TV learns from print's mistakes
'We come in peace." So said Google UK's managing director Ronan Harris at the Society of Editors conference in Cambridge last week. He was refuting claims that Google and Facebook are 'ruthlessly stealing' the advertising revenue that publishers hoped to acquire through online editions.
Harris argued that Google's main revenue comes from search ads, and this is an area where publishers aren't active. He also pointed out that Google doesn't directly monetise the news content on its Google News platform and that the search giant supplies ad tech and a host of search traffic to newspaper websites. "Every year we share billions of pounds in revenue with publishers globally," he said. "We also drove more than 10 billion clicks a month to publisher websites for free, from Google Search and Google News."
That's Google's PR spin, anyway.
But really, it's academic whether Google, or Facebook, are ruthlessly stealing revenue from anyone. The fact is that the so-called Duopoly is hoovering up overall digital advertising revenue. According to eMarketer, by the end of this year Facebook and Google will account for 63pc of the $83bn online advertising market in the US. By the end of 2019 they will make up 68pc of a $105bn online advertising market. The other large players, in case you're interested, are the likes of Microsoft, Amazon, Yahoo and Snapchat.
The closest thing to a media company on the list is Oath; the brand that AOL and Yahoo spawned, which includes Huffpost and techcrunch. eMarketer estimates Oath will account for 4pc of the ad market by 2019.
This isn't just an American trend. It's global. According to Zenith's Top Thirty Global Media Owners, which ranks the world's top media companies in terms of advertising revenue, Facebook and Google captured 64pc of all the growth in global adspend between 2012 and 2016.
In 2016, Google earned $79.4bn in advertising revenue. Facebook reached $26.9bn.
In the UK, news publishers have seen their share of advertising revenue dwindle from £5bn to £2.3bn from 2005 to 2016. In the same period Google's takings grew from £1bn to over £6bn.
So Google telling publishers that it comes in peace is like cars telling horses they come in peace in the early 20th century. Publishers can be forgiven for feeling skittish.
And the plight of publishers at the hands of Google and Facebook has been noticed by other areas of the media sector, namely TV, which is preparing to take on the Duopoly. How? By ganging together.
Earlier this week Channel 4 announced that it was investing in a new international digital ad sales partnership called European Broadcaster Exchange, or EBX for short. EBX is a evenly owned by Channel 4 in the UK, ProSiebenSat.1 from Germany, France's TF1, France and Mediaset from Italy.
The broadcasters will pool the ad inventory from their video-on-demand platforms, offering media buyers international audience of 310 million consumers. All this and a brand-safe environment. This is a pop at the troubles Google faced earlier this year when numerous brands pulled advertising from YouTube for fears that their ads would appear alongside unsavoury content like hate speech, or incitement to violence.
"The demand for multi-territory digital ad campaigns in brand safe and transparent environments is increasing as the programmatic video ad market continues to grow exponentially across Europe," said Jonathan Lewis, Head of Digital & Partnership Innovation at Channel 4. "Our investment allows Channel 4 to cater for this demand exclusively in the UK market and forge closer strategic and commercially successful partnerships with key broadcasters in European markets which will, in turn, generate new digital revenues for Channel 4 to reinvest back into the UK creative sector."
TV has remained relatively unscathed while other media sectors have struggled to find their feet in the online era. Now traditional television ad sales are coming under pressure, and the launch of EBX reflects broadcasters' proactive approach to getting on top of real time ads at scale and having a relationship with global brands at a larger than national level.
They still face a considerable battle. But successful joint ventures like EBX - and others such as OpenAP, a joint effort in the US from Turner, Fox and Viacom - are important to ensure TV advertising isn't captured by a small number of global players that can take advantage of strong demand by controlling supply, if allowed. They come in peace, but they play for keeps.
Sunday Indo Business