December: Week in Review
By Carson Schatzman, Senior Copywriter
Each Monday, Athena employees receive a recap of important news stories from the past week. On Thursdays, our morning meeting is dedicated to a quiz testing our ability to retain the information. A free lunch is the reward for the winning team. We’re a competitive group, and the quizzes bring out that spirit. Over time a number of our clients have requested our weekly review as well, so we’ve begun to share it weekly now. See below for what we’re paying attention to and why.
Companies Cashing in on Streaming
Telecom giants like Verizon are looking to get into the streaming game as a middleman between services and customers, The Wall Street Journal reports.
Gold Rush: Companies like Amazon, Apple, and Alphabet are also trying to drive subscriptions through their marketplaces, where they will typically earn a cut of sales and ad revenue, with the added bonus of gaining consumer data.
The Verizon “+play” platform provides new customers Netflix for a year if they purchase a different year-long subscription on the platform. Otherwise, the platform is largely a neutral party managing billing on behalf of services.
Bundling: The practice of bundling is on the rise for a number of reasons.
- Bundling improves subscriber retention for the streaming service.
- 60% of U.S. consumers have 4+ streaming services, compared with 40% two years ago.
- Bundles can reduce cost and complexity.
The Partnerships: For a promotion like Verizon’s, typically the streamer (Netflix) will receive a wholesale rate while both partnerships share marketing costs. Then, the platform (Verizon) will receive a revenue cut from those who convert and subscribe at the end of the promotion.
Biden Signs Respect for Marriage Act
On Tuesday the 13th, President Biden signed a bipartisan bill codifying same-sex and interracial marriage, NPR reports.
The Bill: The Respect for Marriage Act passed the Senate with the support of a dozen Republican Senators. It requires states to recognize same-sex marriage across state lines and ensures federal benefits for all married couples, but it does not nationally guarantee the right to marry.
The Need: The 2015 Obergefell Supreme Court case ruled same-sex marriage is protected by the 14th Amendment. In the wake of the landmark Dobbs decision earlier this year, the new Respect for Marriage Act is meant as a protection against a similar dramatic change.
The Journey: NPR provides an interesting story-through-data of the United States’ cultural shift:
- In 2004, 42% supported same-sex marriage – today, it’s 68%
- In 2004, 19% of Republicans were in favor, doubling today to 43%
- Gen Z/Millennials have the highest generational approval, at 70%
- Biden himself had a well-publicized change of heart in 2012
The Bottom Line: With Congressional majority shifting in January, action is being taken to define America’s culture for the future.
Spectacular Finish to the 2022 World Cup
Instantly hailed as one of the greatest matches of all time, Argentina defeated France on Sunday to win the 2022 World Cup.
The Final: France’s Kylian Mbappé recorded the first World Cup Finals hat-trick in over half a century, with two electric goals just minutes apart at the end of regulation and another in extra time. But Argentina’s Lionel Messi – with two goals himself and perhaps the greatest to ever play the sport – finally hoisted the golden trophy in the twilight of his career. Here’s a video recap from Fox Sports, the game’s broadcaster.
Host Nation: The extremely high cost, both human and economic, of the Qatar World Cup was much publicized, but The New York Times concludes that Qatar got what it wanted from the tournament: a month as the center of the world.
More to Check Out: From NPR, here’s a guide to what soccer you should watch now that the World Cup is over.
And, The Atlantic looks at another aspect of the World Cup’s significance: “the tournament’s knack for staging history-making moments that can immediately be absorbed into broader historical narratives.”
Best of the Rest
The House has elected to have Puerto Rico vote on its status as a U.S. commonwealth, with the options of statehood or Independence, but the resolution’s future in the Senate is unclear. [Forbes]
Ernst & Young’s blockbuster split, featuring headline payouts for its many partners, is moving forward, though there are funding hurdles still to navigate. [WSJ]
Marketing in 2023 may be defined by more traditional, sure-thing campaigns, an increase in AI monitoring (though other Web3 projects will likely be paused), and TikTok’s continued rise, according to experts. [WSJ]
A First-of-its-Kind Dollar
Last Thursday, Janet Yellen became the first female treasury secretary with a signature on the U.S. Dollar, The New York Times reports.
Cracks in the Glass Ceiling: In addition to Yellen, Marilynn Malerba, the first Native American treasurer, also signed the new currency. This marks the first time in history two women have been on the U.S. Dollar. As a spokesperson for women in economics, Yellen aims to bring more gender and racial diversity to the field.
The process for redesigning the U.S. dollar:
- White House must first choose a U.S. Treasurer
- Treasurer must sign the currency along with the Treasury secretary
- Signatures are engraved at the Bureau of Engraving and Printing
- The engravings are printed and submitted to the Federal Reserve
- Currency is added to circulation
State of Play: While Yellen’s tenure has been largely positive, there have been some road bumps. Currently, Yellen is spearheading a $80 billion revamp of the IRS, something she hopes will improve the Internal Revenue Service. Yellen is also taking initiatives to make Biden’s administration’s economic position more equitable.
From Yellen: In an interview, she stated, “Today is not about me or a new signature on our currency, it’s about our collective work to create a stronger and more inclusive economy.”
Prepaying for Green Energy through Municipal Bonds
In the newest wave of financial trends, prepaid energy municipal bonds are helping supply decades worth of renewable electricity to investors, according to Forbes.
Background: Municipal bonds, often referred to as “muni bonds” are debts issued by states, cities, and counties. Over the past few decades, tax-free prepaid revenue bonds have mainly been associated with natural gas, but there has been a shift towards prepaid energy bonds, renewables, and fossil-fuels. “ESG” or environmental, social, and governance investing has become an increasingly desirable asset. These bonds are hot on the market, and they are designed to help communities prepay for decades worth of green electricity.
By the Numbers:
- ESG-related assets were $2.2 trillion in 2015
- In 2021 they were worth $18.4 trillion
- About 400 bonds have been issued per quarter for the last two years
Advantages: The appeal to prepaying for energy through a municipal bond is simple: a discount. For example, municipalities that are part of the CCCFA, California Community Choice Financing Authority which issues muni bonds, are expected to save $7 million per year on their electricity.
Theoretically, it’s a win-win. Banks get cheap loans and investors lean toward greener power with a reputable bank’s backing. Further, the bonds are tax-exempt. So, while there is some lost tax revenue, this may further incentivize a financial shift towards green energy.
Bottom Line: On Wall Street, the prepaid energy bonds have gained popularity due to the reliability of the investment and moving towards greener energy is beneficial for the economy and environment together.
Slower Growth, but Headed in the Right Direction
Advertising growth in 2023 is now expected to be slower than previously predicted, according to The Wall Street Journal.
Up Next: Media owner’s expected ad spend should come in around $833 billion in 2023, a $4.8% increase year over year. This is down from earlier expectations of a 6.3% increase, while 2022 saw growth of 6.6% on the year.
Headwinds: As the Federal Reserve has tried to target a soft landing to curb inflation, the economy has slowed accordingly. Marketing sectors like consumer-packaged good, finance, and fin-tech, will likely see flat ad spending through 2023.
Tailwinds: On the other hand, travel, entertainment, and sports betting are growing sectors. And, as pandemic-related supply chain issues continue to be resolved, the automotive industry is also likely to see increased marketing efforts.
More to Come: Companies are proceeding with “an abundance of caution” going into 2023, but the gloomy forecasts of a major recession are less likely now and economic growth, albeit slower, should continue.
Best of the Rest
In their latest push to curve economic downturn, China moves to halt Covid testing and minimize quarantine requirements. The country has sited larger concerns over the damage to their economy than the risk of Covid infections. [WSJ]
From The Philadelphia Citizen: “The Citizen’s new podcast starring former Philly Mayor Michael Nutter and former Atlanta Mayor Kasim Reed dives deep into the mystery and mastery of urban leadership.” [Citizen]
Now headed to the semifinals on Wednesday, Morocco has been a World Cup Cinderella story – here’s how they built their team that surprisingly took down giants like Spain and Portugal. [WSJ]
Calling all movie and television enthusiasts! With 2022 wrapping up, here are the 10 best actors of this year. [NYT]
Meta Fines & Big Tech’s Problem
Meta was fined nearly $275 million for a data leak that resulted in the personal information of Facebook users being published online, The New York Times reports.
It’s Not Just Meta: Other U.S. companies such as Amazon and Google have faced massive fines from E.U. regulators relating to similar issues, marking a new wave of regulatory crackdowns, and the future of data protection.
- The recent $275 million brings the total European fines levied against Meta this year to $900 million since last year.
- These fines are a result of the General Data Protection Regulation (GDPR) enforcement, which has fundamentally changed data privacy in the EU.
- While the legislation has been around for nearly five years, it is just now leading to serious implications for tech companies.
Biden Signs Deal Averting Railway Strike
President Biden imposed a labor agreement between railway companies and railway worker unions to avert a potential strike and shutdown, The New York Times reports.
The Deal The final agreement contains a 24% pay increase over the next five years, increased schedule flexibility, and added one paid day off. The sticking point between the companies, the unions, and lawmakers was a provision for 7 days of paid sick leave.
Urgency: While pro-Union on the surface, Biden and a Democrat-controlled Congress pushed through an agreement in the interest of economic stability. Railways are essential for many industries, and a work stoppage would have cost the economy an estimated $2 billion per day. 40% of freight still travels by rail in the U.S.
Resolution: The Constitution’s commerce clause gives Congress the authority to regulate interstate trade, and the Railway Labor Act gives the government special authority in these labor disputes. While the House passed a measure to include 7 days of sick leave in the deal, the Senate missed the 60 required votes and the final agreement does not include those sick days.
Content or Costs?
Under former CEO Bob Chapek, Walt Disney Co. teamed up with McKinsey on plans to centralize control of spending decisions and marketing efforts, according to The Wall Street Journal. Current CEO Bob Iger announced plans to do away with the restructuring almost immediately.
Out with the Old: The unfinished plans reflect growing investor pressure media companies have been facing to cut costs as competition increases and the economy weakens. The tightening would’ve come at the expense of Disney’s content teams, reflecting the discord between corporate and content during Chapek’s reign.
In With the New: Iger has plans to empower content creators: “It is my intention to restructure things in a way that honors and respects creativity as the heart and soul of who we are.”