Ozone: How UK publishers are competing with duopoly to offer scale and quality

Digital advertising is moving into a “different chapter” where transparency is key and publishers will play “a much more active role in deciding what changes will come through in the future”.

These comments from Ozone Project chief executive Damon Reeve come as the digital ad platform for national news publishers is expanding its offering to buyers, moving away from open market programmatic trading.

The move follows Google’s decision to stop supporting third-party cookies on Chrome by 2022, following Firefox and Safari. The digital marketing industry has been reliant on cookies to track a user’s online behaviour and serve them relevant ads – often products they’ve just been browsing.

The death of cookies means marketers will be less able to track users from site to site and more reliant on particular brands for providing access to audience.

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What is the Ozone Project?

The Ozone Project is a rare joint venture between rival publishers News UK (Sun and Times), Reach (Mirror, Express and Star), Telegraph Media Group and Guardian News and Media, which acts as a single platform selling digital ad space across the publishers’ network of sites.

All the publishers who contribute to a particular audience – e.g. business – are remunerated in proportion to the audience they contribute.

Ozone’s goal is to give publishers more control over their ad business while offering a premium environment for advertisers “without a lot of the negative aspects of programmatic advertising”, said Reeve.

He said marketers had relied on metrics around impressions – when a digital ad is shown to a user – and clicks on ads, while the “value of the audience they’re reaching has very much been second”.

But, he said there were now more conversations being had “where measures of success shouldn’t be based on impressions and clicks” but on “business measures, in line with other media channels”.

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How news publishers are competing with Duopoly

In 2019 total UK digital ad spend reached £15.7bn, up 15% on the year before, according to figures from the Internet Advertising Bureau and WARC. Of this, £6.2bn was from display, up 17% year-on-year.

In the first half of 2020, the IAB found that total UK digital ad spend fell 5% to £7bn under the coronavirus pandemic, but remains “relatively stable”. The display market has grown slightly, up 0.3% to £2.84bn.

Digital advertising is the largest media channel today, with programmatic advertising making up about 90% of the channel, said Reeve.

Google and Facebook (including Instagram) hold nearly 80% of the market share of digital display ad spend in the UK.

Reeve said buying ads through these Big Tech platforms had led to the loss of the relationship and “strategic engagement” that publishers – even large ones – can have with brands.

“What ultimately ends up happening, if you do nothing, is publishers just see an erosion of revenue,” he said. “We created Ozone to be a counter to that sort of buying behaviour.”

Damon Reeve, chief executive of the Ozone Project

Brands are ‘getting a lot more engaged’

The issues with programmatic advertising – the automated buying and selling of digital ads – were exposed in a report by marketing trade body ISBA and professional services giant PWC, published in May, which for the first time mapped the programmatic ad delivery system end-to-end from January to March 2020.

Of the 267m ad impressions served from advertisers to publishers, only 31m (12%) were successfully “matched” to their target audience. The report said the remaining 88% “could not be mapped due to low data quality”.

The report found that publishers receive half (51%) of advertiser spend on programmatic advertising on average, and that 15% of advertiser spend could not be attributed. ISBA and PwC’s study called for industry collaboration to investigate this “unknown delta” further and push for standardisation across the system “to facilitate data-sharing and drive transparency”.

Reeve said the report had spurred a “huge wave of activity” in the marketing industry. “Brands are asking a lot more questions, they’re getting a lot more engaged, they want a lot more control over where their money is spent,” he said.

“I think that we’re now entering a different chapter in digital advertising where transparency is much more the flavour of the day and brands and publishers will have a much more active role in deciding what changes will come through in the future.”

Reeve said that over time he believed quality would grow to be more valued over quantity in the digital ad market – “that’s the direction of travel” he said, but added: “Nothing turns on a dime.”

As such, one of Ozone’s selling points is that its portfolio of news websites offers an audience that rivals Google and Facebook in the UK. Comscore web data for September 2020 puts its reach at 45.5m UK adults, compared to Google at 45.2m, Facebook at 44.1m and Amazon at 41.7m.

Reeve said: “Working together and collaborating to create that scale, to build that front door where it’s easy for buyers to engage in quality environments, that’s necessary for us to be successful.”

But the revenue it captures is still only 1/40 what the Duopoly turns over.

Ads bought through Ozone run across its network of news websites, so they can appear on the paywalled Telegraph and the free Daily Star, for example. This means the quality and type of content that ads appear next to – and their accessibility to readers – can vary wildly.

“Ozone is principally an audience network,” said Reeve.

“If you’re looking to reach an audience, let’s say it’s a business reader or a business user, the logic would be that you would target them on the Telegraph in the business section, for example.

“But the truth is, a lot of those readers actually do read the sports section of The Sun… and so we have access to that information to be able to say: ‘We know that you’re reaching this audience, and that’s your target audience… [but] that audience also does other stuff.”

Ozone has seen four-fold growth during Covid-19 and is expanding its service with the roll-out of Ozone Marketplace, offering programmatic trading through direct connections as an alternative to the open market, as well as greater GDPR compliance.

This is alongside its pre-existing audience offering, covering Ozone’s entire network of news websites, which is led by its sales team.

Buyers will also be able to buy digital ad campaigns with News UK and TMG through Ozone’s Advertising Centre of Excellence from January next year. TMG chief executive Nick Hugh said Ozone would “exclusively deliver” all of its digital display and video advertising.

Putting editorial before ads is ‘good for advertisers’

The Telegraph and Times titles have both pursued subscription strategies, erecting strict paywalls around their online content in an attempt to grow reader revenues and reduce reliance on advertising.

Reeve said this strategy was “key” as consumer attitudes towards advertising continue to decline.

“I think the user experience has degraded for the last few years,” he said. “I think it’s starting to turn around now, but in the chase for short-term revenue, the user experience has been compromised.

“I think that premium publishers have realised that was the wrong path, that that was a mistake.”

He said putting editorial before advertising was actually “good for advertisers”, as it meant “less ads on the page” and a “better user experience”. This, he said, is a “much better outcome for advertising that in the long-term builds value for both”.

He added: “If your measure of success is around brand engagement, brand recall, consideration, rather than impressions and clicks, then, a better user experience and a better environment will drive those measures much more successfully.

“Ozone are here to support a reader-first strategy, not to compete with it.”

Reeve said his view was that premium publishers had been “under-represented” in the world of programmatic advertising, which he said supports the “long tail web” over the likes of the Times.

Premium publishers can offer a quality environment to brands, said Reeve, adding that readers are much more engaged and attentive in quality environments, something he said was backed up by research.

“If you want to build a brand then quality environments are where you build brand. So I think that as long as that’s the marketers’ objective, which it always will be, then those environments are required,” said Reeve.