The big news sites get bigger, not helping their merger case
Scroll down for the latest ad industry stats.
New Zealand’s 10 most trafficked sites, February 2017
1. Google: 3.4 million
2. Microsoft: 3.0 million
3. Facebook: 2.6 million
4. Fairfax Media: 2.2 million
5. NZME: 2.1 million
6. NZ Govt: 2.1 million
7. Trade Me: 1.7 million
8. Yahoo: 1.4 million
9. Wikipedia: 1.2 million
10. Amazon: 1.1 million
12. MediaWorks: 1.0 million
16. TVNZ: 798,000
27. Twitter: 629,000
50. RNZ: 428,000
66. BitTorrent: * 345,000
67. Netflix: 338,000
79. Guardian Media Group: 294,000
83. Telegraph Media Group: 283,000
132. New York Times: 176,000
1035. Breitbart News: 25,000
* Service often used for piracy
Source: Nielsen Media View. Nielsen's survey measures home (not business) users' website and app usage using a mix of cookies (tracking software) and a people panel.
The good news (of a sort): Fairfax and APN/NZME’s cage-fight for clicks is increasing their audience. Piling tabloid crowd-pleasers on to their respective flagship websites, Stuff and NZ Herald.co.nz, built their audience over the last year, according to Nielsen’s latest Media View survey (see sidebar).
Back in 2014, the two media stables both had unique monthly audiences around the 1.4 million mark. In February 2016, NZME was up to 1.8 million and Fairfax 1.9 million.
For February 2017, Fairfax was up to 2.2 million and NZME 2.1 million.
Their rivals are growing too. For example, February 2016, RNZ had an online audience of 348,000. For February just gone it was an estimated 428,000. But by hook or by crook (or by cat photos and bachelor stories), NZME and Fairfax have remained the big two.
The bad news: The Commerce Commission already thinks the pair are too dominant, so the good news about unique audience numbers won’t help their merger case (the watchdog is due to give its final verdict on April 11).
In the commission’s draft decision, issued in November, chairman Mark Berry noted a combined APN NZ and Fairfax NZ would control 90% of the printed newspaper market.
"This would be the second-highest level of print media ownership in the world, behind only China," he said.
In these days of new media, there is a lot more to the equation than print, of course. But Dr Berry also saw problems in the brave new cross-platform world.
"Our preliminary view is that competition would not be sufficiently robust to constrain a multi-media organisation, potentially with a single editorial voice, that would be the largest producer of national, regional and local news by some margin in New Zealand,” he said.
"The merged entity would also control New Zealand's two largest news websites – NZHerald.co.nz and Stuff – which together have a population reach more than four times larger than the next biggest domestic news website."
I’d have to question the chairman’s calculations. Fairfax’s unique audience of 2.2 million and NZME’s 2.1 million, if added together, are more than four times larger than their nearest rival – but you can’t simply do that, as there will be a lot of crossover audience between the two sites.
Still, I take his broader point. Fairfax and APN’s sites have big audiences, which are getting bigger. You can see his case that consumer choice could potentially suffer.
Source: APN-Fairfax joint merger application. Click to zoom.
The ad dollar equation
On the commercial side, 1 + 1 should equal 2.
But the problem – according to APN and Fairfax’s joint merger application – is that while the ad revenue from NZHerald.co.nz can be added to that from Stuff, it doesn’t amount to a hill of beans (and bear in mind they've both said they have no interest in paywalls).
According to their figures, in the year to 2016, Fairfax booked $10.4 million in online ad revenue (5.8% of the market) and NZME $10.8 million ($6%).
Together, they would have just under 11% of the market.
In terms of unique audience, together they are roughly on the same scale as Google but they struggle to get anything near the search giant’s share: $67.4 million or 37.4% of the market – and that’s probably underestimated as Google books New Zealand search and syndicated advertising to subsidiaries in Ireland and Singapore. Facebook is the clear second in the market with $29.5 million (16.4%), with the same offshore booking issue as Google.
It’s the same in every new media market: Google and Facebook are winning about 80% of new online ad spending. It’s not just about the biggest, it’s about offering the most targeted options and it’s hard to beat our dynamic duo’s breathtaking level of knowledge about their users’ tastes, employers, location and so forth.
Online ad spend in NZ, fourth quarter 2016. Source: IAB. Click to zoom.
Online ad spend in NZ, 2016. Source: IAB. Click to zoom.
Online ad market up — for some
Interactive Advertising Bureau figures released this week for the fourth quarter and whole of 2016 indicate this trend is getting more extreme.
The IAB says the total online advertising market increased 11% for the year to $550 million. That’s a positive. But once again search (read: “Google”) had the largest slice of the pie (55%), and the largest growth by dollar value. It was followed by classifieds (Seek, Trade Me) on 17% and social media (7%) also took a larger portion of spending.
Display advertising (16%) is where traditional media usually seems the most action but spending in this area actually fell 3% in the fourth quarter of 2016, despite including the trending new discipline of programmatic advertising (where Fairfax and NZME are already co-operating on their KPEX platform, along with others).
For my money, it will always be a thankless task to try to outsmart Google and Facebook and their multi-billion R&D efforts, and subscriber funded-content (which also incentivises quality stories) is the only way to go.
Still, if APN/NZME and Fairfax are foolish enough to want to give it a crack, perhaps they should be left alone to try.