ePrivacy: A loss of more than 30 percent in digital advertising sales for journalistic media
The EU’s planned ePrivacy Regulation will have negative consequences for journalistic media in Germany and will further distort competition with big platform operators. This is the finding of a first survey on impacts which VDZ used to measure the relevance of the ePrivacy Regulation for business. The majority of the managers of publishers and marketers surveyed expect journalistic media to suffer losses of more than 30 percent in digital advertising sales.
VDZ President Dr. Rudolf Thiemann calls on the German government to oppose the planned ePrivacy Regulation and not to bow to one-sided data protection and the needs of Internet giants. “For publishers, this could mean huge losses. The proposed ePrivacy Regulation will largely remove the basis for their business models, especially for open publishing offerings on the Internet,” explains Dr. Thiemann.
The experts believe that the consequences of the ePrivacy Regulation will especially pose a threat to small and medium-sized websites as well as niche offerings, since these websites will no longer be able to finance themselves and cover their costs while providing the same level of journalistic quality. In the medium term, this will lead to a loss in information diversity.
Ultimately, those who use online journalistic offerings will have to accept a poorer quality user experience as the price for improved protection of their personal data under the ePrivacy Regulation. Readers will be offered less relevant content because editors and newsrooms will receive hardly any data to analyse, so that content can no longer be made available on the basis of key figures. What’s more, users will be confronted with advertising that is not tailored to their interests as well as with new access restrictions for quality content due to closed systems. More than two thirds of the managers surveyed by VDZ believe that in future the media will only offer its content behind a login. This would put an end to the recent upward trend in paid content and make it extremely difficult to implement paid content.
The experts expect the economic loss for total digital advertising sales by all websites (including non-journalistic websites, but without Google and Facebook) to be in excess of €300 million each year*. But they also believe the other digital revenue sources, such as direct-customer and agency business, along with transaction-based revenue in e-commerce, will decline significantly.
On the other hand, however, due to their high user numbers, platform giants like Facebook, Amazon and Google will benefit unduly from the ePrivacy Regulation unless EU policymakers take significant changes into account. All of the managers surveyed see Facebook as the winner under the new Regulation. This platform’s dominance on the advertising market and its gatekeeper function for content and downstream services will be strengthened even further.
* Basis: VDZ Steering Committee – Digital media sales forecast for 2017 of around €1 billion for display advertising in Germany without Google and Facebook