In his weekly “Stories I’d like to see” column, journalist and entrepreneur Steven Brill spotlights topics that, in his opinion, have received insufficient media attention. This article was originally published on Reuters.com.
1. Another threat to newspapers’ business models?
This article in The New York Times last Friday and this one in the National Journal pinpoint two important developments in the media business that could collide to pose yet another threat to the financial viability of journalism.
The Times article describes the rise of “programmatic advertising,” in which new online tracking technologies allow an advertiser to follow a consumer whose profile fits the advertiser’s targeted demographics wherever the consumer goes online rather than just make an educated guess about the websites that consumer is most likely to visit.
Before programmatic advertising, if an upscale restaurant chain decided that its best prospects were well-to-do men who live in major metropolitan areas and travel a lot, it might buy ads in the business sections of high-end newspapers or on business travel sites. Now the restaurant chain can follow those targeted people to any website they visit. It doesn’t have to buy ads on the sites where the target is most likely to be found but can instead simply bid on an electronic ad exchange to buy the cheapest ad that will reach someone with those demographics no matter where he or she goes (a gossip site, for example).
This erodes the premium upscale newspaper sites can charge. The individual consumer is what’s important and now identifiable, not the place where he sees the ad.
Thus, the Times reports in this article, “The shift is punishing traditional online publishers,” and that online advertising revenue at its own newspaper actually fell 2.2 percent in the last quarter as a result of a decline in the rates the Times is able to charge for Web advertising. That’s a trend reflected lately in the results of most other major newspapers.
In other words, on the heels of the Internet having destroyed the readership and advertising revenue of printed newspapers, further advances in digital technology now threaten the papers’ digital ad business.
The principal FTC issue being debated is whether and how to change the current voluntary method of regulating websites’ cookie tracking. As things stand, sites post privacy policies describing the tracking they do, then allow consumers to choose to opt out of being tracked. Privacy advocates have been pushing for rules — already seemingly headed for adoption in Europe — that would flip the process and require websites to get the affirmative permission of visitors before they can be tracked.
This deserves lots more coverage. It has been generally assumed that tighter regulation of cookies of the type being pushed on the FTC by privacy advocates would hurt all advertiser-supported websites, including those of newspaper publishers. But in light of the Times article about programmatic advertising, would a curtailing of fine-grained tracking actually help content-centric websites, particularly those of upscale newspapers, because advertisers would once again have to choose a place to advertise rather than target a person to advertise to? Or, have I got it wrong — and do the content websites still benefit so much from supplying tracking data to advertisers that they, too, will fight cookie regulation?
Beyond that, with major American companies such as Google and Facebook totally dependent on tracking, what would be the economic impact of crippling their ability to track en masse? How much of our economy, not to mention balance of trade, is based on a tracking economy that depends on the masses not opting out?
Who’s doing the lobbying on which side of the cookie issue? Are cookie-less advertising businesses, like print magazine and newspaper publishers and television and radio broadcasters, joining with the privacy advocates?
And how do those opposing tighter regulation rationalize an argument that it is bad public policy to give consumers a clearer choice?
Last year, Internet industry giants like Google and Facebook ignited and benefited from a popular uprising on the Internet that enabled the industry to beat back regulations aimed at making websites more responsible for piracy of copyrighted material. But might the Internet grassroots turn against the industry on the issue of whether consumers are entitled to a clearer choice about whether to be tracked so their data can be sold?