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May 16, 2023

Google traffic worth less than £75m per year to UK publishers says NMA

Publishers and platforms disagree over how much they each benefit from each other.

By Charlotte Tobitt

UK publishers have accused Google of exaggerating how much revenue is generated for them from the platform.

The News Media Association has published a new report by Professor Annabelle Gawer, director of the Surrey Centre of Digital Economy at the University of Surrey, estimating Google returns less than £75m in revenue to publishers per year in terms of the traffic it provides (out of estimated Google UK ad revenue of more than £10bn).

She cited a Deloitte report published by Google in 2019 that estimated the total value of all web traffic to UK publishers in 2018 was £500m and the total value of all referral traffic was £370m.

But she claimed Google’s use of that study to “represent its contribution to news organisations is misleading and provides an exaggerated estimate”.

However, it should be noted that Google and Facebook owner Meta have previously dismissed such claims including that they earn £1bn a year by publishing UK news content, saying they provide more value to publishers than vice versa.

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Ronan Harris, Google vice president and MD in the UK and Ireland, wrote last year: “When people use Google Search to look for information about what’s happening in the world around them, they want links to reliable news sources. Likewise, publishers want to reach and inform more readers, helping everyone make sense of events. This has real benefits for publishers. In fact, the overall value of web traffic is estimated to be worth more than £500 million a year to news publishers in the UK,” linking to the Deloitte study.

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Google accused of being ‘disingenuous’ in estimates

Gawer argued it was “disingenuous to assert that the Deloitte study provides a way to estimate the value created by Google (or other platforms) for news publishers” because it did not estimate the potential change to news traffic if the search engine no longer referred users to any news sites, meaning it failed to examine how much referral traffic was because of Google versus how much would come by another route anyway.

Calculating her own estimate, she said news publisher revenues in the UK have declined by a fifth between 2018 and 2022 and therefore reduced the web traffic revenue estimate from £500m to £400m.

She then found that the revenue associated with publisher traffic from Google in 2022 could not “be more than £140m”, 35% of that £400m, after finding that traffic generated by Google conservatively accounts for 35% of UK news publishers’ total web traffic by visits. That would be “much less”, she said, if measured by page views.

“If Google ceased to display news and generate traffic to news publishers’ sites, at least some, and likely many, users would find other ways to reach news websites; thus the traffic lost by publishers would most likely be lower than Google’s current share of traffic,” Gawer wrote. “Further, readers arriving from search may spend less time and generate less revenue for the news publisher, compared to readers who go to the publisher’s site directly.”

She then added that the Deloitte study treats direct and indirect web traffic as equally valuable for publishers, whereas direct users tend to generate more revenue because they stay for longer and read more articles.

Giving a direct visit a relative value that is three times higher than a referral visit, and estimating Google’s share of referral traffic as 35% of total traffic and 61% of referral traffic, Gawer resulted in an estimate for the maximum value of Google traffic in the UK in 2022 of £75m.

However she said “Google’s contribution to joint value is likely much smaller than even £75m in 2022” due to the fact she could not quantify the substitution effect regarding how many users would find another way to publishers’ websites in the absence of Google.

The share of advertising spent with news publishers has collapsed since 2007, when the UK newspaper and magazine industry for £7bn a year in UK ad spend (or 40%).

Last year all UK local, national and magazine news brands combined made £2bn from advertising compared with more than £10bn going to just one tech platform: Google.

NMA chief executive Owen Meredith said: “Professor Gawer’s paper reminds us again of why the need for digital regulation in the UK is so urgent. For years, publishers have had to operate in completely unjust circumstances in which they are forced to accept unfair and unequal payment terms from the tech platforms. It is time for this to end.

“With the publication of the Digital Markets, Competition and Consumers Bill, we have an opportunity to correct the scales and deliver fair reward for news publishers, paving the way for a truly sustainable future for high quality journalism.”

Google and Facebook will disagree with Gawer and the NMA’s conclusions, however. In response to the NMA’s previous claim of £1bn in revenue for the platforms deriving from news content, Google has previously argued the research wrongly suggests news content accounts for half of its ads while news-related queries in fact accounted for under 2% of total queries on Google Search in the UK in 2020.

Google has also pointed to news companies’ use of its Ad Manager, which they claim on average allows the publishers to keep more than 95% of the resulting digital advertising revenue, resulting in payouts of £245m to the UK’s top five news publishers between 2018 and 2020.

Meanwhile a recent report by the Institute of Economic Affairs, which has said the UK’s Digital Markets Unit which looks set to force publishers and platforms to negotiate “risks stifling investment and innovation“, said publishers “appear to derive significant value from free traffic to their websites” and that the “benefits they receive may well be greater than any reasonable valuation of the news snippets they provide to those platforms”.

The IEA report said the £1bn claim “greatly overstate[s] the importance of news to digital platforms” by wrongly extrapolating an Ofcom finding that Brits spend 6% of their time online on news to say they spend 6% of their time on Facebook with news content. It also pointed out that many news-related search engine and social posts are not advertised against, and therefore do not bring in revenue.

Meta has previously claimed it sent 180 billion global clicks, worth an estimated $9bn (£7.4bn), to publishers in its News Page Index in 2020. The IEA’s academic and research director James Forder said in a separate report “there seems to be no convincing case that platforms benefit disproportionately” from their relationship with publishers.

A Google spokesperson said this week: “Both publishers and readers gain real value from the presence of links to news sources on Google Search. Google is proud to be one of the world’s largest financial supporters of journalism, including paying for news content from 285 UK news outlets through Google News Showcase.

“The Google News Initiative has also supported projects which help drive readers directly to publishers’ sites, recognising, as this research does, that it can be the most valuable traffic for publishers. We will continue to work with the government, publishers, journalists and readers to continue to support the news ecosystem.”

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