Executive Briefing: Wednesday 28 October

Executive summary: The marketing landscape is significantly shaped by the expanding application of AI, driving both operational restructuring and new opportunities in commerce media. Brands are navigating shifting media consumption habits, with notable budget reallocations to platforms like TikTok and Instagram. Concurrently, increasing regulatory scrutiny impacts retail operations and digital content governance, demanding heightened compliance and adaptable strategies. AI reshapes marketing operations and workforce strategy Artificial intelligence continues to integrate deeply into business operations and marketing functions. A recent Nielsen report indicates that nearly 98% of marketers now utilise AI, with a third trusting AI recommendations without human oversight, yet accuracy in measurement remains a key priority, increasing twofold year-on-year. This AI-driven shift is also impacting workforce planning, as seen with Microsoft offering buyouts to approximately 60,000 employees to restructure for the AI age. Meanwhile, OpenAI's GPT-6.1 Terra demonstrates significant advancements in computer-use capabilities, scoring 15 percentage points higher than its predecessor at a third of the cost, and reducing hallucination rates by nearly 37 percentage points at low reasoning effort, highlighting improvements in efficiency and reliability for diverse applications. Commerce media expands beyond traditional search and performance Commerce media is evolving beyond conventional keyword-based search and direct sales, with major players identifying new revenue streams and focusing on richer, performance-driven advertising models. Expedia Group Advertising is targeting non-travel brands like fashion and finance, leveraging travel planning signals for a potential $100 billion opportunity in the US alone. Similarly, DoorDash is expanding its advertising tools across 40 countries through Wolt and Deliveroo, with a focus on brand storytelling formats like Spotlight to enhance discovery on mobile screens. This shift is further underscored by the introduction of performance-based models, such as mobile ad tech holding company Affle's Cost Per User Acquisition (CPCU) model for CTV ads, which charges advertisers only when an action like an app install or purchase occurs after ad exposure, using household signals for attribution. Major shifts in media spend and platform content strategy Australian advertisers are significantly reallocating media budgets, with money shifting into TikTok and Channel 10, while Meta and rival TV networks experience declines. TikTok spend among top advertisers in Australia surged by 212% in July, contrasting with an 8% drop for Facebook. Concurrently, Instagram is intensifying its video strategy by testing "Features" for horizontal videos up to 90 minutes and "Series" for episodic content, aiming to capture a larger share of the entertainment landscape and compete with platforms like YouTube and TikTok. This strategic pivot includes efforts to facilitate creators in linking short-form Reels to longer videos. Amidst these changes, multicultural publishers are leveraging first-party data to combat shrinking reach and improve RFP eligibility across channels such as CTV and digital audio, building sub-affinity segments for targeted audience activation. Increased regulatory action across retail and digital platforms Regulatory bodies are enforcing stricter compliance and introducing new mandates that will impact commercial operations. Fresh produce wholesaler Perfection Fresh faces a proposed $12 million penalty for admitted cartel conduct, specifically fixing prices of vegetables supplied to ALDI in NSW between 2019 and 2020. In New South Wales, service stations are set to face fines of up to $110,000 from 2030 under new plastics laws, requiring them to offer reusable cups free of charge with every sale. Meanwhile, Google has updated its user-generated spam policy, explicitly advising platforms and tools that allow user-generated content, shared pages, or web apps to use 'noindex' or crawling restrictions for content not intended for public search discovery, signalling a stronger focus on content governance.