Thanks to signal loss, recession fears and the “ad tech tax,” publishers of all sizes are seeing their ad revenue suffer.
But the problem is more pronounced among local news publishers, many of which were barely getting by before platform privacy changes roiled the digital advertising industry.
The Local Media Consortium (LMC), which represents more than 90 local media holding companies and more than 3,000 outlets across the US, Canada and Puerto Rico, sees firsthand how hard it’s become for local news publishers to monetize.
Add overzealous brand safety tech and tactics to the mix, and the challenges only mount.
Headwinds are blowing
But how bad is the revenue situation for publishers?
A 2021 survey of LMC members found that programmatic display CPMs ranged between $1.50 and $2.75, and there’s no shortage of reasons why.
Changes like Apple’s AppTrackingTansparency (ATT) framework have impacted how social media platforms, including Facebook, can target users, which resulted in a dip in referral traffic and significant ad revenue declines for local media sites, said Fran Wills, LMC’s CEO.
Whereas Facebook used to be the No. 1 referral source for local news traffic, said Chris Fehrmann, a newly appointed LMC board member and VP of digital products at TEGNA, that traffic has dropped 40% to 60% over the past two years.
It’s also common to see revenue shortfalls in the range of 30% to 40% among local news publishers compared to pre-ATT numbers, Fehrmann said.
Buy-side concerns
Local news is also having trouble attracting demand due to brand suitability concerns, said Fehrmann, who also sits on the Brand Safety Institute’s advisory board.
“National advertisers are concerned with hard news at the local level: crime news, disaster news, etc.,” Fehrmann said. “There are some decent brand safety tools out there, and then there are a lot of blunt instruments that are more of an ‘easy button’ – and, unfortunately, the majority of buyers use the easy button.”
In programmatic channels, local news publishers are often categorized as simply “news,” regardless of whether the ad inventory appears alongside a crime story or a heartwarming human interest story. Many advertisers use a brand safety solution to block the news category from their programmatic ad buys altogether, said Fehrmann.
“We need better tools that enable advertisers to be more granular,” he said, “and we need better education for buyers and advertisers on how to use these tools.”
Further complicating matters, in the programmatic ecosystem, credible local news ad inventory is often placed in the same category as social media and user-generated content, “making it harder for advertisers to buy local media audiences at scale,” Wills said.
While publishers can build contextual solutions or work with partners to categorize content at a more granular level, those tools are currently more suited to direct deals rather than open programmatic channels, Fehrmann said, and buyers are not typically going direct to local publishers.
For open web programmatic, the IAB’s seller defined audience taxonomies are the most viable contextual standard, he said, at least for now.
“I’m a proponent of seller-defined audiences,” Fehrmann said. “We can debate over how accurate the standard is, but until there’s a better one, it’s the one that we should be all gathering around and using.”
First-party data pivot
To help local news publishers mitigate these headwinds, the LMC launched its NewsNext initiative in 2021 with help from IAB Tech Lab Founder Scott Cunningham.
Out of this initiative sprang NewsPassID, a single-sign-on membership solution that combines the scale of an ad network with a cross-publisher first-party data pool.
Like other alternative IDs, NewsPassID generates a randomized identifier for each user. But unlike other alternative IDs, this one was created for and by publishers.
Local news publishers can use NewsPassID to gather first-party data from their readers and share that data with the other publishers involved.
“The network is pooling our resources and our inventory together to be more attractive to national buyers,” Fehrmann said. “This also makes it more efficient for national buyers to buy local media inventory in a single buy versus having to go to each publisher individually.”
The solution is powered by UK publisher alliance The Ozone Project’s digital ad platform, and Osano provides the consent management tech. Hashtag Labs supplies the managed service software that publishers can use to integrate with NewsPassID.
By developing an alternative ID operated by publishers, the LMC hopes to eliminate a large chunk of the ad tech tax extracted by third-party intermediaries. According to the Incorporated Society of British Advertisers, only 51 cents for every dollar spent by advertisers actually goes to publishers.
Currently, only five LMC members are transacting on NewsPassID, but an additional 25 have committed to participating. The LMC is on track to have $1 million worth of inventory transacted through the ID by the end of the year. So far, participating publishers have seen CPM lifts of between 10% and 25%.
NewsPassID has also attracted interest from SSPs and DSPs, although some DSPs might be more interested in the ID as an opportunity to learn about a competitive solution, Fehrmann said.
“We are aware of DSPs that are trying to build their own SSPs, and they have their own ID solutions,” he said. “They’re trying to take back that tech tax, and any other ID is in competition with theirs.”
