March: Week in Review

Mar 28, 2023 | From the Breakroom

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.

The Fed Raises Interest Rates

The Federal Reserve recently raised interest rates by a quarter percentage point in the face of persistent inflation despite banking turmoil complicating the matter, The Wall Street Journal reports.

The Economics Behind: Interest rate hikes are an economic tool conventionally employed by the Fed to stave off inflation.

Higher interest rates mean higher borrowing costs, which in turn tightens financial conditions and slows economic growth.
This is the ninth consecutive interest rate hike over the past year, bringing rates to their highest level since the eve of the Great Recession.
Despite these measures, the U.S. economy has remained resilient since the start of 2023 as hiring and spending continue to grow.

Effects of Bank Turmoil: The shocking collapse of Silicon Valley Bank has effectively contracted credit and raised concerns around economic growth, producing effects that the Fed was previously unable to create with rate hikes alone.

Jerome Powell, Chair of the Fed Reserve, comments that possible microeconomic effects such as slower hiring and less economic activity remain unpredictable yet a real possibility that “argues for being alert as we go forward.”
Powell also suggested this may be the last rate increase for the foreseeable future.

Diverging Perspectives: Experts have mixed opinions on the Fed’s decision following an incredibly stressful week for the U.S. economy.

Google’s Entry into A.I.

On Tuesday, Google announced its entry into the A.I. race with its own chatbot, Bard, in a direct move to compete with Microsoft’s ChatGPT, though uncertainties and concerns lurk beneath this innovation, according to The New York Times.

How It Will Work: Rather than be integrated into Google’s search engine, Bard is a stand-alone webpage with a question box and a “Google it” button below the answers it provides. The separation allows Google to slowly figure out this new technology without disrupting its most critical service.

Like many other chatbots, Bard uses L.L.M., or large language model, to learn by absorbing the vast amount of information and data available online.
Right now, Bard is released to a limited number of users in the U.S. and U.K. but will expand into the wider public over time.
Leadership indicates that they are still unsure how Bard will generate money for Google.

A.I. Arms Race: Google declared a “code red” soon after ChatGPT’s release, making A.I. the company’s biggest priority.

The industry agrees that Google has more at stake than any other big tech firm when it comes to A.I., which can either enhance its search engine or allow competitors to share the market.
However, as Google engineers rush to gain approval and release new products, concerns around A.I. safety also come to light.
Although Bard has been in development since 2015, it was kept under the radar as the technology tends to share untrustworthy information and make biased statements.

The Current State: Google and Microsoft are turning around A.I. Chatbots technology at a breakneck pace.

OpenAI recently released GTP-4, which will allow businesses to build ChatGTP’s A.I. capacity into various software and websites.
Bard marks the start of Google’s plan to introduce more than 20 A.I. products and features in the future.

TikTok in the Hot Seat

Last Thursday, TikTok CEO Shou Zi Chew faced 5 hours of a Congressional hearing that channeled bipartisan concern about the social media platform’s impact on national security and individual well-being
The New York Times reports.

No Softballs: Lawmakers on both sides of the aisle pressed Mr. Chew on a range of issues.

Most questions surrounded the relationship between ByteDance – the internet company that owns TikTok – and the Chinese Communist Party (C.C.P.).
U.S. lawmakers question whether ByteDance, which has several C.C.P. members on its board, was required to censor or amplify content in accordance with the C.C.P.’s messaging agenda.
Some representatives seemed to pin more general concerns about social media on the video platform, citing personal image issues and internet addiction in adolescents.
The hearing did not appear to assuage lawmakers’ concerns and calls for the app to be banned or sold continue to mount.
Project Texas: In advance of the hearing, TikTok proposed housing the data of American users in a Texas data center to be independently overseen by American software giant Oracle.

Go Deeper: Analysts believe CEO Chew’s relatively low-profile ahead of the hearing may have hurt the company’s public image. While Chew maintained his composure throughout the hearing and stuck to his apparent talking points, The New Yorker breaks down the hearing’s rhetorical back-and-forth.

Best of the Rest

Philadelphia recently agreed to pay $9.25 million to compensate those who sustained “physical and emotional injuries” from police response during the George Floyd protest in 2020. This follows a similar move by New York City and marks “one of the largest settlements of its kind” in Philadelphia’s history. [NYT]

As content creation becomes an increasingly essential business practice, companies across the industries – from media to sports to banks – are investing in setting up in-house production studios and creative services rather than outsourcing to agencies in order to churn out content on the fly and at a lower cost. [NYT]

To shore up shareholder support, big tech companies like Google and Meta are altering their core services, like searching the internet or connecting with friends, in favor of driving revenue through advertising, arguably making their product worse as “user’s experience [becomes] subordinate to the company’s stock price.” [Business Insider]

Industrial Policy has a long history of both advocates and detractors, and while economist and politicians debate its efficacy, it’s back in a big way in the U.S. This 8-minute Wall Street Journal video breaks down the practice of impacting industries through policy decision. [WSJ]

March 21

T-Mobile Acquires Mint Mobile

Mint Mobile, the wireless brainchild of Ryan Reynolds, was recently acquired by T-Mobile in a $1.35 billion deal. Mint Mobile is best known for its unconventional and catchy advertising campaigns headed by its star founder, according to The Wall Street Journal.

Celebrity Effect: Ryan Reynolds has been channeling his Hollywood fame into building the Mint Mobile brand in the already competitive wireless industry.

Reynolds made himself the face of the company’s ad campaigns, which are often characterized by their offbeat tone and trending potential.
One recent Mint Mobile ad featured Reynolds reading out an ad script written by Chat GPT.
On Wednesday, Reynolds posted a video of him joking and hugging with T-Mobile’s CEO to announce the acquisition on Twitter.
Experienced in advertising creative, Reynolds has also spearheaded the campaigns for the tech company MNTN and the marketing firm Maximum Effort.

“Fastvertising” is how Reynolds describes his approach to brand-building. In his own words, “everything we do is scrappy. It’s fast, it’s inexpensive, character over spectacle.”

What’s Next? T-Mobile, the second largest wireless operator in the U.S. in terms of subscribers, now has Mint Mobile as a second prepaid offering for the low-income market, in addition to Metro.

T-Mobile plans to keep the Mint Mobile brand, and Ryan Reynolds will continue to be the personality behind it.
CEO Mike Sievert expressed the hope to utilize Reynold’s creative expertise and apply it to more parts of T-Mobile’s business.
One Wall Street analyst remarked that the deal won’t be “a needle mover,” but could effectively bolster T-Mobile’s brand image.

Utility Poles Stall Rural Connectivity

Utility poles stall projects to connect rural America to high-speed internet as pole owners wrangle internet providers over federal funding, The Wall Street Journal reports.

Budget-Ready: As more people moved out of big cities into rural areas during the pandemic, the federal government is focusing on rural broadband deployment.

FCC established a $9 billion program in 2020 to expand rural broadband.
A bipartisan infrastructure law in 2021 allocated $42.5 billion to the cause.
Washington plans to commit $60 billion in the next decade to deliver high-speed internet to every household.

The Dispute: Utility pole owners often do not receive rural broadband funds and are unwilling to shoulder the costs of accommodating new cable lines. On the other hand, cable companies complain that the pole owners’ reluctance to provide access to poles is slowing the expansion of broadband internet.

Charter vs. Warren Rural Electric: Friction between Charter Communications and Warren Rural Electric over broadband rollout in Bowling Green, KY is a case in point.

Charter wanted to attach its cables to poles owned by Warren Rural Electric, while the utility company hoped to start its own internet service in the area.
Charter appealed to the FCC about the inefficiency of its competitor’s 14-year rollout schedule.
Though it already received federal grants, Charter is also campaigning to change the rule that requires internet providers to pay for new poles needed for building expanded broadband networks.

Upholding Neutrality: FCC commented that it hoped to “strike a balance between the local authority of pole owners and internet service providers,” as corporations quarrel over costs and access to funding.

The Fallout: Disputes over utility poles often take a serious toll on local communities. In one such case, two elementary schools in New Mexico were left without high-speed internet for years and were charged a higher-than-expected fee for pole replacement. Questions around access, availability, and affordability are at the center of community-minded planning for all stakeholders.

The Business of NIL Money

Name, Image and Likeness endorsement opportunities for college athletes have outgrown the usual volunteer booster groups and opened the door to new NIL professionals, according to Forbes.

NIL Overview: In June of 2021, The Supreme Court ruled college athlete could make money on their Name, Image and Likeness (NIL) through marketing and other promotional work. Athlete marketplace Opendorse estimates $1 billion in NIL money will change hands this year, and the business of arranging those deals is booming.

Specialized Firms:

The On3 database tracks NIL earning potential for young athletes. Athletes’ performance, influence, and exposure metrics (their “P.I.E. Score”) is the basis of On3’s individual player valuations.
On3 expects the NIL market to reach $3-5 billion in the next five years.
Other firms, like Blueprint Sports, specialize in accounting, payroll, and managing relationships between NIL collectives and school athletic departments.
The NCAA requires a separation between the NIL collective booster groups and school athletic departments.
NIL managers typically charge a fee to onboard new NIL collectives and then take a cut of the money exchanged.

Skills Beyond Sports: “I’m a big believer in empowering student-athletes to reach their full potential and give them the tools to develop their personal brands,” says Andre Agassi, former tennis champion and Blueprint Sports investor. He believes NIL deals help educate student-athletes to view sports as a “long-term game” that can help set them up for professional success once their playing days are over.

Best of the Rest

Meta recently announced another sweeping layoff of 10,000 workers. Mark Zuckerberg communicated the hard news in an internal message that drove home his philosophy of operation efficiency to justify his decision to the employees. [WSJ]

As women’s sports gather more attention and larger fanbases, brands are looking beyond traditional sponsorships to associate themselves with the leagues – innovation is everywhere, from promoting sports ads, to providing outfits, to launching impact initiatives. [Marketing Brew]

French President Emmanuel Macron exercised his executive powers to raise the national retirement age to 64 – a proposal some two-thirds of the French public opposes – prompting widespread backlash as well as a nonconfidence vote which Macron’s government was able to survive. [WaPost]

Cannes Lions has named AB InBev, with brands like Budweiser, Bud Light, Corona, and Michelob Ultra among others, as Creative Marketer of the Year, marking the first-ever back-to-back winner of the prestigious award. [Fast Company]

March 13

Rapid Response to a Bank Collapse

US regulators are working to contain fallout and avoid a potential financial crisis following the collapse of Silicon Valley Bank, the Financial Times reports.

Confidence & Cash: Last week, Silicon Valley Bank (SVB) lost account holder confidence after it sold $21 billion in low-yield bonds at a nearly $2 billion loss. According to The New York Times, the reason for this sale was poorly communicated to the bank’s customers and concerns about SVB’s solvency sparked a bank run.

As customers raced to withdraw their cash before the bank’s liquid assets dried up, attempting to withdraw some $42 billion on March 9th alone, the bank collapsed and regulators stepped in to take control. Signature Bank, also owned by the Silicon Valley Financial Group, was shut down by regulators on Sunday.

Safe Deposits: The Federal Deposit Insurance Corporation guarantees up to $250,000, but many of SVB’s customers were startups and small businesses with accounts exceeding that amount. US Treasury Secretary Janet Yellen took the extraordinary measure of designating SVB and Signature as systemic risks to enable all depositors to access their funds, regardless of the usual FDIC $250,000 limit.

Making Whole: Regulators and President Biden have tried to reassure the public that their deposits are safe and the financial cost of SVB’s collapse will not burden taxpayers. The goal is not to prop up SVB but to shore up confidence in the financial system, NPR reports. Banks pay into the deposit insurance fund with fees, and management and investors will not be bailed out.

Preventative Measures: To encourage stability across the financial system, the Federal Reserve rapidly created the Bank Term Funding Program, which will provide year-long loans so lenders can meet their obligations without needing to rapidly sell off securities.

Biden’s 2024 Budget Proposal

President Biden unveiled his $6.8 trillion budget proposal for 2024. The New York Times outlines its key takeaways: more taxes on the rich, less budget deficits, increased military spendings, and more aggressive stance towards Russia and China.

Increase Taxes:

Biden’s progressive tax policy would target the wealthy and large corporations.
It would entail a 25% minimum tax on billionaires and raise corporate tax rate from 21% to 28%.
This would entail a $5 trillion tax increase over the next decade.

Reduce Deficit:

According to Biden’s plan, a significant part of the savings would come from negotiation over prescription drug prices.
Cheaper prescriptions could bring in $200 billion savings over the decade, which would be used to fund Medicare.
The plan is to reduce the deficit by nearly $3 trillion over the next 10 years.

Spend to Compete:

The proposal allocates $842 billion for the Defense Department – a 3.2% increase from 2023.
Part of the funds will be used to support Ukraine and counter “Russian malign influence.”
Biden outlines a $9.1 billion investment to “out-compete” China and develop weapons to protect U.S. allies and interests, known as the “Pacific Deterrence Initiative.”

House Divided: Biden’s plan is a bid to “lift the burden on hard working Americans.” However, it will certainly face a tough pushback from the Republicans, some of whom have scoffed the plan as “completely unserious.”

Ohio Train Derailment

Following the derailment of a Norfolk Southern train in Ohio last month, railcar temperature sensors have emerged as a critical technology in addressing railway safety, according to The Wall Street Journal.

Hot on the (T)rail: Temperature sensors, also known as hot-box detectors, are the most commonly used safety measure for monitoring railcar defects in the U.S. According to data from 2015, there are 6,000 detectors spread across North American tracks.

When railcar wheelsets pass through the detector and show a reading of 200°F above the ambient temperature, the railcar should be stopped for inspection.
The Norfolk Southern’s railway system has about 1,000 hot-box detectors, each is on average 13.9 miles apart from another.
The Ohio derailment occurred when a railcar reached a critical temperature 20 miles away from the prior checkpoint.

New Measures: The National Transportation Safety Board is investigating Norfolk Southern, and the company CEO issued an apology before Congress on Thursday.

The Senate introduced a bipartisan bill after the incident, mandating that temperature sensors should be no more than 10 miles apart from each other.
Major railway lines plan to add 1,000 more sensors along key routes and to lower the temperature threshold for safety inspections.
Norfolk Southern pledged to add 200 sensors to their tracks in addition to other safety measures.

Bottom Line: The incident brought attention to the country’s railway safety technologies. Its lack of advancement has long been a point of criticism by lawmakers and union members.

Best of the Rest

Biden’s FCC nominee, Gigi Sohn, withdrew her candidacy from the commission due to “unrelenting, dishonest and cruel attacks” from industry lobbyists. This is a decided blow to Biden’s plan to reverse Trump-era internet policies. [Washington Post]

The Justice Department is seeking to block JetBlue Airway’s acquisition of Spirit Airlines, citing antitrust concerns for an already concentrated industry. [NYT]

Generative AI, Mixed Reality, 5G, IoT… The Wall Street Journal takes a dive into the hottest buzzwords from the 2023 Mobile World Conference that may take us beyond smartphones and into the next era of technology. [WSJ]

Women workers are at the forefront of the hiring efforts across the U.S., and their return to the workplace will play a crucial part in powering the economy and guarding against high inflation and rising interest rates. [WSJ]

March 6

Supreme Court Hears Student Debt Case

This past week, the Supreme Court heard a controversial case regarding President Biden’s student loan forgiveness program. Their decision, and whether Biden moves forward without Congressional approval, could set an important precedent for presidential power moving forward, according to The New York Times.

The Big Question: Does President Biden have the legal authority to cancel debt for more than 40 million Americans without Congressional approval?

The proposed program applies to Americans making up to $125,000 a year and married couples making $250,000
Eligible recipients can get up to $20,000 in debt relief
The program would cost $400 billion over 30 years
The Supreme Court will likely announce the decision in late June

Legal Situation: The Biden administration, post-pandemic, proposed a program that would forgive thousands of dollars in student loans for Americans.

Biden is acting under a 2003 law, the HEROES Act, which allows the government to provide relief in cases of national emergency.
Those challenging the program, including six Republican-led states, are calling the actions of the President an “abuse of executive authority” and a “pretextual connection to a national emergency.”

The Bottom Line: The Supreme Court’s decision will not only decide the financial fate for millions across the nation but also further define the reach of Presidential authority.

Ownership Issues with the Washington Commanders

Pressure is mounting for Washington Commanders’ owner Daniel Snyder to sell the team and get out of the NFL ecosystem, The Washington Post reports.

A Contentious Sale: The Commanders’ current owner, Snyder, announced his plans to sell the team in November, and he has fielded several bids throughout the past months. He has recently demanded legal protection from the NFL following the sale of the Commanders, but these concessions are unlikely as a second investigation into his workplace environment is still ongoing. Additionally, Snyder refuses to entertain a bid from Jeff Bezos, owner of Amazon and The Washington Post, out of frustration with how The Post has covered Snyder through the years.

Consulting The Rulebook:

Other NFL owners are threatening to take an unprecedented step and vote to remove Snyder if he refuses to sell the team.
The NFL constitution and bylaws stipulate a removal process, which includes a closed-door hearing among the owners.
If the other owners chose to take a vote, Snyder could ask the court for a temporary restraining order to buy himself time, but that will only extend, not stop, the process.
If he is voted out, Snyder would likely make an antitrust argument in response, but the NFL has a legitimate argument that the League is protecting its brand.
If the NFL abides by its own rules throughout the process of removing an owner, analysts believe the decision should withstand any legal battles.

Expert Opinion: Gabe Feldman, director of Tulane Sports Law program, stated “If they go through the process to determine that Daniel Snyder is harmful to that image and integrity, they have the right to remove him.”

About Snyder: Since his purchase of the team in 1999, Snyder has repeatedly been accused of perpetuating a toxic workplace environment, and he has been formally investigated by the NFL twice now. Snyder has also been accused of sexual assault in addition to being known to make racist and sexist jokes. He also faced scrutiny in 2020 after refusing to change the team’s name regardless of pressure from fans that the name was offensive to Native American culture.

What’s Next: The fate of the $5.6 billion team is still uncertain, but the actions of the NFL may lead to new regulations in the ownership world.

Toblerone Required to Rebrand

Distinctive Swiss chocolatier Toblerone will be forced to undergo a rebrand as a result of operational changes, according to Fortune.

About Toblerone: First sold in 1908 in Switzerland’s capital city of Bern, Theodore Tobler drew inspiration from the 14,692-foot Matterhorn Mountain when designing the chocolate’s distinctive peaks. The mountain logo also has a Bernese bear etched in, referencing Bern’s legendary origins as the “City of Bears.”

Not Swiss Enough: Toblerone parent company Mondelez International has decided to move some aspects of production to Slovakia to grow global demand. However, 2017 legislation strictly limits the use of Swiss iconography and language for marketing a food product as “made in Switzerland.”

Swissness: Marketing an item as a Swiss product comes with both strict criteria and clear benefits.

Food products must source at least 80% of their raw ingredients in Switzerland.
Milk-based products must be 100% Swiss in origin, with exception for certain ingredients like cocoa.
A majority of the production process must also happen in the country.
“Swissness” can add up to 20% to a product’s price, and up to 50% for luxury goods.

Brand Changes: The mountain logo will need to go, and the box will now read “Established in Switzerland” rather than “of Switzerland.” In addition to a new logo design that draws on the Toblerone archives, the brand will get a new typeface and likely incorporate Tobler’s signature.

Best of the Rest

Looking for a new spot to watch Philly sports? The Boyd Theater is now “Bankroll,” a $25 million sports bar, and opened last week. Check it out for the next big game! [Philly Inquirer]

The future may be closer than we think with billionaire Elon Musk pushing controversial plans to begin human trials testing his new brain chip. The FDA turned down the bid, but Musk has big plans for his company Neuralink. [Forbes]

AI is creeping into all aspects of the business world, and marketing campaigns are increasingly focused on the importance of the new technology. Check out this article to see how companies are utilizing AI on their platforms. [Marketing Brew]

Bill Nye is maybe the most recognizable icon of the edutainment industry – a space that prioritizes education through short-form, engaging content – and the sector is poised to grow as a new generation enjoys alternative learning models. [Forbes]