Media crisis: What else has Canadian media missed out on?

While all over the world, media criticize the current weight of digital media in the market, they also fail to say that it has not always been so , and many of the media that attack them have themselves already been in position of power in the market. Some commentators, accustomed to the old paradigm, even suggest that this  abrupt change of guard  took place on questionable, even illegitimate grounds. This is however not the case.

By observing the 2008-2017 reports of the IAB Canada ¹ , we note that the  share of digital advertising has increased from 17% to 55% of the  Canadian advertising market in 10 years. At the same time, the 10 largest digital media in Canada, which represented 77% of Canadian advertising revenue in 2008, now represent 88%. We therefore see a concentration that dates back to a time when digital advertising represented half of print advertising (not counting TV). 

The Canadian Media Concentration Research Project ²  also indicates that  Google and Facebook obtain 74.3% of the digital advertising market here  (i.e. 41% of the total advertising market). All this raises questions about the sources of this concentration.

Looking more closely, we notice that over the same period, the share of search marketing has gone from 39% to 50% of digital advertising… or from $628 million to $3.386 billion over the same period, which equals 54% of the growth of the digital advertising market… or more than 100% of the growth of the total advertising market (the ' search ' grew by 2.787 billion, in a market which grew by $2.552 billion, which necessarily implies losses for others)! The growth of a strictly digital and focused format at Google,  search marketing has therefore roughly equaled the growth of the entire advertising market . 

Of the additional $2.489 billion in digital growth compared to other media, three-quarters come from display (35% of total digital growth). One could assume that this display corresponds to print media, which have migrated their display online, but display is a very broad category that includes social media in particular. Of the 2.322 billion obtained by this type of media in 2017, Facebook comes first, with $ 1.593 billion in revenue, far ahead of Torstar and Bell, second and third, which delight respectively 131 and 111 million. It is therefore not a migration, but there too, a change of leader. 

The notion of programmatic exchange also has a heavy impact on this market and on the online video advertising market, which has accounted for most of the rest of the growth in digital advertising since 2008. With 40% of non-marketing revenue from research in 2016 ³ , programmatic purchases would represent approximately $1.3 billion in 2017. 

Out of 6.8 billion, we would therefore have 3.4 billion in search marketing, 1.6 billion in Facebook, 1.3 billion exchanged in programmatic… and… around 400 million in other modes and formats. 

The leadership of Google and Facebook in the Canadian advertising market is not to be proven, but  why haven't the other media that are present online also grown,  when many were already there well before 2008? The simple fact of going through the Internet or following the behavior of the population was clearly not enough...

AN INVENTORY OF DEMAND, NOT SPACES

Search marketing, the first vector of this growth, has an interesting characteristic: it is based on an inventory of consumer requests, and not on advertising space. The ad is displayed based on user searches, not ambient content (e.g. cover page, home page, business section, etc.) In other words,  they target purchase intent, or shopping intent and not a market segment . 

This is probably the biggest paradigm shift that digital has brought, and something that traditional media has never been able to adapt to. Does the creation of these new advertising formats represent an illegitimate gain compared to traditional media? 

One could even wonder if advertising really has its place in the news media, compared to search contexts… which are perhaps real shopping situations, where advertising would ironically be more “in its place”.

The model of advertising on social media and programmatic display attempts to replicate a similar logic: in the absence of having an audience that clearly says what it wants in a search, we have access to some of its behaviors in line that make it possible to deduce purchase intentions and create audiences… from the advertiser's point of view, a  supposed intention  is still better than a socio-demographic segment.

A SELF-SERVICE SALES APPROACH

As the inventory of spaces where to post advertisements appears and disappears as quickly as the searches of millions of Internet users, this type of advertisement has no other choice but to be automated... thus letting the advertiser specify him - even when he wants to appear, that is to say following what research of the potential customer. 

By giving self-service access (marked, controlled by the interface) for the purchase of advertising to their customers, the platforms  allow very niche advertisers to find their place, even a very small one,  which they sometimes find difficult in traditional media… which, in order to reach the greatest number of people, necessarily had to omit certain corners of the market. These platforms therefore reach a market of advertisers who would not have paid for the too large and less qualified market of traditional media. 

Media that rely on a traditional sales approach cannot achieve this sophistication at scale or respond as quickly… 

A MINIMAL FLOOR PRICE, AT AUCTION AND AT PERFORMANCE

The moving and infinite inventory of searches and user behavior means that an equilibrium price will have to be found for this abundance of spaces, all in near real time. 

This is where the notion of auction comes in: by ensuring that any advertiser, from the smallest to the largest, can bid on a space, we create an environment of healthy competition where everyone can find interesting niches at reasonable, corners of the market sometimes overlooked by others, but often more relevant to Internet users doing research (the long tail principle), and more likely to generate sales: this goes well with the intention to purchase the internet user.

By including a notion of performance and relevance in auctions, therefore by displaying and invoicing according to customer interaction (e.g. cost per click) we also ensure the relevance of the ads: an impertinent ad will be displayed less and less for more and more money, and a sassy offer for its ad will cost a lot in clicks, without any conversion. 

This accessible logic, centered on the consumer experience, is very different from the traditional negotiation of spaces: this logic of relevance according to the customer's purchase intention brings not only a granularity for the evaluation of performance, but above all a  mechanism economic consistent with their objectives: to pay for advertising when you have a real purchase situation .

Beyond criticizing the biggest players, who by their simple position in the market immediately have a significant power that must be questioned, what strategies can a media adopt?

On the one hand, it is important to keep in mind that advertising is not the only business model to propel a medium…  in some cases, display advertising is simply not the most suitable model . 

However, among the media that rely on the advertising model, faced with their decline and the rapid and pharaonic successes of Google and Facebook, many imitate the digital tactics used by these giants: 

• Multiply digital presences, and page views on them;
• Create user profiles, for example by asking readers to log in in exchange for any functionality; 
• Offer or request social interactions, such as votes or comments on content; 
• Accumulate data about their audiences, for example their location, their age, the articles they read, or other; 
• Create new advertising formats. 

Yet a good number of these tactics just remain  digitized traditional tactics and fall flat . Why? They are not adapted to the new paradigm of advertisers.

While some see personal data as a windfall for the advertiser, the reality is much more nuanced: in reality, the success of Google and Facebook is not so much about identifying the user so well (in fact, they could probably survive by replacing all the personal data with codes), than in the type of information captured: the propensity to buy .

A medium therefore has every interest in thinking about its segmentation, or even its structure, where possible, first on this type of variable: do behaviors indicate tastes? Researches? Desires? Can the consulted contents allow to deduce from it? Should content be cut or published differently? Should we deal with different subjects, in order to better identify purchase intentions? Could different targeting segments be sold?

Should we create properties with a more commercial vocation? New information training (buying guides, comparators, etc.)?

What media is this acceptable for?

The news media have always had a tense relationship with the advertising market, and this since well before the advent of the GAFA: the current state of competition, however, forces them to ask real existential questions about their mission and their business model. A reflection that will not be simple. 

If advertising can do without certain types of news, could news do without advertising? Will the answer come by reflection or by force of circumstance?

1. https://www.iabcanada.com/research/annual-internet-advertising-revenue-reports/ ,  https://www.iabcanada.com/research/2018-canadian-internet-ad-revenue-is-projected-to -rise-by-over-945-million-to-7-7-billion/
2. http://www.cmcrp.org/
3. https://www.iabcanada.com/iab-canada-releases-2016-17-internet-advertising-revenue-report/