Donald MacKenzie on digital advertising and the economics of online news.
Click on a link to an article on a news website. If you have a fast internet connection, you’ll see the article almost immediately, but the slots for adverts will usually remain empty for another second or two. The ads which then appear aren’t generally chosen in advance. Instead, a near instantaneous, automated auction of each slot goes on behind the scenes to determine which ad you will be shown. Your phone or laptop may itself be gathering bids for the auction. Sometimes, an enigmatic pattern or grey rectangle will appear instead of an ad.
What goes on during those few seconds is vital to the economics of journalism and is the subject of sharp, subterranean conflict among news publishers, the big online platforms (especially Google), and independent providers of ‘AdTech’, the technology of digital advertising. Sales of print newspapers have been falling for years, and revenues from online subscriptions alone are generally insufficient to support large-scale news reporting. So advertising income matters. British newspapers were making £4.6 billion a year from print advertising as recently as 2007, but by 2017, according to the consultancy Mediatique, earnings had fallen to £1.4 billion. Online advertising, by contrast, has boomed, but the revenue has largely bypassed news publishers. Less than 5 per cent of online advertising money in Britain is spent on ads that appear on newspaper websites, and the resulting revenue for newspapers (£487 million in 2017, Mediatique says) falls well short of making up for the decline in print advertising.
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