Media’s advertising battle with big tech will long continue

ANOTHER week, another Facebook controversy and yet another battle in the ongoing war between digital platforms and publishers around the world as they rightly seek to force them to pay for the news content that they share or appears on their platforms.

For the estimated 17 million incensed Facebook users in Australia who last week found that their personal feeds had been stripped of all news content, it may have provided them with an insight into the many challenges facing media, the competitive threats that Big Tech have unleashed on businesses and the political wranglings that threaten to bring the big platforms to heel.

Facebook’s controversial decision to pull news content from Australian publishers because it doesn’t want to pay for it is in stark contrast to Google, which recently concluded a deal with many of the same Australian news brands to pay for the content that it uses. It also contrasts starkly with Facebook’s decision to roll-out Facebook News in other markets, most notably the UK where it has recently signed agreements with a number of publishers. Plans are also afoot for Germany, France and India. The inconsistency in all of this is truly mind-boggling.

But set against a backdrop of increased scrutiny from governments and competition regulators around the world and the imminent enactment of legislation in countries like the UK, Australia and of course the EU, both Facebook and Google have found themselves fighting what appears to be a losing battle and there is more than a faint whiff of cordite about these shotgun partnerships. Let’s be clear, this is no entente cordiale and if they were to make a movie about all of this, it would be more Sleeping with the Enemy than Love Story.

From an Irish perspective, Facebook has yet to say whether or not it will roll-out out Facebook News but nobody appears to be holding their breath either. Given the size of the market, it’s probably way down its list of priorities. Google, however, has indicated — in a recent submission to the Future of Media Commission — that it intends to initiate dialogue with Irish publishers later this year with a view to them becoming part of its Showcase initiative.

While these developments are indeed significant and to be welcomed, particularly as our news organisations will benefit financially, there is also a danger that the real problem — their continued market dominance of the digital advertising market — will continue unchallenged or at least kicked down the road, now that they have thrown a few financial trinkets to a baying media mob.

The reality is that this market dominance poses the biggest threat and it is entirely conceivable that these new partnerships may serve to strengthen this dominance by giving them access to even more data, keeping people on their platforms and, ultimately, enabling them to sell more advertising on the back of this.

According to forecasts to be published by Core within the next fortnight, digital advertising spend in Ireland will amount to €539.4m this year, up from €477.6m in 2020 and €526.9m in 2019. With Core forecasting that the overall market for ad spend this year is likely to hit €982m, it means digital’s share of the market is likely to grow from 53pc in 2020 to 55pc this year.

But this only tells part of the story.

Google and Facebook’s share of this €539.4m is estimated to be in the region of €447.7m or a staggering 83pc, up from around 42pc ten years ago. To put this into context, digital advertising revenues for all the main Irish news publishers amounted to just €21m in 2020, down from €26m in 2019, according to a submission made to the Future of Media Commission by NewsBrands Ireland, the industry’s representative organisation.

The full extent of their market dominance over the last 10 years was also articulated by Core in its submission to the Commission. “In the year 2000, the total amount of advertising money invested in media in the Republic of Ireland was circa €630m. Approximately 96pc of this went to indigenous media. In 2020, the total market spend was circa €875m, with indigenous media’s share falling to 49pc. Therefore, over the last two decades, the level of annual advertising support for the indigenous sector has fallen by €176m,” according to Core’s submission.

Media and advertising veteran Peter McPartlin nailed it recently when he said, “We’ve now hit an inflection point where monies have shifted inexorably in favour of a few to the detriment of the many, with consequent implications for indigenous content, culture and commerce.”

Of course publishers looking to tap into a new source of revenue from Big Tech should never look a gift horse in the mouth. But in this case the words of Laocoon, the Trojan priest in Greek mythology spring to mind. When the Greeks presented the Trojans with a peace offering of a giant wooden horse during the siege of Troy he rightly expressed his fears when he uttered the words, “I fear the Greeks, even bearing gifts.”

A more modern rendition of this might read, “be wary of geeks bearing gifts”.