The story goes that programmatic technology’s “unbundling” of news and advertising made it impossible for most publishers to build a sustainable business model on digital advertising. When ads started following individuals across their travels on the web, inventory exploded, CPM rates plummeted, and Google, Facebook and ad tech brokers started taking a huge share of what was being spent.
So everyone should just pivot to reader revenue, right? Which, of course, presents its own challenges.
More likely, the advertising situation, especially for local publishers, is not as dire as it looks, and while almost everyone should be looking at some form of reader revenue, publishers will need a healthy mix of both to survive.
With a growing backlash against programmatic, the timing is right for publishers to make a renewed case for the old-fashioned concept of ads being sold based on their adjacency to quality journalism.
First, there are “brand safety” concerns. After the 2016 election, companies were embarrassed to find that their ads were appearing on (and financially supporting) fake news sites, and next to racist rants and violent imagery. An exodus of major advertisers is forcing YouTube, for example, to make major changes in how it screens and recommends content.
Second, there are privacy issues. The Cambridge Analytica scandal rocked Facebook and the ad tech world at-large. The use of ad blocking software had already been on the rise, in part, because of users’ concerns that tracking of their browsing history and the kind of targeting that resulted was creepy and invasive. We found out from the Cambridge Analytica story that it was way creepier and pervasive than most assumed.
And the European Union’s passage of its General Data Protection Regulation is having global consequences. GDPR requires companies to gain consent from users in order to access some personal data, and gives users more power to ask that they not be tracked or that such data be deleted.
“…The largest impact will be on firms whose business models rely on acquiring and exploiting consumer data at scale,” according to The Guardian. That’s programmatic advertising in a nutshell.
Third, there’s fraud. A recent Adobe study found that more than 28 percent of all web traffic was “non-human”—produced by bots or “click farms” aimed, in part, at defrauding advertisers using programmatic technology. And even if a human is visiting the page where your ad appears, how long are they on that page, and is your ad even viewable to them? Few uniform standards on viewability exist, and the likelihood that they’d be enforced across a programmatic buy is unlikely even if they did.
Anyone with knowledge of the media business who has scrolled through Facebook and seen how many videos they weren’t interested in autoplayed can see the potential issues with “viewability” across the web.
“Advertisers are more concerned that they are wasting money on Facebook than they are about the platform’s privacy lapses,” Seb Joseph wrote in Digiday recently. “They are unhappy about how expensive it’s gotten to advertise on a platform that has openly admitted it hasn’t always charged the correct amount for ads. Combine that with lower-than-expected return on investment from pricey inventory like video, and some of those companies are starting to question why Facebook dominates so much of their media plans.”
Finally, there’s evidence that ads appearing in a “trusted editorial environment” get significantly better results than ads that appear on any random web page. Recent research by World Media Group (a consortium of media companies including Bloomberg, The Economist, Forbes, Fortune, National Geographic, The New York Times, The Wall Street Journal, Time, The Washington Post and Reuters) found that readers were far more likely to click on ads that appeared alongside quality journalism or some other form of quality content, and that those ads were viewable 51 percent longer due to time spent on a page and other factors.
In a guide to “10 Advantages” magazine and hyperlocal publishers have in selling digital advertising, Kenny Katzgrau of Broadstreet Ads argues that local publishers can offer a lot that programmatic networks and big platforms can’t—a direct relationship with advertisers, flexibility in pricing, custom placement, creative ad formats, and greater assurances and transparency on traffic and viewability.
In short, that cheap CPM rate advertisers pay for programmatic advertising campaigns is actually pretty expensive if you account for fraudulent traffic, non-viewable ad impressions, potential damage to a company’s brand, and basic ineffectiveness. Paying a higher CPM with a trusted local publisher could provide the same or higher basic return on investment, and support the existence of a fundamentally important community institution in the process.
Matt DeRienzo is executive director of LION Publishers, an organization that supports local independent online news publishers from across the country. He is a longtime former newspaper reporter, editor, publisher and corporate director of news.