The meteoric rise of global digital media ad spend, from online video to paid searches, is only set to continue this year and next. Media agency Carat predicts that digital’s current 27% of the overall share of the ad market will swell to 29.3% in 2017, as advertisers pile money into mobile, video, and social media. eMarketer expects digital to fast become the biggest source of advertising revenue, overtaking television in the US within the next year.
These figures shouldn’t surprise anyone; time spent on mobile devices is growing as time spent watching TV is declining, and anyone throwing overwhelming investment into the latter would be accused of shortsightedness. The problem, though, is the market advertisers are being forced to move into - digital is increasingly dominated by two US giants, Facebook and Google.
A lot has been written lately about the dominance of US tech companies more generally, along with the issues of competition and net neutrality this raises. Facebook and Google, headquartered less than seven miles apart, essentially have the monopoly over the digital ad market, between them accounting for 75% of all new online ad spending in 2015, according to reports. The Financial Times revealed the situation in the US is even more pronounced, with 85% of digital ad spend going to the two behemoths in the first quarter of 2016. And the aggressive expansion of both companies means this situation will likely only worsen.
It’s against this backdrop that the struggling UK newspaper industry has put aside its differences to come together in response. According to City AM, The Guardian, The Sun, The Daily Mail and the Times are investigating ‘how they might be able to work together to take on declines in the advertising market.’ The ‘feasibility study’, named Project Juno, is being headed up by former advertising chief executive Steve Booth. ‘The newspaper industry has been overly competitive within itself,’ Booth told City A.M. ‘And it would more likely be able to face its more obvious competition if it were united in its approach.’
Booth explains that by coming together, the newspapers are looking to offer new and exciting opportunities to advertisers in a medium that has fallen, as he puts it, ‘out of fashion.’ The Guardian Media Group’s digital turnover fell 2.3% in the 12 months to April 2016, and US internet giants are almost unanimously considered the cause of the ominous decline. Monetization has been a problem in the digital publishing industry for some time, particularly among publishers that on the one hand eschew heavily ad-laden sites, but on the other are loathe to introduce a paywall. The Guardian, for example, asks for donations from its readers rather than subscriptions, but revenue is dropping as a result UK print advertising revenues.
The project is not the first of its kind, though. In 2015, The Guardian, CNN, The Financial Times, Reuters and The Economist came together for Pangaea, a programmatic advertising network similarly designed to pool the group’s collective audience - some 110 million readers at the time - as a lucrative advertising space. According to the Business Insider, the alliance had nothing like the intended effect, generating ‘negligible’ revenue for stakeholders, though The Guardian claim the project is on course to go ‘from strength to strength.’ Regardless of its success, the involvement of The Guardian in both projects stands as evidence of the giant’s concerns about the digital advertising industry.
For publications with such disparate political and, often, social attitudes, the coming together shows just how much of a threat the likes of Facebook and Google are perceived to be. Rather than eating itself, the print journalism industry needs to look outwards, put together a plan to combat the financial tumult of declining sales, and offer something to advertisers that the US tech giants perhaps cannot.