Germany’s biggest publishing houses including, Axel Springer, Funke Mediengruppe, RTL Groupe and Gruner+Jahr have come together to form an advertising alliance, reports Digiday. Their goal is to counter the dominance of Facebook, Google, and Amazon for digital ad revenues.
The alliance aims to draw media agency and direct-advertiser investment from the platforms to the publishers. According to Digiday, it will sell the combined inventory of all four publishers.
“Gain more bargaining power”
Carsten Schwecke, Chairman of Media Impact’s Management Board said, “The successful development of Media Impact has shown to us that publishing cooperations can be an essential component for a promising and competitive marketing business.
“We are now taking the next step and creating the conditions to grow even stronger in the digital sector and to counter the increasing international competition with force. In collaboration with Ad Alliance, we are creating a highly attractive offer for advertisers in Germany.”
With this framework and cooperation, we want to get back our fair share. Amazon is also relevant in the German market and growing. This is the base of our future growth: to find the right mix of reach, relevance, service and highest ad quality that you can generate for advertisers and agencies.Carsten Schwecke, Chairman of Media Impact’s management board
This appears to be a growing trend as most of the ad revenues continue to go to the duopoly. Late last year, BuzzFeed CEO Jonah Peretti said in an interview to The New York Times that he was open to merging with digital media companies like Vice Media, Group Nine, Refinery29, and Vox.
Peretti contends such a move could help them gain more bargaining power with the duopoly because as a combined entity they’d be commanding more eyeballs.
If BuzzFeed and five of the other biggest companies were combined into a bigger digital media company, you would probably be able to get paid more money.Jonah Peretti, CEO of BuzzFeed
According to WARC’s Global Ad Trends, March 2019: The Duopoly report, out of the $590.4B spent on advertising worldwide last year, $144.6bn (24.5%) went to Google and Facebook. That is equal to almost one in four dollars. Further, the duopoly took 56.4% of ad money in 2018—this is expected to rise to 61.4% this year.
The report states, “This growth is squeezing other online media owners, as the pool of ad money available to them is now in decline for the first time, down 0.7% to $111.0bn.”
Publishers are increasingly seeing value in collaboration
It’s not just a select few like Peretti; publishers, in general, are seeing value in cooperation. Reuters Institute’s Journalism, Media, and Technology: Trends & Predictions 2019 report found that news publishers are increasingly willing to collaborate. Out of the 194 editors, CEOs and digital leaders from 29 countries in the study, 71% saw value in selling advertising together.
Moreover, publishers—being content creators themselves—can control it more effectively, compared to Facebook, Twitter, YouTube and others that rely on user-generated content. The platforms have been struggling with the proliferation of misinformation and propaganda.
This has made brands anxious about their ads appearing next to questionable content. It’s less likely to happen on publications that have tighter control over their content. And that, according to Digiday, also constitutes the core pitch of the German alliance to advertisers.
“Create the scale to counter platform power”
Publishers do not just compete with other publishers today, as Hearst Chairman David Carey said earlier, “While much is made of company A competing with company B, we all realize that our modern competitive set is far and wide, and goes beyond traditional publishers. All of us compete for digital revenue with the entire world.”
Nic Newman, Senior Research Associate at the Reuters Institute and author of the Reuters’ report states, “News organizations have traditionally been highly competitive at every level but could that change in 2019? More co-operation could help create the scale to counter platform power and defray the costs of ever more complex technology.”
These ideas are already driving several publisher alliances across the world. The Pangaea Alliance launched in 2015, is among the notable ones with major international publishers like Guardian, CNN, The Week, Reuters, Fast Company and Inc in its fold.
Speaking on what it takes for these alliances to succeed, Pangaea’s General Manager Fiona McKinnon told the Drum, “A willingness to collaborate; openness about any challenges and shared goals; a desire to make things work and appreciating that whilst big wins may take some time, working together is the best way to change the industry, benefit clients and create a beneficial environment for all to succeed in.”
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