Features

The media consortium: Publishers’ last grain of hope against Google and Facebook?

As more South East Asian media owners team up to fight against the social media walled gardens, Eleanor Dickinson explores whether co-operative ad exchanges will be a silver bullet for the publishing industry

An intriguing piece of news emerged from Malaysia last week that seems to have largely slipped under the radar.

Five of the country’s largest online digital publishers – Media Prima Group, Star Media Group, Utusan Malaysia, MCIL and The Edge – decided to put aside the traditionally fierce rivalry expected of publishers and form their own advertising exchange.

Named the Malaysia Premium Publishers Marketplace, the ad exchange essentially combines all their advertising inventory into one single market place, which in theory allows them to command better yields through a larger reach. 

While the subject may not seem like the liveliest of pub conversations, the news should provoke a sense of déjà vu for those in the media and marketing industry. It was only a few months ago that SPH and Mediacorp made a similar move towards what is known as the consortium model with the launch of SMX.

Evidently South East Asian media is finally coming to terms with the realisation that the digital advertising revenue coming in is not enough to sustain a healthy business. Indeed how could it be? In 2016, of the US$26 billion dollars spent on digital advertising, US$23bn of it went to search and social. No prizes for guessing who those players may have been.

With already only a tiny slice of the pie left to compete for in a fragmented media landscape, large news organisations often left with little choice than to hand their cut-price inventory over to an ad network. And as Mumbrella’s Tim Burrowes said earlier this year, this leaves them with just pennies of the original dollar.

The multiple rounds of layoffs and newsroom streamlining in Asia and across the world are evidence enough of the effects this revenue depletion is having. But, as they say, strength in numbers.

So can publishers’ combined inventory tempt media planners and buyers away from the duopoly of Google and Facebook? And can a consortium really help media owners generate enough revenue to pull themselves out of their current state of managed decline?

Probably not, says Francis Lee, associate professor at The Chinese University of Hong Kong, but it would at least give them a stronger leg to stand on. “This is a sensible move for publishers,” he said. “After all, the reason why internet giants like Facebook and Google are earning huge amount of digital ad revenues is their ability to personalise the dissemination of advertising messages based on user data.

“So, when several publishers group themselves together and share their ad space, theoretically it is also a way to create the advantage of showing ads at the right place to the right group of people. However, in the broader context, the move itself may not be able to address the more fundamental issues of digital ad revenues being absorbed substantially by social media platforms and new online niche media. So it is easier to acknowledge that the move should help, but much more difficult to say to what extent the move can really help.”

Dataxu APAC vice president and general manager James Sampson is more optimistic about the concept’s value. He explains: “As a national news publisher, you may not have everyone logging into your site to read an article, so you may infer the interests of someone based on what they are reading, but may miss out on knowing the demographics or other behaviours associated with that reader.

James Sampson”: “Theoretically, the consortium gives publishers bigger yields”

“Suddenly, when part of a consortium which is sharing audience data, that national news publishers may be able to append in more data points about that reader via other partners in that consortium. This allows the national news publisher to sell ads against that reader at a higher price and theoretically increasing their yield. The partnership may also allow that national news publisher’s sales team to sell bigger deals that span across its own and partner properties.”

He added: “From a marketer perspective, they have a locally relevant premium option at scale to advertise in outside of the non-premium environments of Google and Facebook.”

The consortium model is nothing new; similar set-ups can be found all over the world with varying degrees of success. The most famous of these is The Pangaea Alliance, a consortium of UK-based publishers Guardian (which initially led the project), CNN International, the Financial Times, Thomson Reuters and The Economist . Although the Alliance recently suffered a legal row over fees with vendor The Rubicon Project, recent news suggest the publishers remain committed to staying united.

Meanwhile in New Zealand, the Kiwi Premium Advertising Exchange (KPEX) is able to reach 80 per cent of the country’s (admittedly small population) in the two years since its launch. Speaking during Lotame’s recent Ignite conference in Singapore, KPEX CEO Richard Thompson said: “The more of these co-ops we can create around the world, the more we can sell in our own marketplaces at a higher value with better, higher-quality data attached to it.”

However, while the consortium may appear an attractive prospect in theory, the reality is somewhat more difficult. For media owners whose entire business is built around heated competition over scoops and commercial success, the prospect of sitting united around the same table is a leap of faith.  As Sampson puts it: “The hard part [of consortiums] comes down to respective management working through partnership details and potentially collaborating well with what once was a competitor.”

During Ignite, Reza Behnam, the founder and chairman of Singapore-based ad tech company CtrlShift, relayed the difficulties of working with the 12 publishers in the Thai consortium Oppa. “After about seven months it became like herding cats,” he said. “Everyone has a different opinion; it becomes very bureaucratic type of process; it can’t move fast. In order to give Google and Facebook some challenge, you need to optimise fast.  

‘Like herding cats’ – the Oppa consortium in Thailand

He added: “[The consortium] is predominantly personality driven, so it can be unstable. Every publisher wants to optimise for themselves.”

Elaborating on the difficulties he faced trying to form a co-operative in Indonesia, the chief marketing officer of internet forum Kaskus, Ronny Sugiadha, says: “We had everyone signed on and then, at the very last minute, one publisher dropped out because of a change of management. And then everything fell apart. We are trying to pick up the pieces again. Indonesia is a large country. We understand that we need a consortium, but there are a lot of challenges.”

Of course not every publisher needs to – nor should – rely on advertising revenue alone. There are many in the region, such as e27 and Tech in Asia, that have managed to diversify their streams into events and data.

On the surface, these may appear tricky areas for traditional news outlets to capitalise on. Nevertheless, niche events on a publication’s specialism, like health, travel and leisure, have potential. Meanwhile, the audience data possessed by publishers is one of their most undervalued assets.

Inevitably, the industry cannot sustain itself through the revenue generated by online advertising alone. However, if the collaborations by SMEX and MPPM prove successful, then at least other regional publishers have a strong example from which to follow. While unlikely to make any major dent on the duopoly’s coffers, a consortium can give media owners a fighting chance of maximising their inventor revenue. As Thompson said: “There is no other option that we can all align behind now.”

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