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News Corp Media Transparency

Timing is everything: Rupert Murdoch’s Google rebellion returns as News Corp eyes more ad budgets


By Seb Joseph, News editor

March 28, 2017 | 7 min read

The juxtaposition of The Times’ exposé on ad placement on YouTube couldn’t come at a better moment for owner News Corp and its pursuit of a larger slice of advertisers’ media spend.

Rupert Murdoch

News Corps Rupert Murdoch is himself a vocal critic of online media giant Google

The Rupert Murdoch-controlled media empire has made no secret of its desire to challenge Google’s dominance of the advertising industry. Between a $10m stake in adtech outfit AppNexus, the Unruly video platform and murmurings of its own ad network, it has (on paper at least) a more transparent alternative to what the online behemoth is offering advertisers.

However, brand-side marketers lack the know-how among many in the adtech ecosystem; too naïve to ask the necessary questions that could ensure they end up in the brand-safe environments promised by the likes of News Corp. That is until now.

Spurred by headlines like ‘Google lets anti-Semitic videos stay on YouTube’ and ‘Global brands shun Google’, advertisers have rounded on the online powerhouse and openly questioned its value as a media trading partner. With dissent against Google peaking, News Corp has seemingly fanned the flames, positioning chief executive Robert Thomson as a: “longtime evangelist for the view that large tech platforms are ‘platforms for piracy’”.

Like Rupert Murdoch - a longtime critic of the online business - Thomson’s indignation toward the online business has gathered steam over the last year, according to lengthy email from News Corp earlier this month that served as a greatest hits of his critiques.

One remark read:“…We are in an era in which integrity is priceless, yet digital distributors have long been a platform for the fake, the faux and the fallacious, highlighting an issue which we have long stressed – that they have eroded the integrity of content by undermining its provenance. Put simply, content distributors are profiting at the expense of content creators and at the expense of veracity… And in the ad market, there has been an awakening, and there will surely be a reckoning.”

Murdoch has long wanted a rebellion against Google’s hegemony of the online media business. As early as 2009, the media mogul openly dismissed his online rival’s perceived attempt to value content quantitatively rather than qualitatively. This disdain quickly turned into a decision to remove articles from its quality papers such as The Times and The Sunday Times from appearing in Google’s listings, a move that was later reversed as the pay versus free content debate hit crisis point. Not to be dissuaded by the setback, Murdoch appears to be gearing up for another assault on his long-term rival; this time by striking where it will hurt the most – advertising revenue.

Some of the world’s biggest advertisers including British Gas, L’Oreal and Verizon Wireless have pulled ad budgets from Google amid the uncertainty. What News Corp has done – whether by design or inadvertently – has been to galvanise a committed coalition of the willing to end the Google and Facebook duopoly of online media.

These concerns were most evident at Advertising Week Europe, fuelled by media owners (many of whom have been stunted by Google’s success in recent years) all too happy to highlight the brand safety failings of online media negatively impacting brands.

“Here’s hoping that duopoly does shrink a bit, so the money does get spread around. As an advertiser you want choice,” said Hamish Nicklin, the Guardian’s chief revenue officer, and one of the industry’s most vocal critics of his former employer’s stranglehold on online media.

Speaking at Advertising Week Europe, the media executive, whose brand was one of many to get misplaced on YouTube, openly mused whether premium sites like the Guardian would ultimately benefit from the brand safety concerns.

“What has happened over the last two months; the amount of people suddenly questioning the existing digital ad paradigm of low cost audiences at scale without any consideration for context,” he continued.

“That is becoming a significant conversation. That is what the duopoly will always find hard to win, because their context is crap. I would argue there is a significant difference between a premium environment like the Financial Times and the Guardian, and Facebook. If you are a brand advertiser, especially as your stats show three-times higher brand impact, that will be something that will start breaking the duopoly’s hold over all of the digital advertising budget.”

On its last quarterly earnings call to investors, chief executive Thomson alluded towards his ambitions to launching an ad network its own. Offering little details at the time, he did proffer one USP to advertisers, and taking a swipe at network agencies as well as adtech offerings of holding companies.

“A tweak to an algorithm, or a fact check here or there does not solve the basic problem. Ad Agencies and their programmatic ad networks are also at fault, as they sometimes artificially aggregate audiences, and these are then plied with content of dubious provenance: the agencies win; the fabricators of the take win; and advertisers and society both lose,” he said.

Beyond advertising, there’s also the small matter of Murdoch’s renewed bid for Sky, which will be won and lost on whether 21st Century Fox can convince regulators that the proposed media behemoth will make no difference to media plurality in a market where Google and Facebook wield so much influence. The social network is the second largest online source of news in the UK behind the BBC, a concentration of power that’s emblematic of how it and its peers are sucking cash out of ad budgets in multiple industries. The stakes have clearly risen since Murdoch’s last bid for Sky and the media mogul will no doubt try to harness the promotion and distribution benefits the merger would yield in the unfettered world of online media.

There are multiple issues here, the biggest of which is the way the likes of Google reap the rewards of content they do not own. Google and Facebook "continue to profit at the expense of publishers and content creators like News and others and provide no value themselves, yet yield 100% of the ad revenue that content generates," said Darren Woolley, founder and global chief executive of media consultants TrinityP3.

"This is a parasitic business model and cannot be sustained with any integrity, which is why we have seen the rise of fake News - cheap to create and highly profitable."

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