument.
That all comes before the government potentially finds itself on another collision course with the platforms over its stated News Bargaining Incentive policy - a threat of a digital levy, with platforms able to offset it against deals they do with publishers.
That’s if the government still has the ticker after this battle. As Paul Hamra, founder of Solstice Media, observes in tomorrow’s Unmade interview: “If they were as concerned about the media as they say they are, something would have happened by now.”
Globally the anti-trust pressure is growing for a breakup of Google. The people who own the programmatic pipes should not also own search. Or maps. Or robot taxis.
And AI may yet ruin the business model of Google’s search business.
Right now, Google is at the peak of its powers, and of its arrogance. But - as Nine and WPP have demonstrated - that will change.
Convergence corner on the Unmade Index
Southern Cross Austereo, ARN Media and Vinyl Group’s market capitalisations converged today, with SCA landing on $142.7m, ARN on $142.4m and Vinyl on $141.4m.
Towards the top end of town Ooh media had the best of it, gaining 2% while Seven West Media lost 3.5%.
The Unmade Index closed on 582.7 points, up 0.24%
More from Mumbrella…
Opinion: Marketing measurement is having a moment, but can it deliver?
‘Callous and punitive’: Rosie Waterland launches own podcast network after battle with SCA
Dr Mumbo: Is Youtube social media? Just Google it
Time to leave you to your evening.
We’ll be back with an audio-led edition tomorrow in which we talk to Solstice Media founder Paul Hamra about this week’s Australian Traveller acquisition.
Have a great day
Toodlepip…
Tim Burrowes
Publisher - Unmade + Mumbrella
tim@unmade.media
