Former editor in chief of The Guardian blames Facebook for hoovering up $27 million of newspapers' ad revenue last year

Former editor-in-chief of The Guardian newspaper in the UK Alan Rusbridger said the Guardian's predictions for ad revenues last year never materialized "because it all went to Facebook".

Photo from Facebook page

He noted that Facebook sucked up nearly $27m of the Guardian's digital advertising revenue last year. Rusbridger, now principal of Lady Margaret Hall college at Oxford University, said The Guardian forecast online revenues of $132m before he left in May last year.

In the end, the newspaper's digital turnover was $108m, which was down 2.3 per cent since 2014. A Guardian spokeswoman declined to comment. At the time it published its annual report in July, sources at the newspaper blamed online giants including Google and Facebook for hoovering up ad spend.

Rusbridger said Facebook does present some opportunities for publishers, but "they are taking all the money" because "they have algorithms we don’t understand, which are a filter between what we do and how people receive it."

"This is going to get worse because they have a means of distribution which we simply can't cope with and the more people switch on to these devices, the more problematic that question is going to get," he noted.

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A recent article in the New York Times, notes that audiences have migrated away from news websites and toward Facebook and other social media destinations, which for a competitive price can provide advertisers access to larger and more finely targeted groups of people, challenging the value of a publisher’s own channels. With a weaker claim over audiences, publishers have been left to compete for advertising on different terms, leaning less on the size or demographics of their readerships, and more on the sorts of campaigns they can engineer for advertisers — campaigns that are then used across the internet.

As it has for traditional editorial content, Facebook has become a primary distributor for many publications’ sponsored posts, even though outside sponsored content was not officially permitted until April, when the social network published formal guidelines, the Times article notes.

Facebook’s welcome of sponsored posts was broadly seen as a promising and necessary development. But some publishers were troubled by the manner in which Facebook said it would display sponsored posts and by how much power it put in the hands of advertisers.

Under Facebook’s system, all advertisers must be disclosed and displayed as co-authors under the post or video, a level of disclosure that is required by the Federal Trade Commission.

From Facebook’s point of view, this transparency eliminates inefficiency — why let middlemen charge extra for an audience that Facebook is selling? But for publishers who sold advertisers on their ability not just to create posts but to make sure they are seen, either through clever promotion or paid placement, such visibility can be deflating.

The change also discourages any illusions about how easy it could be for publishers to make money from native advertising the article notes. Sponsored content — which, in 2016, often means video — is expensive to produce and difficult to do well. Controlling distribution, albeit through Facebook, was for some a more profitable lever, and a way to pad deals that, while often growing in size, offered thin margins, said the article.

This is, of course, a boon to advertisers. “Many native campaigns are quite expensive, and if you limit the work you’re doing to the creation of content, and leave the distribution to the brand, then it can become more affordable,” said Stephanie Losee, head of content for Visa.

With less ability to charge for distribution, on their own channels or others, and a growing dependence on margin-squeezing outside platforms, publishers may be left to compete with creative agencies on their turf. Publishers becoming ad agencies, in other words, means competing not just with one another, but with the agencies that already exist, the article notes.

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