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May 16, 2024updated 17 May 2024 11:27am

Hard paywalls are ‘dangerous’ says Mail CEO Rich Caccappolo

Revenue up for Mail Online in first half, but potholes lie ahead says CEO.

By Dominic Ponsford

Chief executive of DMG Media Rich Caccappolo has warned that hard paywalls are dangerous for democracy as Mail Online continues to roll out its premium content model.

He also revealed that DMG Media has achieved digital revenue growth in the first half of its financial year for Mail Online and increased profit despite a challenging online advertising market.

And he explained why publishers need to work together to put in place the foundations for a generation of profitable journalism as Google phases out personalisation cookies on the Chrome browser.

Privately-owned DMG Media is the largest national news publisher in the UK with a daily print newspaper circulation of around 1.8 million copies (via Metro, the Mail and the i). According to Similarweb data, Mail Online is the fourth biggest commercial news website in the world – attracting 376 million visits per month.

DMG Media revenue up in first half of year

Speaking to Press Gazette at the Beeler.tech Navigator conference in New York, Caccappolo, who splits his time between the Daily Mail offices in New York and London, said DMG Media digital revenue was up in the first six months of its financial year from October 2023 onwards. (Listen to the full conversation on the latest edition of the Press Gazette podcast here).

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He said: “We are on a good path for the second half, we have a good team and we’ve been operating well…

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“We still have a really vibrant print business that throws off some profit and that allows us to invest in the digital initiatives. We’re really fortunate online to have a huge percentage of our traffic coming direct.”

Over the past year the Daily Mail has become the biggest UK publisher on Tiktok, with 8.7 million followers for its main account and nearly 13 million in total.

He said the Mail’s work on social media platforms like Tiktok and Snapchat is reflected in focus group research with younger people.

“They tell us ‘I don’t read your paper, I don’t go to your app but I go to your edition on Snap every day and I love what you do on Tiktok’ and we have to realise that we have to embrace that, we have to figure out how to do well on other platforms other than our own in the way that works on those platforms.”

Hard paywalls ‘create two-tiered group’

Asked about the future viability of journalism on the open web, as opposed to behind paywalls, Caccappolo said: “I think hard paywalls are difficult and they are dangerous.

We’ve launched a subscription product called Mail+, it’s a reader revenue premium product in the UK but it’s not a hard paywall, it’s ten to 15 articles out of the 1,000 to 1,500 we do a day that people who want more from the Mail can subscribe to.

“We’re trying to thread the needle to keep the massive scale but also get some reader revenue.

“The challenge with hard paywalls is you create this two-tiered group. You’ve got one group that’s better informed and perhaps more tied to facts and you have this other group that’s reading murky or less reliable information.

“An informed public is the foundation of democracy and if you put a paywall in front of that you run the risk of not having an informed population.

“All of us – publishers advertisers, agencies, regulators, Google etc – need to realise that is at risk and that a lot of publishers are going to be challenged unless things change a bit.”

Attribution of online advertising major threat for publisher

Caccappolo said one major challenge for publishers in the online world is over attribution and being able to prove return on investment to advertisers.

“None of us have ever been big enough to sort of push for attribution, a pixel on a thank you page…

“Advertisers buy Facebook, they put in their dollar and they believe because of the attribution model they’re making $1.20 or whatever, they buy Google for 57 cents and they make 72 cents.

“There’s some sense of a return on ad spend that we don’t have and we’ve allowed that to make our inventory less valuable than I think it is.

“We don’t get credit for the impact we have. I understand our place in the funnel is tough, we’re not necessarily awareness, we’re not necessarily conversion, we’re more in that middle consideration range. People come to our site, they know they want to buy vitamins, they see an ad for vitamins and they go to Amazon and they buy.

“It’s tough to credit us but we have to use this opportunity of cookie deprecation as not just a chance to fight back for what we have today, which is not a great spot – commoditised cheap reach. We need to fight for a better representation of the value of getting in front of our readers.”

Fighting Google in the courts

The Daily Mail brought an anti-monopoly lawsuit against Google owner Alphabet in the US in 2021 alleging that its monopoly over search and the tools used to buy and sell online advertising space across the internet had rigged the market in its favour.

Last year marketers spent around £14bn with Google on search advertising alone in the UK versus around £2bn with every newspaper and magazine publisher in print and online combined.

A case putting US state attorney generals against Google will go to court in Virginia in September and is one of a number of class action and private cases alleging that Alphabet has unfairly exploited a monopoly position.

Meanwhile the UK Competition and Markets Authority is considering lodging a similar case against Google while scrutinising its plan to replace publisher cookies on Chrome with its own Privacy Sandbox system. CMA concerns have already forced Google to push the planned end of cookies on Chrome from this year to 2025.

Caccappolo hinted that the legal challenges could make it hard for the CMA to allow Privacy Sandbox to be rolled out.

“I think what’s really interesting about all this is that the CMA is in sort of an interesting spot if they choose to go forward with a case or these cases play out,” he said.

“That question about whether or not Google has done some things that manipulate the markets. How can they say that they want to file the case and at the same time approve Privacy Sandbox, which in many ways gives more control to Google, it seems a tough circle to square.”

He added: “If Google is found guilty of some of those things then we’ll all try to claim damages and there will be some changes, whether are behavioural changes or structural changes.”

New advertising tech, video and e-commerce driving DMG Media revenue growth

Asked what’s driving revenue growth at DMG Media, Caccappolo said online advertising yields were up partly driven by new ways of targeting readers based on anonymous data signals.

He said contextual advertising (serving ads based on the content being read) was also being looked at by DMG Media, but he cast doubt on whether this technology would work well for newsier content. US consumer media giant Dotdash Meredith has reported digital advertising up 13% year on year in the first quarter of 2024 driven partly by its own contextual advertising solution.

He said: “I don’t think it works well for news sites. It’s hard right now to run any contextual ads on stories about Ukraine. It’s hard to monetise news through contextual.

“That said, I think contextual signalling is an important aspect among others of defining audience segments and I think that’s what we need to be looking at. We sell access to the audience.”

Video has been a source of incremental revenue growth, Caccappolo said. The Daily Mail has 3.6 million followers on Youtube and is also rapidly expanding its audio output.

Caccapolo said more ad revenue will move to Youtube in the post-cookies world. In the first quarter of 2024 Youtube ad sales rose 21% year on year to $8.1bn and publishers take around a 55% share of programmatically sold ad revenue on the platform.

He said e-commerce is currently DMG Media’s best-performing revenue area and its direct ad sales operation has also been performing well.

“Things are working right now, there are a lot of challenges coming up in the second half and there are a lot of potholes, but we’ve always found ways to manage through that and I’m very confident that our team will do that.”

Advice for publishers on surviving the big cookies switch-off

On the issue of Google phasing out cookies, Caccappolo urged publishers to test Privacy Sandbox and not make the same mistakes of 2018 when the European Union’s new GDPR regime came in, forcing publishers to obtain reader consent for using their data.

“GDPR was a mess and some people really played it badly and they were very hurt by it. We want to avoid that this time and I think that’s just by communicating and working together on things that we can do to make Privacy Sandbox as viable as it can be.

“I read the Google announcement that they weren’t just delaying it, they were also open to addressing some of the concerns that many people have raised.

“So I think we need to work with Google  and with the buyers and the agencies on figuring out how we give them the clean signals they are going to want to do buying.”

He added: “Let’s not just be content with fighting to keep the spot we’re in right now which is commoditised cheap reach. I think if we can get some of the past sins rectified we could be in a better place for the next generation.

“It’s going to be a tough year and I’m not sure everyone will make it through but I think if you can get to the other side I do see a world which could be better for publishers and advertisers and hopefully readers as well.”

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Select and enter your email address Weekly insight into the big strategic issues affecting the future of the news industry. Essential reading for media leaders every Thursday. Your morning brew of news about the world of news from Press Gazette and elsewhere in the media. Sent at around 10am UK time. Our weekly does of strategic insight about the future of news media aimed at US readers. A fortnightly update from the front-line of news and advertising. Aimed at marketers and those involved in the advertising industry.
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