For every new dollar of digital advertising budget spent in Q1 of 2016, Google and Facebook earned 85 cents, according to Brian Nowak, a Morgan Stanley analyst cited in the New York Times.
This stat should serve as a wake-up call for the hundreds of high-quality content publishers competing with these giants. Google and Facebook may not look like typical content companies, but they are beating publishers by playing a totally different game.
Instead of differentiating with expensive content and endless customizations, they offer advertisers data targeting at scale, standardized ad products, and reliable metrics -- all in an easy-to-buy platform.
Rather than fight for an increasingly smaller share of the market, publishers need to work together to get back some of what’s taken up by Google and Facebook.
In the U.S., publishers have focused on their own differentiated content over scalable data-driven products, which has distanced them from one another and made it harder to capture media dollars. Meanwhile, Google and Facebook have taken up bigger and bigger percentages of advertiser budgets both at the national and local level.
To fight this trend, more than 1,000 German Web sites have taken a bold step forward, pooling massive amounts of user data onto a common platform called Emetriq in order to compete head-on with Google and Facebook. France’s La Place Media has been successful at competing with Google and Facebook, as have other cooperatives like it across Europe, where streamlined advertising products have provided big CPM improvements for its members.
However, efforts in the U.K. such as Pangaea have not caught on, for the same reason that several earlier U.S. efforts by newspaper companies didn’t work: Participants focused only on slices of inventory like programmatic IAB standard sizes, provided few unified ad products, no data standards, and no easy process for measurement and payments.
It remains to be seen if the U.S. newspaper alliance Nucleus led by Tribune, Gannett and Hearst will fully embrace these required elements of success.
Advertisers don’t want to cobble together 20 or 30 premium publisher relationships to equal the audience size they can get with a single order on Google or Facebook.
Publishers must work to eliminate the need for individual RFPs and insertion orders, and different data processes, performance metrics and billing. Media buyers are tired of the manual labor involved in achieving scale on premium sites today.
Google and Facebook make it easy for advertisers of all types to spend money, with mostly automated processes that scale from major brands down to the long tail — while many publishers can only afford to sell directly to the top brands or offer antiquated products to their network of local advertisers. A streamlined cooperative offering could open the doors to a wider variety of advertisers.
Companies like Kargo are also a good option for publishers today. They provide premium inventory at scale on mobile, offering unified rich-media ad products across their network of premium publishers, making it easy for advertisers to get scale.
What’s more, between click fraud, ad blocking and viewability concerns, advertisers have a complex and risky environment to navigate. They lean on safe and streamlined partners like Google and Facebook to help ease the burden. A cooperative of premium publishers that can provide safety and quality standards would be that much more valuable.
It’s time for more publishers in the U.S. to coordinate their ad-sales strategies to offer a streamlined, standardized and safe set of products. A cooperative that allows publishers to sell common, valuable inventory and audiences at scale could offer advertisers something even better than Facebook and Google: safe, quality, audience-targeted inventory, adjacent to premium content.