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“Our incentives are very much aligned”: Google’s Head of News Ecosystems on why their relationship with publishers is misunderstood

Google has come under frequent fire from the publishing industry over the past few years, whether that’s for unfair algorithm changes, not doing enough to stop ad blocking, and most frequently, hoovering up ad dollars that were meant for publishers.

Some of these criticisms are well-deserved, and Google should rightly be held to account when it comes to algorithm transparency and how its actions affect the wider industry.

But the widely-held view that Google as part of the Duopoly is taking revenue that would otherwise end up in publisher’s pockets is too simplistic a take on what is quite a complicated issue. Many media analysts have already picked apart the New York Times story which wrongly claimed that Google made $4.7 billion from the news industry in 2018, but the fact that stories like this get shared so widely is demonstrative of a wider problem that Google is an easy target.

This week, the Media Voices podcast sat down with Madhav Chinnappa, Google’s Director of News Ecosystem Development, to find out why he believes Google’s place in the publishing ecosystem is fundamentally misunderstood.

The many different ad spaces of Google

The point Chinnappa was keen to emphasise when it comes to Google’s relationship with publishing is that when it comes to serving ads, Google are the supplier. “The way that we interact with the news ecosystem is very much around a revenue share model,” he explained.

“In this space, in the space that we operate in, the space that’s relevant to digital advertising to publishers, we only make money when publishers make money, because we’re an ad tech supplier. That’s different from the other tech companies but it’s important to understand our role in that.”

“And so therefore we’re sort of selfishly incentivised to want the news ecosystem to thrive, because if they thrive and they make more money, we end up making more money.”

Of course, the vast majority of Google’s income comes from search advertising, and the adverts that show up in and around search when looking for something like car rental, local restaurants or flight options.

“Those ads are paid for by advertisers based on the clicks that people click through, and that is not a piece of business that publishers are in,” Chinnappa explained. “That’s performance-driven advertising.”

“Publishers are in the display advertising business. And in the display advertising business, Google is an ad tech supplier.”

Google then provide the tools that publishers use to source and serve adverts, which is done on a revenue share model. It is this point which Chinnapa says the relationship between Google and publishers hangs on. “We only make money where publishers make money,” he said. “That’s why we’re always trying to help them thrive in that space.”

Google: supplier or competitor?

The idea that Google is unfairly swallowing up publishing money is one that Chinnappa, as a self-described “news person”, did a great deal of internal research into when he heard rumours of these preconceptions.

“Imagine you’re an advertiser, and you have a pound to spend,” he said, describing how ‘smarter people’ at the company had explained the relationship to him. “You can put a pound into a publisher, and if we are a supplier, we’ll take a little piece of that, but the vast majority of that will go to the publisher.

“If you put it into the Google Display Network, again we’ll take a piece of that, but the vast majority will go to where that ad ends up being displayed on the publisher side.

“That’s different from some of the other tech companies that are out there. We don’t see ourselves in digital display as a competitor.”

Chinnappa doesn’t deny that digital advertising is growing rapidly for Google. But search revenues don’t take anything away from the news ecosystem, and display – which is also growing – is where Google acts as a supplier. So when Google is benefitting, publishers are benefitting too rather than seeing that money taken away from them.

Why Google are an easy target for blame

The last decade has been incredibly tough for publishers, with businesses having to evolve rapidly to keep up with technological advances. Chinnappa thinks that Google has become a target for easy blame, as well as technology in general, rather than a failure to innovate quickly enough.

One example he gave was around Google’s decision to crack down on tracking cookies a few weeks ago, which will have an impact on publishers. “I don’t think anyone would say that it’s a bad thing for users to have more control over their data,” he argued. “And that’s actually what they’ve been trying to do in Chrome, but they’re trying to do it in a very balanced way.”

“We’re trying to make it transparent to the user, but we’re also trying to make it transparent to the publisher. So again, the devil is very much the detail there. And we think we’re doing that in that balanced way between the user and the ecosystem.”

It’s a similar dilemma to the ongoing ad blocking debate which has been ongoing for a number of years. Chinnappa said that publishers came to Google at the time asking for help with ad blocking, and a group of people came together to form the Coalition for Better Advertising. “Google looked at this and said, ‘We can’t solve this on our own,’” he explained.

When the research came back, it was clear that users didn’t mind ads, they just objected to intrusive ones. So to help the industry get better, Google put in tools and solutions to help users have transparency and control over what they were seeing. “We really should as an industry be better about that…Publishers should be able to understand that as well,” he argued.

“So there’s this narrative that sometimes gets built up of Google versus publishers, and everything that Google does is really horrible for publishers, actually it doesn’t stand up to scrutiny when you actually look at the detail of it, because our incentives are very much aligned”

“The reality is that it’s actually very complicated and nuanced, and so I think if we’re going to have a successful, sustainable, thriving, news ecosystem, we actually need to diagnose what’s going on very specifically, and understand that these are the different roles that people play in this ecosystem.

More scrutiny, less simplification

It’s easy to put Google in the ‘bad tech giant’ box, and the company still needs and deserves criticism and scrutiny of its decisions, whether that’s on what constitutes hate speech on YouTube, how their mobile homepage news articles are chosen, or why only a handful of major outlets ever make it into the top bar.

But when publishers are seen as one entity, pitted against the Duopoly as one entity, it misses many of the issues bound up in keeping the relationships within the news ecosystem fair and balanced.

“The issues are too important for that kind of conflation and simplicity to be the common currency,” Chinnappa concluded. “I really wish we were having better, deeper conversations about this, because those issues are important, and doing those kind of conflations just doesn’t help anybody.”

Download WNIP’s comprehensive new report—50 Ways to Make Media Pay—an essential read for publishers looking at the multiple revenue opportunities available, whether it’s to reach new audiences or double down on existing super-users. The report is free and can be downloaded here.

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