Gannett’s recent lawsuit claims that Google monopolized online advertising which harms local newspapers’ advertising revenue. This claim overstates Google’s share of the online advertising market and ignores that consumers’ interest in local news has been falling for years.
The “ad tech” market that Gannett accuses Google of monopolizing consists of supply-side platforms (SSP) which help publishers find advertisers, demand-side platforms (DSP) which help advertisers find publishers, and ad exchanges that connect the other two. In each step of the process, Google faces competition from other firms.
Because publishers use an average of six SSPs each, multiple SSPs are used by at least 12 percent of publishers. The number of SSPs with a high market share is likely to grow as publishers are expected to use more companies’ SSP services in the future.
When it comes to DSP tools Google isn’t even the largest provider. More advertisers are using Amazon’s DSP tools than Google’s. Advertisers also use multiple companies’ services, though only 2.8 on average. But when asked which they would use if they had to use only one, Google was not the preferred first choice.
While Google does have the largest ad exchanges for connecting SSPs and DSPs, there are many other smaller competitors like OpenX and Rubicon. Both advertisers and publishers have multiple options other than Google for each of the three needed tools needed to facilitate online advertising.
With many competitors to Google in digital advertising tools, no online monopoly is costing Gannett its advertising revenue or causing the recent closures of many of its local newspapers. Gannett’s claim links Google’s advertising services to a 70 percent decrease in newspaper advertising revenue since 2009, but newspapers’ advertising revenue was already on the decline before then. From 2006 to 2009 it had already fallen from $49 billion to $28 billion. In fact, a 2007 American Consumer Institute report found that from 1999 to 2006 newspaper tonnage had declined nearly 2 percent per year.
The real problem Gannett is facing is that demand for local news has dropped dramatically. The fall in local newspaper advertising revenue follows a decades long decline in newspaper distribution in the US. In an ever more interconnected world consumers are simply not choosing to read local news as much as they once did. The loss of advertising revenue is a result of consumers’ choices for news content, not a result of anticompetitive behavior in the advertising industry.
According to a study from Reuters and the University of Oxford, in 2021 the only local news topics that one-third or more of consumers were accessing were weather, politics, crime, and coronavirus information. Local weather was the only topic more than half of the people asked had paid attention to in the last week. Even with weather leading readership of local news, only 6 percent of Americans think local newspapers are the most reliable source for the weather.
Few consumers think local newspapers are the best place to get other types of news either. For local politics 24 percent of people thought local newspapers were the best source, while 34 percent thought local TV was. Even looking for things to do around town consumers trust social media more than local newspapers.
Newspapers’ revenue problems stem from the convenience that online services provide, which creates a preferable option for consumers to access information. For example, newspaper classified sections have been disappearing for years as online classified services become more popular. Gannett doesn’t look like it is fighting back against a bully, it looks more like Gannett is trying to find any financial lifeline it can as local newspapers continue to decline and be replaced by new methods that better meet consumer needs.
Instead of trying to use the force of government to support their falling revenue, local newspapers need to reassess what consumers are looking for and realign their business models to provide consumers the products and services they want. If local newspapers don’t find a way to do this, they will continue to lose revenue and find themselves shutting down, replaced by newer and more modern sources of information for consumers.
In the end its all a matter of consumer choice.
Justin Leventhal is a senior policy analyst for the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit www.TheAmericanConsumer.Org or follow us on Twitter @ConsumerPal.