This time hits different... Ad-pocalpyse 2020 is hitting every ad-reliant business, from Big Tech to Instagram influencers. Stores, restaurants, and travel are shut and over 22M are newly unemployed = people are spending way less. When companies know you're not spending, they're not going to waste their precious marketing dollars trying to sell you a lobster dinner or the new Spring lip gloss with an ad.
- Less ad spending means less money coming in for ad-reliant media companies like news agencies.
- 2020 is a year of big, national news. That's partly why big, national newspapers are more protected than small, local papers.
- Local news has been hit much harder — now that many local businesses are closed, the small newsrooms which run on ads for these businesses are getting $0.
Hitting the breaking point... The situation has gotten so bad that 240 Congress members drafted a letter to President Trump urging the White House to save local newsrooms. Some of their requests:
- Prioritization of local outlets: Federal agencies spend around $1B/year on advertising — Congress wants these ad dollars to go to local news outlets, first and foremost.
- Additional relief for local papers which were already struggling pre-corona, but are now near collapse. The $2T package passed last month partly covers local newsrooms, but some are saying it won't be enough to save them.
This could be a re-defining moment for the news biz... Between the ad dominance of Google and Facebook and the prevalence of "free news," we see two options to save local news destruction:
- A) Government subsidies: NPR gets some in the US, BBC gets them in the UK, and some in Congress are proposing that local news get some too.
- B) Big Tech: Australia is now forcing Google and Facebook to pay news agencies when their posts create ad revenue for them. Since 45% of Americans get their news from Facebook, Big Tech sharing ad profits with news outlets could be a game-changer.