🍋 Ad Monopoly Cracking

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Good Morning! Sam Bankman-Fried pleaded not guilty to fraud charges yesterday and faces a potential 115 years in prison. He reportedly brought his gaming laptop to court with him. In an unlikely coincidence, yesterday the Fed, OCC, and FDIC issued a warning to banks about the dangers of crypto, stating that digital assets are "likely inconsistent with safe and sound banking practices."

More companies are ordering their employees back to office - in some cases, bosses have told those who fail to comply that they could face termination within weeks. Renters may have finally reached their breaking point across the country. Rent prices shot up 30% during the first two years of the pandemic, but a new study found they may have hit a price ceiling.

It looks like luxury gym chain Equinox isn't a fan of New Year's resolutions. They reportedly banned new members from signing up on January 1st. But don’t worry disgruntled investment banking analysts - the chain will be glad to take your $300/month dues now that New Year’s Day is over.

Speaking of New Year's resolutions, 2023 will probably be a good time to start getting rewarded for paying rent. Today's sponsor, Bilt allows you to earn points when paying rent, which can be redeemed for travel, credit towards your next rent payment, or towards a down payment on a home. Apply here.

1. Story of the Day: Ad Monopoly Cracking

It looks like Google and Facebook are finally getting a taste of their own medicine! These two behemoths have been monopolizing the digital ad market for years, but it looks like their reign is coming to an end. According to research firm Insider Intelligence, these two giants only accounted for 48.4% of U.S. digital ad spending in 2022. That's the lowest it's been since 2014, and it's expected to drop even further to 44.9% this year.

It was a rough year for Google and Facebook, as people spent less time online and marketers worried about a potential economic downturn cut back on ad spending. Meanwhile, Amazon, TikTok, and other streaming services have been making a splash in the digital advertising world.

Facebook and other social media companies also took a hit thanks to Apple's decision to require apps on its devices to ask users if they wanted to be tracked. Most iPhone users opted out, which hurt Facebook's ability to precisely target ads and prove their effectiveness to marketers.

TikTok and Amazon are chomping at the bit to capture Google and Facebook's dwindling market share. With almost 100 million monthly active users and a grip on Gen Z, millennials, and influencers, it's no wonder TikTok’s ad spending market share more than doubled in 2022.

Meanwhile, Amazon's ad business is on the rise too, with 11.7% of U.S. digital ad spending last year and projected growth to 12.4% in 2023. Streaming services are also trying to grab a bigger slice of the digital-advertising pie.

Takeaway: Advertising spending is expected to slow in 2023. But while spending dries up as a whole, a larger proportion of spending is targeted at digital consumers. More players are getting involved in the space, meaning Meta and Google can’t rely on their brands alone to continue dominating.

2. Markets Rundown

If you want access to Wall Street insider interviews, industry deep-dives, premium research/resources and weekly Knowledge Drop newsletter, check out our Insiders membership.

Stocks closed the first trading day of 2023 lower as recession fears mount.

Movers & Shakers

• (+) PayPal ($PYPL) +5% after a stock upgrade from Truist.

• (+) Block ($SQ) +3% after an upgrade from Baird.

• (–) Tesla ($TSLA) -12% after disappointing Q4 deliveries.

Private Dealmaking

• Thermo Fisher Scientific bought Binding Site, a British medical diagnostics firm, for $2.8 billion

• MBK Partners will buy Medit, a 3D dental scanners manufacturer, for $2 billion

• SpaceX is raising $750 million in new funding at a $137 billion valuation

• Akulaku, an Indonesian fintech platform, raised $200 million

• Kream, a South Korean sneaker marketplace, raised $157 million

• Reliance Retail Ventures bought Lotus Chocolate, a chocolate maker, for $9 million

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Top Reads

• Blackstone’s BREIT gets $4 billion California injection (YF)

• 2022 was a huge year for LBOs (Axios)

• 3 different paths the economy could take in 2023 (Vox)

• Gold surges to 6-month highs, analysts expect record 2023 (CNBC)

• The real-world effect of Elon Musk’s online drama (Axios)

• 80% of Americans forecast economic difficulty in 2023 (Fox)

• Stocks usually go up - just make sure to give it 20 years (YF)

• How you can take advantage of tax breaks in the Inflation Reduction Act (Vox)

• 7 key economic storylines for 2023 (Axios)

• Why Deere thinks satellites are the next great technology to invest in (CNBC)

4. Book of the Day: Butler to the World

The Suez Crisis of 1956 was the nadir of Britain's twentieth century, the moment when the once-superpower was bullied into retreat. "Great Britain has lost an empire and not yet found a role," said Dean Acherson, a former US secretary of state.

Acheson's line has entered into the canon of great quotations: but it was wrong. Britain had already found a role. The leaders of the world just hadn't noticed it yet.

Butler to the World reveals how Britain came to assume its role as the center of the offshore economy.

Written polemically, but studded with witty references to the butlers of popular fiction, it demonstrates how so many elements of modern Britain have been put at the service of the world's oligarchs.

“Within a decade, the machines were earning bookies almost £2 billion a year in profits. On average, that’s a loss of almost £100 from each family in Britain, and the money was coming overwhelmingly from families least able to afford to lose it.”

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5. Short Squeez Picks

• 7 shortcuts that will make you a Gmail pro

• The 6 habits the ultrawealthy have in common

• How to build a habit in 5 steps, according to science

• Everything you need to know about ChatGPT

• How emotionally intelligent people turn frustration and stress into achievement and fulfillment

6. Daily Visual: Apple Loses $1 Trillion in Market Cap in 1 Year

Apple stock price

Source: Axios

7. Daily Acumen

"So extreme are the admission standards now that kids who manage to get into elite colleges have, by definition, never experienced anything but success. The prospect of not being successful terrifies them, disorients them.

The cost of falling short, even temporarily, becomes not merely practical, but existential. The result is a violent aversion to risk. You have no margin for error, so you avoid the possibility that you will ever make an error.

Our system of elite education manufactures young people who are smart and talented and driven, yes, but also anxious, timid, and lost, with little intellectual curiosity and a stunted sense of purpose: trapped in a bubble of privilege, heading meekly in the same direction, great at what they’re doing but with no idea why they’re doing it.”

Source: New Republic

8. Memes of the Day

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