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Meta, Google, & Tariff Impact on APAC Online Advertising

This interview with a Former Head of Ad Partnerships at Meta explores the potential impact of tariffs on APAC ad spend across Meta and Google properties and how ROAS may evolve as AI adoption grows:

even during my time at Google and Twitter, I've heard that Facebook has a much better ROI compared to Google and Twitter. This is because Facebook knows its users very well, allowing them to perform audience segmentation effectively and help advertisers target micro-segments efficiently.For example, on Google, it's challenging to target a 25-year-old single woman in Brazil who works in an investment bank and is interested in running. Such targeting is very difficult on Google, but on Facebook, it's very easy. Because of this, Facebook has always had a huge advantage in effective targeting and segmentation. - Former Head of Global Advertising Partnerships at Meta

Google has tried to replicate Reels with YouTube Shorts:

Google, with YouTube, has tried to create different formats, like YouTube Shorts, to replicate some of Facebook's advantages. However, it's a different ball game, and they can't compete with Facebook's inherent advantages. - Former Head of Global Advertising Partnerships at Meta

The quality and depth of Meta’s user data may only extend its advantage as AI penetration increases: 

Google has the advantage in Google search, but with GenAI platforms emerging, we'll have to see if search declines and what Google will do about it. Facebook's advantages will remain and grow because they have billions of users spending a lot of time on the platform, and they have a lot of data about them. Facebook's formats are very advertiser and user-friendly. Even with TikTok's disadvantages, Facebook's advantages will continue to grow. Facebook has a large user base and a wealth of data, including personality, preference, profile, and interest data. It has very current data about every user. For instance, Facebook can detect changes in your interests, like if you were interested in running yesterday and are interested in dancing today. Facebook knows your interests better than you might because it observes you closely. - Former Head of Global Advertising Partnerships at Meta

Coupang: Coupang Eats & South Korean Food Delivery

This interview with a Former Coupang Eats executive explores how the food delivery service has scaled over the years. One critical variable for marketplace health is the balance of driver costs, engagement, and incentives to ensure supply meets demand:

"There are many lessons learned on driver engagement and setting up different incentives so that you're paying only to the group. You essentially have a set of supply curves that differ for each freelancer. Some people are only willing to work at certain prices. How do you ensure you're only paying to satisfy each person's supply curve? You can't do that by paying everyone the highest price. Coupang develops different engagement incentives to ensure enough people are available during peak times. Being competitive and data-driven in the incentives approach is crucial - Former Senior Executive at Coupang

The executive gives an example of driver incentives to keep driver loyal and engaged:

"For example, for the gold level, over 30%, it states that in the previous two weeks, you must have delivered more than 400 orders, with at least 100 orders per week and a 70% or higher acceptance rate. These metrics aim to ensure engagement and consistent delivery. If drivers reject an order, it costs the customer and the delivery platform additional time to assign a new driver. When an order is rejected four or five times, it takes a few minutes for any rider to pick it up. They're trying to reduce this and improve the acceptance rate. - Former Senior Executive at Coupang

Copart vs IAA Competitive Dynamics

An executive with over three decades of experience at IAA explores how the company is positioned to compete against Copart:

I would say that IAA is still able to compete on selling prices, and their returns are comparable or sometimes better. IAA has a reputation among buyers as a place to get good, clean cars. What you see is what you get. When buying from Copart, there could be hidden damage, and you don't always know what you're buying. Yet, buyers continue to choose Copart because the platform offers a better experience overall. Even if there might be hidden damage or undisclosed issues, they prefer Copart for its ease and speed compared to IAA. However, IAA is known for cars you can trust. - Former VP at IAA Inc

And what insurers care about when using salvage auctions:

It's all about how we can quickly pick up their cars and help them minimize their advance charges, which is crucial for keeping costs low. We discuss protecting the cars by shrink-wrapping exposed areas with broken windows and preserving value by cleaning, preparing, and vacuuming the cars for sale. This was more common during live auctions, but it's still relevant today regarding the services performed. We also focus on attracting buyers and ensuring competitive bids. - Former VP at IAA Inc

This can be read alongside our other material on Copart and salvage auctions:

FTAI vs CFM Materials: USM Sourcing, Pricing, & Availability

A major driver of FTAIs ability to complete module swaps is not only having the amount of engines in inventory, but also part availability and the capacity for DER repairs.

FTAI 2023 Investor Presentation
FTAI 2023 Investor Presentation

Getting access to LLPs and critical non-LLPs like turbine blades and vanes is not easy. CFM has a specific division called CFM Materials that is solely focused on buying USM and recycling it back through its shops. This interview with a Former CFO of CFM Materials shares how the division operates within the wider JV and how it both serves and competes with FTAI.

Like FTAI, CFM Materials buys engines, tears them down, and sells the parts. CFM Materials also sells USM to FTAI. The interview explores the illiquid market for buying and tearing down engines:

Being part of the CFM family is advantageous. We probably got about 50% of our parts from internal sources. Fortress never had access to that volume. I remember the AAR deal well because it was concerning, but not a huge worry. Fortress didn't have the parts supply, so they ended up buying parts from us...for hot parts like LPT, the priority is GE and Safran first, and then our biggest, loyal customers. If we had spares, we would sell to Fortress at market price without any discount. - Former CFO of CFM Materials

Without access to USM or DER, FTAI has to buy new LLPs and parts from CFM at list price to complete the maintenance. While the turnaround may still be quicker, buying from the OEM reduces the cost differences of FTAIs module swap versus a traditional shop visit.

When there's a short supply, you can't do the swap. There's no question about it. From what I understand, unless a company has a big contract and negotiates a discount, many companies buy the parts during the shop visit and pay full price. By full price, I mean catalog price for new parts. They don't bring any value or savings. The advantage they offer is getting your engine back straight away instead of waiting three to four months. The module swap is more certain; you know the cost and outcome. LPT repairs are uncertain because you don't know what will be discovered during the repair. The timing is faster with a module swap, so you get your engine back quickly. - Former CFO of CFM Materials

CFM Materials saw FTAI in the market willing to pay higher prices than CFM given the need to build an inventory of parts to complete swaps.

there was a lot of variability in the pricing on the Fortress side while I was there. Sometimes they were very competitive, to the point where we thought it was absurd to pay that much. Other times, they were not competitive at all, at least we didn't think so, because they weren't even mentioned when we got to a second or final round. - Former CFO of CFM Materials

The interview also discusses how CFM approaches selling USM to FTAI whilst FTAI aims to PMA its high-value OEM parts. FTAI is exposed to the liquidity and pricing of USM and has a unique frenemy relationship with CFM. On the other hand, we also explore why CFM may have bigger issues to worry about than FTAI on the CFM56. This interview is part of a series of work over the last 6 months to understand FTAI and the business of engine maintenance:

  1. FTAI Aviation; a curation of all our work on FTAI
  9. FTAI Aviation: Short Report Review w/ Former FTAI Engineer

Halma: Apollo Fire Detectors, Open vs Closed Protocols

Apollo Fire Detectors is one of the largest opcos within Halma’s fire portfolio and the wider group. The subsidiary earns a consistent 25% EBIT margins and 40%+ ROE.

This interview with a Former Apollo Director explores how Halma has scaled its razor razor-blade model of closed fire systems:

"Let's say you're up against someone with a closed protocol. Their strategy is to sell the product as cheaply as possible through an electrical or building contractor. If I'm building a new building, I seek prices from fire alarm companies to install systems in this building. Company A offers a system for £1,000, while Company B offers it for £1,500. The electrical contractor might say, "I don't care, it's a fire alarm, I'll take the £1,000 option." However, the true cost of the job is £1,500, but the company that quoted £1,000 uses a closed protocol system. Once the building is finished and sold to a new owner, the owner needs a maintenance contract and might need to replace or add detectors. The detector, initially sold for £10 is now over £150. Meanwhile, an Apollo detector was £25 at the start and remains £25. The maintenance contract is also costly. We're the only ones who can maintain that system, so the maintenance is £1,000, whereas with Apollo, it would have been £100. Their business model aims to grow revenue - Former Director at Apollo Fire Detectors - a Halma company

We explore how Apollo disrupted the UK market with an open protocol strategy:

"Between 2007 and 2014, I developed a strategy during the financial crisis when few new buildings were being constructed. I targeted closed protocol buildings by asking, "How much are you paying for maintenance?" They might say £40,000. I would respond, "That's the cost of a new system. If you install our system, you'd pay £40,000 initially, and then only £400 annually for maintenance, saving money every year." This approach educated the market, and our sales grew - Former Director at Apollo Fire Detectors - a Halma company

And compares how maintenance pricing compares between open and closed models:

With closed systems, once installed, they can charge whatever they like. The alternative for the client is to remove the entire system, except for the cabling, and install an open system in the building. I've seen quotes of £30 to £50 per point for a service. That compares to the £2 per point that an installer would charge within an open system - Former Director at Apollo Fire Detectors - a Halma company

We've been covering Halma and similar industrial holdcos for the last five years: