top of page

Handling a dysfunctional online ad market

Level the field when two-thirds of ad revenues are going to two digital platforms, publisher says

Toronto Star, 23 Oct 2019, TARA DESCHAMPS

Platforms should lower fees they impose on publishers for everything from web hosting to licences for technologies, report says.

As part of a series, the Star looks more closely at a new report by the International News Media Association: How to Decode the Publisher-Platform Relationship identifies seven issues as the most concerning to publishers in the digital age. Today, the series ends with market power: ad technology dominance.

As German publisher Axel Springer’s senior vice-president Dietrich von Kläden told the INMA, all news media companies today “are facing the challenges of a dysfunctional online advertising market in which two-thirds of the advertising revenues are going to two global digital platforms.

“High-quality journalism is expensive to produce,” he said. “At the moment, the platforms take all journalistic content and use it without adequate financial compensation.”

Publishers and advertisers often have no choice but to use — and sometimes pay for — a tech giant’s related tools and products when wanting to advertise or publish content on their platforms. These tools offer little transparency around policies and processes including ad exchanges, which are digital marketplaces that allow companies and publishers to buy and sell advertising space, often through real-time auctions.

Google’s market share of ad exchange services is 66 per cent. Its closest competitor holds 11 per cent of the market. Google used that dominance in April to launch “unified pricing rules,” which stopped publishers from setting granular pricing, limiting how they compete. A month later it dealt publishers another blow when it introduced a “fair access agreement” requiring competitors to provide Google with visibility on all their bids and transactions. Possible solutions: Revamp fees, commissions and revenue sharing.

Platforms should lower fees they impose on publishers for everything from web hosting to licences for technologies — because publishers are engaged in working for the public good and producing quality journalism, INMA says. It believes such a solution is possible because it has already seen platforms strive to be flexible in signing different revenue fee deals based on the size and prominence of news publishers. Facebook, INMA points out, has led the way by introducing a news subscription tool at no cost or hidden fees for publishers. “This improved on Google’s attempt to undercut Apple by introducing a 5 per cent fee for a subscription transaction, which Google has said repeatedly is only to cover its cost,” INMA says.

Allow publishers to collectively bargain with the platforms for better terms. INMA says Facebook and Google account for about 90 per cent of all digital advertising revenue growth, so “they exert enormous power over publishers in all negotiations.” Lawmakers and advocates behind the U.S. Journalism Competition and Preservation Act are attempting to change that by pushing for publications to land the ability to collectively negotiate fairer advertising revenue pricing terms without the threat of legal recourse from platforms and regulating agencies. They are hoping the act will trigger algorithm stability, increase publisher access to data, end the suppression of media brands and deliver funds to publishers. They believe the act will give them leverage to argue that because Facebook and Google license and pay for other kinds of content, including music, they should be willing to pay for news. Remove ad sales conflicts. INMA is calling for the regulation of ad pricing, independent auditing of the practice and the restriction of forced bundling of tools, services and products. Given that regulators have been unable to stop Google from repeatedly swallowing up ad tech businesses, INMA would also like to see Google separate its ad technologies from its advertising business and hold them in a separate, possibly independent trust. INMA believes this could lower costs and drive competition in the ad market. Ad tech regime. INMA has suggested tech companies could create an independent, non-profit ad tech regime that links clients directly with all entertainment, music, news and web publishing companies.

INMA believes this would reduce fees and repatriate most or all of the 70 per cent of ad money that currently disappears to intermediaries standing between advertisers and publishers. National ID sign-ons. A global initiative that would create national identification sign-ons across banking, telecommunications companies, retail and news media using hyper-secure technology could quash the destructive allure of using platforms for sign-ins, INMA argues. Such a sign-in would be as simple to use as those currently operated by tech platforms, but would bypass the platforms altogether, allow data to be collected and ensure power is not consolidated by the digital giants. It would also disrupt Apple’s current model, which requires apps in its App Store with social login opportunities to offer sign-ins with Apple ID.

Apple does not share that data with publishers unless a consumer opts in and beginning later this year INMA says a new feature will allow consumers to sign up by default through an anonymized email address Apple provides to a publisher.


bottom of page