Medi@8_ Citi CMO Survey _ Survey Implications for Global Agencies _ LAGA _ PUBP & GOOGL

Summary of Key Points from the Conference Call Industry Overview - Global Advertising Outlook: The 5th CMO Survey conducted by Citi indicates a more challenging outlook for global advertising, with a defensive shift in marketing priorities. China is the only market where growth expectations have improved since the last survey, while the US is viewed positively for the next 2-3 years [7][18]. Core Insights - Marketing Budgets: Expected to grow by 3.8% over the next 12 months and 6.1% over the next 2-3 years, reflecting a deterioration from previous surveys. The US is anticipated to be the fastest-growing region in the long term [8][19]. - Digital Media Growth: Digital media's share of the media mix is projected to increase from 47% to 54% in the next year and 60% in 2-3 years, indicating a significant shift towards digital platforms [9][19]. - Focus Areas: Key areas for growth include digital short-form video, Connected TV, Retail Media, and Influencer Marketing, with Instagram Reels and YouTube highlighted as effective channels [10][19]. Agency Dynamics - Agency Importance: Despite challenges, 61%-86% of CMOs consider using agencies as 'very important'. Agencies are well-positioned to help CMOs leverage first-party data, which is a top criterion for agency selection [11][19]. - Defensive Positioning: CMOs are shifting priorities towards shorter-duration marketing investments, indicating a more defensive approach in their strategies [12][19]. Stock Implications - Positive Outlook for Digital Platforms: The survey results are favorable for larger digital media platforms and support a constructive view on global agencies and IT services, while traditional media faces mixed implications [13][19]. - Top Picks: Recommended stocks include META, GOOGL, RDDT, TTD, APP, EXLS in the US, and WPP, PRX, CAP in Europe, along with Tencent (0700) in Asia-Pacific [14][19]. Company-Specific Insights - PDD Holdings Inc: Reported 3Q24 revenues of RMB 99.4 billion, a 44% year-over-year increase, but missed consensus estimates. Non-GAAP net profit was RMB 27.5 billion, 14.5% lower than expected, attributed to increased costs from merchant support programs [29][30]. - iQIYI: 3Q24 revenue was in line with expectations, but competition remains intense, leading to lower visibility for FY2025. The company is expected to maintain flat operating profit in 4Q24 [26][27]. - Alibaba Group: Announced the integration of its eCommerce platforms, which is expected to enhance operational efficiency and profitability in the medium to long term [28][29]. - Wix: Reported strong 3Q24 results with a positive outlook for 4Q24, driven by growth in bookings and agency partnerships. The company plans to release new AI products to further drive revenue [32][33]. Additional Notes - Acquisitions and Partnerships: Lagardère Publishing acquired Sterling Publishing, and Publicis Sapient announced a partnership with Google Cloud to enhance AI technology adoption [24][25]. - Market Sentiment: The overall sentiment indicates a cautious but constructive outlook for agencies, with investor concerns about AI and digital channels being addressed through survey findings [20][21].