The UK’s media industry is at a precarious crossroads. There are regular reports in the press about the deterioration of ad revenues and the increasing dominance of the duopoly of Facebook and Google in the digital market. The News Media Association (NMA), have recently asked the government to help in the matter stating: “The value chain of digital news has become wildly out of step with the contribution that each player makes and this is not sustainable.” As Stuart Austin (pictured below), head of retargeting, ESBConect, writing exclusively for ExchangeWire, explains, UK publishers need help if they are to make it against the digital duopoly.

It is common to read that the big two are taking as much as 85% of digital ad spend. That is a staggering amount of money; and given that digital is where ad growth is coming from it does prompt the question, what’s left for the UK publisher industry? Let’s not forget that eBay, Amazon, and the Mail online are all fishing in the remaining percentage and they’re all big beasts. Even if we assume that the duopoly takes 75%, that still only leaves the rest fighting for a quarter of the spend. 

Where is this spend coming from? Ninety percent of this spend is being planned and purchased by Ad agencies and the growth of programmatic trading has undoubtedly driven this shift in spend to the big four (let’s put them all together for the rest of the piece). Agencies spent considerable amounts of money setting up trading desks in order to be able to trade programmatically and are keen to maximise the return on this investment. There are new tech providers that enable buyers to have an unprecedented relationship with their audience. The ability to understand when people are most likely to perform an action makes them a much more valuable customer, so being able to buy your next customer when they’re in the market to buy is a very enticing prospect.  

The growth of mobile has meant that logged in users are much more valuable than people that are not.  This has also benefited the big four massively.  This is a playing field that UK publishers cannot compete with and the end result is that more of the spend goes to the big four.  With this we are in essence exporting increasing amounts of our ad spend straight to the US.  Another five years of this will undoubtedly see some big names drop from the news stand, and with that an essential part of UK democracy.  Who will hold the government to account if the only place anyone gets their news is curated by Facebook or on the first three pages of a Google search?

The commonly quoted average CTR for display advertising is 0.07%. So that is less than one click for every thousand ad impressions. This is largely unchanged in the last eight years. In that time, we have seen an explosion in the tech available to improve and enhance ad campaigns. Yet, if we’re being brutal, it doesn’t seem to have moved the performance needle at all. Let’s also remember that as Google own search and Facebook own social, they own all the search and social data already, while Amazon and eBay have shopping data that other retailers can only dream of.  

Stuart Austin, Head Of Retargeting, ESBConnect

The standard conversion attribution metrics are still post-view and post-click. There are more complex and robust forms of conversion attribution tracking but, while there is no industry standard, these are not widely adopted. They are also expensive and complicated to set up and maintain. 

In the past decade, if we have seen virtually no overall improvement on CTR despite increasing technology, is it time to ask what is it that the algorithms actually optimising based on?  

So, if the raft of new technologies isn’t feeding into improved performance for the advertiser, what exactly is it doing? Would the performance be a whole lot worse without it? 

Ad fraud is thought to be costing the ad world as much as 37% of its revenue. This year, UK advertisers are due to spend £8.6bn on digital advertising, so as much as £3.18bn is wasted on fraudulent traffic. This is a staggering amount of money and if this was redirected back into the UK's publishers it would give them a dearly needed shot in the arm.  

It is obviously not possible to just turn off the fraudulent traffic but consider these things, ad agencies are employed to offer specialist knowledge about where to advertise and gain the best response and return on their advertisers’ money. If they are pushing three-quarters of their spend across two sites then surely they are not offering much in the way of either expertise or unique relationships. Add to this that their performance is largely unchanged in a decade despite millions being spent on new technology. In fact, if you take money lost through fraud, their performance may have even dropped.  

The current status quo is killing the UK media industry and, as more video and TV is consumed online, it won’t be just the traditional press that suffer. As online TV is more accountable than BARB, what does the future look like for the free-to-air broadcasters? 

There is a solution, although it’s more inward-looking than ideal, but this isn’t an ideal situation. 

If the big agency groups stipulated that their teams were limited to buying 25% of their budget on search and the same on social, there would be over £4bn for the rest. From here, if they tasked their teams with creatively targeting 25% to UK publishers and vendors they would breathe life into the UK publishing and media industry. We should remember that it has a role that is much deeper than gossip and sensation and without it the UK and world will be a much poorer place.