Tech giants have monopolized the digital advertising market over the past decade. These companies collect tons of user data and offer robust ad targeting as well as massive reach to brands—all for a relatively low cost. As a result, this level of competition has proven challenging for even the world’s biggest media organizations to keep pace with.
Along with the rise of Big Tech, many publishers’ digital advertising revenue has declined in recent years. In this article with research from our recent report (created in partnership with NAPCO and Adweek), Combined Revenue Models Gaining Traction in Media Industry, we’ll cover how media companies view the walled gardens as digital advertising platforms. We’ll also explore what the current media landscape signals for publishers’ revenue models.
58% of publishers report that the tech giants pose a significant threat to their advertising income. Companies like Amazon, Facebook, and Google continue to invest in advertising technology, which suggests this hyper-competitive landscape is more than just a passing phase. In turn, many media organizations have begun to shift their revenue models toward subscriptions.
It’s easy to see why publishers are concerned about Big Tech. Last year, eMarketer reported that Amazon, Facebook, and Google swept up nearly 70% of all digital ad spend. And media companies aren’t the only ones up in arms over this monopoly. In summer 2020, the Facebook advertiser boycott made headlines, with big names like Adidas and Starbucks pulling their ads from the platform, along with hundreds of other brands that felt Facebook wasn’t properly addressing hate speech on its network.
New developments in the fight against the tech giants
The heat has been turned up even further on the walled gardens recently in the U.S., with news in mid-October 2020 that The Justice Department and attorney generals of 11 states launched a lawsuit against Google for allegedly violating antitrust laws.
“Google gained its ‘grip on distribution,’ the Justice Department said, by paying billions of dollars to become the default search application,” according to an article in The Washington Post. “This vast, unparalleled reach allowed Google to enrich itself through lucrative ads, maintain its online foothold and render it impossible for other search engines to compete, the federal lawsuit alleges.”
Publishers can expect that Big Tech will continue to face scrutiny from government regulators, which will likely result in more oversight of the companies’ activities and their handling of user data. However, the walled gardens aren’t going away, so publishers must learn to become competitive.
Currently, local media organizations are too often unprepared to take on the tech giants. However, publishers have an opportunity to play to their own strengths and train their ad sales teams to show prospective customers why local advertising is a smart addition to their brands’ marketing mix.
How publishers can compete with the walled gardens
Here are 4 ways publishers can differentiate themselves from Big Tech:
A higher level of public trust
The media industry is no stranger to criticism of bias, however, public trust in traditional media outlets in the U.S. and Canada is significantly greater than trust in social media. Over 60% of Americans and Canadians trust the former, while less than 30% trust the latter, according to The Edelman Trust Barometer 2020.
This data presents a strong selling point for publishers to convince advertisers that their publications offer a more credible way to reach audiences.
A brand safe environment
In addition to the advantage of more positive optics around trust, publishers can also provide advertisers with a higher level of control over where their brands appear in the marketplace than Big Tech can offer.
“When consumers assume every ad placement is intentional, it makes them 2.8x less willing to associate with a brand when its ads are displayed in unsafe environments,” reported a study by MAGNA.
Brands must be especially mindful of the context in which their ads appear in today’s sociopolitical landscape, which is another value proposition that publishers can deliver on.
Data and personalization
It’s inevitable that third-party cookies are on the decline. This means that publishers’ comprehensive, legally-obtained first-party audience data has become increasingly attractive to advertisers. Knowing their audiences well enables publishers to offer brands hyper-personalized advertising packages to reach consumers in a highly targeted way.
In addition, as growing numbers of media companies shift toward agency-style service delivery models, publishers can become one-stop-shops for advertisers’ customized marketing needs.
The human element
Big Tech isn’t exactly known for its level of customer service. Publishers have a huge competitive advantage in their ability to sit across a desk (or on a video call) with their customers and listen to their questions and concerns.
Asking about your advertisers’ goals and showing that you’re taking steps to deliver on those objectives goes a long way in today’s connected-yet-disconnected society.
As part of this trend toward being human, publishers can also offer greater flexibility to their advertisers who may need to revisit contracts in the wake of Covid-19. Of course, you have to do what’s right for your business, but the more you can show your customers empathy, the longer they’ll stand by your side.
The future of revenue for media companies
Publishers have relied heavily on advertising revenue for decades, and ads will continue to support their bottom lines well into the future. However, events such as the rise of Big Tech and the Covid-19 pandemic have put pressure on advertising-centric revenue models to evolve into something more varied and sustainable. As a result, combined advertising-subscription models have proven successful and taken the spotlight.
To learn more about how you can mitigate the effects of Big Tech’s offerings on your advertising income by launching a combined revenue model, read our full Adweek report, Combined Revenue Models Gaining Traction in Media Industry.