Advertisers are paying "too much" for below-performing online advertising, while publishers should seek alternatives to becoming reliant on Google and Facebook, the Campaign podcast heard this week.
Nick Manning, the Manning Gottlieb Media co-founder and media consultant, and ID5 chief strategy officer Joanna Burton discussed the major findings from the Competition & Market Authority's recent report into the so-called tech "duopoly's" dominance in UK online media and how to curb their power.
Burton warned that, as a consequence, there has a been a dramatic drop in the number of publishers and number of journalists in the UK. "One of the really important recommendations in the report is the idea about data separation and about [whether] should these parties be asked to share their data with other publishers and people in the ecosystem," she said. "It’s more likely that we’ll end up with ‘no-one has access to the data’, but the current situation is there’s too much data in too few hands."
The CMA is proposing to create a "digital markets unit" that should have the ability to ensure that Facebook and Google do not engage in exploitative or exclusionary practices, and which can impose fines if necessary.
However, Manning warned that advertisers are getting a raw deal too because they are paying too much for ads that are not as effective as they should be because they are not being served on quality media publications often enough.
He explained: "Advertising works best when it is showcased in the right kind of context. There’s a strong correlation between where advertising appears and its effectiveness and the ability to engage and get the attention of consumers. The danger is that, as the traditional publishers who are providing high-quality premium content start to suffer, as they are at the moment, then the advertisers have less high-quality premium advertising context in which to advertise."
Advertisers are paying too much in transaction costs in order to make online advertising work, Manning went on to say, with as much as 35% of their media not going towards the publisher. The recent ISBA report about the programmatic industry put this number at a much bigger figure of 49%, with almost a third of that effectively going missing from an accounting point of view.
"That 35% is depriving publishers of revenue they desperately need, but it’s also reducing the effectiveness of advertisers’ budgets by that much swell," Manning added.
Burton advised publishers not to wait for Facebook and Google to be regulated and gives specific actions to take now, such as seeking an alternative to using Google’s Ad Manager, and instead come together on Prebid, an open-source community-driven solution in which publishers try to share learnings and innovate technically.
"[Google] have such power they can wipe out whole markets. Publishers should be wary of that and they should reduce their dependency," she said. Burton also recommended that publishers do not post their content for free online and look to find alternatives to the single sign-on platform that Google and Facebook offer, where users can use their accounts to log in to a publisher's website.
This week's episode was hosted by Omar Oakes and edited by Ben Londesbrough at Campaign.