Publishers: Stop expecting handouts from Facebook and Google, start innovating
Facebook and Google direct enormous volumes of traffic to news publishers. But instead of paying for the privilege, like other brands do, publishers expect to get paid. Simon Larcey says that instead of the 'last-ditch, half-assed cash grab', media companies need to, unsurprisingly, innovate.
Hey, if you can’t beat them, then just throw a tantrum and demand they pay you a percentage.
In a nutshell, this sums up the ludicrous move by the Australian Competition and Consumer Commission and local news publishers, which have demanded that Facebook and Google cough up cash for any news content that the digital giants share across their platforms. And with Google agreeing to play ball last week, it looks like these demands are being met.
While some might regard this move as a digital giant throwing a lifeline to a drowning local news industry, other, more cynically minded people – myself included – might see this a move as one developed by Google’s PR department to win the hearts and minds of stakeholders. Putting Google’s motives to one side, there’s a risk that this is yet another nail in the coffin, an admission of defeat by local publishers who are no longer able to successfully compete.
At first glance…
… this seems like a positive for the local media industry, which has been plagued by falling advertising and subscription revenues for years, and ravaged mercilessly by the economic monster that is coronavirus. Local media companies are suffering, and Facebook and Google are richer than most sovereign states. One could argue that it makes sense to demand that the behemoths contribute to those struggling local businesses who create the very content that Facebook and Google benefit from so regularly.
The perfectly-tuned digital machines have created such effective advertising channels that they have left brands and marketers very little choice but to allocate significant budgets to them, leaving traditional media in their dust.
In an attempt to compete with these tech platforms, publishers the world over have embraced new technologies and started using programmatic advertising systems that they hoped would give them a competitive edge over the duopoly.
But this tactic merely diluted advertising dollars, provided minimal revenue to the publishers, and generated poor results for brands and marketers. This has only encouraged more usage of the tech platforms and, for 20 years now, publishers’ ad revenues have been declining while Facebook and Google continue to grow.
So, look, I get it. It makes sense that local media should fight back. It makes sense they should fight for a bigger slice of the advertising pie. But is a handout the right way to go about it? Absolutely not.
The problem with handouts
Welcome to 2020, and after years of lobbying, the government has decided that if the news publishers of Australia cannot build a sustainable digital advertising revenue model, the two tech platforms will be strong-armed into footing the bill. (Of course, whether you would call Google’s recent move a capitulation to local media ‘strong-arming’, I’m not so sure.)
It’s like something out of a comedy show.
In 2017, ACCC research into the source of internet traffic to news sites found that 44% of audiences went to the news source directly, while 32% came from Google and 18% came from Facebook.
The numbers from the digital giants are probably even larger today. At least 50% of all news traffic is directed to Australian news sites via third parties. If Australian news providers did not have these two platforms, their traffic would be cut in half, and they would generate half the ad revenue. Any brand or marketer wanting to get that type of traffic to their site would pay Facebook and Google big money – in fact they do – yet Australian publishers think they should be paid for the privilege. It makes no sense.
What’s more, the entire premise of the handout is that Australia’s once vibrant and globally dominant media industry is admitting defeat. The publishers are essentially saying that they are incapable of creating a competitive offer, that they are unable to innovate, and so they are looking to their far more successful competitors to bail them out.
How could this approach ever be sustainable?
To put it bluntly, this is a bad idea, not least because it shifts the focus away from the local innovation, creativity and entrepreneurialism that made Australian media great, once upon a time.
The solution, unsurprisingly, is innovation
Don’t get me wrong. I’m a major advocate of the local media industry. In fact, local media is the bread and butter of my business. Facebook and Google are my competitors. So, shouldn’t I be jumping for joy at the thought of some much-needed cash injections into the Australian mediascape?
Sure, more money into the industry is fantastic. But I would prefer more money flowing into the coffers as a result of a thriving local industry, rather than a last-ditch, half-assed cash grab. I would prefer to be building solutions with publishers in order to build their commercial proposition and develop competitive digital sales strategies.
It’s time for local publishers to get smart, and to get a bit of bulldog into them. Now is the time for publishers to innovate. Now is the time to take on the duopoly and find a solution that actually provides comparable advertising results for brands and marketers, because, at the end of the day, we’re talking about advertising.
The purpose of advertising is to build awareness, drive sales and help create sustainable businesses. If the advertising and marketing solutions that news publishers offer do not provide similar results to the duopoly, why would anyone use them?
Forget the handouts. Now is the time for publishers to take control, take advantage of the radical changes affecting the digital landscape around advertising technology and the demise of the cookie, and launch a system that drives results for advertisers while increasing revenue for publishers.
Simon Larcey is managing director of Viztrade
Great article Simon. If the handout is perceived more like a grant than a business model any reason why publishers can’t do both?. ie. take the handout from major tech and use it to fund the innovation that is so desperately needed.
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And….in the late 1800’s, a candle-making factory in London asked the local power company to instal their new-fangled electric lighting so that the factory workers on the night-shift could see a lot better and make more candles….
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Well may “Facebook and Google direct enormous volumes of traffic to news publishers” but there is a flip side of that coin.
Most people who click-through to a News site read-and-run. They are difficult to monetise, so the volume of traffic becomes a large cost but with low income.
F&G also take away a lot of browsing time on the numerous News websites with no (though that is changing) direct compensation for the content creator (i.e the original publisher).
It is not a one-way street but the street is far from even.
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Well said Simon. I’m no fan of the Tech Platforms either – but I’m even less a fan of building business models that rely upon non-sensical ‘revenue’ models (eg. the ‘hand-out’). The Tech Platforms don’t owe the media a dime for providing a mechanism to funnel traffic through to their sites. And like you said – many of us pay them big coin for this same privilege.
The concept of linking the sustaining of quality journalism in AUS to the Tech Platforms making big bucks out of enabling these audiences to get to the Publishers’ sites is also a complete con job.
News Publishers have never had bigger audiences. They should be generating bigger revenues than ever. They just cannot compete using their existing Ad Products (and more importantly – their old ‘CPM’ commercial models which were dragged from the off-line world into the Digital space).
I agree – it is going to take Ad Product innovation – but it’s also going to take a leap of faith commercially to transition across to models that are more performance based (like much of the Tech Platforms, Aggregators and Affiliates use) and where those Publishers have to have some skin-in-the-game. This is ultimately what it comes down to. And while ever they are getting hand-outs (to ‘sustain’ quality journalism in AUS) – their businesses will not be able to compete and they’ll be stuck in in 2nd or 3rd gear.
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God this article reeks of someone who has never worked in publishing.
As someone who has for all of their career, I assure you publishers are working hard to innovate – but without the financial support google and facebook has this can prove challenging.
What the industry needs instead is support from media agencies who are lazily directing their budgets to google and facebook to build publishers back up again. Time and time again FB has been proven as an ineffective media channel but because it is cheap and easy to buy, agencies continue to invest.
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When traditional publishers went Digital/Social, they started chasing easy impressions (cats, botox, celeb fails).
Coupled with a tired CPM-based inventory model, this fundamentally, this lead to the demise of investigative journalism.
As a result, the niche publication was born – the comparison site, the affiliate, the influencer.. They knew how to value their inventory/content/context and instead of chasing attention, they fulfilled context. They sold on CPC models or CPL…
You made your bed pubs! X
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While I agree the media industry should be embracing innovation to compete with the walled gardens offered by Facebook and Google, and that a common marketplace like Viztrade and increased transparency in programmatic from platforms like Fenestra are a start, I think it is disingenuous to classify the payments as handouts. It demeans the value of the public interest journalism that these publishers produce. In the Senate hearings into the Public Interest Journalism, I shared the example of what would be the outcry if the ABC Four Corners program was rebroadcast by a commercial channel with advertising and no payment was made back to the ABC? This is compensation by Facebook and Google for using content created by others to generate advertising revenue.
If readers from FB and google cut and run from the publisher sites, then how is that the platforms’ fault? I think it says more about the publishers’ (in) ability to engage those readers when they land on their sites. If publishers really believe their content is so valuable to the platforms , and that the traffic they get from them is really not worth much, then there’s a very easy solution – they can stop posting to FB and block google from crawling their pages. I think we all know who would lose most if they were to go down that route.
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Can you please provide sources that Facebook is an ineffective media channel? It should be easy considering it has been proven ‘time and time again’
I hate Facebook but I am forced to put advertising dollars there because it so effective
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Adapt or die (except when you have a stranglehold on the news media in Aus and you can push your agenda to influence government until they bend to your demands, because you couldn’t adapt).
Pretty straightforward…
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There is not evidence of this. Forcing platforms to pay for traffic that they are sending to publishers who would otherwise not receive the volume is clearly a short-sighted solution. Governments may side with publishers but this is only delaying the inevitable demise of non-innovating newsrooms. Instead, there should be a call for broader tech solutions to get newsrooms to the 21st century, where short-form content is king.
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Where are this guy’s media credentials? …Oh wait, he has none.
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The ABC Four Corners example is not really a valid comparison with what is happening with the platforms and the publishers. The platforms are not running (or “rebroadcasting” in your analogy) the publishers’ content in full. They are running snippets (and the publishers can restrict or even stop this completely if they choose) and linking users to the publishers sites for the full story, thus generating very significant traffic for the publishers. A more valid analogy would be a commercial channel running a short promo for an ABC Four Corners story and prompting viewers to go watch the full story on the ABC.
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Why are you not a fan of the tech platforms?
I personally believe Zuckerberg is a trickster. Larry and Sergei are a lot better and imho Google was the foundation stone, which changed the game. The cultural revolution we see today is because we can ‘Google’ anything, use our noggins a little also (critique) and become informed.
Google is freeing us up from mental slavery.
My 10 cents. I love the tech platforms. You watch the fact checking come on leaps and bounds in the next 5 years – it is going to be huge and Rupert is going to hate it !!!
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@Sam wins the thread with this comment, shut the thread down pls mod.
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Remember when Nine (then Mi9) has that spinning cube ad unit? Oh the annoyance to the reader, but my god… the cut through! And the ridiculously high CPM!
Now that was innovation!
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