Latest News

30 November 2017

More Local Papers Will Close Unless Digital Advertising Imbalance Addressed, Committee Told

Local newspapers will close unless the dramatic imbalance in the digital advertising landscape which fails to adequately reward the content creators for their investment in news is addressed, an influential parliamentary committee was told this week.

Giving evidence on behalf of the News Media Association to the House of Lords Communications Committee’s enquiry into advertising, Newsquest chief executive Henry Faure Walker said the dominance of Google and Facebook was creating a problem in the digital advertising marketplace.  

 “We think there is a case for the CMA to review the digital advertising market and make some recommendations as to how it can foster a more competitive marketplace,” Mr Faure Walker said. “I think unless something changes significantly to the revenue outlook, and what we’re seeing is still steep revenue decline, then more local newspapers will close and hit the wall.”

Mr Faure Walker appeared as a witness on Tuesday alongside head of public policy Guardian Media Group Matt Rogerson who called upon the committee to take action to help make the digital advertising marketplace more transparent.

The session also heard from ISBA director general Phil Smith who said that advertisers lacked choice in the digital space and called for “urgent action” to be taken to address brand safety concerns following the latest revelations from The Times around brands appearing next to inappropriate content on YouTube.

In his evidence, Mr Faure Walker cited the NMA’s study of Newswhip study which shows that 47 per cent of all engagements on UK content on social media are powered by commercial news brands but, Mr Faure Walker said, news brands “only getting a very few crumbs on the revenue table.”

“We are in dialogue with them but they are very slow to move and I think one needs to put more pressure on Google and Facebook possibly, in my view, through regulation so that we can create a more balanced marketplace,” Mr Faure Walker added.

In his evidence, Mr Rogerson cited Enders Analysis stats stating that for every £31 in lost print advertising news media brands were only recouping £1 in digital advertising revenue. The print sector’s share of the advertising market had dropped from 30 per cent in 2008 to just 10 per cent in 2018, he added. 

Mr Rogerson added: “There’s this great myth that I’ve seen in some of the submissions to this committee that the internet is somehow free. The internet is not free. Both of our organisations invest a lot of money in the journalism which is distributed online and we find that we don’t necessarily get an amount of reward for that which is necessarily commensurate with the effort.”

Advertising had become “disconnected” from content instead following audiences around the web, Matt added.  He continued: “The two platforms that have the most personal data on the most people are Google and Facebook.

“Therefore, advertisers book to follow an audience round the web regardless of where they go in terms of the quality environment and that’s a fundamental change in the way the advertising industry has worked – it delinks from quality content and absolutely attaches to the audience.”

In a seperate development, it was announced today that a consumer group called Google You Owe Us, has launched a legal action against Google which it said it aims to secure compensation for the millions of people across Britain who are alleged to have had their personal information unlawfully collected by Google.

Between June 2011 and February 2012, it is alleged that Google unlawfully harvested the personal information of millions of people in the UK by bypassing the default privacy settings on the Apple iPhone. In a statement reported by the BBC Google said: "This is not new - we have defended similar cases before. We don't believe it has any merit and we will contest it."

In the select committee session, the Lord Bishop of Chelmsford asked what the Government could do to help with the demand for advertising services in the nations and regions. Mr Faure Walker called for national and local Government to invest more ad spend in local media.

He said: “One area where we’ve seen the most aggressive declines is the public sector so we would encourage national Government, whose advertising budget is about £140 million to use newsbrands more, locally and nationally.” 

Appearing with Katharine Newby Grant, associate director, media - Northern Europe, Procter and Gamble, Mr Smith said ISBA took a “strong line” on brand safety and “urgent action needed to be taken to ensure content is fit for consumption

Talking about the tech platforms, Mr Smith added: “I think that the impact in digital of their strength is that advertisers do feel that they lack choice when they’re looking simply within digital media and the mechanisms for the sharing of revenues between content provider and platform and the need to be on those platforms if you wish to represented digitally, which drive you into those terms, are tilted in the wrong direction.”

Ms Newby Grant said: “We do believe that all advertising - the content of the advertising and the advertising platforms - need to hold themselves as accountable otherwise consumers will lose trust in the brands, in the advertising and in the platforms, and we want advertising to be a force for good for society and a force for growth and therefore we think that the industry needs to take more action.

“We absolutely want to put our advertising next to content that is appropriate because we are very aware of the value equation that advertising can fund excellent content and that can improve the lives of consumers.”  

Asking a question about quality versus volume, Baroness Quin, Labour, said: “The adverts that I tend to focus on more are probably in print, particularly in things like local newspapers where you are looking at it in a more leisurely way and very often looking at these things more closely.

“I just wonder if in all the talk about digital and online there isn’t a quality issue which relates to print which is being overlooked in this somehow?”