News Media: Where the Ad Dollars Are Going

By GilPress
June 18th, 2016
- Misc

Pew_news-media_june2016

It has been evident for several years that the financial realities of the web are not friendly to news entities, whether legacy or digital only. There is money being made on the web, just not by news organizations. Total digital ad spending grew another 20% in 2015 to about $60 billion, a higher growth rate than in 2013 and 2014. But journalism organizations have not been the primary beneficiaries. In fact, compared with a year ago, even more of the digital ad revenue pie – 65% – is swallowed up by just five tech companies. None of these are journalism organizations, though several – including Facebook, Google, Yahoo and Twitter – integrate news into their offerings. And while much of this concentration began when ad spending was mainly occurring on desktops platforms, it quickly took root in the rapidly growing mobile realm as well.

Increasingly, the data suggest that the impact these technology companies are having on the business of journalism goes far beyond the financial side, to the very core elements of the news industry itself. In the predigital era, journalism organizations largely controlled the news products and services from beginning to end, including original reporting; writing and production; packaging and delivery; audience experience; and editorial selection. Over time, technology companies like Facebook and Apple have become an integral, if not dominant player in most of these arenas, supplanting the choices and aims of news outlets with their own choices and goals.

The Atlantic:

“There’s still a bunch of stuff on the web. The stuff we read everyday, the stuff you write, is on the web. And that’s great,” says [Medium founder Ev] Williams. … “There’s still the fact that anyone, at any time, can create their own website and start publishing, and they have a voice—I mean that’s the idea that I got really excited about almost 20 years ago.”

“I think that will continue. I think the openness of voices is not going to consolidate back to the old days of media,” he told me. “I think the distribution points are going to consolidate.”

The distribution points are the search engines and the social networks: Facebook, Google, Twitter, Snapchat, and the messaging apps. Also on that list are YouTube (owned by Google), Instagram (owned by Facebook), Whatsapp (also owned by Facebook), and Facebook Messenger (ditto). By linking the web together, or hosting normally data-heavy content for free, these distribution nodes seize more and more users. And because each of the nodes is more interesting than any one individual’s personal site, people who used to go to personal sites wind up at the nodes instead.

As Williams puts it: “Primarily what we’ve seen is that the social networks have gotten really, really big, and they drive more and more of our attention.” With this size, they also collect more revenue: 85 cents of every new dollar in online advertising went to Google or Facebook in early 2016, according to a Morgan Stanley analyst quoted by The New York Times.

“That could be bad,” says Williams, in his low-key way.

Last updated on June 18th, 2016.