"[I]t is imperative that the media development community take the lead in helping its partners become more effective in the digital space, with priority placed on mobile."
This report from the Center for International Media Assistance (CIMA) at the National Endowment for Democracy (NED) looks at the implications for national news media of the growing dominance of global players on digital and mobile platforms and the way these changes have transformed how advertising media is bought, sold, and distributed. The report also explores how those working to support independent media around the world can help to ensure that local and national news media can continue to thrive in the changing advertising environment.
The report examines 10 factors that have altered the media marketplace and that pose challenges to national and local news producers and their sources of revenue. They include:
- Ways in which governments interfere in media markets - Offering several examples, the report shows how independent media are being captured and replaced with "high-quality entertainment and even with glossy news productions - but with an emphasis on the sensational and scandalous, and without the critical content citizens need to hold their governments to account." As author Michelle J. Foster asserts that, "[b]etter connected globally, but less informed locally, citizens living in these media environments may not recognize when their rights to be informed about their government and their society are being compromised."
- Changes in the structure of news distribution and audience behaviour - Many audiences have switched to digital, especially on mobile; in this context, the continued viability of advertising as the key source of revenue for news media is coming into question. As reported here, the International Telecommunication Union (ITU) reports that 7 billion people, or 95% of the world's population, live in an area covered by one or more mobile networks and that more than half of the world's population has a mobile phone. Data cited here show that, even in least developed countries (LDCs), mobile penetration has grown rapidly during the last 5 years.
- The enormous potential for an even greater shift by audiences to digital - ITU's data show that, by the end of 2016, more than half of the world's population (3.9 billion people) were not yet using the internet. (Almost 1 billion households in the world have internet access, of which 230 million are in China, 60 million in India, and 20 million in the world's 48 LDCs). This digital divide remains geographical: 84% of households are connected in Europe, compared with 15.4% in the African region. According to Foster, the remaining inequalities can also be viewed as the potential for these trends to spread and intensify. She points to Free Basics, a programme being piloted in Nigeria by Facebook that aims to be a Facebook-centric, stripped down version of the internet. The service has been criticised elsewhere for providing a platform that could be easily controlled by authoritarian governments. Foster points out that, in areas where internet access is limited, or where newspapers exist in vernacular languages, newspaper circulation has increased in recent years. The largest gains have occurred in Asia, primarily in India and China, followed by more modest increases in Africa and Latin America. "Whether these bright spots of growth in national and local news media can be sustained, however, may depend on whether media houses are prepared for, or somehow protected from, the disruptive effects of the shift to digital and mobile."
- The rise in internet advertising revenue (desktop plus mobile combined), which Zenith Optimedia predicts will surpass the amount spent on television during 2017. Internet advertising is growing 3 times faster than advertising on other media channels, increasing 15.7% in 2016 fueled by increases in social media (31.9%), online video (22.4%), and paid search (15.7%). Mobile advertising (which can include all 3 of these as well as traditional display advertising) is the fastest-growing component of internet advertising; it is expected to achieve a growth rate of 32% per year between 2015 and 2018. While internet advertising grew from 6% to 29% of global ad spend between 2005-2015, newspapers' share fell from 29% to 13%, and magazines' share declined from 13% to 6%. What these data fail to fully show, however, is the synergistic relationship between some of these different platforms.
- The domination of the global advertising market by digital giants and diversified media companies such as Alphabet (the parent company of Google) - "The high-production-value content from these media giants is deeply appealing to audiences and often outshines national and local offerings....Local audiences prefer them; local media find it difficult to compete with them."
- Ubiquitous, high-quality media competing for attention in an expanding world media market - McKinsey & Company estimates that global spending on all media will rise at a compound rate of 5.1% between 2014 and 2019, reaching US$2.1 trillion. "By 2019, we believe digital spending will account for more than 50 percent of all media spend....This rapid digital shift is being driven in part by the growing number of connected consumers, the expansion of mobile telephony, and elevated mobile broadband adoption."
- The reshaping of the advertising industry's architecture as advertisers follow audiences to digital - In a context in which the global advertising industry is concentrated among a small number of key players with vast horizontal holdings delivering creative services, digital marketing, media placement, marketing and data services, and public relations, "[t]oo often, the smaller independent news organizations are also simply invisible within this system. They are amateurs. If a local media house lacks data, does not have a compelling message about its audience, or fails to dominate in one or more segments, it is unlikely to be included in a significant media buy. Moreover, many of brand advertisers actively seek to avoid controversial news media."
- Advertising placement that is driven by data, not deals - "The clients investing in marketing communications demand proof that their messages are reaching the right people, the right way, and having impact. It also brings international standards to bear on smaller markets that may be unfamiliar with those practices..."
- Use of mobile ad blockers that shut out revenue - Consumers, desiring fast load times and uninterrupted access to content, can now download ad-blocking software. Its adoption rate has been running at between 10% (Japan) and 38% (Poland) to date, but its use is highest among young adults and those who consume news the most. "In the absence of user-paid content, or royalties for content use paid by other platforms, publishers find it deeply worrying that access to ad revenues will also be blocked."
- Facebook's evolution from "just a social media platform" to "a dominant advertising environment in the mobile space" - As of this writing, Facebook has more than 1.7 billion users, or more than the combined populations of China and the United States. This portion of the report examines trends in the growth of this entity, such as the introduction of its live-video product, Facebook Live, blurring the line between professional reporting and individual observation. Facebook also owns 2 leading messaging apps that have almost supplanted SMS (text messaging): WhatsApp and Messenger, each with more than a billion users. In April 2016, Facebook formally launched Instant Articles to bring stories from content producers into its own tent. These developments have been met with "both guarded enthusiasm and caution on the part of large media organizations." For example, "[t]he net effect...was that content creators would lose the initial social referrals sending users to their own websites where they could monetize the audience and have the opportunity to engage them more deeply in other content on their own sites." As explored later in the report, "[r]esponding to publishers' concerns, Facebook announced during the second half of 2016 that it is increasing the number of ways publishers can monetize their content directly within the Facebook environment."
Foster is concerned that these 10 factors contribute to a market environment that is arguably inhospitable to independent news outlets seeking national and local audiences - that is, unless those news outlets prepare for the new digital advertising environment by using data metrics. The report then examines the key engagement metrics taken from a sampling of media development partner organisations to offer thoughts on how well these news producers are prepared to compete for audiences and revenue. Specifically, Diversity Ad, based in Copenhagen, Denmark, represents independent news producers that are typically supported by the international community and are operating in more than 30 countries. Diversity's network delivers more than 200 million paid ads per month to its partner sites; aggregating Google Analytics data from a wide range of those clients provides a kind of baseline of audience reach and engagement. The analysis produced the following findings:
- Overall, traffic levels relative to in-country population sizes were low; a lack of technological prowess, an internal focus on news reporting without an equal focus on audience development, content that is negative or politicised, and websites that don't function well in search engines are reasons often cited by media development practitioners.
- Social users - those visiting a site because they followed a link from Facebook, Twitter, or some other social media site - tend, once they click through, to often visit only the content they were directed to before backing out and closing the window. Yet, "[i]f the website is trying to monetize its audience, luring its audiences to view multiple pieces of content - and also click through on advertising - is essential."
- In less developed areas, social referrals were not as significant a factor in driving traffic to partner websites as they are typically in more developed areas.
- Facebook is the near-universal leading source of social referral.
To reiterate, the issue is that "[p]ublishers are now operating in a 'distributed content' system where individual pieces of news are sent across multiple platforms, including ones not owned by the media organization. Their content is vacuumed up by online and mobile content aggregators, where those sites typically benefit financially from audience views, not the content producer. Even when ads are delivered to their sites, users can block them. And smaller media organizations exist outside the armature of advertising markets, invisible. If these broad and deep shifts in the way news is produced, distributed, censored, and monetized challenge operations with the business sophistication of major media houses..., why would it be surprising that they present nearly insurmountable threats to independent news media that often operate under threat, in exile, or in opposition?"
After looking at the particular weaknesses of the outlets in the data set, the report makes some recommendations for how independent news media and the media development community can adapt to the rising tide of digital advertising:
- Consolidate - "The media development community could create an organization to centralize platform development; support mobile deployment; harvest, analyze, and report metrics; deliver advertising services; create self-marketing strategies; and advocate with social media platforms and advertising actors."
- Be on top of the data - Metrics are the heart of effective media management today. "No matter how good it is, content is irrelevant if it fails to connect with an audience." Media development practitioners should help do field testing, asking: What raises engagement? How do load times affect the bounce rate? What types of content attract intended audiences? Which fail to connect? This approach could help highlight gender gaps in audiences and identify content approaches that build reach among women. It could also set performance benchmarks and identify best practices which, when shared with the news organisations and aggregated regionally or by other characteristics, could help guide news and engagement strategies.
- Pivot to digital, with mobile as the platform - According to Foster, the partners of media development organisations, whether in post-communist countries, developing nations, or in countries where governments use sophisticated techniques to suppress their voices, too often have their voices silenced by distributing their messages in the wrong mediums, or when using technologies they do not fully understand or embrace.
- Digital craftsmanship matters - In an era of distributed content, journalists need to understand the craftsmanship of structuring it in ways that engage and retain audiences.
CIMA website, January 24 2017.