Google overtakes Swiss media in advertising revenue in 2018

In 2018, Google and Facebook are expected to siphon off more advertising money in Switzerland than the established Swiss media combined for the first time. The industry now finally wants to act.

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The debate is urgently needed, was announced in February to the time after the No Billag initiative (Werbewoche.ch reported), was postponed and is now finally to take place: The Swiss advertising market players SRG, Ringier, Tamedia, Admeira, Goldbach, Swisscom and the Swiss Media Association want to sit down at the round table and, under the leadership of KS/CS Kommunikation Schweiz, discuss what to do about the ever-increasing outflow of advertising money to the IT giants from abroad.

While the Swiss players are sometimes at loggerheads, worrying about the succession of Publicitas or having to defend themselves against the threatened abolition of the public service, Facebook and above all Google are cashing in ever more strongly. In 2018, the two US giants will, according to the Switzerland at the weekend in Switzerland will break the 2 billion barrier for the first time and thus overtake the advertising revenues of the entire Swiss media landscape in the print, television and radio (excluding online) sectors.

Advertising revenues from Google and Facebook are growing rapidly

While the established media players are struggling with constant, structurally-related declines in advertising revenues, the competition from overseas is on the rise: industry insiders estimate that Google and Facebook will grow by 50 percent in 2018. The Swiss revenues of the two groups are already half a billion francs higher than forecasts suggested in January.

It seems that Google in particular has become an overpowering opponent - within a very short time. Media Focus, for example, attributed a turnover of "only" CHF 450 million to the group in 2016. In 2018, according to expert estimates, it could already be CHF 2.1 billion (!). If the Swiss media slip as much as they did last year - and thus below the 2 billion mark - Google alone is likely to generate more advertising revenue than the rest.

Neither Google nor Facebook communicate local data. Certain figures are based on the estimates of well-informed industry insiders.

Google & Co. should pay contribution to the media

Since Google and Facebook make part of their revenue from external journalistic content, there have long been calls for the tech companies to return part of their advertising revenue to the media. SP National Councillor Matthias Aebischer, for example, has called for Google and Facebook to "make a financial contribution to Switzerland's democratic media system". He also objects to the fact that TV broadcasters are obliged to donate part of their revenue to Swiss film, while providers such as Netflix are not subject to any rules and allow all their revenue to flow abroad. Swiss laws should also apply on the internet, says Aebischer, who is also president of the film umbrella organisation Cinésuisse.

Build alliances as competition

For Edi Estermann, Head of SRG Media Services, there is only one way to stand up to Google & Co: Alliances like Admeira, "in order to be able to stand up to them with a certain size". The marketing joint venture was launched by SRG, Swisscom and Ringier with the aim, among others, of developing a powerful competitor to Facebook and Google. Since then, the role of SRG has been the subject of debate, particularly within the industry. In the meantime, SRG is planning to sell its Admeira shares (Werbewoche.ch reported). Admeira critic Tamedia, in turn, wants to build its own competition to Google, Facebook - and Admeira - by taking over advertising marketers.

Common platform as a possible solution

The extent to which agreement will be reached at the round table chaired by KS President Filippo Lombardi remains open. There is talk of a joint platform, for example, which would be developed with subsidies and made available to Swiss media providers for marketing. According to Lombardi, this is only one of several approaches.

"New national platforms for marketing and advertising" are the right approach, agrees Bakom director Philipp Metzger in an interview with the Switzerland at the weekend. These must have a critical size in order to keep up in the international context - cooperation is therefore important.

When two people fight...

As long as the Swiss media don't get their act together and forge a powerful, functioning alliance against the outflow of advertising money, Google and Facebook will continue to laugh up their sleeves and enjoy the billions in rising revenues. Presumably undisturbed by the Competition Commission, which otherwise meticulously examines every merger in the media sector. Competition policy sometimes reaches its limits, says Bakom boss Metzger. It shows how difficult it can be to effectively bring giants into the law or even split them up. "Market developments are often faster than attempts at regulation. Sometimes giants are no longer giants before they can be regulated. Because they struggle to compete with new products from competitors." (hae)

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