A leading regional publishing boss has called for greater regulation of the digital ad market in order to save local newspapers from potential closure.
Newsquest chief executive Henry Faure Walker said the dominance of Google and Facebook in the digital advertising marketplace needed to be addressed.
Google UK managing director Ronan Harris told the Society of Editors conference earlier this month that two-thirds of revenues generated by online content went to its originators.
But giving evidence to a House of Lords Communications Committee into advertising on behalf of trade body the News Media Association, Henry said that in fact only a “very few crumbs” were going to the publishers.
He said: “We think there is a case for the Competition and Markets Authority to review the digital advertising market and make some recommendations as to how it can foster a more competitive marketplace.
“I think unless something changes significantly to the revenue outlook, and what we’re seeing is still steep revenue decline, then more local newspapers will close and hit the wall.”
In his evidence, Henry cited a recent NMA study showing that while 47pc of all engagements on UK content on social media are powered by commercial news brands, the news brands themselves were getting “only a very few crumbs on the revenue table.”
“We are in dialogue with them but they are very slow to move and I think one needs to put more pressure on Google and Facebook possibly, in my view, through regulation so that we can create a more balanced marketplace,” he added.
His comments fly in the face of Mr Harris’s SoE Lecture on 12 November in which he insisted that most of the ad revenues generated by news content were already going to the publishers.
“I’ve heard lots of people say that Google and Facebook are “ruthlessly stealing” all the advertising revenue that publishers hoped to acquire through online editions,” he told the gathering.
“In display advertising, Google is a supplier of ad inventory to newspaper websites. In every deal we do, without exception, the publisher keeps the majority of ad revenue — typically more than two-thirds but often more.
He added: “In short, we only make money if you’re making money.”
A video clip showing part of Henry’s evidence at the committee hearing can be viewed here.
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No Henry, the newspaper industry has totally missed the boat as far as monetizing the web. I don’t think Ford Motor Company subsidised the horse and carriage industry when it started selling cars. They and others took over the roads as Google and Facebook now dominate the web. Should have employed some forward thinking people about 20 years ago. The local media gravy train is now hitting the buffers.
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You have to admire his cheek in expecting competitors, who’ve made a success of monetising their digital services, to bail out newspaper groups who failed to take web news and advertising seriously when it emerged and mishandled their own core businesses leading them to the position they find themselves in today.
If my business had seen me reaping rich rewards then falling in hard times due to losing both readers and advertisers through being badly managed and lack of business foresight would I expect my business competitors to prop me up ? Exactly
Sorry HFW et al, no ones got any sympathy for you, you’re only seeing the fruits of your failure to invest in quality staffing to produce quality content coming back to haunt you now.
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Lensman, a sad but true call.
What’s depressing is that May 18 (when GDPR kicks in) will sound the final death knell. At that point targeted ads stop. (Good article by Elliot Haworth this week in CityAm, for those who are interested)
Apple recently introduced its recent version of Safari when cookie tracking was badly hampered, meaning less targeting. Observers will have noticed what happened to Ad firm share prices – they tanked. Safari has roughly 15% market share of internet browsing.
GDPR applies to 100% of the market, and does’nt just hamper user tracking – it kills it.
It means the value of programmatic outside the walled gardens of Facebook, Google etc.. is going to come crashing down. Direct advertising that was even slightly targeted looses that ability. Ads will have to be based on article context and reader demographic. Foreign readers will see irrelevant Uk ads, local readers won’t even be able to be targeted based on their gender.
And this is even before adBlocking is factored in.
Sure, some signed up readers will agree to let a group like Henry’s use their data within the newspaper titles. But I’d wager they won’t tick the other 7 boxes requesting that they share their data with separate ad firms for ad targeting (where GDPR rules state that by not giving consent, the reader can’t be penalised). Don’t get me wrong, a number of signed up readers, with a bit of personal data and data from their reading history is definitely a marginally better result for ad targeting. But compare that with 80+ data points that Facebook will still be able to use under GDPR. Who would you advertise with…
The clock is ticking. For the sake of local journalism and all the great people employed in the industry, lets hope Henry and his peers are brave enough to try out new and bold solutions.
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I remember a Advertising Manager telling when I first started work that the small adds on the front page paid the wages of all of the newspapers staff. A long time ago of course….
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