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Articles by: "Jason Kint, CEO – DCN"

Advertising | Innovation | Perspectives

DCN leads new era of quality content signaling with trust.txt

Since its founding, Digital Content Next has been at the forefront of emphasizing the importance of brands as proxies for trust and advancing the future of trusted news and entertainment. 

We share this message about trusted digital publishers with policy makers, advertisers, and the public. We share how the trust DCN members’ brands have built – both their reliability and integrity – is critical to their on-going relationships with advertisers and consumers. And today, we also share that message through an innovative new way – through the trust.txt framework.

What is trust.txt? 

The idea is disarmingly simple. 

Trust.txt is a machine-readable text string that enables any web-crawling robot to easily understand there is a relationship between DCN and our members who also choose to install a trust.txt file on their sites. The concept will be familiar to anyone familiar with robots.txt or the more recent ads.txt. Scott Yates, founder of JournalList.net is the caretaker of the trust.txt framework, along with a few members of his non-profit board. 

This simple idea helps to solve a long-standing challenge: Research has repeatedly shown that membership in DCN is a clear positive signal of trust to the industry, press and others.  However, that “trust signal” is not actionable for social networks, search engines, programmatic ad networks, researchers and others that wanted to transact only with trusted publishers. Over the years, platforms, agencies and advertisers have asked us to manage lists of trusted publishers however we’ve always been concerned those lists would be too narrow unless they recognized the entirety of the media ecosystem – not just DCN members. And that’s what the trust.txt framework does.

In support of this framework, DCN has placed a small text file on our website. You can actually look at it here.  

We recommend that all of our members install a similar file. It’s easy. And, significantly, it signals that the trusted publishers that do so have a relationship  to DCN. It confirms our association with each other in a decentralized and secure way. 

Why do this? 

As you likely know, DCN has consistently expressed concerns about how Google and Facebook have undermined the power of brands to serve as proxies for trust. We’ve held their feet to the fire in many ways. But they do have one valid excuse for why they do not send more users to more trusted publishers: They don’t have a way for their web-crawling robots to see that trust relationship. The same can be said for automated advertising systems and brand safety filters begging for automated inclusion lists.  

What they need are machine-readable signals that they can plug into their algorithms. With trust.txt they will have that and their last excuse for why they don’t more prominently feature trusted digital publishers evaporates.

When these trust.txt tags are on more trusted publishers’ websites, DCN will have a new way to hold the platforms accountable. We’ll also be able to use it with new and emerging advertising systems to encourage smart ad spending on trusted content creators. 

Trust us 

Members of DCN: I encourage you to install your own trust.txt file. The instructions to do so are here. I also encourage you to join JournalList.net, a member-owned cooperative that manages the whole system. It also means that Yates, the founder of JournalList, can help you get your trust.txt file built and installed.) 

DCN is pleased to be the first national organization to sign up for JournalList, and we encourage every other membership organization to start using this tool right away so that the network effect of trust will be visible as quickly as possible. The framework was built as a starting point that is truly open and available to all. DCN is, and will be, only as trusted as its  members. The same holds true for any other membership, whether it be a new coalition or an organization that has stood the test of time like the Associated Press. 

The last few years, and especially the last few months, have provided stark evidence that the underlying problems that plague society are made worse when the information ecosystem is weak. It’s time to strengthen our digital infrastructure with trustworthy information, We are hopeful that trust.txt is another powerful step in the right direction.

Featured Post | Perspectives

Alexa, can I trust this news service?

No, not that Alexa. Many years before Amazon hatched the infamous brain inside of their smart devices, there was another Alexa on the Internet. The original Alexa started as a 1990s plug-in for web browsers before it was acquired by, oddly enough, Amazon in 1999.

After acquisition, OG Alexa evolved into a simple web traffic service that, because it was free, was often cited by academics who lacked access to pricier (and better) alternatives. Those who were around in the early days of the world wild web may have forgotten about the Alexa Site Rankings — I certainly did. And it is safe to assume that you would never guess that today, this service influences global news on what is arguably the most controversial, if popular, platform: Facebook.  

In 2014, I noticed that Alexa Site Rankings resurfaced in an industry advertising report that evaluated premium publisher experiences. I questioned how the researchers determined which sites were “premium” (they also called them “respected sites.”) I discovered they used Alexa Site Rankings as the proxy, effectively substituting popularity for quality. They also didn’t take into account that the list included porn and piracy sites which, while certainly popular, aren’t known for quality. All of this raised significant concerns about the findings, which I outlined on Re/Code, “False Advertising: When Lazy Headlines Undermine Great Research. Let’s not confuse clicks with respect.”  

Popularity contested  

Fast forward to October 2020 and what (seemed to be) the peak of U.S. election hysteria and concerns over election and information integrity. I read a brilliant report by Alex Hern at The Guardian that examined a controversy around Facebook’s fact-checking process and found some startling surprises – including that Facebook is using the same dubious popularity data from the Alexa Site Rankings as a proxy for trust.  Hern’s analysis relies on sections of leaked Facebook content moderation guidelines including this (emphasis mine): 

Stories can be “enqueued” for Facebook’s third-party factcheckers in one of two ways: either by being flagged by an AI, or by being manually added by one of the factcheckers themselves. 

Facebook’s AI looks for signals “including feedback from the community and disbelief comments” to automatically predict which posts might contain misinformation. “Predicted content is temporarily (for seven days) soft demoted in feed (at 50% strength) and enqueued to fact check product for review by [third-party factcheckers],” the document says.

But some posts are not automatically demoted. Sites in the “Alexa 5K” list, “which includes content in the top 5,000 most popular internet sites”, are supposed to keep their distribution high, “under the assumption these are unlikely to be spreading misinformation”. 

Wait. What? Indeed, it looks like Facebook gives a “fast pass” to any site on the Alexa 5k Site Rankings.

Integrity, please 

In 2016, I wrote to Facebook CEO Mark Zuckerberg pleading for him to show actual leadership by inspiring a “moonshot” to address a growing information integrity crisis on his platform, asking him to use brands, not popularity or engagement, as proxies for trust.  

Soon after, Facebook created its own “News Page Index” to maintain a list of trusted news organizations that could be used to surface additional context, exempt the press from rules applied to political advertisers and source stories for its News tab. Yes, there was some controversy in that Facebook included Breitbart on its list. But that was Facebook’s decision to make, not ours. Welcome to responsibility, Facebook.  Kevin Roose, a brilliant technology columnist at The New York Times, has spent years documenting the effects of social media platforms. Recently, he has drawn significant attention with his daily list of the top ten news posts on Facebook. The pages appearing in his list are often sites that are popular beyond belief. They also clearly show the drawbacks in relying on engagement metrics. 

Misinformation  

By using the Alexa Site Rankings as its benchmark, Facebook provides these sites with the digital equivalent of an airport TSA Precheck under the assumption they “are unlikely to be spreading misinformation” (Facebook’s words, not mine) by being on the Alexa 5k. This is a list which includes Zerohedge, Infowars, PJ Media, Gateway Pundit, the Palmer Report, and Russia Today. If you are unfamiliar with these sites, they’re generally considered to be flush with misinformation and disinformation (Russia Today is even funded by the Kremlin.) This isn’t partisan, it cuts down both extremes where there’s often a common intent to deceive.  

Do you know what sites don’t get this same Alexa 5k benefit of the doubt that they’re not spreading misinformation? The websites for the newspapers of record for nearly every local market in America, from the Portland Oregonian to the Lexington Herald-Leader to the Kenosha News to the Philadelphia Inquirer.  

These news desks are full of journalists from cities large and small, from red states and blue states, and who have been on the streets over the last six months covering justice in America. Yet, their information isn’t given the same benefits as some of the most toxic sites on the web. Instead, they are presumed guilty and put into a long line for fact-checking whenever Facebook’s AI determines a story may be problematic. For years, The Knight Foundation has found that, among news sources, local news is the most trusted. So, this isn’t a rational or responsible decision by Facebook. 

Outsourced responsibility 

There have been many important reports on how Facebook outsources content moderation in order to separate itself from decision-making. Casey Newton at The Verge has been recognized for shining the light in this area, work that even led to a major Facebook settlement. Now, it appears that Facebook may also be outsourcing the criteria for its automated decision-making to the Alexa Site Rankings to determine whether a news site is trustworthy. 

By choosing “popularity” rather than Facebook’s internal decision making, Facebook doesn’t disrupt its business need to drive engagement. It also avoids political backlash for favoring a particular ideology; conservative sites are every bit as popular and engaging, as Roose’s reporting demonstrates. And, finally, Facebook outsources liability for maintaining its list.  

I’ve put these concerns to Facebook’s leadership asking for clarity or a correction. But, three weeks later and: crickets. Earlier this week, Twitter CEO Jack Dorsey testified to the powerful Senate Judiciary Committee that algorithmic amplification has a profound impact. We agree. The largest news platform in the world reaches nearly 3 billion people and we don’t know how or why it makes these decisions. We all deserve better. 

With great power, comes great responsibility. Facebook is a monopoly with the power to limit choice for consumers and advertisers. Now we know that this platform, where half of Americans consume news, uses a vetting process that equates clicks with quality, that devalues many of the most trusted newspapers and gives a fast pass to sites that serve Facebook’s priorities – engagement and popularity. If that’s the case, the public should know about it so they can decide if that’s where they want to put their precious time and attention.

Featured Post | Perspectives

Censorship isn’t the issue. Controlling the spread is.

In a recent meeting between the Vice President of Values and Transparency of the European Commission, Věra Jourová, and Twitter CEO Jack Dorsey, they agreed there should be more focus on how harmful content is distributed and shown to people rather than pushing for its removal. This is a critical point to be made as we enter what may be the most volatile two months in the history of our still-young democracy.

If you don’t know Jourova, she speaks from experience on civil liberties and technology. Time Magazine named her to their Time 100 last year and she played a key role in passing the General Data Protection Regulation (GDPR) privacy law in Europe. Her responsibility now includes watching over democracy and election integrity. Meanwhile, Jack Dorsey continues to lead Twitter bravely, despite the political risks. Facebook, however, continues to play a game of public relations to the continued detriment of our democracy.

Facebook would prefer that our public debate is focused on issues of free expression. Mark Zuckerberg can then symbolically drape the American flag around his shoulders and remind us of the importance of free speech while his company sidesteps the perils of his platform and dodges the thorny issues at the core of Facebook’s profit model. In positioning his argument this way, Zuckerberg creates a false case in which supporters of our democracy’s rights to free expression must agree with him.

In this crowded theater, he not only defends the right to yell fire, and light them, but also algorithmically fans the flames so that they spread out of control. And he does so in the very same month his company threatens to block all news in Australia and to withdraw from Jourova’s Europe because their profit model can’t survive regulation, quite a statement if you stop and think about it.

As long as Facebook focuses on the issue of content take-down versus minimizing or stopping its amplification, they avoid the real issue with the platform. And they are certainly not going to solve it.

Yes, Facebook has become an essential utility to the world despite harboring toxic sludge

This is undeniable by all parties, including Facebook. And it makes any scaled changes particularly sensitive. This is particularly problematic and impactful in nations without the freedoms of our First Amendment. For these countries, the positives and negatives of Facebook are even more pronounced. And reports of Facebook cozying up to authoritarian governments are even more troubling.

We need to stop debating the “censoring” of posts on Facebook

First, Facebook is a private platform and has the right to make decisions to remove or promote posts as it sees fit according to the (you guessed it) First Amendment. More importantly, press advocates should be uncomfortable with Facebook outright removing posts unless the information presents an immediate danger to the public. If a Facebook user wants to follow and read Alex Jones or Michael Moore, then so be it. If Jones, Moore, or any of these folks want to share questionable content (within limits around issues like inciting violence and hate) then so be it. These are consumer choices and the statements from Jourova and Dorsey imply they tend to agree.

Reach = velocity x amplification

It has been frequently stated in policy circles that “freedom of speech” does not equal “freedom of reach.” This is a clear and elegant way to illustrate how protections from the government or from Facebook’s freedom of expression bear hug should stop at the company’s decision to permit a post to survive on its platform. It is too simple an analysis to treat Facebook merely as a “platform” or the “21st century town hall.” Being neutrally available to all is one thing. However, it does not account for the platform’s design decisions that impact whether posts spread like wildfires or fade into history. The average person’s posts simply don’t travel like a Trevor Noah monologue or a statement from President Trump, and it’s not simply because they have more “friends.”

This is the argument presented in an important 2019 UK report positing why Facebook is neither platform nor publisher. If Facebook were the traditional model of a publisher, it would commission, pay for, edit, and take responsibility for the content it disseminates. And there are already renewed efforts to make social media carry more liability. At the same time, it’s not merely a platform because it continually changes what is and is not seen, based on algorithms and its own employees’ human intervention. If it were purely a platform, then that liability protection it receives may be warranted.

Content targeting suppresses counter-speech

An influential academic compared Facebook’s “black box” algorithms to the opacity of newsrooms in the 80s. This is disingenuous. As we stated in our 2016 letter to the CEOs of Facebook and Google, no one is arguing we should return to the world of gatekeepers and information scarcity. Any comparison to newspapers and television falls apart here as social media platforms reinforce a cycle of regurgitated bias. We must recognize these same algorithms that microtarget content to individual users also serve to suppress the counter-speech to that same content. No news media is entirely immune to bias. However, balance, integrity, and responsibility to the public are fundamental to their success. And consumer feedback and choice offer a sufficient check on this.

So, when Facebook executives share platitudes about free expression in response to harmful content, please ask why they continue to actively promote this harmful content with their algorithms. When they describe the labels they had to be pushed into affixing to harmful content, please ask why they haven’t gone a step further and put these labels on the harmful posts before they’re even visible to users. When they describe their reluctance to censor individuals, please ask why they haven’t removed the tools in their product that allow for massive amplification of questionable content. In a message all too familiar to us in 2020, we need to stop the spread

Featured Post | Policy

An insider’s guide to next week’s Antitrustpalooza

EDITOR'S NOTE: As of 4 p.m. July 24, 2020
Monday's first-of-its-kind congressional hearing with the CEOs of Amazon, Apple, Facebook and Google was been officially postponed due to a conflict with the memorial services for the late Rep. John Lewis, the House Judiciary Committee confirmed Friday. 

How to watch 
Congressional Hearing: Online Platforms and Market Power, Part 6: Examining the Dominance of Amazon, Apple, Facebook, and Google
Who: Tim Cook, Mark Zuckerberg, Sundar Pichai, Jeff Bezos
Date: Originally, Monday, July 27 / Rescheduled for Wednesday, July 29
Time: 12:00 p.m. ET 
Stream: on YouTube of course!

As CEO of DCN I have the privilege of addressing the executive leaders from our membership at our annual Next: Summit. This past January, my remarks were titled “2020 Vision.” When I look back at my presentation just six months later, it is astounding to me how little we knew about what 2020 would bring.

However, my first slide had a close-up of the eyes of the CEOs of the four companies who have most benefited from the growth of our industry: Google, Facebook, Apple, and Amazon. On Wednesday – halfway through this tumultuous year – we will hear from them directly. “The 4 Horsemen of the Techopolypse” – as Kara Swisher called them in The New York Times – will testify under oath before Congress for the first time, on antitrust matters, an area where they face the most risk to their massive businesses.

Two of the companies, Google and Facebook, are already under highly sensitive antitrust investigations by nearly every state, federal, and international regulator of note. And Apple is being investigated by EU antitrust regulators. So, this is the public accountability portion of the show. Get the popcorn ready, because this is going to be one to watch. 

Tuning in

There is a well-paved road of industry concerns around these four companies. Like many topics these days, they tend to gravitate towards specific concerns of the left or the right. For serious experts, though, antitrust becomes a critical focal point because nearly every one of the grievances is a symptom of too much power and too much control over the design, delivery, data and dollars that fund the media ecosystem. This hearing offers an unprecedented opportunity to discuss these issues with the chief executive at each of these organizations. And while it is clear that everyone involved in these antitrust investigations has become far more knowledgeable on the issues in play here over the past few years, we can’t afford to waste a moment.

Having closely studied prior global testimonies for these companies, I am optimistic the committee will be confined to lawmakers focused on antitrust. But I’ve been thinking a lot about the way these lines of inquiry usually go. And while there are absolute must-ask questions for each of these companies, there are also those that should be avoided. I call the latter group “rabbit hole” and “sand trap” questions.

The trouble with rabbit holes is that – while the question may well be a good one – the answer is likely to be complex, unwieldy, and take the inquiry places that will confuse many and clarify little. As for the sand traps, these are the types of questions that the PR and lobbying machines at these companies adore. They lend themselves to unrelenting spin and little actual insight. And critically for this hearing, they will do little to illuminate the issue of antitrust.

Targeted questions and unwanted detours

Here’s my list of burning questions that must be addressed, along with likely rabbit holes and sand traps to be avoided.

What to Watch For – Apple

Tim Cook, CEO 

Burning question: App store terms 
This is of particular concern as Apple rolls into TV, Music, and now News. The company even acquired a weather app last month.

Rabbit hole: Security
Whether it be backdoors for law enforcement, data access by China, or app security, this discussion won’t get anywhere; it leads to a false choice between security and privacy. Consumers deserve both. Period.

Sand trap: Privacy
Tim Cook, on behalf of Apple, has been a unique and powerful voice carrying the torch for the human right to privacy. This is good and favors them significantly, most notably in contrast to the practices of Google and Facebook. However, it is important to remember that Apple doesn’t have an advertising business. So, it is happy to criticize the core asset of Google and Facebook.

What to Watch For – Google

Sundar Pichai, CEO

Burning question: Advertising marketplace
All parties – the UK, Australia, France, the Department of Justice and State AGs – seem to be focusing antitrust investigations on Google’s advertising systems. This includes its vast data collection across its dominant search, operating system, browser and its many adtech acquisitions. An expert economist described it as a “walled garden” yet across the open web. Remember this every time Google champions the “open web” and the small publishers all while taking half of the revenue for itself.

Rabbit hole: Censorship
Republicans would love to nail Google for bias in its search engine. I’m empathetic because all searchers should readily find their trusted news sources in search results. Algorithmic bias is an issue of concern. And censorship is a troubling topic. However, these are complex issues that cannot be adequately addressed in this context. The short answer is that you need competition to provide alternatives, as I testified to Senate Judiciary last year.

Sand trap: Revenue share confusion
In previous testimony and in press reports, there has been significant debate around the “ad tech tax” or the percentage taken by Google whether it be 70/30 or 30/70. Don’t go there. It’s a time suck. Google has powerful spinners working on obfuscating their dominance here.

What to Watch For – Facebook

Mark Zuckerberg, CEO

Burning question: Data collection
As the German courts concluded, Facebook uses its data collection across the web and its own apps to dominate social media. Copious research and leaked documents have shown how Facebook has used this access to data to cut out competition and control markets. Facebook has created an advertising marketplace fueled by its massive data and has turned away from addressing issues of quality of the experiences around it, harming both publishers and advertisers.

Rabbit hole: Content moderation
Don’t get me wrong, the push for Facebook to better moderate its content is incredibly important. But the solution isn’t simply tighter enforcement and arguably outside the scope of this hearing. Mark Zuckerberg will point to EU audits on Facebook policing hate speech and their tens of thousands of “moderators.” Put simply, if Instagram and Facebook were two different competing companies, the incentives to act on issues such as harassed journalists like Maria Ressa, boycotting  advertisers or persecuted people, would be much higher.

Sand trap: Censorship
Zuckerberg would love to have a partisan debate in which Facebook carries the torch of free expression and he cloaks himself in love for the First Amendment. The real conversation Facebook wants to avoid is its algorithmic amplification decisions which provide velocity and reach to the content and advertising on Facebook’s platforms, regardless of its potential harm and without any liability for it. However, this issue is better suited for a hearing on CDA 230. In the context of antitrust, alternative and competitive social platform choices for consumers and advertisers will only drive more quality.

What to Watch For – Amazon

Jeff Bezos, CEO

Burning question: Platform privilege
Did Amazon lie under oath to the committee? Do they use data from retailers to inform their own product decisions as WSJ reported? Do they unfairly control prices and exclude competition? Lawmakers want to know, and Congress should find out.  

Rabbit hole: Getting personal
Anything related to Bezos’s ownership of Washington Post or personal life. It’s his first time testifying and let’s hope this hearing stays on topic.

Sand trap: Pandemic savior
Amazon, more than any company represented, has a critical role in supply chains and is vitally important during the pandemic. While they are certainly the fox in the hen house, they’ll happily talk about how they benefit online small businesses (even launch an entire association to do it!) The fact is that local businesses are struggling mightily during the pandemic while Jeff Bezos is reported to be closing in on $200B as the wealthiest man on the planet. His fortune grew a record $13B on a single day last week – during a global pandemic. That pretty much tells you what need to know about who benefits the most. So, why even go there?

There is so much that we’d all love to see uncovered in the interrogation of these powerful tech CEOs. But this hearing is focused on antitrust. And frankly, there are so many issues with these companies that would be addressed, or at least alleviated, if their unrelenting market dominance was diminished. It is critical that this questioning stay on point and avoid rabbit holes and sand traps. It is clear that each of these companies has been allowed to benefit from rules that were intended to foster capitalism and  innovation – strong American principles that everyone can still get behind. As Scott Galloway has consistently pointed out, real competition is the basis for both of these.

It is time for change.

Uncategorized

Google antitrust heats up

There is good reason why 50 attorneys general, the Department of Justice and regulators around the world are investigating Google for anticompetitive conduct in the digital advertising marketplace. It seems like new reports are issued almost every month that offer a clearer understanding of Google’s dominant position in the data and pipes underlying the buying, selling, serving, and measuring of ads across the open web.

Orchestrated acquisitions 

Google generates the most revenue and retains the most profit in the ad industry. DCN has long espoused the viewpoint that Google is able to do this because of its market power and ability to see large amounts of data on consumers’ online interactions. This data and market power wasn’t achieved through superior service and innovation but instead through orchestrated acquisitions beginning with the purchase of Doubleclick in 2007.  

Now, a little over a decade later, 95%+ of DCN’s member publishers use Google’s ad platform when selling their ad space on real-time electronic exchanges. These exchanges primarily target audiences (using cookies as their proxy) while mostly dismissing the value of the publisher brand and the quality of the content ushering in the user (cookie). They intermediate scale but diminish the value of what differentiates it. No doubt there is a lot of profit in marrying the data exhaust with cheaper inventory rather than having to subsidize the expense and liability of the content itself. 

Google wins out most often, on all sides of the market, simply because it knows more about the audience, the advertiser, and the transaction to be made. With Google’s machines looking into all parts of the supply chain, Dina Srinivasan rightly compares this to insider trading in a recent report. In the securities trading market, the intermediaries that trade on behalf of third parties and on behalf of themselves must manage their conflicts of interest. These same competitive principles must apply here and assure other exchange entities to the fair access to data and speed that Google currently controls.

Muddying the waters 

The good news is that antitrust regulators also appear to be on the right track as press reports and global investigations release preliminary findings that investigate this intersection of market dominance and data. Make no mistake though, Google is also ramping up its efforts to muddy the waters. This includes documenting for the press and regulators the long history of re-brands and repackaging of Google’s various platforms along with the incredibly complex market that is “adtech” in a way that favors their chosen narrative of market efficiency for all.  

In a recent filing In a recent filing in Australia, Google attempts to argue that the entire adtech ecosystem really isn’t even that important for the company by pointing out that most of its ad revenue is derived via Google Search. This may be true in terms of direct dollars. However, this entirely discounts the value of the data that Google collects across nearly 80% of the web, which bolsters the value of Google’s owned and operated businesses along with the value of its own inventory. The German Federal Cartel Office decision against Facebook, which was reinforced by a court earlier this week, is relevant to how this data across the web ties back to the value of the core platforms. Google plays the same game as Facebook. 

It’s not the money but the impressions

In the same Australia filings and Google blog posts earlier this week, Google also tries to dismiss the value of the adtech ecosystem for publishers. Google implies that this type of advertising is a very small percentage of the revenue for publishers: At only 15% of their revenues, they suggest that there’s “nothing to see here.” Google even invented a new term “intermediated open auctions” to describe it. (And, as everyone knows, any antitrust investigation deeply depends on defining the market).  

Readers of Google’s filings need to ask 15% of what? Who falls into this new market definition set by Google?  You’ll soon find out that it includes social networks that operate their own private, closed markets including, significantly, Facebook.

More importantly, DCN’s own benchmark analysis shows that a whopping 75%[1] of the impressions across its medium to large premium news publishers are sold in these same auctions.

So yes, we agree that these auctions end up being a minority of premium news publishers’ actual revenues but a significant majority of their inventory.  Google has devalued the inventory for premium publishers using its data and pipes underlying the buying, selling, serving, and measuring of ads across the open web. Google has essentially made the point for regulators. 

[1] DCN 2019 Benchmark Report, Proprietary Analysis.

Advertising | Featured Post | Policy

The Google antitrust ship has set its course

When DCN created our original chart, where we coined the term “duopoly,” it marked the first wave of what would become five years of interest and activity, marked by intense journalistic investigation – which heats up as antitrust scrutiny does. The line of inquiry often starts with challenging whether anything is new or different. While some industry pundits like to posit that they’ve already “seen this show,” this time around the players are wiser and the stakes are even higher.

In the seven years since the Obama-era FTC issued its decision not to take action against the cool kid in their class, Google, the company has managed to triple its U.S. ad revenues (source: GOOG SEC filings) in line with the overall U.S. digital ad market (source: IAB/PwC Internet Advertising Reports). Put differently, Google has maintained its market share, which is hovering at around 50%.

How on earth has Google maintained share during the same period in which Facebook has grown from virtually nonexistent to the other half of the two-headed duopoly monster? Answer: Pilfering the open web by establishing a walled garden to shift revenues from everyone else to Google’s own properties.

Tired arguments

Yet a small handful of academics, analysts, and influencers (who often fly too close to the sun) continue to rehash the tired arguments that were widely shared back in 2013. They start by broadly painting any scrutiny of Google as a combination of the jealousy of dying legacy media and protectionism by Europe. Often, they claim that news media is manufacturing outrage with an “axe to grind” rather than rightly doing its job of holding the powerful accountable.

They misleadingly suggest that Google makes no revenue from Google News while turning a blind eye to the billions in value they collect from harvesting news content. Much of the value of search would disappear without news content for consumers to find. And when these pundits finally get down to pragmatic analysis, they point out the “gift of web traffic” publishers receive from Google’s free search engine, as if the web, and publishers, couldn’t exist without Google’s pixie dust.

The new wave

However, what these arguments miss is that the voices and minds leading the case in 2020 have evolved their understanding of tech and the marketplace. There is a significant and growing body of consistent research and investigation around the globe about Google’s anticompetitive action from savvy digital thinkers in academia, think tanks, state and federal regulator offices. Say what you want about the various Congressional hearings these days, but they undoubtedly make the committees, public, press, and thought leaders wiser on the topic

Reading long investigative competition reports may not be your cup of tea, particularly during a global pandemic. So, I’ll summarize what DCN is focusing on, what the latest research shows, and what is most important to the health of our members’ businesses.

The latest research

Two key investigative reports have been released: The Australian Competition & Consumer Commissioner (ACCC) July 2019 Final Report and the U.K.’s Competition & Markets Authority (CMA) Dec 2019 Interim Report. If you can only read one, read the latter (and don’t miss Appendix E). The U.K. investigation launched well before those in the U.S. and it offers a solid look into how Google and Facebook are being examined.

I was also delighted to see a Yale professor, Dr. Fiona Scott Morton and co-author David Dinielli, publish “A Roadmap for a Digital Advertising Monopolization Case Against Google” earlier this week. They lean heavily on the U.K. CMA report and did a masterful job of translating hefty regulator documents into a readable form that anyone who has followed our industry will understand. They assert that any eventual court case will demonstrate how Google’s established monopoly in the search business was subsequently leveraged for market power in the design, growth, and capture of value through its intermediation of ads across the open web.

Inside Google’s walled garden

It is important to understand that approximately 90% of Google’s revenue growth (3x over the last seven years) was captured on its own properties (search, Gmail, YouTube, etc.). This led to a shift of Google’s source of revenue to increase from a total of 74% to 84% from their own properties, where their costs to acquire traffic approaches zero. Not coincidentally Google was, all the while, cementing a dominant position in the buying, selling, serving, and measuring of all ads across the open web.

This shift in revenue growth towards areas where Google keeps the most revenue has only been possible because of Google’s market power and ability to see large amounts of data throughout the consumer and advertiser journey, in its own so-called “walled garden.” This allows them to optimize the customer experience in a way that will inevitably keep consumers and advertisers driving the most profit to Google.

Revealing revenue research

Just a few weeks ago, the U.K. advertiser group ISBA published a transparency report. For the first time, the report laid out empirically just how much revenue was captured by intermediaries. Google was, of course, the most substantial player on all sides of the market. (Though there was a curious mystery 15% that the researchers couldn’t lock down.) At this point, it’s beyond hypocrisy each time Google preaches “transparency” but refuses to report both gross and net revenue for its advertising services.

Based on various investigations, Scott Morton and Dinielli expose how Google has achieved this dominance. They examine how Google collects 40% of the revenues across the open web, limits the use of data, and steers consumers to its Google-owned properties with its own higher-margin ads. Google does so while appropriating publishers’ data and audiences for its own gain on its own properties and elsewhere on the web.

Anticompetitive conduct

Morton and Dinielli clearly lay out 20 examples of Google’s potential anticompetitive conduct. Many of them tie to previously published concerns and research from DCN. All will require further investigation and subpoena power – but I’m sure we can agree that they pass the sniff test.

  1. Acquiring Independent Companies To Cement Its Role Across the Ad Stack
  2. Leveraging Market Power in General Search into Display
  3. Designing Auctions That Facilitate Arbitrage and Rent Seeking
  4. Cross-Subsidizing Competitive Functions of the Ad Tech Stack with Monopolized Functions In Order to Rise Rivals’ Costs and Foreclose
  5. Deceptive Gathering and Integration of Data
  6. Strategic Disabling of Interoperability To Disadvantage Rivals
  7. Withholding Interoperability to Steer Demand and Supply Through Its Own Exchange
  8. Providing Exclusive Programmatic Access to YouTube Though Google’s DSP
  9. Retiring the Third-Party Cookie
  10. Disadvantaging Rival Exchanges by Google’s Publisher Ad Server
  11. Undermining Header Bidding Through the Development of So-Called “Open Bidding”
  12. Undermining Header Bidding Through Exclusionary Features of AMP
  13. Designing Analytics to Steer Market Participants to Google Products and Prevent Entry
  14. Resisting Transparency at All Levels of Ad Tech Stack
  15. Obscuring Fees So That Competitors Cannot Enter and Compete Effectively
  16. Using Privacy Laws as an Excuse to Hide Performance Data
  17. Thwarting Publisher Efforts to Understand Source of Payments
  18. Designing Attribution to Favor Search and Disadvantage Publishers
  19. Raising Rivals’ Costs and Foreclosure of Existing and Potential Horizontal Competitors
  20. Capturing Publisher Data in Order to Monetize Their Audiences

Antitrust investigations

Finally, we should still ask whether Google’s lobby and power somehow afford it unique protection in the U.S. market. Only time will tell. But we expect Congress’ antitrust investigation to issue a report in the next 90 days.

Nearly 50 state attorneys general, who previously announced their inquiries, are expected to move forward along with the (not easily intimidated) Department of Justice. Both have broad subpoena power as well as the U.K. and Australian reports to inform their deliberations. Providing further confidence thus far is that the Texas Attorney General office is leading the states’ investigation. They provided Google with an extensive list of nearly 130 questions focused mainly on Google’s advertising business. (Note: DCN received this “CID” through a public records request). It certainly looks like they want answers to Morton and Dinielli’s claims.

The internet has evolved, and it continues to do so. While many of the arguments media pundits and academics may have made a few years ago seemed plausible at the time, that time has passed. It is clear that serious research and reflection is being done that will inform any discussions around the duopoly, antitrust in the advertising ecosystem, and restoring the value exchange between premium content and the “virtual pipes” of technology that control and make money off its flow.

Advertising | Featured Post | Perspectives | Revenue

We need the news. And the news needs us.

“In a pandemic good info saves lives.”  

– Dr. Marc Lipsitch, professor of epidemiology at Harvard University

Like much of America, I was introduced to Dr. Lipsitch in the early weeks of our education on COVID-19 when he became a fixture of news coverage. His credentials are certainly impressive. However, it was also significant that Dr. Lipsitch was being presented as an expert by some of the most trusted news brands – from CBS News to The New Yorker, The Atlantic, and CNN.

On a normal day, I probably wouldn’t have been quite so attuned to his CV. (Hey, a Yale->Oxford->Harvard resume isn’t what it used to be!) But this was different. It was late February 2020, a period in which rumors and false information were running rampant across social media and our President was well, being our President, while the actual experts were warning about the seriousness of the pending pandemic. I was growing more and more uncertain and feeling vulnerable. Like many people, I was trying to figure out who I could trust to provide the closest thing to the truth in a rapidly evolving situation. In this case, Dr. Lipsitch earned my trust.  

“It is universally recognized that trust can only arise under conditions of uncertainty and vulnerability, i.e., when the trustor encounters risk, and when there exists a state of dependence between the trustor and trustee.”  

(Kelton, Fleischmann and Wallace, 2008, Trust in Digital Information, p. 3)

Big picture 

Most people have a favorite news source, be it their local news brand, syndicated news outlet, or a national news organization. And really, regardless of our personal preferences, they each have different strengths.  

For national and international news brands like The Washington Post, The Wall Street Journal, BBC, and their ilk, consumer trust is anchored by their reliability, consistency, and reputation established over time. This includes taking accountability when they fall short. Even the finest media brands occasionally make mistakes and self-correct as they pursue the truth. (“The truth is hard to find” and “worth it” ad campaigns from The New York Times brilliantly remind us of this.)  

In local news, an area hit hard over the past decade, the journalists are part of the same community as their customers. They overwhelmingly share the same impact as their readers and viewers when they report the latest news and work to get to the truth.

For Seattle news reporters covering the ongoing tragedy in Kirkland, the risks are real in a way that is akin to working in a war zone. There is no doubt that the public appreciates the work they are doing, now more than ever. If it weren’t for the need for social distancing, it would definitely be “hug a local journalist day.” We’ll save these hugs for another time and deliver them when we can. 

A higher mission

But today, we need much more than hugs. We need this trust to turn into funding for the costly work being done across the news industry. While these reporters are dealing with the same issues as the rest of America – shelter-in-place, vulnerable family members, work-from-home mandates, job and financial insecurity, and personal health risk – they’re not missing a beat in making sure we all stay informed.  

At no time in the past century has the news industry been more vulnerable, for both the humans and the news organizations informing the body public. Trust has value. And we need to support the individuals and organizations in which we place our trust.  

There is hope, signaled by the impressive growth of trusted brands’ subscription numbers over the past few years. Even in a world ruled by the attention economy, in which low quality and false information proliferates according to algorithms, the public’s willingness to invest in reliable valuable information is growing steadily. 

We applaud the choice of so many media organizations to drop their subscription gates during times of crisis when getting trusted information out to as many people as possible takes precedence over the bottom line. The choice to make critical information freely available once again demonstrates how news providers feel compelled to inform the public, full stop.  

It is heartening to see signs that subscriptions are coming in, despite publishers lifting these gates. However, publishers have made this move knowing full well that the likelihood of a widespread international recession may force difficult choices for everyone needing to reduce their expenditures in the near future.

Missed opportunity

However, the subscription model is far from the primary revenue source for news organizations. Most digital publishers still heavily rely on advertising support. And right now, there is a great deal of uncertainty in the advertising business. That said, we know that people are turning their attention to news at record rates. And we know that people need to make decisions about how and where they are going to spend their scarce resources of both time and money. 

Normally, advertising follows audience attention. So, a surge in interest around a particular subject would lend itself to a nice uptick in advertising placements. News, unfortunately, does not always work this way. Overzealous, often blunt, keyword blocking, and avoidance have long been an issue around news content, particularly as automation and advertising exchanges delivering “blind programmatic” have taken off.

Advertisers are wise to be wary of the company their ads keep and should remain vigilant about the impact of context. However, now is not the time for advertisers to hide from so-called “hard news.” The fact is that news – now and always – is a critical component of consumers’ media diet. And right now, it is literally a lifeline. 

The trust “halo”

There is a significant body of research to support how association with high reputation and trusted news experiences creates a “halo effect” for the advertising brands funding it. There is also the inverse, which shows the damage to a brand that can come from association with low-trust environments, like social media newsfeeds. DCN’s subsidiary, TRUSTX, was built entirely on the concept that trust must be married to transparency, simplicity, scale, and automation for real success. 

On the local level, advertisers supporting their local news outlet is perfect karma. Local advertisers tap into the trust established by journalists who bring personal interest and community knowledge to important issues. (Contrast this with the “absentee ownership” of tech platforms with little direct experience or accountability to the local communities they serve.) Truly local advertising also helps keep these valuable publications alive and well to support communities and the businesses in them. It is a virtuous circle if ever there was one. 

On the national and international level, advertisers that garner the public’s attention in the context of valued, authoritative media will accrue trust in a way that is only possible at moments like these. These opportunities are uniquely offered by news outlets such as the Associated Press, USA Today, NBC News, Vox Media, and the many dozens of other DCN members.  

Step up, news matters 

I was struck by a statement earlier this week from an executive at one of the “big four” advertising agency holding companies on the planet, in response to advertising technology companies marketing their capabilities to block hard news and coronavirus reports.  

“I will say this again. Please, don’t block or harm news sites during this time under the pretext of brand safety. The Coronavirus topic is unavoidable, news impressions are increasing, and responsible brands should be there in respectful and meaningful ways.”  

– Joshua Lowcock, Chief Digital Officer at Universal-McCann 

I wasn’t being facetious earlier this week when I called on Google, the largest gatekeeper of advertising on the planet, to turn off the ability to block advertising against Coronavirus for the next six months in order to maximize funding of news organizations. Yes, by doing this Google could lose advertising business to their so-called competition. But a monopoly like Google could show the same sort of leadership for which Mr. Lowcock so beautifully advocated. We must support quality independent journalism because, as Dr. Lipsitch stated, “in a pandemic good information saves lives.”  

Featured Post | Perspectives | Video

Audience expectations are critical in DCN’s 2020 vision

We’ve just returned from our annual summit where a couple hundred senior executives gather in a closed-door meeting to discuss the most pressing issues and exciting opportunities that we, as an industry, have before us. It was my sixth year of having the honor of setting the table to open the executive summit, after more than a dozen years listening from the audience.  

Everyone in the room is a premium publisher – with the exception of a handful of supporting sponsors, speakers, and invited guests. The attendees at the DCN Next: Summit are among the most knowledgeable people in the business of digital media anywhere. It is a daunting task to capture the proper sentiment for the direction of our industry at a gathering of such key leaders. That said, here are the main points from my kickoff remarks this year.  

This new year also marks the start of a new decade, 2020.  

2020. Yes, perfect vision. Optimal focus. As we begin this decade, I believe that DCN’s members are uniquely positioned. As a group focused on creating premium content experiences, we have never lost sight of the importance of our audiences. We’ve remained steadfast in their trust and our direct relationships. 

I see three key facets to this 2020 vision: 

First, we find ourselves rightly renewing our resolution to put the expectations of our audiences first. To meet, to exceed, their expectations. To be their trusted ally. 

Second, we’ve defeated the myth content has to be free and finally defined what it means to be premium. It simply means to have real value worth paying for whether by distributors or consumers. 

Third, given too many years of platform dominance – in which they have indiscriminately hidden the real costs to their services and vacuumed up as much consumer data as possible while, at times abusing trust – we find ourselves in the best position to align with new user expectations. To believe that data is the lifeblood of the Internet is to look past the trust and audience expectations which underpin it now, and in the future.  

Audience first 

Unlike some of those who seek to cravenly capitalize on consumer attention merely to collect data and target ads, we celebrate an unwavering focus on the wants, needs, and expectations of our audiences. The experience across platforms can be rich and elegant. But even more importantly, digital allows us to use multimedia to tell stories in ever more engaging ways, better informing the public – something that has never been more important.  

In this case bringing it altogether, I’d like to point to the brilliant Wall Street Journal report on Google’s ad tech business. It informed a public conversation and made its way not just across the industry but into meetings of regulators investigating Google – this is true impact in journalism. 

Storytelling at its best 

As technology enables us to better tell our stories, it also becomes more deeply embedded and entwined with every aspect of our audiences’ lives. The New York Times 1619 Project was one amazing example featured at a DCN Storytelling Member Day. It not only brilliantly told the story; it reexamined the legacy of slavery and made its way into other media – not just audio and video but it also found its rightful place in classrooms and libraries as educational material – this is true impact in journalism. 

Revenue revived 

The past couple of years have been particularly promising around subscription-based and other Direct-to-consumer (DTC) models. While ad vendors chase “DTC”, the latest acronym in their alphabet soup, DCN’s members have always focused on direct, trusted relationships with their audiences.  

While concerns have loomed around subscription fatigue, recent DCN research found the opposite. In fact, consumers aren’t even aware how much they are spending on subscription products. (DCN’s research shows an average of $54 per month across 4.3 products). So, it’s clear there’s room for more! And we now see that younger audiences who grew up in digital are willing to pay for satisfying experiences. The DCN research backs this up showing that they see value well beyond their cost. 

As we build our subscription-based offerings, and optimize ad experiences across platforms, we must keep these audience experiences top of mind. We serve neither our audiences, nor advertising partners, if we do any less.  

Video views 

Our members – and the industry as a whole – are seeing a hearty appetite for audio and video content. We see robust revenue around licensing of our content and IP, which also allows us to impact ever widening audiences. This is backed up by a renewed effort to preserve copyright over their art, notably including last year in the EU.  

We are also seeing true diversification in our busiess models.  

Where desktop display eroded over the past years, mobile display has offset it. And other forms of advertising including native, sponsored content and leads have helped drive growth. Video advertising, where inventory can be created, continues to carry the highest price and growth in advertising.  And arguably the most important growth of all, we’re seeing direct audience revenues grow more than 20% per year where content companies are being paid directly for their content recognizing its premium value. 

UBS estimates that a combination of 16 media firms will spend $100 billion to produce content in 2020.  In fact, it has been predicted that more than $35 billion will be spent on streaming video content alone.  And with over 60 media companies among the DCN membership, we know that the total investment will be much higher. And rightly so. Hulu has been investing in premium content for its streaming video platform. So is CBS All Access. Disney+ launched in the last few months with an absolutely gorgeous experience. Peacock will launch in April and then HBO MAX a month later. And those are only a few examples. 

Engaging experiences 

While we continue to monitor the power of platforms, their own investment in content demonstrates that information and entertainment are the lifeblood of social experiences online. And now the platforms are starting to pay for it. No DCN member is surprised that film, television, news, sports and other topics engage audiences and ignite conversation, debate, and discussion across platforms.  

Be it delivered on the big screen, small screens, smart speakers, or the myriad delivery channels in the digital content ecosystem, the work our members do forms a nexus of cultural impact. We have reached new heights of digital storytelling. And, undoubtedly our craft, the art of storytelling, will continue to surprise and delight as its evolution continues in the decade to come. 

And, while we face challenges like broad-swath and blunt keyword blacklisting masquerading as “brand safety” and the ease of data-driven scale, we also see signs that marketers too are shifting their focus to quality contexts and making genuine customer connections.  

Yes, it is “easier” to pull a series of data-driven levers and reach purportedly targeted audiences with generic messaging. However, as a growing number of consumers opt out of advertising and intro tracking prevention, savvy marketers too are reviving the art of storytelling. They have a renewed understanding of the power of delivering compelling messages in trusted, engaging, inspiring environments and an appreciation for the cost to their brand when it’s associated with experiences that abuse customers’ expectations. They see that being part of exceptional experiences creates the kind of cultural resonance and relevance that a click cannot compare to.  

Data diligence 

Don’t get me wrong. Certainly, data is a powerful tool for understanding audiences. It is also critical for storytelling and we see it leveraged in stunning executions to create vivid narratives built on numbers. 

But user expectations around data collection and use are of critical concern. With increasing consumer awareness around data practices online and looming enforcement when they’re abused, we must continue to focus in on what’s best for our audiences and only then for our marketing partners. The ability to micro-target, to force an action with a digital ad is not the same as engaging audiences around trusted content. It is not the way to build long-term customer relationships. 

Fans and friction 

It up to us to keep our customer focus razor sharp as we embark on this 2020 vision. We need to minimize complexity and reduce friction while continuing to innovate and enhance experiences for our audiences. Certainly, challenges abound including news deserts impacting local communities, anti-press rhetoric from none other than our own President which sends dangerous signals globally, and continued platform competition and unequitable marketplace control now under investigation by Congress, FTC, DOJ, states, the EU among others.  

I’m feeling good this year about where things are headed. I’m feeling really good.  And I’m thrilled at the programming lineup we assembled for our annual summit to talk about it.  

What I’ve seen in my time in digital, particularly the years I’ve been fortunate enough to spend on the team at DCN, has taught me is that we are at the forefront of something great here. We are on the frontlines of storytelling and communication. We have the power to shape minds, to touch hearts, to fill the world with laughter and tears. Here’s to 2020 bringing the roar of the crowd as we focus on what matters most: the audiences we serve. 

Featured Post | Perspectives

Platforms, politics, people and sharks

Last week at the 2019 World Media Congress in Las Vegas I had the privilege of being asked to address the weighty topic of “Platforms, Politics, and People.”  At this moment in time, it presents a remarkable challenge to cover the confluence of these topics before a global audience.

I found myself trying illuminate a perilous intersection between the growing distrust of tech platforms (which continue to register record usage) and the growing divisiveness in politics. And, to make things even more challenging, my speaking slot was at 5 p.m. just before cocktails in Las Vegas, of all places.

And so, facing challenges both topical and logistical, I decided to do what had to be done: I cued up “Baby Shark.”

Jumping the shark

As much as this dreaded video is guaranteed to intractably embed itself in the mind of any hapless listener, it also represents the good of these topics. This song impossibly united all of Washington, regardless of politics, as the Nationals won their first ever World Series. It has racked up close to four billion views on Google’s YouTube making it one of the most watched videos of all time. If there is good in the world of platforms and politics, it’s represented in Baby Shark.

Yet, despite the tenaciously peppy and persistent beat of Baby Shark, my mind turned to the bigger, badder sort. After consulting DCN member National Geographic and the Merriam-Webster dictionary, I found the term I was looking for: feeding frenzy.

This wildly aggressive attack of prey by an animal or group of animals provides an accurate description of policy makers’ and the press’ relationship to tech companies right now. Their frenetic scrutiny of tech has been driven primarily by Facebook’s woes over the past 18 months. It took some time but there are already signs of Google’s blood in the water. The alpha predators are under attack.

Boiling the ocean

Tech platforms currently face two issues that are making big waves. The first is a slew of antitrust investigations, which are underway in the Germany, UK, Israel, Australia, and France. Oh, and also in the offices of nearly every one of the United States’ Attorneys General, not to mention by the Department of Justice, the Federal Trade Commission, and Congress. For perspective, recall the antitrust investigation of Microsoft two decades ago, which many argue provided the oxygen for Facebook and Google to launch. That investigation (which resulted on certain limitations being imposed on the company) involved a mere 20 states as compared with this bipartisan group of nearly 50.

On its own, an antitrust review might not cut too deeply. Significantly, however, this one takes place at the same time as new laws around privacy and data protection are being enacted globally. The business model of devouring personal data to micro-target advertising is at risk. It’s this intersection of data and competition policy which presents significant challenges to this mighty Duopoly.

Google and Facebook would prefer to keep antitrust scrutiny focused on the price of their products. That’s because most of their services are free to the end consumer. But price is not the only factor in an antitrust investigation. And, in an increasingly complex profit-driven data economy, new issues have arisen that raise the stakes. For one, there’s the obvious question of whether Facebook’s dominance allowed it to look the other way while users’ data was abused, and its post-IPO profits soared. 

Shark tank

Significantly, today’s political concerns – and these investigations – are bipartisan. Republicans and Democrats alike are increasingly worried about data privacy and the ability for market entrants to innovate in a world where two companies dominate through data-based surveillance advertising. At the same time, everyone is getting more educated on the issues as we can see in the hearings. And we’re seeing an increasing flow of press coverage and research.

I find no better examples of these two developments – bipartisan concerns and savvy scrutiny – than in the actions of some of our youngest politicians:

The youngest member of the House is the media-friendly Democratic US Representative, Alexandria Ocasio-Cortez. Ahead of Mark Zuckerberg testifying two weeks ago, she went to Twitter to learn more about the issues and asked the public for good lines of questioning. Her engaged constituents dutifully replied with more than 12,000 responses.

With this input, her questions of Zuckerberg captured significant attention and highlights spread through Twitter receiving millions of views. We witnessed a representative using Twitter to gather input to question one of the most powerful people in the world and then to move the discussion further along after the hearing. Simply put, she came of age with the Internet and social media and knows how to use it.

The youngest member of the Senate is Missouri’s Republican Senator, Josh Hawley. I played his grilling of a Google policy executive for attendees of the World Media Congress. The audience was clearly pleased to see a Google executive being expertly questioned about concerns ranging from antitrust to child safety and privacy.

Chumming the water

These matters continue to drive down consumer trust in Facebook and Google. Unfortunately, this is where we confront an uncomfortable dichotomy between the interests of advertisers and the public. To date, advertisers are still drunk on the precision targeting, efficiency, and scale that Facebook brings to the table. 

As such, they’ve been willing to avert their attention from the growing body of research that shows that the perception of environment seeps into advertisements presented there. In the right context, that’s a good thing. In the wrong context, irreparable brand damage can occur.

Shark tale

The sailing is not smooth for publishers right now. While digital offers incredible opportunities for consumer engagement, audience interaction, and innovation, the market is reacting having been driven to the brink by the dominance of a few predatory players.

But it’s time to take the offensive and go on the hunt. There’s blood in the water and a frenzy of scrutiny buoyed along on a tide of changing consumer perspective. We need to focus on the opportunities emerging amidst this political and public scrutiny of the way in which information is being distributed and data is being collected and deployed.

DCN member research shows considerable growth in non-advertising revenues driven primarily by subscriptions and direct-consumer revenues. DCN’s public research, further confirmed by recent News Media Alliance research, also shows that most digital subscribers are happy with the value they’re receiving and at the same time are not concerned about how much they’re spending in any given month. These are two very good things: Consumers are happy with the value and not closely tracking what they’re spending. I smell opportunity in the water. The launch of Disney+ last week for $6.99 per month saw more than 10 million customers sign on in the first 24 hours. That’s a clear testament to this dynamic. 

Open water

With all of this in mind, there are four things I encourage everyone to focus on as we continue to build safe and sustainable businesses. First, know that trust is the currency our industry must capitalize on. Publishers can take their uniquely trust-based consumer relationships and brand safe environments to the bank. Second, premium publisher brands add considerable value to any platform. This is evident in the $100 million Facebook spent to entice publishers to participate into its latest foray into news. Third, media’s revenue mix is changing. Publishers are doubling down on consumer revenues and it’s paying off. And fourth, direct relationships win, and data is very much a part of this equation.

Above all, publishers need to maintain their trust-based relationships with consumers. They must protect their data and ensure that under emerging privacy laws, Facebook and Google don’t find ways to circumvent these protections and continue to vacuum up consumer data outside of their expectations. We must continue to illuminate these behaviors when we see them, and to build the next wave of digital innovation as the tide turns against the Duopoly.

Advertising | Featured Post | Perspectives | Policy

Google continues its offensive, but we’re all smarter now

There is a certain musical rhythm to our digital media industry calendar. If there was a crescendo, I expect it would be in the Fall, as leaders migrate from execution to strategic planning. And with this shift, conference season begins. There are many forces at work shaping these agendas, not the least of which are businesses wanting to get their messages to market.  

As is so often the case, Google sits at the top of the influence food chain and its extensive industry relations efforts impact nearly everyone else’s agenda. Whether Google’s wishes and goals are delivered directly (as they are for a privileged few of their so-called “premium partners”) or through the company’s trade lobbies, press efforts, investments and research, Google’s impact is as predictable as the autumn leaves.  

But this year is different. 

As we wind down 2019, Google is a bit less focused on driving its own profits and a lot more focused on strengthening its fortress against scrutiny. Right now, it seems that Google’s first and only priority is to dispel or confuse any analysis being done on anticompetitive behaviors. This marks a more sensitive and controlled conversation for Google.  

For us, it is important to bear in mind that one of Google’s best defenses can be getting the industry to support its efforts. This is where all of us come into play. We need to be sure we clearly see (and accurately portray) how self-serving Google’s “industry relations” efforts are. The good news is that we are all smarter now. And we – the media industry, the press, and politicians everywhere – are in a position to take informed, proactive action to confront wrongdoing in the form of untenable industry dominance.  

The market today 

Here is what we know about the scrutiny of Google:  

  1. Everyone has upped their game. Everyone. The people involved in the many antitrust investigations have done a lot of homework. This isn’t 10 years ago; it’s not even three years ago. Global scrutiny by international regulators, the press, and the industry has made everyone smarter on the topics. These days, critics are unlikely to get lost in the complexity of Google’s digital business. (As an example, this time around regulators are asking questions about nuanced industry topics like auction mechanics and data rules.) 
  2. Everyone understands Google’s core business. Everyone. Google operates free services in order to devour as much data as possible in order to micro-target advertising to audiences. Investigations appear to be focused on Google’s vertical control over experiences and the entire advertising stack funding them. This is where Google continues to make more than 85% of its revenue. And dozens of Google products work together to enable it.  
  3. Everyone is significant. Everyone. Investigations happening globally from Australia to the U.K. In the U.S., it includes 48 State Attorneys General, Congress, and the Department of Justice. Put another way, a lot of serious antitrust experts across nations, and political aisles, are aligning to explore areas of concern.  

Growing concerns  

These investigations primarily focus on the intersection of Google’s data practices and its market dominance. Both are protected by Google’s command of search and mobile operating systems – two areas where the company has already been found by EU regulators to have violated antitrust law.  

Aggregating other’s content for searching the web was the original and easiest version of Google’s strategy to understand (and attempt to address). However, the company has extended into new services that exponentially increase its ability to collect data. And, as we now know, a majority of Google’s data collection occurs when users aren’t even choosing to interact with Google.  

So, the roll-out of privacy laws in Europe (and now the U.S.) present escalating risk to Google’s business. As Google attempts to comply with these new data protection laws while maintaining its profits, it needs to avoid tripping more antitrust wires as it did last year in Europe.  

Make no mistake, the cards are still stacked in Google’s favor. Its annual budget for academic research, think tanks, lobbying, publisher support, trade press PR, and event sponsorships likely matches the top lines of revenue for nearly every organization in the industry. No one wants to upset Google and therein lies one of the key symptoms of the problem.  

What can the industry do? 

But in the interest of transparency and support for a fair assessment of Google’s business practices, what can the rest of the industry do to be supportive? 

1. Press scrutiny. I would emphasize that the trade and policy press must continue your great work to cover the company fairly and with the healthy bit of cynicism it deserves. This has shifted significantly over the past few years in a positive way as newsrooms have ramped up their coverage of big tech. We’re seeing fewer instances of the industry press simply rehashing Google’s announcements or sharing its carefully crafted blog posts. Instead, they’re reporting on them with proper context and careful analysis.  

It is important to add that as an industry that seeks to inform, instead of simply propagating the spin of a corporate blog post, we have a responsibility to share the best coverage of issues, even when it’s written by the competition. With the advent of social, proliferating quality information must be one of our highest objectives.  

2. Independent academic research. We saw something remarkable play out this past quarter. Academics at Carnegie-Mellon and Minnesota released independent, empirical research that showed how little publishers actually benefit from third party cookies (around 4%). The research spanned three years and offers critically important analysis as publishers consider changes to data policy. For this reason, it also very much threatens Google’s interests.  

Recently, Google released its own “internal research” consisting of a single data point, which suggested that more than 50% of advertising revenue would be lost without third party cookies. It’s a ridiculous argument. After reporters and academics scorched Google for the claim, they eventually posted a thin three-page summary which they subsequently buried and backed off from (suggesting, perhaps, that they weren’t anxious for another careful analysis of the quality of this “research”). No doubt there are many more examples. 

As an industry, we must continue to question self-serving or corporate-baked research. The onus is upon us to seek out the best independent research and share it widely.  

3. Persistence. When Google’s Head of News put out a blog post defending its practices and unwillingness to pay publishers for use of their content despite competitors’ willingness to pay and new copyright laws rolling out in Europe, that’s not the last word. When Google sends a note to publishers in France extorting them to give Google permission to use their content for free or lose traffic to their website, there is only one answer: “No.” This all happened in the past week. Really, Google is not going to turn off Google News across Europe and they’re also not likely to want to be in an inferior position as other news platforms roll out.  

As an industry, and bound by ethics and the law, we need to continue to hold the line for the proper value of trusted news and entertainment and the trust of the users and advertisers we serve.  

The PR machine rumbles, but its workings are exposed 

Just this week, we witnessed the incredible power of the Google disinformation machine. A senior executive at Facebook and several industry influencers are sharing a piece that uses an arcane analysis of file sizes (yes, as in bytes) instead of referral traffic to confuse the issue of the company’s search dominance and disparage the knowledge of a vocal antitrust proponent. It is disheartening to see this get any air. At the same time, we clearly see that politicians have increased their knowledge of how Google’s business (and PR machine) works. Rather than being buried by obfuscation, we see clear-eyed and immediate push back coming from lawmakers on both sides of the aisle including Senators Josh Hawley and Elizabeth Warren. 

I considered titling this piece, “Winter is Coming” but that’s overused. I’ll just conclude with a note that there are significantly important investigations happening by competent authorities which will impact the future of our industry. And California offers new guidance for how data can be collected and used. Both issues play directly into publishers’ business interests.  

Fortunately, there are positive signs. We see well-informed, reasoned calls for a close examination of technology’s impact and its business practices. Journalists and industry watchdogs have begun to see biased research and self-serving statements for what they are. And that is progress.  

Featured Post | Perspectives | Policy

Behavioral advertising: The mirage built by Google

Important new research was recently presented at a major economics conference and reported on by the Wall Street Journal. The comprehensive study was conducted over nearly five years by Veronica Marotta, Vibhanshu Abhishek and led by Alessandro Acquisti, who is globally recognized for his work studying behavioral economics and the impact of privacy on digital society. The bottom-line: Acquisti’s team found that behavioral advertising, as measured and delivered based on third party cookies, increased publisher revenues by a mere 4%.

If you’re nodding your head unsurprised by this statistic, then you’re likely in the 67% of publishers surveyed recently by Digiday who answered that behavioral advertising doesn’t help their business. But make no mistake, the findings are profound as to how they inform the future of digital advertising. They will also have a strong influence on the next steps in US privacy legislation. Put simply, nearly all of the growth touted by the industry benefits intermediaries rather than the publishers who provide the news and entertainment. And for the first time ever, there is empirical research to dismiss long-touted industry arguments that privacy rules will kill the golden goose that pays for free content.

Implementing new rules

This empirical study makes it clear that the absence of rules has overwhelmingly benefited intermediaries. (This would also explain the market caps of a few of the biggest intermediaries.) And now, there remains a singular challenge: No individual publisher can change tactics unless all significant publishers move in lock step. That’s because individual companies would lose significant revenues moving on their own, even on behalf of consumers. Therefore, the bar must be raised equally, through a combination of tech and regulation.

Google is the most critical company with the most to lose and will have a seat at the head table no matter where the market or regulators take us. It will be critical for individual publishers to be able to move in the best interests of consumers and their fellow publishers without being held back by Google’s stronghold. Reuters reports that “Google has repeatedly said that it acts in the best interest of its users and offers sufficient warning to industry partners potentially affected by its moves.” We’ll see.

Recent experience suggests that Google will not cede ground. A friendly reminder that when GDPR rolled out last May in order to better protect the privacy interests of EU citizens, Google waited until the final days to push through its own interests. Global publishers had to send a formal letter of concern to Google’s CEO. They also filed a copy with every major competition authority in the western world.

Built on a shaky foundation

Much of the digital advertising marketplace and Google’s business have been built on direct-response advertising in which clicks and audience targeting are valued more than the media that surrounds it. This presents a challenge for media companies which have invested heavily in high-quality, premium news, and entertainment environments. Unfortunately, the largest part of the digital advertising market was whittled down to little more than an efficient delivery vehicle for cookies auctioned off to the highest bidders. And little has been done to dismantle this poorly-built foundation. Rather, our entire industry – data brokers, ad tech platforms, agencies and publishers have fueled these direct-response metrics by doubling down on them through behaviorally-targeted advertising.

The premise? That the new capabilities to collect and use browsing data across the web eliminate the waste in advertising, giving marketers their long-sought dream of one-to-one targeting with real-time measurement and publishers a share in the spoils to help fund their digital growth. And, through these same data reservoirs, advertisers could focus on cherry-picking consumers as efficiently as possible. This spawned a slew of sites optimized not for long-term relationships with loyal audiences but instead for their ability to create diverse cookie pools for these real-time markets.

The 800lb gorilla

Google was a company built for the direct response economy post-2009. Due to several years of belt tightening after the 2008 financial crisis, chief financial officers had more pressure to ensure that marketing investments met the quarterly demands of shareholders. And boy did Google deliver. Google did everything it could to maximize the personal data in its coffers and to minimize friction for advertisers who wanted to micro-target people based on it.

Some history:

  • When web browsers were on the cusp of consumer privacy innovation by restricting tracking cookies, Google lobbyists hindered industry progress.  At the same time their own browser, Chrome, took a dominant seat in the market.
  • When consumer ad blockers became a risk to Google’s data collection, Google began a series of secretive deals and payments in order to whitelist their own data collection tags and later commandeer a browser solution to protect its own ad formats. This saved the company billions in revenue while everyone in industry took a hit.
  • When a more privacy-focused mobile environment emerged from Apple, Google continued investing in its privacy-porous Android device. It earned a $5.1 billion fine for its efforts. Google also launched its own code layer in AMP. This provided the company deeper influence on what can be on publishers’ websites.
  • Google wrestled control and influence over the ad tech supply chain used by competing publishers through a series of targeted acquisitions.

Market dominance

The fruit of its labors is an advertising market optimized for its own interests.

  • Who conducts the most bids to buy advertising in these real-time markets? Google.
  • Who offers up the most bid requests to sell advertising in these real-time auctions? Google.
  • Who operates the most negotiations between buyer and seller? Google.
  • What is the most valued asset in digital advertising? Personal data.
  • Who owns the most personal data? Google.

Put another way. Google is the largest buyer, seller, and transaction vehicle for digital ads that leverage personal data. And Google has by far the most personal data. At this point, it should hardly be a question whether this is a rigged market.

The numbers are startling. In the past decade, Google’s SEC filings show that the advertising revenues Google delivers across its vast network of millions of publishers have barely doubled, having grown from $9 billion in 2010 to $20 billion last year. However, in the same ten years, Google has quadrupled its owned and operated advertising revenues from $28 billion to a whopping $116 billion last year.

Search was (and is) the monopoly that privileges entry into any other business by Google. However, the rich interest profile that can be assembled by harvesting personal data across its operating system, browser, ad services, analytics, and its own properties comprises a behavioral advertising fortress.

The anticipated Department of Justice decision to investigate Google is the company’s worst nightmare in terms of timing on these issues. Already we’re seeing influencers and former competitors begin to open up about bad conduct in Mountain View. Inevitably, there will be more details and more reports. It’s critical to the process—and the future of digital media—that light be shone on their activities.  

Without a doubt, the investigation means that Google will have a harder time finding friends in the publisher and ad tech communities. However, it’s unlikely you’ll hear publicly from many of them. And therein lies the ultimate symptom of antitrust: No company wants to cross Google. But the word “frenemy” will cut in a different direction now: You won’t find anyone watching your back when you’re under the regulatory microscope.

The rise of ad tech intermediaries

All of this said, Google wasn’t alone in its attempts to reap the spoils of the behavioral advertising marketplace. In the period between 2010 and 2016, hundreds (if not thousands) of new companies spawned in the ad tech wild west. By my count, there were 78 ad tech companies starting with the letter “A” in 2016 and today 64 of the 78 have either been acquired or disappeared from the industry. History will determine whether most (if any) of these companies had a lasting impact on the industry.

The core proposition of nearly all of them was to serve a burgeoning programmatic marketplace in which third parties could be inserted into the supply chain in return for value. The typical webpage went from dozens of third parties to hundreds. This triggered a real-time competition for eyeballs, most often represented by third-party cookies.

Personal data was collected by these third parties without consumer knowledge or control. The data was then used to target consumers across the web, as cheaply as possible. All of this was done outside of consumer expectations which led to the “adtechlash” with the rise of ad blockers, various levels of tracking protection launched into Chrome’s “competition” web browsers Safari, Brave and Firefox, and new privacy laws like 2018’s GDPR and CCPA rolling out in 2020.

Now we find ourselves on the eve of new laws globally to better align with consumer expectations. Publishers need to be fierce defenders of these consumers and protecting their experiences. Ultimately, the fight to defend behavioral advertising likely isn’t worth it. At the very least, every publisher and their representative organizations should make certain whose interests they’re fighting for. This will determine who benefits over the next ten years.

Advertising | Featured Post | Perspectives

Publishers have their mojo back

I’m calling it. 2019 is the year publishers get their mojo back. While there’s still work to be done – and the rewards for many are further down the road – the signs are pointing in the right direction. 

More than ever, digital media companies understand that their most precious assets are their audiences and advertisers. They understand that they must foster this relationship over time through their programming, advertising opportunities and the overall experience they create wherever they touch their customers. And, they understand that their brands are proxies for this trust. Without a doubt, the companies that publishers choose as business partners — whether distributing their content or advertising — can, and do, have a lasting impact on this trust.

Those of you who have been in the digital media business for a while are probably thinking: “Haven’t we been here before?” and perhaps you’re wondering what’s really changed in the past two years. Here’s the way I see it:

Facebook: pivots around publisher content

Initially, publishers believed the promise of a fire hose of traffic to their sites but eventually grew tired of the hoops they were jumping through to address Facebook’s changing priorities. From organic content to paid promotion, external traffic evolving into Instant Articles, embedded video becoming Facebook Watch, and everything-must-be-free to efforts to support paid subscriptions – it’s mind boggling. But all of this has resulted in publishers wanting to control their own destinies more than ever before.

Apple: push for consumer privacy

While Apple’s push for consumer privacy in its Safari browser is a laudable approach, it has hamstrung publishers’ ability to monetize their web inventory. At the same time, it pushes publishers towards Apple’s closed app platform where they cough up 30% of their revenues from selling subscriptions to their own apps. In an odd way, this 30% take-rate by Apple has made its reported 50% take on its new Apple News+ product seem more acceptable. In any case, growing consumer trust through a higher privacy bar while building in real support for publisher ad and subscription revenues are steps in the right direction.

Google: control of advertising supply chain

Google has demanded that publishers allow it to track their customers and collect their behavioral data across the web. At least if they want to get the full benefit of what has evolved into a Google-influenced, if not controlled, advertising supply chain. Google has also essentially made it a requirement for publishers to participate in AMP if they want to avoid being lumped into a news black hole on mobile. The relationship with Google can easily be one of the more sensitive issues inside any media shop and rocking the boat will almost certainly have consequences. However, consumers aren’t happy with unrestricted tracking, and that bodes well for trustworthy publishers who are transparent and handle consumer data with care.

Emerging platforms: a chance to get it right

There are new platforms growing quickly, which will succeed or fail based on their ability to fully appreciate the value of high-quality programming. Each one surfaces new negotiations and concerns. Roku is one to keep an eye on as they have the chance to reinvest in high-quality, brand-differentiated programming by truly partnering with their publishing partners. Or, they may be the next Blackberry — steamrolled as their market advantage is lost to other larger platforms that can beat them on technology alone. However, the path to success for emerging platforms will be true partnerships with trusted content brands.

What’s next? 

While we may never know exactly what has caused this shift, it is a positive sign that digital media companies here and in Europe are also asking for the same things, which I’ve seen first-hand. Publishers now speak of Facebook, Google, and even Apple not simply in terms of opportunity but with skepticism. They see the positives of each in driving new audiences, innovations, and experiences – and to be a part of what is “next.” However, they’ve turned a critical eye to each platform’s motivations and are pressing for better terms, including:

  • Protecting and preserving the relationship with their audience. They know that trust and value reside in the relationship: The data, the brand and two-way dialogue with the customer. 
  • Ability to drive subscription or membership revenue. For too long, this was antithetical to the interests of platforms, which wanted to touch as many users as possible for the purpose of mining their data for targeted advertising. The global discussion around this issue has shifted, starting in Europe. Now, the rest of the industry is trying to catch up. 
  • True partnerships. They’re not looking for another quick fling, featuring a spotlight appearance at Facebook’s or Apple’s soiree. Hopefully that no longer carries the glamour it once did as the hangovers are real. Instead, publishers are looking for fair value and a long-term commitment by the platforms to work together, solve issues, and build success for all parties.

Publishers everywhere are looking at these opportunities with a shrewd business eye. They recognize that these opportunities are being designed and offered by an intermediary to their customers. And, as the stock market clearly demonstrates, these intermediaries are focused on maximizing their own profits.

Whatever the reason, or confluence of events that caused it: The non-negotiable, take-it or leave-it discussions from platforms are in the rear-view mirror. Change is here and publishers have rediscovered their mojo.

Now it’s time to put it to work.

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