Plenty of pixels have been spilled both promoting and criticizing a report released this month by trade association the News Media Alliance, which claimed that Google earns $4.7 billion at the expense of the news industry. David Chavern, president and CEO of the Alliance, testified before the House Judiciary Committee this month about the market dominance of big tech companies, saying that companies like Google were taking the bulk of publishing companies’ advertising revenue.
But as many have noted, the $4.7 billion figure was calculated based on a 2008 comment by Marissa Mayer, when she estimated that Google News generates $100 million in revenue a year. The report released by the Alliance does not actually make a direct connection between the news business and money earned by Google, meaning that the anguish from publishing companies, while valid, is not entirely tied to reality.
Typically, when publishers fret about the digital ad duopoly eating their lunch, they’re talking about the roles Facebook and Google play in the programmatic display advertising ecosystem, where both duopoly players serve as publishers as well as ad tech intermediaries. Our latest figures show that Facebook and Google make up 52.1% of the $70.06 billion spent on US digital ad display.
The Alliance report, however, explicitly excluded any analysis of programmatic display and the amount of working media dollars that might be skimmed off in programmatic fees collected by Google, Facebook or a host of other programmatic players. It focused instead on the amount of news content delivered in Google search results, which highlights the important role news content plays in the user experience of Google.
It’s undeniable that the presence of news content in Google search results makes Google’s search engine more valuable to consumers; the more content indexed by any general search engine, the more useful it is to those querying it.
But the connection to revenue is more second-order than first: The Alliance report looked at the overall volume of news results returned for a set of trending queries, but did not include information about how many ads were present on those same results pages, let alone clicked on. Search results pages that are returned for queries involving news-related topics are often ad-free; for example, a search for “Syria” does not return any sponsored results.
At the time of this writing, even a results page for the query “Hong Kong”—which might at a less-newsworthy time include travel-related ads when accessed from the US—has no ads. A check of the top 10 Google Trends searches for today (the starting point of the News Media Alliance methodology) returned 10 results pages with no ads.
Google (and Facebook, as well as a host of other ad tech providers) does have a more direct connection to media business ad revenues in the form of its programmatic display business. Google’s display ad stack is massive and complex, and there’s been a lack of adequate research into how much of the value created by the behavioral targeting facilitated by programmatic display makes its way to publishers, as opposed to being captured by ad tech providers instead. (In May, the Wall Street Journal covered an academic study that claimed behavioral targeting earned publishers just a 4% premium on impressions despite a much larger increase in ad prices, but the research had significant methodological limitations.)
So while the Facebook-Google duopoly and impact on the news industry is undeniable, it’s not exactly fair to say that Google is siphoning $4.7 billion off the news industry based on a decade-old estimated figure.
We are in the process of conducting research that we hope will allow us to estimate the amount advertisers are spending on programmatic fees, also known as the ad tech tax. We expect to publish this research later this summer. In the meantime, read our latest report on US programmatic ad spending for 2019.