Dentsu boss warns of the dangers of Meta dumping deals with news publishers
The CEO of one of the nation’s biggest advertising agencies has sent a stern warning about the impacts on the ad industry after Meta axed deals with news outlets.
The boss of one of the nation’s biggest advertising agencies has warned Meta’s decision to abandon financial deals with media outlets will result in a shrinking advertising market, restrict agencies’ placement options and increase clients’ costs.
Danny Bass, chief executive officer of media at dentsu ANZ, said the move by Meta – the owner of Facebook – to axe deals with media outlets could have significant flow-on effects on the advertising market.
“If there’s less choice and the global players – particularly in the digital space – only get bigger and stronger, then ultimately media agencies and clients could be faced with fewer options, which in turn would be higher prices,” he told The Australian.
Meta revealed its shock decision on March 1 to abandon its payment-for-content deals that are understood to be worth up to $100m per year for Australian news publishers.
The deals are set to end in the middle of this year.
Meta’s 2023 annual report showed its advertising revenue is growing, rising to $US131.9bn ($198.8bn) in the 12 months to December 31, up from $113.6bn in 2022. In 2023, 97.8 per cent of Meta’s total revenue was from advertising.
Meta owns social media platforms including Facebook, Instagram and WhatsApp and is headed up by founder, chairman and CEO Mark Zuckerberg.
In February, after the release of its annual results, the company said it “improved advertising performance for the businesses who rely on our services”.
Meta’s advertising revenue in the three months to December 2023 was $US38.7bn, up from $US31.2bn in the same quarter in the previous year, an increase of 24 per cent.
Mr Bass said denstu was supportive of robust journalism and without it there would be added cause for concern by for advertisers who had to be “extremely vigilant” about where their content appeared online.
“We really support public-interest journalism and dentsu believes it forms a really healthy role in the democracy of this country, but that comes at enormous cost,” he said.
“Vendors and media partners such as News Corp and Seven do give us a high sense of comfort knowing client ads still appear across all their sites and all papers – because they are trusted sources. We know the rigour that goes into the journalism and content creation.”
Prime Minister Anthony Albanese recently accused Meta of unconscionable conduct over its move to abandon the news deals.
“The idea that one company can profit from others’ investment – not just investment in capital but investment in people – is unfair,” he said on March 1.
“That’s not the Australian way.”
Josh Faulks, the chief executive of The Australian Association of National Advertisers, the self-regulatory body for advertisers and marketers, also noted the concerns among advertisers about where their ads appeared online, including social media sites.
“Advertisers are relentlessly vigilant about brand safety,” he said.
“It is up to each digital platform to continue to work with advertisers to ensure advertisements are placed in a safe and appropriate way for consumers and their brands.”
Jaime Nosworthy, chief executive officer of digital agency The Pistol, said while Facebook remained an important platform for advertisers, getting value for money by advertising on the platform remained critical.
“In the economy at the moment, it’s very much about where I’m getting bang for my buck,” she said. “It’s a challenging advertising ecosystem – advertising dollars are not necessarily in excess at the moment.”
Advertising across different aspects of social media feeds also remains important, according to media agency Half Dome’s digital partner, Euan Macdonald.
“We are looking at things like Instagram reels, Instagram feeds, Facebook feeds, that’s the majority of the inventory that we buy,” he said.
“We’re having to pivot so our ads look like more organic content on reels.”
News Corp is publisher of The Australian.
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