Amazon HQ2 thread

[SLO]

Originally Posted by JManc

Price: $46,500,000
Monthly Maintenance/CC: $14,024
Monthly Real Estate Tax: $10,933




In addition to a $36 million mortgage (if you only put 10% down)...you have to shell out an additional $24,000 per month.

yikes, yep the money is completely insane these days especially in NYC, Socal, Bay Area, maybe Miami. I have 3 projects underway right now in 10-11,000 sq foot range, but really whenever I've had projects like that they are cash deals. Then I start thinking about upkeep, taxes, etc....

[Austinlee]

Originally Posted by Shawn

Complex question. It comes down to how big of a presence overall media has in the market, not just ad tech. Let me explain.

Media owners are wholesale migrating to digital - this isn't new, we all have been aware of this for the past decade. But the movement has accelerated among the major glossies like Condé Nast and Hearst, and the major holding companies have finally accepted that over-the-top, non-linear delivery will be the norm moving forward. This means that traditional advertising revenue streams are drying up, while new ones are opening (non-live event TV rates are globally tanking, whereas digital premium video placements now go for $60-$70 CPM, which is 1000%+ price inflation over the past 5 years alone).

Tier 1 advertisers now tend to care about three things when it comes to digital media: is it premium? is it addressable? is it brand-safe? Premium meaning things like 100% 1st fold in-view (not 5 folds down) on a top portal or glossy site; Addressable meaning there is ad tech in place to allow granular segmentation and targeting; Brand-safe meaning the placements appear in context appropriate for the brand's image. If a media property can tick all three boxes, the price of this Goldilocks-zone media won't be a barrier to booking. This is because supply of this type of media is still relatively scarce, in any market.

Amazon sits in a pretty unique position. It is both a massive supplier and purchaser of Goldilocks digital media. Amazon has one of the most developed "stacks" in the industry - they have the most thorough set of addressable consumer-purchase data in the world for all the markets brands care about save China, which they make available to advertisers via their DMP (data management platform, which sorts, categorizes and segments user data), and they are on any given day one of the world's largest suppliers of digital inventory, which they pump into their own and other partner SSPs (supply-side platforms, which allow publishers to manage their media yield by setting floor and ceiling prices). Amazon is a large enough publisher to also have direct inventory deals with many of the world's largest DSPs (demand-side platforms, where advertisers go to buy placements based on segment and audience data crunched in the DMP). Amazon needs to work with the big DSPs to ensure it can hit as close to 100% run rate as possible (otherwise they're just leaving money on the table). And they can never own their own DSP, as the DSP functions as a price arbiter for all media, not just Amazon media. Meaning Amazon always will have to rely on third party partners to move a big part of their inventory.

The important thing to keep in mind is that Amazon (and Google / YouTube, and Facebook) all operate within the Agency-Media Rep framework. This means that Amazon will not go directly to a brand and strike a deal; instead, they go through the brand's media agency of record. Amazon doesn't have a direct deal with P&G - Amazon has an absolutely amazing deal with P&G via Omnicom. Unilever has an almost-as-awesome deal with Amazon via GroupM. And Amazon also works with both of these agencies on Amazon's behalf (meaning Amazon is the client) to better monetize their own properties and to meet their own marketing-communications strategies, especially in new markets where the OMDs and GroupM/WPPs of the world have been operating for 30+ years already.

So Amazon needs the big media owners and the big media agencies in order to work with the Tier 1 brands and their $billions in ad budgets. The ad tech makes up the entire delivery ecosystem for the most profitable part of Amazon's business, especially on the demand-side. But the "demand" here is largely gate-kept by agencies, and not unlike high finance, personal relationships between leadership among media owners and publishers, ad tech, and the agencies make or break where spend gets funneled.

So to answer your question: in most cases, Amazon would not elevate the HQ2 city into an ad tech center, because Amazon is just one admittedly big player in an even bigger field. GroupM, Omnicom, Interpublic, and/or Publicis are not going to up and leave New York City for wherever HQ2 goes. The ad tech giants like AppNexus, Pubmatic, Xaxis, or The Trade Desk aren't leaving New York or Boston either. None of the big media holding companies are leaving New York. The corporate media cluster in NYC exists for the same reason the finance cluster does. This is where the "Amazon hires from anywhere, the local talent pool doesn't matter" line doesn't gel with the reality I live every day: ad tech people are in extremely short supply. I have a bunch of open head counts now for both execution-level and manager-level positions, and the salaries are ridiculous - still cannot fill them, because of scarcity. People jump from one ad tech company to the next, doing the "agency dance": 1 year here, then negotiate a better salary at a competitor and move there for a year; reverse and repeat. Ad tech people don't move to a market where there's only one job option, even if it's as big as Amazon. New York, the Bay Area, and Boston are the three markets in the US where ad tech clusters exist, not just one company. New York is the only market where an ad tech cluster sits in many cases in the same building as the world's largest media owners and advertising brands.

And to your point, Charlotte didn't become a new finance cluster just because BOA moved there.

Shawn: I read it. I didn't understand a lot of the industry terminology you used but it was still an interesting read about media/ad industry clusters.
I am surprised you didn't include LA on your list. That is a huge media city. I would imagine they have a large presence in the industry. What other cities are 2nd or 3rd tier in this industry? I am interested because I was involved with a lot of marketing in local residential real estate but I don't really know much about the national or global level of marketing.

[LouisVanDerWright]

AMZN is up another $15 today. Bezos is literally getting like $1 billion net worth bump per day.

Originally Posted by 10023

This is nonsense.

How does Chicago score as poorly as possible on "cost of living"?

That's objectively wrong.

Yeah that's literally a joke. How is Chicago more expensive than LA and equally as expensive as DC, Boston, and NYC? I love the trash coastal writers come up with about cities they've apparently never been to (or maybe came and stayed at their hedge fund manager buddy's house in Lincoln Park and never left that part of Chicago long enough to realize that the vast majority of the city isn't like that).

[Sun Belt]

Originally Posted by LouisVanDerWright

AMZN is up another $15 today. Bezos is literally getting like $1 billion net worth bump per day.

But wait, Amazon is shopping for an HQ2 because they need taxpayers from a certain city/state to finance it.

Receive billions to build a campus with some middle income jobs over a couple decades.

Amazon here in the 1990's, dominating in the late 2010's, gone 2030 or dominating everything? Who knows. Once they get into drug distribution I think we will see anti-trust news. Too much money in that.

[10023]

Originally Posted by LosAngelesSportsFan

Less respect? It's literally the best thing we can do for this world.. Too bad this movement didn't start 5 billion people ago

This.

[Sun Belt]

Originally Posted by 10023

This.

Had it started 5 billion people ago you would not exist.

[Shawn]

Originally Posted by Austinlee

Shawn: I read it. I didn't understand a lot of the industry terminology you used but it was still an interesting read about media/ad industry clusters.
I am surprised you didn't include LA on your list. That is a huge media city. I would imagine they have a large presence in the industry. What other cities are 2nd or 3rd tier in this industry? I am interested because I was involved with a lot of marketing in local residential real estate but I don't really know much about the national or global level of marketing.

Thanks Austinlee, hope you could pick something interesting up from my long-winded posts.

Just as a bit of additional info, there are 4.5 media agency holding companies which control 90% of the global media advertising spend. The Big Four in order of billings are WPP (GroupM - London/NYC joint HQ), Omnicom (OMD - NYC HQ), Publicis (Paris HQ, Americas HQ in NYC), and Interpublic (NYC HQ). Dentsu-Aegis makes up the 0.5 of the 4.5: they absolutely dominate Japan and have a strong presence throughout APAC, but are weak otherwise.

In terms of "tiers", the global network looks like this (China tiers existing outside the global system):

Tier 1: NYC, London, Paris, Tokyo, Singapore (Shanghai)
Tier 2: Amsterdam, Dublin, Dubai, Bangalore, Hong Kong, Sydney, Miami, Moscow, Mexico City, Sao Paulo, Nairobi, most other OECD-member European capitals (Beijing)
Tier 3: Los Angeles, Mumbai, Jakarta, KL, Taipei, Boston, Toronto, Seoul (a bunch of Chinese local markets with populations larger than most European countries)

LA is perhaps the only city that could see its overall position in the tiers of media / mark-comm cities improve. LA (actually Santa Monica) is home to the West Coast offices for all the above agencies. OMD in particular has a big team (largely dedicated to Apple's global business). Moreover, some important media owners are there: Snap and Buzzfeed. Also one major and one minor global ad tech firms: OpenX and AdColony.

The problem comes down again to the nature of clustering: LA is the media production center of the US, but not the home of corporate media. Decisions on trading deals aren't made in LA - they're made on Madison Avenue. And that's where Amazon needs to be to influence decisions.

[Baronvonellis]

Exactly, this is what's wrong with the US, that the richest man on the planet needs taxpayer money from ordinary people so that he can get richer, while he does nothing to give back.

Originally Posted by Sun Belt

But wait, Amazon is shopping for an HQ2 because they need taxpayers from a certain city/state to finance it.

Receive billions to build a campus with some middle income jobs over a couple decades.

Amazon here in the 1990's, dominating in the late 2010's, gone 2030 or dominating everything? Who knows. Once they get into drug distribution I think we will see anti-trust news. Too much money in that.

[chris08876]

• Video Link

[10023]

Originally Posted by Sun Belt

Had it started 5 billion people ago you would not exist.

What makes you say that?

My parents had perfectly good access to contraception and birth control, or even medical abortion, and had two kids (below the replacement rate).

We're talking about parts of the world where fertility rates remain much too high.

[Sun Belt]

Originally Posted by Sun Belt

Once they get into drug distribution I think we will see anti-trust news. Too much money in that.

It has begun. Looks like I spoke a day too soon.

Amazon, Berkshire Hathaway, and JPMorgan Chase to partner on US employee health care
Jeff Cox | Angelica LaVito
https://www.cnbc.com/2018/01/30/amazon-b...-partner-on-us-employee-health-care.html

[Via Chicago]

Originally Posted by Sun Belt

Had it started 5 billion people ago you would not exist.

whether i would or wouldnt exist is immaterial. i dont recall minding not existing before i did exist, do you? or are you of the opinion that unfertilized eggs also qualify as human lives...

[CherryCreek]

Originally Posted by Sun Belt

It has begun. Looks like I spoke a day too soon.

Amazon, Berkshire Hathaway, and JPMorgan Chase to partner on US employee health care
Jeff Cox | Angelica LaVito
https://www.cnbc.com/2018/01/30/amazon-b...-partner-on-us-employee-health-care.html

Can't tell exactly what is planned, but it sounds more to me like they want to replace the insurers they use to manage the self-insured benefits with their own company. That may or may not include drug distribution.

Going into business to compete against health insurance companies is great news! That sector is a mess in my opinion, and could use some new business models and better use of technology.

[Sun Belt]

Originally Posted by Via Chicago

whether i would or wouldnt exist is immaterial. i dont recall minding not existing before i did exist, do you? or are you of the opinion that unfertilized eggs also qualify as human lives...

Don't be weird. This is pretty straight forward.

If there wasn't a baby boomer generation or post ww2 population boom in the west or other developed nations at that time, none of us would be here. 10023's parents wouldn't have been here if his grandparents decided to use condoms and birth control (5 billion people ago).

[IrishIllini]

This thread has charted an interesting course...

[ScreamShatter]

Said it many times, but if Amazons plan is to go into pharma distribution...that’s great news for the philly proposal. Eds, meds, healthcare/pharma, and technology are the backbone of phillys business infrastructure. Not saying that’s the only factor, but it does help solidify philly as a major competitor for hq2 if that is indeed their plans.

[ssiguy]

Which ever city wins I hope it is ANY city but one that is using taxpayer bribes and offering corporate welfare to one of the largest, most profitable, and powerful corporations on the planet. Big corporations demand lower taxes and "getting rid of government waste" but conversely are the first pigs at the trough when government largess is up for the taking.

As Toronto is the only Canadian city left standing, I am very glad that it, nor the province or Ottawa, have sunk to the level of corporate welfare..........if you want to come here great but were not willing to bribe you to do it. May the best city win but on it's own merits.

[Khantilever]

Originally Posted by ssiguy

Which ever city wins I hope it is ANY city but one that is using taxpayer bribes and offering corporate welfare to one of the largest, most profitable, and powerful corporations on the planet. Big corporations demand lower taxes and "getting rid of government waste" but conversely are the first pigs at the trough when government largess is up for the taking.

As Toronto is the only Canadian city left standing, I am very glad that it, nor the province or Ottawa, have sunk to the level of corporate welfare..........if you want to come here great but were not willing to bribe you to do it. May the best city win but on it's own merits.

Ideally, we’d structure incentives in a clear, open way that are accessible to all firms. Illinois’ offer rests on tax rebates that are more or less available to any decently sized firm moving to the state, and that’s a decent way to do this.

[Pedestrian]

Originally Posted by ssiguy

Which ever city wins I hope it is ANY city but one that is using taxpayer bribes and offering corporate welfare to one of the largest, most profitable, and powerful corporations on the planet. Big corporations demand lower taxes and "getting rid of government waste" but conversely are the first pigs at the trough when government largess is up for the taking.

As Toronto is the only Canadian city left standing, I am very glad that it, nor the province or Ottawa, have sunk to the level of corporate welfare..........if you want to come here great but were not willing to bribe you to do it. May the best city win but on it's own merits.

Home boy (from Toronto) speaks:

Mayors, Say No to Amazon
By Richard Florida
Jan. 28, 2018 4:42 p.m. ET

When Donald Trump and Mike Pence handed Carrier a boatload of money in 2016 to save a handful of jobs in Indiana, many people shuddered. When Carrier pocketed the cash and fired some of the workers a year later, the skeptics nodded knowingly. But when Amazon dangles the opportunity to host its HQ2, asking the most progressive mayors on the planet to bend over backward to lavish it with corporate welfare, many excuse it away as required to compete for the jobs and investment this project will bring. It isn’t. It is a disgrace.

The roster of mayors in Amazon’s 20 finalist cities reads like a who’s who of leading Democrats: New York’s Bill de Blasio, Los Angeles’s Eric Garcetti, Chicago’s Rahm Emanuel, Washington’s Muriel Bowser, Pittsburgh’s Bill Peduto and Newark, N.J.’s Ras Baraka. At home they’re all about fighting inequality and gentrification, creating affordable housing, increasing the minimum wage, and generating “inclusive” prosperity. But they apparently have no problem forking over hundreds of millions of dollars, in some cases billions, to a corporate giant led by the world’s richest man. Is it any wonder many cities have kept the terms of their Amazon offers under wraps?

America’s leading cities should say no to this kind of reverse Robin Hood. A good model is Toronto, an HQ2 finalist whose bid to Amazon offers little in the way of tax incentives, while proposing that the city make much-needed local investments in its workforce, transit and other areas.

At heart the HQ2 competition is a ruse. Amazon without a doubt already has a very good idea of where it wants to put its new headquarters. The map of the 20 cities on the short list has clusters that give away the game. New York City and Newark are next to each other. So are the District of Columbia, Northern Virginia and Montgomery County, Md. Clearly, Amazon wants to be in either the New York metro region or Greater Washington . . . .

Amazon’s plan is surely intended to pit those five cities and states against each other to come away with the biggest deal . . . .

https://www.wsj.com/articles/mayors-say-no-to-amazon-1517175734?mod=searchresults&page=1&pos=2

[skyscraper]

Originally Posted by Pedestrian

Home boy (from Toronto) speaks:


https://www.wsj.com/articles/mayors-say-no-to-amazon-1517175734?mod=searchresults&page=1&pos=2

If Amazon can't decide between being in dc and ny by now, then they know they need access to both.
they need to go with philly.