Freeing Media from Google and Facebook

The rise of Google and Facebook in the advertising space is not a positive sum game, and the vanguard facing the brunt of the damage are newspapers.

The digital advertisement revenues that essentially run Facebook and Google are rapidly eating away from the traditional and new media’s revenue. Even though authoritarian forces and echo chambers are blamed for our “post-truth” era, they are coupled by a loss of media capacity. As an opinion piece in the Guardian noted in a provocative headline, “[t]he biggest threat to journalism isn’t [authoritarian] Donald Trump. It’s declining revenues.”

The Pew Research Center 2016 report on the State of the News Media noted that advertising in newspapers experienced a drop of 8% in 2015,. Now, a quarter of advertising revenue for newspapers comes from digital advertising. And this is not a growth, digital advertising revenue fell by 2% in the same year. Newsroom employment dropped 10% in a single year. Hundreds of newspapers have shut down since 2004. The report gloomily remarked, that for the newspaper business, “2015 might as well have been a recession year.”

At the same time, Google and Facebook contributed to nearly 54% and 45% of the growth share in advertising in 2015-16 in the US, leaving less than 1% for all other ad agencies combined.

The state of the current digital advertisement market can be traced back to the early stages of the ‘.com’ revolution when publishers with advertising space could reap huge revenues by creating fake traffic and showing exaggerated numbers of eyeballs and engagement. This led to huge revenues for them, but little or no benefit to the advertisers. As Pamela Laird noted in Advertising Progress: American Business and the Rise of Consumer Marketing, a trust deficit developed between advertisers and publishers with advertising space. Google snugly fit in to correct the information symmetry by developing a fairly transparent ad-exchange driven through auctions.

Thus, Google was, and continues, to be a middleman bridging the interests of two parties: the advertisers, who want legitimate engagement and traffic to their product; and those with advertisement space, who could auction their space to a larger base and receive reliable payments. Now, world over, Google and Facebook account for 20% of the total advertising budget in 2016. In the 83 billion USD online advertising market, Google alone accounted for 40.7% of U.S. digital ad revenues in 2017.  

World over, publishers are reacting to the duopoly that dominates the market with collectivist models. Such models aim to displace the giants by sharing ad technology and pooling databases to facilitate efficient personal targeting of ads.

In June 2016, media giants in Germany such as Axel Springer, Gruner & Jahr, RTL owner Bertelsmann Group, and Der Speigel decided to pool audience data on a single platform. In 2017, in Portugal, six large publishers – Impresa, Global Media, Cofina, Media Capital, Publico and Renascença – joined hands for a similar initiative called Project Nunio. More recently, 35 publishers, including The Washington Post, The Atlantic and the New York Magazine, committed to trading on the TrustX Alliance platform.

Perhaps the oldest such example is from Britain, wherein a cooperative of 30 regional publishers came together in 2014 to form 1XL, an alliance  including publishers such as Johnston Press, Archant and Newsquest. Newsquest subsequently reported the doubling of its ad revenues, and Johnston Press attributed 99% of its growth to 1XL.

While the model looks like an effective way for publishers to circumvent the dominance of Google and Facebook, these collectives have their own set of challenges. Today, these companies may be uniting to face a common enemy, but in their own business, they are competitors themselves. Infighting may easily emerge in such alliances: for instance, Rubicon Project, which helped launch the Pangaea Alliance, left the collective following a legal dispute with its alliance partner, the Guardian. The alliance failed to gather steam, and the Guardian entered multiple different agreements later.

Secondly, these syndicates may quickly turn into cartels. When these alliances acquire a substantial share of the market, they may be inclined to not let smaller publishers enter the shared platform. Since most data-sharing on these platforms is agnostic to how much personal data an alliance partner is generating, huge partners may have incentives to exclude smaller players. As these collectives mature, they face more challenges.

Additionally, even if these collectives are wildly successful, it’s hard to ignore that they mostly still conform to what Shoshana Zuboff calls surveillance capitalism model. From a consumer perspective, the concerns of privacy and informational autonomy will remain the same, albeit fragmented over more services than the duopoly that currently dominates the sector.

Noting how nearly 90% of digital advertising revenue flows from India to just Facebook and Google, Raghav Bahl recently called the Indian succumbing to these foreign powers as “DACOIT”-y, “Digital America, China Colonising Obliterating Indian Tech”. While it was not a protectionist plea, it was a clear recognition of the void in the Indian digital advertising space. One step in closing the gap would be setting up of a cooperative ad platform by our publishing houses.

Copycatting moves of the foreign publishers, though, may result in a quick failure. For example, even platforms like Amazon and Uber which were backed millions of dollars have had to adopt cash payment methods: whenever new business practices enter India, they need tweaks for the local culture. A cooperative digital advertisement network system that learns from its foreign counterparts and respects Indian sensibilities might be switch that lights up journalism and the revives the credibility of fact.

 

Sunil Abraham is the Executive Director of the Centre for Internet & Society (CIS), and Gurshabad Grover is a Policy Officer at CIS.

[Disclosure:  The Centre for Internet and Society is a recipient of grants from Facebook and Google.]

source https://www.indiaoutbound.org/freeing-media-from-google-and-facebook/