Covid-19’s impact on advertising was swift and merciless. But many publishers were in a strong position to weather the storm, having reduced reliance on ads as a primary revenue stream. Esther Kezia Thorpe rounds up the year in data and advertising as part of our Media Moments 2020 report.
The conversation around data and advertising has grown even more complex this year, intertwined with wider issues of governance, regulation, and platforms. Some of these key events are addressed in our dedicated ‘Platforms’ chapter, but here we will deal specifically with the changes in data and advertising in 2020 where they have affected publishers.
Many in the industry have pointed out that Covid-19 has brought five year’s worth of transformation to publishing businesses in the space of just a few months. Advertising revenue – already in decline for most publishers – went into freefall in spring, meaning that those who had hoped for a slow weaning off it as a revenue stream had to make fast and painful decisions.
But it’s not just Covid-19 pushing transformation through. Google, Facebook and Apple are just a few of the tech giants making waves by taking matters into their own hands regarding privacy, tracking and cookies.
What happened in 2020
At the start of the year, Google made a dramatic announcement that it was working towards “making third party cookies obsolete” and phasing out support for them in its Chrome browser within two years. This was not an entirely unexpected move; Firefox and Apple’s Safari browser announced similar third party cookie-blocking measures in 2019, and Google had been seen testing their own version within Chrome towards the end of the year.
Those three browsers between them have a share of over 87% of the combined mobile and desktop browser market, meaning that third party cookies have no viable future on the internet.
However, unlike Apple and Firefox, Google has also said it is committed to finding alternatives. The company announced an initiative called the Privacy Sandbox in late 2019 in order to develop a set of open standards to “fundamentally enhance privacy on the web”.
A number of options have shown promise, among them a proposal for a ‘Federated Learning of Cohorts’ (FLoC) which allows companies to observe the behaviour of a cohort (or ‘flock’) of similar people, rather than sharing personally identifiable information.
In the meantime, publishers have been hard at work this year strengthening their own positions in the absence of a concrete alternative to third party cookies. As we noted last year, many have used this as an opportunity to establish or grow first party data strategies, which play much better to the strengths of publishing companies; namely a loyal audience with whom they have a trusted relationship.
The New York Times saw its ad sales plunge 44% in Q2 of this year. But they saw this as an opportunity to plan ahead for the future, investing in better ad experiences and developing contextual targeting as a substitute for third party cookies. This contextual targeting involves classifying content including the emotional tenor of a story, topic targeting, and motivations, in order to better understand where people respond to ads. That doesn’t mean clients aren’t still coming with unrealistic targeting goals, but it allows the publisher to have a more solutions-focused conversation with them.
“Coronavirus has accelerated us moving into the ad business that we want to be in. There is something that happens when you can’t do a lot about your quarterly results and it requires that you focus on a year or two from now. For us it has ripped the Band-Aid on some hard decisions.”
Allison Murphy, SVP of Ad Innovation, New York Times
Other publishers are building their own tools. Vox Media launched Concert Ad Manager, a self-service tool to give brands – especially small and medium businesses – the ability to build and deploy advertising campaigns at scale across the Concert marketplace, which includes publishers like NBC Universal, Penske Media, Quartz and more. This is a particularly important step in making advertising on publisher sites accessible to smaller brands; a key reason why Facebook’s own self-service tools perform so strongly with the ‘long tail’ of SMBs.
But it’s not just browsers which proved a challenge to advertising this year. Apple announced in June that it would be making a change in its upcoming iOS 14 update that would require users to give explicit permission before letting apps track them for advertising purposes. In practice, this would be a pop-up which asks permission for the app to track the user across apps and websites owned by other companies, with two options: ‘Allow Tracking’ or ‘Ask App Not to Track’.
The vast majority of people are expected to choose the latter option. This in turn will reduce the amount that advertisers know about the people they’re trying to reach, and will reduce the price of ads sold. In 2017, Apple rolled out a similar restriction on behaviour tracking for its Safari web browser, and publishers saw ad rates plummet for these users.
One estimate from Weather Co estimates that the price advertisers are willing to pay within iPhone apps could decline by as much as 40% as a result of the change.
DMG Media – owner of the Daily Mail – is just one of a number of publishers to express concerns at the move. Their MailOnline iOS app is used by 1.2 million people per day. “It makes it much harder for us to monetise our Apple app users, who are an incredibly loyal readership. And quite frankly, it puts at risk our ability to provide an Apple app,” Publisher Martin Clarke said. “When every publisher is fighting for every last advertising cent, this couldn’t come at a worse time.”
However, in September, Apple said that they would delay implementation of the tracking permissions until early 2021 in order to give developers time to make the necessary changes. This brief reprieve doesn’t mean the impact will be lessened next year.
“Many news publishers will struggle to adapt; few have the sort of robust data systems that would allow them to create something like the ad targeting Apple would be limiting,” Joshua Benton wrote in Nieman Lab. “Publishers who sell most of their advertising directly will have an edge over those who rely on programmatic ad networks. In the long run, that’s probably a healthy tradeoff for publishers – but there’ll be pain in the meantime.”
Then of course, we have the dramatic impact of the pandemic. Marketing budgets across all sectors have seen record declines, with ad spend set to fall 8.1% globally this year. As for the impact on publishers, PwC have estimated that global newspaper advertising – both print and online – will fall more than a quarter from $49.2bn in 2019 to $36bn in 2024 as a result.
The effects of declining ad spend on publishers has been exacerbated by keyword blocking. Blocklists are used by advertisers as part of brand safety efforts to stop ads appearing next to inappropriate content. This often adversely affects news publishers, as these blocklists ban terms relating to topics such as terrorism, disasters, or even LBGT+ content, with titles like PinkNews having as much as 73% of their stories flagged as ‘brand unsafe’ earlier in the year.
As the pandemic started to take hold, advertisers rushed to include keywords related to Covid-19 on their blocklists. But this meant that publishers of all shapes and sizes suffered.
In February, ‘coronavirus’ became the second-most common word on block lists for news publishers (with the most common being Trump’). By March, Integral Ad Science, a digital ad verification company, had over 3,000 advertisers blocking the term. Its software automatically blocked 36% of ads it attempted to place on the New York Times’ website due to coronavirus content, up from 6% in February. It also blocked 45% of ads from appearing on the Washington Post, and 29% on CNN.
Between April and July, coronavirus-related keyword blocking alone was estimated to cost publishers £50m in lost advertising revenue.
“The Chrome announcement was definitely ‘Oh shit!’ for many, but a sense of relief for us too. Now at least we know what to expect, have a time frame, and are able to plan for it together.”
Karen Eccles, Senior Director of Commercial Innovation, The Telegraph
What can we expect in the future?
It’s a low bar to bounce back from, but there have been green shoots of recovery in the ad market towards the second half of the year, despite the pandemic dragging on around the world. Digital ad spend is expected to increase by 6% in 2020, with paid search, social and CTV seeing strongest growth.
However, the outlook for publishers is still very much in flux. The triple-whammy of keyword blocking, reduced ad spend and action from the tech giants makes the outlook for advertising revenue very grim indeed for 2021.
Those who have prepared in advance by strengthening their first-party data strategies and tools are going to be in a much stronger position going into the year than those who are still heavily reliant on traditional display.
This article is an extract from our Media Moments 2020 report. To see the case studies for this chapter and to read the full report, download it here.