Pemsel: Tech Giants ‘Snapped’ Relationship Between Ad Revenue And Reach

The relationship between news media publishers’ ability to reach large audiences and attract advertising revenues “snapped as aggressively as I’ve ever seen” in the face of the Facebook and Google duopoly, Guardian Media Group chief executive David Pemsel has said.

In an interview with Campaign this week, Mr Pemsel said that Government intervention was inevitable as the tech giants continue to siphon advertising revenue away from news media publishers.    

Asked whether the regulators should break up the tech giants, Mr Pemsel said: “The maths say yes. I don’t think that’s a [subjective] judgment. The maths have to get you to the place where some kind of intervention from government is inevitable.”

Mr Pemsel said that, “any platform that provides anonymous reach” with no ability to have a direct relationship with the reader plays “no role in our business strategy – that’s why we’ve come out of Apple News and [Facebook’s] Instant Articles.

“Be really sure of your own strategy and do not allow the platforms to disrupt you. Apple and Facebook will say they’ll give you reach. But we don’t have a traffic problem. We’ve got a really clear strategy about how to have a deeper relationship with our readers and encourage greater contributions.”

Big ad agency groups must change because they are as “equally challenged” as publishers, according to Mr Pemsel. “Google and Facebook are creating as many complications for them as they are for us,” he added.

Campaign reported that GMG’s turnover increased one per cent to £217 million in the past year, with more than half coming from digital for the first time. In another milestone, revenues from readers through contributions, subscriptions and print cover price sales outweighed advertising.

“I don’t think there’s a limit on how far The Guardian’s journalism can travel,” Mr Pemsel said, pointing out that its trusted content reaches an audience of 155 million monthly unique browsers in the era of fake news.

“Reach does breed complacency,” Mr Pemsel said. “You think it’s important just because you’ve got a big number, but you realise you’ve got no [direct] relationships [with readers who are largely anonymous].”

In the face of the Facebook-Google duopoly. “The relationship between reach and ad revenue snapped as aggressively as I’ve ever seen,” Mr Pemsel said. “It was almost a quarterly shift.” At the same time, agencies were automating spend, which required the sales team to pivot to programmatic trading.

“You can imagine at some point there will be a brief, saying, ‘What are the various ways that print can add value to people’s lives?’ But then there’s this binary thing of, ‘When are you going to turn it off?’ – it’s much more nuanced than that. People in this digital age love the tangibility of print and we’ve got to respect that.”