Only half of the money spent by advertisers actually ends up with publishers. The advertising supply chain is dominated by monopolies and bloated with service providers. The UK’s Competition and Markets Authority (CMA) found that intermediaries (of which Google is the largest) captured at least 35% of the value of advertising bought from newspapers and other content providers in the UK.
This puts a tremendous weight on publishers’ ability to spend resources on generating high-quality content. As the CMA points out , greater competition and transparency would put downward pressure on intermediary (Google and Facebook) fees, helping publishers to receive a larger share of this value. A well-funded, competitive, and independent, news and publishing sector is fundamental to a healthy, free and democratic society .
Publishers are overly reliant on Google
Publishers are reliant on the open display ecosystem where there is no competition between intermediary services, and far too much reliance on Google. Sudden, unexplained, and significant changes to Google’s and Facebook’s algorithms can have a meaningful impact on a publisher’s advertising revenues. There is very limited transparency, dialogue, or warning, making it difficult for publishers to plan and manage the impact. Facebook and Google account for around 40% of large publisher traffic. Unexpected changes to Google’s search algorithm and Facebook’s News Feed algorithm have resulted in dramatic reductions in traffic, overnight.
Deprecation of third-party cookies will impact revenues
When Google tested traffic without cookies it yielded an average of 52% less revenue, for publishers, that number was 62% lower. When McKinsey interviewed a cross-section of US publishers, the feedback was mixed with some publishers already leaning more heavily on first-party data and paywalls with others suggesting third-party targeted ads accounted for 805 of ad revenue. McKinsey estimates that up to $10bn in US publisher revenues is at risk.
Both Google and the UK’s Competition and Markets Authority (CMA) studied the impact to publisher revenues when third-party cookies are blocked. The CMA results suggest short-run publisher revenues drop by 70%. News UK estimates revenues generated through Firefox fell by 50-60% following Firefox’s removal of third-party cookies in September 2019. The Telegraph Media Group estimated a 50-60% drop in CPM between Safari and Chrome, following Safari’s removal of third-party cookies. DMG Media estimated revenues were down 70-80% per page across Safari and Firefox compared to other browsers where third-party cookies were still functional. As the CMA notes in their study, the numbers are misleading to the extent they do not reflect how the industry will, and has, reacted to third-party deprecation with a pivot towards first-party data, contextual advertising and other measures that help offset the impact from third-party cookie deprecation. Nevertheless, losing the ability to develop target audience data and track users for attribution does, in isolation, have a meaningful impact on publisher revenues. Notwithstanding existing countermeasures, we believe that publishers are incentivised to seek high resolution, reliable personal data from individuals, directly. We believe that by making publisher key players in the OwnYou supply chain, helps rebalance value away from a bloated ad tech stack, towards content creators and content consumers.
No independent verification
Neither Google nor Facebook allows full independent verification of their own inventory. This lack of transparency means publishers and advertisers cannot observe directly how they are being charged, with very little visibility on the fees charged along the entire supply chain. This makes it difficult for them to optimise their inventory. Entities with excessive market power have an incentive to overcharge for their services. Reducing transparency allows them to overstate the quality and effectiveness of their product. Ultimately, this makes it difficult for their customers to demonstrate the quality of their advertising products, eroding effectiveness and trust across the entire supply chain.
Publishers rely heavily on advertising
Advertising remains the primary means of financing Internet content. Publishers must generate advertising revenues if they want to generate high quality content. Behavioural targeting helps increase the value of advertising. In a 2009 study , the average advertising rate (CPM) was 2.68 times the standard rate (run of network rate). While large publishers can rely on first party data collected from a more substantial subscriber base, this data often relies on user self-labelling, without verification. Small to medium sized publishers cannot fall back on first-party data and the loss of behavioural advertising, substantially lowers the value of their inventory. It is true that all publishers, although especially specialist topic publishers, will rely more on contextual advertising, but the overall impact from less behavioural targeting will remain substantial. OwnYou wants to replace cookie driven targeting with user driven targeting, not only replacing the value lost from 3rd party cookie deprecation but, thanks to higher quality data, substantially increasing the value of publisher inventory.
Publishers need to extract more value from their inventory
Approximately 80% of publisher audiences are unknown . How can a publisher best Monetise the “unknown user”, without breaching the user’s trust, and without breaking privacy regulations? More importantly, how can a publisher best convert the unregistered users into a longer-term paying subscriber? Publishers argue their content is best experience wholistically rather than one article at a time. OwnYou helps users enjoy the breadth of a publishers’ offering with the higher quality data helping publishers more effectively Monetise transient traffic. While microtransactions have historically failed, much of that has been to do with expensive intermediation and complex technology integration. OwnYou will facilitate the exchange of personal data for access, but it will also make it easy for users to pay for one-off content, to supplement the value of their data.
