Facebook and Google dominate online ads. Can alliances between news publishers compete?
One researcher has estimated that Facebook and Google draw around 85 percent of total digital ad revenue worldwide. Google alone will continue to channel around one-third of this growing revenue base.
Newspaper companies, meanwhile, will likely struggle to find scraps; newspaper ad revenue dropped by 8.3 percent from the previous year in 2017.
In the face of the onslaught, some independent media operators in the Asia-Pacific region are finding new business models to help them compete. Publishers consortia aim to provide a broader advertising platform for digital ad space buyers.
The model may well re-invigorate independent and local media and provide a much-needed new business model.
The idea is theoretically simple. Competing traditional media groups across various platforms agree to combine their demographic reach into one, single advertising product.
This way, ad buyers get access to so-called designated market areas, or DMAs, covering a vast range of consumers. In theory, this would be big enough to challenge the online Facebook-Google duopoly.
The cultural and governance barriers are obvious. Many media groups are fiercely competitive and protective of their consumers. Pooling data on these hard-won and fought-for market segments with other organizations, which may have been dire enemies in the ad buying market, seems counter-intuitive.
But, when the industry itself is under such severe pressure, it seems necessary to pull down the silos and engender more collaboration.
Numerous consortia have sprung up in the past few years. These include Nucleus Marketing Solutions, the Newspaper National Network and the Local Media Consortium in the US, Pangaea Alliance and Symmachia in the UK, Gravity, Skyline, emetriq and Login Alliance in Germany and Audience Square in the EU and Digital Premium in Brazil.
But given the facts on digital advertising, it’s hard to see that these initiatives have made much of an inroad into the revenue of the online behemoths for now.
Established consortia in the US, UK and the EU, and to some extent in Brazil, are in very mature media markets, with huge, complex and often saturated consumer bases. It is difficult to see how quality, targeted media ad placement can really work in such disparate environments when a given consortium, perhaps made up of 20 or 30 large companies, is so potentially unwieldy and the market so nuanced.
Competitors acting a little cagey and not working together openly may also mean some data gets held back by alliance members. This could affect quality and results.
Some large initiatives, like the Newspaper National Network, have ceased operating.
Consortia of media publishers in the Asia-Pacific region have also emerged, where the market may be more conducive to the model.
Asia-Pacific is a younger media environment. The market is less settled. Demographic spreads are less nuanced. Fewer players are engaged.
It may just be the space in which publishing consortia can really take off.
Among those that have launched in the Asia-Pacific region are KPEX in New Zealand, the Online Premium Publisher Association in Thailand, the Singapore Media Exchange and the Malaysia Premium Publisher Marketplace.
The Thai company seems not to have done a lot since it launched with a conference in May 2017.
The Malaysian consortium, meanwhile, seems to have been calibrated less around direct revenue generation and more to deal with concerns around ad hacking and authenticity. They also attempt to provide a screen of security for advertisers. Here also, details of recent activity are limited.
Two consortia, in Singapore and in New Zealand, however, are moving ahead.
The Singapore Media Exchange co-joins Mediacorp and Singapore Press Holdings, the island nation’s two leading media companies, and 21 of their media brands. The company recently announced a new CEO and set up a hard launch as an indication of its intent. While it's early, and there does not appear to be any firm data on the initiative, the SMX has already established a serious presence.
New Zealand’s KPEX has been running since 2015 and so actually predates some of the publishing consortia established in bigger markets. The company links TVNZ, Mediaworks, Stuff and NZME.
Compete with the big guns
Competing online is a significant foundational platform for the group.
“Leveraging the efficiency of programmatic technology to provide scale that is comparable to/greater than Facebook and Google, all in one locally-run and resourced eco-system is key to KPEX's proposition,” KPEX Sales Manager Rogan Polkinghorne told me.
“There were a small number of other co-operatives operating in international markets, but KPEX was one of the first to operate with a larger group of more diverse publishers. The nature of our publisher partners — print plus radio plus TV — is reasonably unique, as is our market penetration/audience reach and the breadth of our product offering.”
As the New Zealand and Singapore initiatives evolve, the impact on journalism will be interesting to track. While both Singapore and New Zealand have relatively advanced media institutions and mature audiences, their small size and more concentrated markets differentiate them from, say, the US, the UK and the EU and offer a unique space in which the publishing consortia experiment may take a firmer root.
Can this mechanism fund journalism? Does it dilute or crowd journalistic space by merging advertising cultures? Is it sustainable enough to truly threaten Google and Facebook?
Such questions remain unanswered. But it is clear that media organizations in the Asia Pacific have the potential to develop the publishing alliance concept more fully than has been done elsewhere.