Google overtakes Swiss media in advertising revenues in 2018

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

While the Swiss players are at loggerheads in some cases, worrying about the successor to Publicitas or having to defend themselves against the impending abolition of the public service, Facebook and Google in particular are increasingly cashing in. In 2018, the two US giants are expected to Switzerland at the weekend in Switzerland broke the 2 billion barrier for the first time, overtaking 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, structural declines in advertising revenue, the competition from overseas is growing: industry insiders estimate that Google and Facebook will grow by 50% in 2018. The Swiss revenues of the two companies are already half a billion Swiss francs higher than forecasts in January suggested.

It seems that Google in particular has become an overpowering opponent - within a very short space of time. In 2016, Media Focus attributed a turnover of "only" 450 million Swiss francs to the Group. According to expert estimates, this could rise to 2.1 billion (!) francs in 2018. If the Swiss media decline at the same rate as last year - and thus fall below the CHF 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 a contribution to the media

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

Building alliances as competition

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

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 to be seen. There is talk of a joint platform, for example, which would be developed with funding and made available to Swiss media providers for marketing purposes. According to Lombardi, this is just one of several approaches.

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

When two people argue...

As long as the Swiss media do not 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 rising billions in revenue. Presumably undisturbed by the Competition Commission, which otherwise meticulously scrutinizes 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 under the law or even split them up. "Market developments are often faster than attempts at regulation. Giants are sometimes no longer giants before they can be regulated. Because they struggle to compete with new products from competitors." (hae)