A governmental report on the future of journalism has described the online advertising market as being ‘difficult to understand for advertisers and publishers alike’.
Published yesterday, the Cairncross Review also criticised the disproportionate influence of Google and Facebook, particularly the way these platforms can impose terms on publishers without needing to consult or negotiate with them. To ensure these tech giants don’t threaten the viability of online news publishers, the report urged the government to introduce cautionary measures, such as asking the platforms to draw up codes of conduct.
“If the powerful position of Google and Facebook remains unchanged (or even grows), the government must ensure these companies do not abuse their position, and just as critically that their position does not threaten the viability of other industries,” it expanded. “To ensure this, the Review has considered two options: industry-wide negotiations, and a code of conduct for the larger platforms.”
Any increased regulation for the likes of Facebook and Google could well have a substantial effect on the current affiliate model. Time will tell whether such an effect would be positive or negative.
Reaching its conclusions, the report continued: “From the evidence this Review has seen, Google and Facebook capture the lion’s share of online advertising revenue. Any market in which a small number of companies capture the bulk of the revenues is potentially a cause for concern. The Cairncross Review position of the large online platforms could be restricting competition, and stifling innovation, with consequences for publishers as well as users.
“This Review has highlighted how difficult it is to gather reliable information on the functioning of this market. This Review therefore recommends that the Competition and Markets Authority (CMA) use its information-gathering powers to conduct a market study of the online advertising market. By looking more closely at the position of different players, their roles, costs and profitability, the CMA will be able to identify how efficiently the online advertising market is working, and what, if anything, should be done about it.”
Access the full 157-page report here.