How newsrooms can use tech to compete with Google and Facebook
In 1648, the world’s first print advertisement appeared in the pages of an English newspaper. Since then, newspapers have depended on print advertising as a primary revenue source. Even today, with internet journalism poised to replace physical newspapers, 75% of newspapers’ advertising revenue still comes from non-digital sources.
To be sure, the internet offers today’s publishers an unprecedented wealth of opportunities. Never before have so many websites, apps, devices, platforms and data warehouses been so inextricably linked. Meanwhile, newsrooms have downsized their workforce by roughly a third since 1989, the year that industry employment peaked.
So why aren’t newspapers naturally transitioning their revenue sources from print to digital, as audiences of all ages move online? The fact of the matter is that much of that opportunity remains stifled – frozen, even – by the omnipresence of two particular companies, Google and Facebook.
A recent report by Bloomberg found these two companies alone accounted for $38 billion of the $59 billion spent on online advertising in the U.S. during 2015. By using proprietary algorithms that round up articles from traditional news sources and confine them to proprietary news feeds and search engines, Google and Facebook have effectively corralled half the lifeblood out of digital advertising, to say nothing of the rest of the global market.
Nevertheless, publishers still feel bound to partner with the likes of Google to make ends meet. Despite the company’s high take rates and lack of transparent technology, publishers revere Google’s dominance as a search engine and work with them anyway. Doing otherwise, they reason, would drastically reduce their digital audiences, putting them at risk for bankruptcy. Similarly, publishers partner with Facebook out of fear of losing their audiences but at the cost of losing revenue.
This raises another interesting question: What about the other $21 billion in that ad spend pool? And what about eMarketer’s projection that digital advertising spend will balloon to over $105 billion by 2020? How can newsrooms seize a chunk of this massive financial windfall for themselves?
As was the case with print journalism in its heyday, online journalism depends on advertising to keep it circulating at scale. Fortunately, technology is ready to make this happen without an intrinsic reliance on Google and Facebook. While transitioning to digital revenue models can be a challenge, the tools are in place for publishers to meet it head on by adopting independent alternatives, like full-stack advertising platforms that are both open and transparent, as well as monetization solutions such as header bidding.
Understanding the basics of header bidding is imperative for any media organization looking to circumvent the built-in bias of Google’s technology. By adding a few snippets of code to their browser, publishers are able to see how much media buyers, not just Google, are willing to pay for an impression in real-time. With additional buyers bidding in the auction on a level playing field, publishers – in this case, news organizations – stand to maximize yield for their inventory.
Header bidding is not the only solution publishers can use to their financial benefit. Increasingly, news organizations are making the switch to open technology platforms that connect them with advertisers directly, without third-party intercession from Google, Facebook or other black-boxes. On these platforms, publishers and advertisers have autonomous control over their own processes and fuller transparency when forecasting future inventory demand and supply.
Finally, online publications are increasingly forming coalitions that help them leverage their collective scale against even the most powerful tech giants. Through these partnerships, publishers can cooperatively collect, organize and share audience data, enabling them to optimize individual strategies. As the internet evolves to be increasingly programmatic, proprietary data is a publisher’s most valuable asset, allowing them to optimize revenue through more sophisticated yield management. In September of this year, the Newspaper Association of America formally changed its official name to the News Media Alliance, reflecting the growing impact of digital technology on content distribution and advertising. This follows in the footsteps of a similar coalition formed by British newspapers in 2014.
2016 marks the end of an era in journalism. Fleet Street, for centuries the undisputed hub of the British newspaper industry, saw its last, remaining newsprint tenant shut down operations in August.
That’s bad news, but there’s good news that comes along with it. If broadsheet news publishers are willing to make the leap into digital publishing, they can also reap the enormous profits of digital advertising and reclaim their rightful share of revenue. Once that happens, there is every chance we will begin to see a robust news industry take shape again.
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