Why Canada’s ‘Online News Act’ is a big deal for news publishers globally and what they can do to prepare for it

Canadian news and journalism outlets have entered into a fierce battle with Google and Meta over the recently enacted Bill C-18, also known as the Online News Act. This legislation, passed by the Canadian government on June 22, 2023, aims to support the Canadian journalism ecosystem by establishing a tax that "digital news intermediaries" such as Google and Meta must pay to the content owners they link to.

In a familiar pattern observed in similar laws like Australia's News Media and Digital Platforms Mandatory Bargaining Code, Meta and Google have retaliated by removing links from their platforms including Instagram, Facebook, and Google Search. Unfortunately, this response undermines the very essence of the bill and is expected to inflict financial harm on Canadian journalism. While Google and Meta argue that they only seek a fair market share for their services, publishers contend that this is unjustified since Google and Meta generate billions in advertising revenue while journalists struggle to make ends meet.

The advertising industry responds with a call for sustainable, ethical & socially responsible advertising practices

The dynamics at play here are further complicated by the fact that media agencies and brands, responsible for a significant portion of news media revenues, control advertising spend. This advertising spend is the primary source of revenue for Google & Meta, which famously represent 80% of online advertising revenue in the country.

Traditionally, Canadian brands and their agencies have allocated the majority of their advertising budgets to these two companies. However, there is a growing trend, driven by recent legislation and broader shifts in advertising, to directly invest media dollars with local publishers. Many agencies and brands have committed to supporting Canadian publishers in light of this impasse. For example, the A2C in Quebec has already taken steps to incentivize collaboration between agencies, brands, and local publishers. Some agencies view this issue as a matter of ethics and social responsibility. Prominent figures in the agency world, like Sarah Thompson, President of Dentsu Media and Brian Cuddy, SVP Responsible Media Solutions at Cossette have been vocal advocates for supporting Canadian news publishers. In response to the announcement from Facebook that all Canadian news will be removed from their platforms within weeks Sarah took to her LinkedIn to share support for local news “We are at a moment of time where action is required to support local owned media, which is more than news.”

In addition to developments within the Canadian ecosystem, there are emerging trends in how marketers allocate their paid media budgets. Advertising executives are increasingly interested in investing more heavily in contextual advertising and leveraging publishers' first-party data for better targeting. There is also heightened scrutiny around programmatic channels, which lack transparency in terms of media ROI. Consequently, there is a growing preference for direct buying. Moreover, measurement strategies are shifting away from the digital attribution focus of the past decade towards more traditional methods, such as brand lift analysis, media mix modeling, third-party audience measurement, and the use of consumer research data and studies.

In essence, these trends indicate a change in the attitudes and choices of CMOs and agency leaders. They are actively supporting a more open and equitable internet through their advertising investments.

While the dust settles, open internet publishers can prepare for the future

Similar to other legislations, it is probable that Google and Meta will have to pay millions of dollars directly to media owners to avoid taxation. However, the process of finalizing these deals will require time, leaving publishers to suffer from decreased traffic and increased competition with these tech giants for ad revenue. In the long run, there is a possibility that Google and Meta might modify their platforms by completely removing links. The economic landscape has evolved for these companies, and it is not unreasonable to consider their initial link removal as a test to assess long-term effects on user engagement and potential revenue. 

To minimize risk, publishers can take proactive measures to future-proof their businesses. 

Here are some recommendations:

• Build a direct sales model that is data-driven - By hiring commercial professionals with a strong background in data and educating your sales teams on how your organization leverages data to develop advertising products, you can make a significant impact. Google and Meta have achieved tremendous success by adopting a data-centric approach to advertising sales, and marketers will seek partners who possess similar capabilities. The indirect revenue generated from large platforms and programmatic partners will likely remain at risk as marketers shift their strategies. Publishers who can effectively execute direct sales efforts will reap the benefits of these changes.

• Invest in a data collaboration platform - Google and Meta's value proposition lies in empowering advertisers to leverage their own audience data for precise targeting and robust measurement. Recent advancements in data clean room and collaboration technologies have enabled publishers to directly provide these capabilities while safeguarding user privacy and ensuring scalability. Data clean rooms and collaboration solutions now play a pivotal role in publisher's' ability to offer innovative solutions to advertising partners and drive ad revenue growth

• Work with technology partners that help you manage your data better, faster, and more efficiently - Having partners who possess a comprehensive understanding of audience data is crucial. Developing a robust data strategy can be intricate, encompassing diverse approaches like identity management, real-time audience building, and ad activation system integrations. For publishers, collaborating with forward-thinking partners is vital, as they can provide a versatile system that extends beyond advertising to content personalization and marketing applications.

• Don't forget your biggest advantage, your content! - News publishers are the ultimate storytellers, directly connecting with their audiences. With this unique position, you not only gain invaluable insights into their preferences but, armed with the right tools, also deepen your understanding of them. This fundamental knowledge becomes vital as more publishers creatively leverage data to amplify co-branded content, sponsorships, audience creation, and other aspects of advertising. By employing these strategies, you can draw in more advertisers and bolster your revenues.

Canadian publishers are witnessing promising support from agencies, brands, and the public, indicating a positive trajectory. Coupled with the growth of future-proof data collaboration technologies, this presents remarkable opportunities for news media publishers to revolutionize their advertising revenue generation. The Online News Act, a legislation that foreshadows the future of news consumption, holds great significance not only for Canadians, but also for Americans, as similar bills have reached Congress. In the midst of these advancements, we find ourselves at a critical juncture for the open internet, journalism, and democracy as a whole. Numerous Canadian publishers have already partnered with Optable to safeguard their advertising businesses, and for those who haven't, we are prepared to provide our assistance!

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