The Week the Open Web Died

Welcome to Marketecture! This week, Ari lays out why last week’s earnings and acquisitions announcements signal the arrival of a moment the industry has been predicting for years.

One of the old saws in the media business is how throughout the 2000s each year would be predicted as “the year of mobile,” only for the sad reality of flip phones, WAP (not that WAP), and carrier business development meetings to disprove that prediction. Then a funny thing happened, and suddenly 2007 was the year of mobile, and the world changed.

When you’re like me and record podcasts and write a newsletter about media and advertising, you’ve probably stated a couple too many times that the open web was “dead” or “dying,” or that we shouldn’t use that term at all, and generally that it was finally all coming to an end. But when would it come to an end? And would the last website turn off the lights, please?

This summer, and specifically last week’s earnings announcements, felt like the nail in the coffin for the open web. We’re done. It’s over. Nothing new happened, but the things that have been happening are really happening now.

The transition from search engines to “answer engines” that started with the introduction of ChatGPT and is now an integrated part of Google’s AI-powered results is now fully upon us. In July, we got the stunning data point that web traffic had declined by 40% in one quarter. This is compounding on top of similar magnitude declines over the past two years.

Publishers are taking notice. People, Inc. CEO Neil Vogel floated the idea (while also denying it) of cutting off Google search traffic, a move that would be unprecedented if it came to pass. Nieman Lab collected some data points with USA Today and Reddit also expressing skepticism on the continuing implicit bargain between publishers and the giant search engine.

This isn’t a stock-picking newsletter, but if you’re like me, you likely follow publicly traded ad companies for vibes, fun, and competitive insight. And last week, when many of those companies reported their Q2 earnings, there was a very clear vibe shift. 

Not to put too fine a point on it, but businesses associated or dependent on the open web are pretty much dead in the water.

Last week’s winners:

Last week’s losers:

I know that the designation “winner” is incredibly subjective. As of this writing $APP’s stock is off 20% or so based on their earnings print. I’m talking about fundamentals and revenue growth.

Which then brings me to the big news from last week, the acquisition of DoubleVerify by measurement stalwart Nielsen for $2.15 billion. This comes after the take-private deal for IAS at $1.9 billion, and somewhat similarly, Publicis’ deal to buy LiveRamp.

None of these are bad deals for investors, per se. They are deals that clearly indicate that open-web-ish companies have seen their best days. While each company is different, and they all have walled garden stories (see LR’s announcement with Meta from just this week), there is no world in which the future prospects for upside are nearly as bright and unlimited as they may have seemed 10, or even five years ago.

Verification grew into a sizable category because the open web is fragmented and dangerous. LiveRamp grew into a multi-billion-dollar company because identity is fragmented across thousands of media and technology companies. These dynamics still exist, but are reversing in importance and direction, with more and more of the media world consolidating.

So far we’ve been observing the death of the media open web, but we should spend some time on the marketer side too. Just as web traffic driven by Google is drying up, ad clicks may be next. OpenAI is experimenting with ad formats that spawn brand-specific chatbots within their UI. This has a hint of TikTok and Instagram storefronts, and speaks to a future where complete customer journeys may live inside centralized apps.

Meanwhile, the smart folks over at Mobian are serving ads directly to the LLMs instead of wasting time with us pesky humans. Whether this will work may be the subject of another newsletter, but certainly not a sign of subtle change.

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