After a judge warned that the Federal Trade Commission's probe into Media Matters for America (MMFA) should alarm "all Americans"—viewing it as a likely government retaliation intended to silence critical reporting from a political foe—the FTC this week appealed a preliminary injunction blocking the investigation.

The Republican-led FTC's determined to keep pressure on the nonprofit—which is dedicated to monitoring conservative misinformation—ever since Elon Musk villainized MMFA in 2023 for reporting that ads were appearing next to pro-Nazi posts on X. Musk claims that reporting caused so many brands to halt advertising that X's revenue dropped by $1.5 billion, but advertisers have suggested there technically was no boycott. They've said that many factors influenced each of their independent decisions to leave X—including their concerns about Musk's own antisemitic post, which drew rebuke from the White House in 2023.

In the time since, the toxic content has started coming from within X, via backlash-inducing outputs from its chatbot Grok. For MMFA, advertisers, agencies, and critics, a big question remains: Can the FTC actually penalize advertisers for invoking their own rights to free expression and association by refusing to deal with a private company just because they happened to agree on a collective set of brand standards to avoid monetizing hate speech or offensive content online?

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• Despite Spotify's strong performance overall, its ad business is struggling.
• Ad buyers say they have been disappointed by a decline in customer service amid high staff turnover.
• Spotify hopes a raft of new ad product launches and partnerships will turn its fortunes around.

Spotify's ad business is floundering.

"We have simply been moving too slowly," CEO Daniel Ek said on the company's latest earnings call.

Spotify has said it wants advertising to make up 20% of its overall revenue. As of June, that figure stood at 11% — a share that has barely budged over time. Second-quarter ad revenue was down 0.7% versus the prior year, and media industry analyst Brian Wieser pondered in a recent note to clients whether it had plateaued.

Chris Camacho, CEO of the ad agency Cheil UK, said cracks in Spotify's ad business have been visible for some time. That contrasts with the rest of the company's relatively strong performance, with healthy growth in user numbers and overall revenue, and a stock price that's up over 100% in the last year.

"In a world demanding seamless media execution and measurable impact, Spotify has struggled to connect ambition with action," Camacho said of the company's ad efforts.

"It needs to give brands access to cultural moments, not just audio slots," he continued. "That means better content partnerships, richer storytelling formats, and measurement that proves value beyond listens."

Industry insiders say Spotify's ad efforts have been hampered by the company's focus on its subscription business, which is much more lucrative. Two ad buyers told Business Insider that Spotify's customer service has slipped recently, while podcast industry insiders said its ad rates remain low.

Spotify seems to recognize the need for change. Longtime ad head Lee Brown left last month, and the company confirmed that a search is underway for a new leader. Ek appeared to blame Brown for Spotify's ad struggles, saying on the earnings call that "execution" and not strategy led to the poor performance.

"We felt it was the right time for a leadership change," Ek added. Brown, who recently became the chief revenue officer at DoorDash, didn't respond to requests for comment.

Spotify's executives said on the recent earnings call that they want advertising to contribute more to the company's revenue.

Podcasts offer advertisers access to Spotify's Premium users — but the strategy has been messy

In some ways, Spotify has a business model that eats its own tail.

If Spotify converts too many free users into Premium subscribers, the audience for advertisers shrinks. If it makes the free offering too attractive, users won't be tempted to upgrade. Spotify's ad-supported tier serves as an important on-ramp for its Premium business — plus the $1.9 billion in ad sales it brought in last year helps toward paying its substantial royalties to music labels and other content creators. However, Premium is the sacred cash cow: Enders Analysis estimates that gross profits for Premium are around 15 to 20 times those of the advertising tier.

The company's big push into podcasts — which have ads for those on the Premium tier — offered a way to bridge that gap. It also gave advertisers the chance to reach more affluent audiences. Spotify spent more than $1 billion to acquire companies like Gimlet Media and Anchor, and signed exclusive deals with Joe Rogan and the Obamas.

Podcast executives and ad buyers told Business Insider that the podcast advertising strategy has been messy, with several pivots in its few years of operation. Spotify ended some of its original and exclusive programming, cut staff, flip-flopped its stance on areas like measurement and ad pricing floors, and made a pivot to video that is still in the early stages and has yet to prove itself as a guaranteed moneymaker.

Spotify acquired the podcast hosting and adtech company Megaphone in 2020 in a $235 million deal that was designed to help podcast publishers make more money through its advertising marketplace.

There were hiccups from the start. A former Spotify ad sales exec said there was an irony in the company attempting to sell Megaphone to podcasters as a best-in-class adtech solution while Spotify itself uses Google as its ad server.

One podcast publisher said they were getting around $8 or $9 CPMs — the cost of 1,000 impressions for a digital ad — on average through Megaphone, versus the $20 to $40 CPMs they would achieve for host-read ads. However, they acknowledged that directly sold ads usually fetch higher prices than those sold via third-party adtech, such as Spotify's. The average CPM price advertisers paid for digital audio ads in the second quarter of this year was $16.51, according to the analytics company Measured — though the final fee a podcast publisher would receive after platforms and other third parties take their cut would be smaller.

A Spotify spokesperson said the average CPM on Spotify is "far above" $9, though they declined to provide additional specifics. They said that ad revenue is influenced by macroeconomic and seasonal shifts that may impact overall CPMs. Publisher revenue generated through the Spotify Audience Network had seen double-digit growth year-over-year, the spokesperson said.

A pivot to video

Spotify has been introducing other money-making opportunities to offset volatile ad prices.

This year, as part of a big video push, it launched the Spotify Partner Program, offering creators a 50% share of the ad revenue their videos generate. It has encouraged some publishers and creators to get on board by giving them minimum revenue guarantees, though it's unclear how long those will last.

The Spotify Partner Program has been a "big win" for YMH Studios, producer of podcasts including "Your Mom's House" and "2 Bears, 1 Cave," according to the company's head of ad revenue, Alan Abdine. He said the company had seen a consistent 20% to 30% revenue lift.

Several ad buyers told Business Insider that Spotify must prove it can be a meaningful player in video.

"Video here feels like an add-on," Cheil's Camacho said. "If Spotify wants to be bold, brave, and first, it needs to reinvent what video within an audio experience could be."

A Spotify spokesperson said video podcast consumption is up 54% this year, with users who watch a podcast consuming 1.5 times as much as those who just listen. The spokesperson said it is building ways to improve the creative options available for creators, fans, and advertisers, such as audio-to-video playback, built-in community tools, better on-platform analytics, and new monetization models like the Spotify Partner Program.

Customer service takes a slide

Some advertisers have been put off by Spotify's increasing focus on automated ad buying and by high turnover in the company's ad sales staff.

Spotify cut 2,300 jobs through three rounds of layoffs in 2023. Last year, it axed 40 positions and 17 open roles in its ad and campaign management teams.

Dan Granger, CEO of the audio ad agency Oxford Road, said getting a response from the Spotify team could take days versus a matter of hours from other partners, and that many of its accounts were handled offshore.

The Spotify spokesperson said the company prides itself on its customer service and aims to respond to advertisers within three to six hours, with the goal of resolving any issues or queries within 48 hours. They added that Spotify has dedicated customer service managers and client partners for every direct sales account.

Granger said his agency had experienced consistency issues when Spotify inserted ads into podcast streams. Sometimes, ads are clustered in a short burst instead of being paced evenly, eroding a campaign's performance. Ad prices had recently jumped without a commensurate increase in the value they delivered, Granger said, adding that Spotify's measurement offering was "inhospitable" for brands.

In an August note to clients, analysts from Arete Research said they questioned whether Spotify "has the DNA of an ads company, or whether ads are simply a way to spur users into paying for Premium."

This dynamic isn't lost on the ad community.

"Spotify just doesn't prioritize the needs of the advertising community the way it does that of its subscriber business," Granger said.

Spotify is pinning its hopes on 2026 being a better year for the ad business

Some in the ad industry think Spotify can turn its fortunes around.

Spotify has made a raft of announcements in the last year. Among them, it launched the Spotify Ad Exchange, which lets customers buy ads using demand-side platforms, an in-house creative lab, and a generative AI tool to help advertisers create audio ads. It hopes these rollouts will help turn the dial for its ads business by 2026.

Will Doherty, senior vice president of inventory partnerships at The Trade Desk, said Spotify's decision to partner with adtech companies gives ad buyers more choice and control versus rival "walled garden" Big Tech platforms from whom they can only buy directly. The Trade Desk is a Spotify Ad Exchange partner.

Doherty said moves like these put Spotify's ad business in a position to grow.

"From a technical standpoint, Spotify is pretty sophisticated," Doherty said. "It takes time for any business to consolidate and unify an ad stack on a global scale, while managing the various partnerships needed to grow and be successful."

• The Trade Desk's shares plummeted nearly 40% and analysts blamed a growing rivalry with Amazon.
• Amazon has expanded its ad business with a Roku deal and live sports on Prime Video.
• Analysts expressed concern over The Trade Desk's prospects amid a competitive TV ad landscape.

The Trade Desk's shares cratered nearly 40% on Friday, its worst decline on record, and analysts say competition from Amazon may be to blame.

The Trade Desk, which helps companies target people across the web with ads, beat expectations in its earnings — but that wasn't enough to quell Wall Street's concerns. In commentary, analysts also cited the departure of the adtech company's CFO, but largely focused on the Amazon factor in explaining the stock drop.

The Trade Desk CEO Jeff Green responded to analysts' questions, saying his company would continue to serve an important role because it's a neutral seller of advertising, unlike Amazon, which also sells its own ads on Prime Video. He also argued The Trade Desk only competes with a small part of Amazon and suggested Amazon might one day allow companies like his own to sell ads on Prime Video.

"Amazon is not a competitor, and Google really isn't much of a competitor anymore either," Green said on the company's earnings call. "We're trying to buy the open internet, leveraging technology that values media objectively. We don't have any media. And we don't grade our own homework."

Analysts were skeptical of Green's optimistic stance, pointing to an increasingly competitive connected TV ad landscape. Amazon, Netflix, and Disney+ have all entered the market in recent years. Amazon's ad business, in particular, is on pace to grow fast with an upcoming deal to let advertisers buy ads on Roku devices through Amazon, and the NBA adding to Amazon's live sports programming on Prime Video.

Meanwhile, The Trade Desk is limited in its growth potential because it depends on its ability to access the ad inventory of other players like Netflix.

LightShed analysts had the harshest words, writing that "Green is either in a serious state of denial, or he is living in an alternate reality."

"The Amazon shadow over this stock is now front and center ... and harder to deny," MoffettNathanson's Michael Nathanson said, cutting his rating to sell from neutral.

Others were more sanguine. Evercore maintained an outperform rating, citing The Trade Desk's growing partnerships to sell Netflix, Roku, and Spotify advertising, and its expansion in retail media and international markets.

Amazon has become an ad titan

The bull case for Amazon's ad business has been gaining steam since the company barrelled into the TV ad market a year ago by making ads the default on Prime Video.

Gripes about the ad rates notwithstanding, advertisers like Amazon's massive scale, ability to target people based on their shopping preferences, and growing live sports offering on Prime Video.

Ad industry insiders recently told Business Insider that Amazon's entrance into TV advertising had made it harder for all but the top TV players, like Disney and Comcast's NBCUniversal, to compete.

A Morgan Stanley report in July said Amazon's Prime Video was on pace to dominate the advertising market on US-based smart TVs, knocking YouTube off its perch as the market leader in 2027. Later that month, Amazon reported its second-quarter earnings, showing its overall ads business growing 22% to $15.7 billion. That beat analyst expectations.

Amazon has also been striking deals with rival streamers like HBO Max and Apple TV+ to make itself the default destination for TV watching.

All this could be OK for rivals if the pie were ever-increasing. But the bigger worry is that CTV advertising won't be the growth engine it once was — leading media companies to fight for pieces of a smaller pie.

Nathanson pointed to slowing growth in recent quarters and intensifying competition from Amazon and Google.

He said he saw "a broader deceleration" in the US CTV ad market that should concern Trade Desk bulls.

• The $8 billion Skydance and Paramount Global deal, led by David Ellison, is finally a reality.
• Ellison plans to revitalize Paramount amid streaming disruption and potential political challenges.
• He faces big questions about how to manage linear decline, handle Donald Trump, and more.

After many twists and turns, the $8 billion tie-up of Skydance and Paramount Global is finally happening. So what's next?

Oracle billionaire Larry Ellison and his son, David, are taking control of Paramount Global from Shari Redstone with a plan to revive the storied entertainment company by giving it a tech infusion. The epic drama has played out as the media industry faces disruption from the rise of streaming — and now a president who's used his power to influence critics in the media and beyond.

We know this much: David Ellison, who will be chairman and CEO of the new combined company, has named his new leadership slate, sweeping out most of the old Paramount execs except for George Cheeks, previously co-CEO of Paramount; while expanding the power of execs like Dana Goldberg, who was chief creative officer at his (much smaller) Skydance Media.

Big changes are ahead for the home of CBS, MTV Networks, Paramount Pictures, and more, where Ellison has promised cost cuts of $2 billion. The company is also expected to invest $1.5 billion to help pay down debt.

The deal's backers, the Ellisons and RedBird Capital Partners, have deep pockets that could fund additional, transformative deals in areas like tech or gaming, said Jonathan Miller, CEO of Integrated Media Co., which invests in digital media and is not an investor in Paramount Skydance. "There's a lot of money surrounding Paramount right now," he said. "They can think big."

Many questions lie ahead, including how its streaming strategy will play out, what the company might keep and buy, and how it'll navigate potential political headwinds.

Paramount is attractive for its new senior management that's well-liked, massive pool of capital, and willingness to look at different structures for the streaming business, Raymond James wrote in a July 31 investor note. "Still, Paramount faces significant exposure to the declining linear TV business, high leverage, and for now a sub-scale, not yet globally profitable streaming business."

Paramount didn't immediately respond to requests for comment for this story.

Here are some of the key questions and challenges facing the new Paramount Skydance.

Can tech save Paramount?

Ellison made a tech-heavy pitch for combining Skydance and Paramount, invoking Steve Jobs as he explained how he sees technology and the arts working hand in hand. Describing the combined company as equally a tech and media enterprise, he talked about upgrading the Paramount+ algorithm to give users better recommendations and using AI to improve content creation. He also described how Skydance worked with his father's company, Oracle, to create a cloud-based animation studio, which it used to produce part of "Spellbound," a 2024 animated film, increasing efficiency and cutting costs.

But changing user behavior takes time, and Paramount+ needs more than better recommendations to make it a must-have for entertainment seekers, starting with more must-see shows. Hollywood is gradually embracing AI, especially to lower production costs. The tech and its adoption are still relatively new, making it hard to precisely quantify how much it could actually cut expenses (or make movies better, as the glass-half-full people like to say).

How can Paramount+ compete?

Paramount+ counts 78 million subscribers, helped by the NFL, CBS shows such as "NCIS" and favorites like "Star Trek" and the "Yellowstone" universe. And Paramount has started turning a profit. But Paramount+ ranks fourth among the major paid streamers by subscriptions and accounts for just 2% of TV streaming viewership, according to Nielsen.

In addition to the aforementioned tech enhancements, Paramount+ needs more must-see shows to drive subscriptions. LightShed has noted that Skydance struck deals to make movies for Netflix and Apple, so those won't be available to Paramount for a while. But in a sign it means business, Paramount just did a $1.5 billion deal for the global streaming rights for "South Park," and will look to Cindy Holland, hailed as the architect of Netflix's original content business, to give its streamer a shot in the arm.

Hollywood insiders are excited for Holland to get going and for Paramount to kick-start the marketplace for new shows, which has slowed since the end of Peak-TV.

One agent said talent is saving pitches for shows that they think could be a fit for Paramount, confident it'll soon be a big customer again.

A second agent said industry chatter is that Paramount will ramp up its movie output. "What it means is a very healthy new buyer," the person said, referring to Ellison's deep pockets compared to the former cash-strapped company. He also expects Ellison will be looking for high-minded fare in addition to the broadly appealing titles Skydance is known for, like the "Top Gun" and "Mission: Impossible" movies.

How will Paramount solve the linear TV problem?

The old linear TV business is going away in favor of streaming, especially as companies put more of their live sports on streaming platforms, taking fans with them.

Growing the streaming arm while managing a declining linear business can go two ways: Paramount can continue to milk its linear channels for the income they're still generating, or spin them off to generate cash. Lately, companies like Comcast and Warner Bros. Discovery have chosen the latter strategy.

Christopher Vollmer, managing director at ad industry consultancy MediaLink, thinks Paramount will take a similar route. "They'll do as much as they can to raise cash," he said. "If you're committed to building a streaming business, you have to put as much firepower behind them as you can."

It's not necessarily an all-or-nothing game, as he sees it. "They'll want to keep CBS to keep their leverage with the distribution world, and with the NFL, the consumer value the network brings is really important." Others, like BET and Showtime — that Paramount tried to sell before — could go.

What about Trump?

Anxieties have been running high for some people in and outside CBS's news division, with President Donald Trump repeatedly targeting the news media. Paramount agreed to a $16 million settlement over a lawsuit filed by Trump over routine editing of a "60 Minutes" segment that many legal experts said was meritless — a settlement that was lambasted in journalism and political circles as a concession to get the Skydance deal through.

Paramount has disputed this, saying the settlement was "completely separate from, and unrelated to, the Skydance transaction." Skydance went on to agree to conditions to get the merger done, including having an ombudsman and committing to an "unbiased" editorial direction. CBS also canceled the late-night show of Trump critic Stephen Colbert, drawing scrutiny for its timing ahead of the FCC approving the deal. (Paramount has said the move was "purely a financial decision against a challenging backdrop in late night.")

Ellison hasn't given a lot of clues about his politics. His father is close to Trump and also has looked at buying Bari Weiss's right-leaning outlet, The Free Press, The New York Times reported. So some insiders are on edge about what role Ellison could play with the news.

It might not take long to find out. Trump just this week ripped CBS News star Gayle King as having "no talent" and questioned her future at the network. For now, "60 Minutes'" recent appointment of an insider, Tanya Simon, to lead the newsmagazine has raised hope for some.

"I have no doubt that she and the excellent corps of correspondents will keep '60' on a strong and sure and independent footing, and I think the new corporate bosses are smart enough to know that's the right call," former producer Rome Hartman said.

Politics aside, it's also not hard to imagine Paramount using CBS News to help get to its $2 billion in cost cuts, given it's already trailing the other news networks.

Could games jump-start Paramount?

Skydance has two video game studios, and Ellison sees games as one of the ways Skydance can kick-start Paramount's business.

Video games are a conundrum for Hollywood companies; they're expensive and risky, but ignoring them means missing a big opportunity to extend their IP to a hugely popular pastime.

WBD and Disney have taken stabs at games with mixed success, and Netflix is building out its games, but has yet to show meaningful results.

If Ellison could figure out how to leverage Paramount's well known IP into games success, he'd accomplish something few others have.

What's the endgame?

Paramount Skydance still isn't considered big enough to hold its own among bigger media and tech giants, and industry observers expect more consolidation will follow.

Analysts have said Paramount Skydance could be a good pairing with Warner, with HBO Max's prestige shows nicely complementing Paramount's sports and Taylor Sheridan's Western soaps. Such a deal would create more exposure to linear TV, though, and it could be hard to fit CNN and CBS under the same roof. And there's the question of whether Comcast's Brian Roberts will get to WBD first. WBD didn't comment, and Comcast didn't immediately reply to a request for comment.

Or, Paramount and NBCUniversal could form an alliance that could take on Disney, but it would require casting off one of their news networks to avoid antitrust concerns. Of course, all these scenarios would mean either Ellison, Warner's David Zaslav, or Roberts would have to go away, which none seem ready to want to do.

Then, more interestingly, there's the TikTok wild card. Oracle has already been involved in both TikTok and Paramount as its cloud services provider. It's also a potential bidder among a group of US firms looking to buy TikTok's US operations and save TikTok from a US ban, Bloomberg and other outlets have reported.

If Oracle ended up owning TikTok, it would put the Ellison family behind one of the biggest content companies and one of the biggest tech platforms, with more than 150 million active monthly US users.

• Linda Yaccarino was named CEO of EMed, a telehealth company, a month after leaving X.
• Yaccarino's tenure at X was turbulent and involved doing a lot of damage control for Elon Musk.
• The new role could help her bolster her CEO chops in a company outside the media world.

It didn't take Linda Yaccarino long to get a new job after leaving Elon Musk's X, where she was CEO.

On Tuesday, just a month after exiting her high-profile job, she was named CEO of EMed, a telehealth startup that sells weight-loss drugs.

It might seem like a right turn for an executive who's made her name selling advertising for big-name companies. Before X, Yaccarino was the head of ad sales for NBCUniversal.

But if you look closely, it's not that surprising. Yaccarino told confidants for years before taking the X job that she wanted to be CEO of a company. And despite Yaccarino being X's CEO, Musk continued to manage major parts of the company, including product design and technology. She hadn't yet gotten a full shot.

After X, landing atop a media company might have been an uphill climb after a turbulent tenure that included the social-media company suing several prominent advertisers, including Nestlé, Colgate, and Shell.

EMed, on the other hand, gives her a chance to establish her CEO bona fides outside the blast radius of Musk.

"She finally gets to be a true CEO that I don't think Elon let her be. It's an opportunity to rehabilitate her reputation," said Lou Paskalis, a longtime ad industry figure who's been close to Yaccarino.

For EMed, it's a chance for a little-known company to leverage Yaccarino's connections with business leaders and CEOs as it looks to expand.

"They're capitalizing on those relationships," Paskalis said.

EMed cited Yaccarino's time at X as an asset in announcing her hire, calling her a "hands-on visionary" whose experience will help it expand to develop employer and government partnerships.

"Her ability to forge game-changing partnerships and navigate complex markets will position the company to become the definitive global leader in population health solutions," the company said in a statement.

Yaccarino, for her part, said in the statement that she saw an "opportunity to combine technology, lifestyle, and data in a new powerful way through the digital channels that impact consumers directly in ways that have never been done before."

When Musk hired Yaccarino at X, many in the industry had high hopes for her success, given her strong relationships with the ad community. Instead, she had to spend a lot of time doing damage control for Musk, as Business Insider previously reported.

The EMed role might just be Yaccarino's chance to get what she wanted all along.

• Disney's quest to make Disney+ a streaming super app has some employees wondering about Hulu's future.
• Analysts say they expect the Hulu app to eventually disappear.
• But insiders say several obstacles stand in the way of phasing out Hulu.

Disney is on a mission to make Disney+ its one-stop shop in streaming, prompting some employees to wonder: Where does that leave Hulu?

Nine Disney streaming staffers tell Business Insider that it's become impossible to ignore the company's increasing emphasis on Disney+ over Hulu.

"Internally, the Hulu brand isn't a priority," an employee on the ads side of Disney's streaming business said.

The Mouse House has been steering bundle subscribers to the Disney+ app by loading it with most Hulu movies and shows and some ESPN content. Unbundled Disney subscribers can also watch some Hulu and ESPN shows free of charge on Disney+. But Disney+ content isn't available on Hulu.

Disney CEO Bob Iger said in May that these changes are "definitely having a positive impact" on the streamer's engagement and cancellation rate.

Disney is also making changes internally. It's discouraging Hulu-only ad buys and merging the platforms' ad servers, employees said.

Two sales-side employees said they need special permission to sell a Hulu-only ad spot, excluding certain interactive ads that only work on Hulu. They said the sales team is pushing advertisers instead to buy across both Disney+ and Hulu, as part of what one of the staffers called a "massive" companywide push "to prioritize Disney+ over everything."

And last week, Disney moved to a unified ad server for Disney+ and Hulu. This shift, known internally as "Mission Control," was labor-intensive and at times painful but necessary, the employees said.

"Everything going through one ad server makes a lot less work for everyone involved when it comes to getting ad campaigns live," the first ads employee said.

Disney's changes show the Hulu brand is now decidedly on the back burner, this person said. They viewed the shift as mostly positive and said further unification of Disney+ and Hulu would give consumers a better experience while simplifying the ad sales process.

Hulu fans' migration to Disney+ is off to a slow start, so far.

Two Disney streaming employees with access to viewer data said the overwhelming majority of Hulu viewership still comes directly from the Hulu app, not through Disney+. Hulu has centered its identity on dramas and comedies for adults and next-day TV.

Disney is seeing some progress, though: One Hulu-focused streaming employee said the "Hulu on Disney+" section has been starting to get more engagement as subscribers start to discover that they can use Disney+ as an all-in-one app.

However, the Hulu-focused employee, who's familiar with the service's analytics, said many Hulu subscribers don't pay for Disney+ and aren't necessarily interested in its family-friendly content dominated by franchises like Marvel, Star Wars, and Disney animation.

Several media analysts support Disney's direction, though, in going all in on Disney+.

Further integrating Hulu into Disney+ could save the company about $3 billion through "the elimination of duplicative technology and administrative costs," MoffettNathanson's Robert Fishman said in a mid-July note.

UBS media analyst John Hodulik told BI in July that Disney fully consolidating Hulu into Disney+ is "one of the steps they need to take to Netflix-ify their streaming business."

Disney didn't respond to requests for comment.

Impacts on Hulu's business

Although Hulu still gets most of its viewership from its stand-alone app, there are signs Disney's emphasis on Disney+ could be affecting its ad business.

According to analysts at MoffettNathanson, Hulu generated the most US ad revenue of any paid streaming service in the second quarter, thanks to its mature ads business, which launched in 2008.

However, Hulu's ad revenue fell an estimated 0.3% last quarter, MoffettNathanson said. Hulu was the lone paid streaming service that didn't grow ad revenue in the second quarter, according to the firm. Meanwhile, Disney+ saw its advertising revenue soar 67% year-over-year in that same span, MoffettNathanson said.

Despite that, Disney+ has a long way to go to catch up. Hulu's ad revenue was more than four times that of Disney+ last quarter, MoffettNathanson said.

"Hulu having slightly lower ad revenue year-over-year while Disney+ has seen a huge increase makes perfect sense to me," the first employee on the ad sales side said, considering the company's continued emphasis on Disney+ over Hulu.

Another Disney+ employee said that "eyeballs are shifting into the Disney+ interface," in line with what one of their Hulu-focused colleagues said.

Both Disney+ and Hulu have seen gradual subscriber growth, even though Disney hiked prices of each service's ad and ad-free tiers last October.

Hulu is well ahead of Disney+ in how much money it makes per subscriber in the US. Hulu brought in $12.36 per subscriber in the first three months of this year, while Disney+ only generated two-thirds of that sum. But Hulu's average revenue per subscriber has fallen in each of the last three quarters, while Disney+'s has steadily risen.

Life after Hulu?

The idea of shuttering the stand-alone Hulu service has been raised internally as a thought experiment, an employee on the business side of Disney's streaming division who had been involved in those discussions said.

"Every time we go through that in our long-range plan, these things come up," this person said. "You're looking at, 'Alright, what would happen if we did this? Could we cut this? Could we merge? What would happen?' So you do those analyses in the background, but not all of them ever come to see the light of day."

A longtime Hulu employee said that Disney's focus with streaming has been on a "unified platform." They added that Hulu's tech had "serious degradation" issues and could feel outdated, given that it's one of the oldest streaming services.

Still, one potential issue with shutting down Hulu as a stand-alone app is that it's emotionally intertwined with the brand for staffers, sometimes called "Hulugans."

"Old employees have an affinity for it," a second veteran Hulu employee said.

• Netflix is quietly searching for an exec to lead its video podcast efforts.
• The streamer is chasing YouTube, which has cemented itself as a video podcast titan.
• Podcast listening and advertising are on the rise, and media giants are investing.

Netflix is quietly searching for a podcast leader as it looks to bring video pods onto the streaming platform, two people close to the company told Business Insider.

Netflix had previously explored potential deals with podcasters as it sought new areas of growth, as BI first reported. The hunt for an exec to lead a video podcasting effort shows how seriously Netflix is taking the space.

The streamer's interest comes as rival YouTube has cemented itself as a living-room fixture and video podcasting powerhouse.

Netflix has also shown interest in creator content more broadly.

"We're really excited about 'The Sidemen' and 'Pop the Balloon' and a wide variety of creators and video podcasters that might be a good fit for us, and particularly if they're doing great work and looking for different ways to connect with audiences," co-CEO Ted Sarandos said on the company's second-quarter earnings call this month. "The Sidemen" and "Pop the Balloon" are two Netflix shows that began in the creator realm.

Netflix has not publicized a podcast lead job opening and declined to comment for this story.

One person who had conversations with Netflix said the company wanted someone who could make video-first podcasts for a big audience.

Many of today's biggest podcasts started as audio-only endeavors and later added video as audience habits changed and YouTube gained prominence. The lines between video talk shows and podcasts have increasingly blurred, and newer podcasts often now start with video in mind.

It's not clear where the podcast role would sit inside Netflix.

A second person who had conversations with the company said they believed it would sit in Netflix's TV and film licensing arm under Lori Conkling rather than the original content side. That could signal that Netflix might look to license existing shows, as it's done with some YouTube creators like preschool entertainer Ms. Rachel, as well as make original shows with hosts. Separate content-side hires could follow.

Edison Research has charted the continued rise of podcast listening. In a new report out this week, the firm said 73% of people ages 12 and over in the US listen to or watch podcasts, up from 55% in 2020.

Video is on the rise, too, with 51% of people 12 and up saying they've watched a podcast, according to Edison.

Podcast advertising grew 26.4% to $2.4 billion in 2024, according to the IAB. EMARKETER projects it will top $2.5 billion in 2025.

Other media heavyweights have made big moves to chase the podcast-listening audience and the advertising that can come with it.

In February, Fox acquired Red Seat Ventures, which produces Tucker Carlson, Megyn Kelly, and others. Amazon paid $300 million for podcast company Wondery in 2020, The New York Times reported at the time, after snapping up audiobook company Audible in 2008.

• Cindy Rose, a Microsoft executive, will become WPP's new chief executive in September.
• Insiders see Rose's tech background and board experience at WPP as assets for the role.
• WPP issued a profit warning this week, and the ad industry is beset with problems.

As advertising giants try to shed their analog roots, WPP has raided one of the world's biggest tech giants to find its next leader.

The UK-based ad giant on Thursday announced that Microsoft executive Cindy Rose, 59, will succeed Mark Read as chief executive on September 1.

Insiders and shareholders told Business Insider they were hopeful Rose would steady the ship after a rocky period.

The appointment was announced the day after WPP had issued a surprise profit warning on Wednesday, saying cautious clients were spending less and less keen on pitches.

Three company insiders expressed relief to BI that the CEO search was over just a month after Read announced in June he would exit the company after 30 years. WPP said it considered both internal and external candidates. Rose was a surprise appointment to most observers BI spoke to and wasn't on their lists of probable candidates.

One WPP insider said they were "very optimistic" about the hire, adding Rose was both a fresh face and knowledgeable about WPP, having sat on its board since 2019.

American-born Rose is a former lawyer who switched to corporate roles, worked a long stint at Disney before joining Microsoft, where she is chief operating officer for global enterprise. She is a dual UK-US citizen and will split her time between both countries, which the insider said was another plus for a company listed on both US and UK stock markets.

Her tech background would put her in good standing to lead WPP to capitalize on the newer and more profitable parts of its offering to clients, the insider added.

"She doesn't come from a 'media' or 'creative' background, so won't see the company through that lens either," the WPP insider said.

WPP chair Philip Jansen praised Rose's experience building "enduring client relationships," having led multi-billion-dollar operations. At Microsoft, she's helped large enterprises harness AI.

Jansen said in a statement her expertise would be "hugely valuable to WPP as the industry navigates fundamental changes and macroeconomic uncertainty."

A US to UK import

Rose studied at Columbia University and New York Law School before relocating to the UK.

She worked at the Allen & Overy law firm in London and later joined Disney as legal counsel for Europe.

Ian Twinn, former director of public affairs for UK advertising trade body ISBA, told BI that Rose's legal background would help her navigate the PR highs and lows of running a large public company.

"In terms of being a public affairs guy, you do rely on people with a good legal background — it makes a big difference," said Twinn, who briefly interacted with Rose while she was at Disney. "She was very receptive and very focused."

Just after the turn of the millennium, Rose became Disney's UK managing director, leading thousands of employees across film, TV, and retail, and launching huge movies like "Finding Nemo" in the market.

Andy Bird, former chairman of Walt Disney International, told BI that Rose's experience as a custodian of several different brands in her time at Disney positions her well for understanding the needs of WPP's marketer clients.

"How you stay relevant to consumers is going to be very important to WPP moving forward," Bird said.

Rose was senior vice president of Disney's Europe, Middle East, and Africa interactive media group when she left after nine years to take senior leadership roles at UK telecommunications companies Virgin Media and Vodafone.

In 2016, Rose became chief executive of Microsoft UK. Joshua Graff recalls first meeting Rose at this time, when he was UK country manager at LinkedIn, which Microsoft acquired in December of that year. They worked together at Microsoft for almost 10 years.

Graff described Rose as "direct, empathetic" and "super funny," with an ability to create energy in the teams around her.

"No doubt she will be a talent magnet for WPP," Graff told BI.

Read previously credited Rose with putting Microsoft on the map among UK business leaders and politicians. She also championed diversity, both within Microsoft and in encouraging people from different backgrounds to take up careers in tech. She will be the first woman to be chief executive of a global advertising holding company.

Bringing a touch of Microsoft to WPP

The American-accented Rose was made an Officer of the British Empire, an honor conferred by the UK government, and received it from Queen Elizabeth in 2019. Rose was promoted to become president of Microsoft in Western Europe during the pandemic and rose to her most recent position in 2023. In this role, she was responsible for helping huge blue-chip businesses understand and use technologies like AI to transform their businesses.

WPP, too, is attempting to retool its business as it looks to pick up more lucrative work than simply creating and placing ads. It's investing hundreds of millions annually in AI and other technologies as it hopes to win lucrative contracts in areas like customer-relationship management and digital transformation, areas where Rose has firsthand experience.

Matt Atkinson, former chief customer officer of The Co-Op, worked closely with Rose as the grocer transformed its tech stack, from data infrastructure to the in-store customer experience. It was a big, competitive process, and Microsoft won the pitch, beating out Snowflake, among others.

"She had created an environment where we were able to creatively and technologically collaborate for mutual benefit," Atkinson told BI.

He added she had the "technology chops, emotional intelligence, and a way of being," which made her a good choice to run WPP.

A peacemaker

Rose will join as the ad industry faces a reckoning. Economic and geopolitical uncertainty is making marketers cautious about taking on big projects and launching new brands. Meanwhile, Big Tech players are increasingly touting AI-powered tools that can create entire ad campaigns and lure eyeballs away from the sites that host the ads agencies make.

With WPP's share price hovering at lows not seen since 2009, investors will look for signs Rose is ready to make big swings to attract new business. Insiders are hoping she will boost morale after a series of restructures, layoffs, and the institution of a strict return-to-office policy that has rattled many in the internal ranks.

Claire Enders, founder of media and telecommunications research company Enders Analysis, said Rose "epitomizes the reasons women have increasingly succeeded to these roles."

"She's a peacemaker, she's very non-confrontational, very thoughtful, and she works very well in very large organizations," Enders added.

• Perplexity AI is cautiously growing its ad business.
• Its main ad product is 'sponsored follow-up questions,' and it recently introduced a perks program.
• Perplexity has a revenue share program with publishers, but its ads business is still nascent.

Perplexity AI is taking a softly, softly approach to building its ad business.

The AI company had a low-key presence at last month's Cannes Lions ad festival in France. Amid the huge multimillion-dollar beach structures erected by tech giants like Meta, Amazon, and Google, Perplexity sent just a handful of executives to meet with current and potential business partners.

Perplexity, a conversational AI-powered search engine, began testing ads last year. Brands such as Whole Foods and Indeed have bought "sponsored follow-up questions," which appear alongside an answer to a user's prompt, encouraging them to dig deeper into the topic. Advertisers themselves don't write or edit the sponsored questions, which are generated by Perplexity's AI.

It's a contrast to traditional search engine marketing, where ads typically appear before the organic results.

Speaking to Business Insider at Cannes Lions in June, Ryan Foutty, Perplexity's VP of business development, said the company is still figuring out which advertising model will work best.

He described sponsored follow-up questions as "a really incredible brand advertorial."

"It's additive because you're helping users figure out the next question they need to ask to make a better decision or figure out what they're trying to do versus just trying to put something in your face," Foutty said, adding that 40% of its users click on related questions.

Perplexity advertisers pay on a CPM, or cost to reach a thousand impressions, model. A Perplexity spokesperson said advertising currently comprises less than a tenth of a percent of the company's total revenue, and declined to comment on the company's current ad prices.

In recent weeks, Perplexity has also introduced a perks program, where it provides subscribers to its Perplexity Pro service with offers and discounts from brands including Turbotax, the smart ring company Oura, and hotel booking service Selfbook.

Both Perplexity ads and perks are only active in the US. Foutty said the company was also considering more ways to monetize Perplexity's shopping and travel booking features, which could theoretically include further ad formats.

"It's very manual today," Foutty said, "But when we find something that works for everyone, then it's very easy, naturally, for us to scale it."

Perplexity hasn't released its user numbers, but its CEO, Aravind Srinivas, said the company received 780 million queries in May, up 20% from April. But compare that to Google's AI Overviews, which the search giant said reached 1.5 billion monthly users in May. Google recently brought advertising to more areas of its AI Overviews product, and it's testing ads within its AI Mode, a newer feature where users can conduct deeper research.

With its relatively small scale and only one specific ad format available, Perplexity's advertising offering is only getting tepid interest from marketers for now, said Eric Hoover, director of search engine optimization at the digital marketing agency Jellyfish.

"I don't see strong adoption by users," Hoover told BI. "People rarely click out of 'regular' AI results; I don't see them being eager to click on sponsored ones."

Perplexity wants to build 'long-term incentive' deals with publishers

Perplexity shares a portion of its ad revenue with the publisher partners it uses to help source its answers, which include Time, Fortune, and Der Spiegel.

The company doesn't cut up-front licensing deals with these publishers because it isn't building foundational large language models that require content for training, Foutty said. It does offer these partners access to its enterprise product and APIs that can help publishers embed Perplexity's tech, like conversational search, into their own sites. (Disclosure: Business Insider's parent company, Axel Springer, has a multi-year content licensing deal with Perplexity rival OpenAI.)

"The model that we're creating on the revenue share side is a long-term incentive," Foutty said. "It's not a one-and-done."

When asked whether any publishers were making serious money from the program, Foutty said it was still early days. The publisher program launched in June of last year.

"We're focused on building the right product before we scale it to everyone," he added.

The relationship between AI companies and publishers can often be fraught, and many are locked in legal battles. Rupert Murdoch's Dow Jones and the New York Post filed a lawsuit last year alleging that Perplexity engaged in copyright infringement by scraping and using their content. Perplexity said last year that the facts alleged in the complaint were "misleading at best" and that it planned to defend itself.

This week, the content delivery network and security provider Cloudflare announced it has begun automatically blocking AI crawlers from scraping the websites it powers unless site owners explicitly opt-in or the AI companies pay.