November 3, 2024

Biz Pedia Today

Easy Shopping, Happy Life

Suing your advertisers as a sales strategy

Suing your advertisers as a sales strategy

Credit: Michael Jeffrey via Unsplash

Billionaire Elon Musk, with News Corp now considering joining the pile on, is suing advertisers because they have acted in unison to stop spending money with him on his private social media platform X, formerly Twitter.

Advertisers say this is all about brand safety and whether or not advertisers can together set standards to determine which platforms are safer and which are not so savoury.

However, others say this is the operation of a cartel, whose members are part of a conspiracy trying to bring down social media platforms and publications, with a conservative bent, which promote viewpoints they don’t agree with.  

News Corp is also considering legal options in confronting what it calls the “blatant political bias of advertising industry bodies who have done serious damage and denied many advertisers access to a significant audience”. 

The Musk antitrust lawsuit is against the World Federation of Advertisers (WFA) and giant fast-moving consumer goods company Unilever, confectionery company Mars, US healthcare group CVS and Danish multinational green energy company Ørsted

They all operated within GARM (the Global Alliance for Responsible Media) which was set up in the wake of the 2019 Christchurch New Zealand Mosque shootings when the killer live streamed the attack on Facebook.

This followed high-profile cases where ads appeared next to illegal or harmful content, such as promoting terrorism or child pornography.

The lawsuit, the announcement of which saw the WFA shelve GARM, alleged a “massive advertising boycott” and echoed findings of a US House of Representatives’ Judiciary Committee investigation.

The committee accuses advertisers of attempting to influence what content appears online by starving disfavoured content, or entire platforms, of advertising dollars needed to survive. 

“GARM likely violated federal antitrust laws,” according to the committee’s report, saying the committee had found “direct evidence” that GARM was “demonetising certain viewpoints to limit consumer choice” and therefore harmed consumers.

“Colluding to suppress voices and views disfavored by the leading marketers at the world’s largest companies and advertising agencies is core to GARM’s founding principles,” the report states.

Internal emails obtained by the committee found that GARM’s leadership strategised how to use the coalition of brands against news outlets, including The Daily Wire, with opposing views from its leadership.

“GARM and its members discussed a strategy of blocking certain news outlets like Fox News, The Daily Wire, and Breitbart News,” the report states, pointing to an email from a top executive associated with the coalition stating that he “hated their ideology and bullshit”.

The committee said GroupM, one of the lead organisations in the coalition and the world’s largest media buying agency, admits in emails that The Daily Wire is “on our Global High Risk exclusion list, categorised as Conspiracy Theories.”

Christian Juhl, the now former global CEO of GroupM, made a submission to the committee last month, saying one of a marketer’s biggest fears is that years, sometimes even generations, of reputation could evaporate overnight as a consequence of bad ad placement.  

“Such scenarios can erase both brand and business value in hours,” he said.

“Companies spending many millions of dollars on their advertising do not want to risk their brand on a strategy that could backfire on their reputation and business value.

“Brands generally agree they do not want to appear next to illegal or dangerous content, such as intellectual property infringement, child exploitation, or promotion of narcotics.  

“Beyond that, many brands also seek to avoid placement of their content and advertisements near subject matter that, while not illegal, does not align with their positioning or target markets.  For example, a children’s clothing company may not want its back-to-school ad appearing on a website that features adult content.  Similarly, a classic American cereal company may not want its ad placed on a website that advocates skipping breakfast.”

The advertising industry believed that consistent standards and methodologies were needed to help brands  connect with consumers.  

Only when brands and platforms operate with a common and understandable vocabulary can they make informed decisions in line with the company’s own direction, risk tolerance, and preferences, said Juhl.

“That is why we, along with a number of other organisations, came together to establish the Global Alliance for Responsible Media, or GARM,” he said.

“GARM developed standard definitions of content that brands might consider unsuitable so that advertisers and publishers could speak a common language about how to delineate different risk levels.”

Juhl said GroupM had no interest in impinging on anyone’s right to speak or publish their points of view.

“However, free and robust speech also means that the internet contains controversial content,” he said.

“We believe companies also have the right to choose where they do and don’t place their advertisements.  It is a legitimate choice for companies to avoid placing advertisements in environments that may produce suboptimal or even negative returns on their investment.”

Historically, press was the main advertising driver. However, trust in news sites is at a low point, he said.

“Brands now generally disfavour advertising on news and politics websites,” he said.

Analysts see little good coming from the lawsuit, under what is known as the Sherman Act.

“It’s hard to imagine that fewer industry-level standards around brand safety – a likely consequence of this week’s news – will help either X or News Corp,” said Brian Wieser of media analysts Madison and Wall.  

“If anything, a more fragmented landscape for standards will probably lead to less spending with smaller publishers and more spending within the largest walled gardens because the complexity of managing these standards on a publisher-by-publisher basis renders spending on smaller ones as less operationally efficient.”

He said the scale of the argument made is seemingly implausible and reflects an illustration of incorrect market sizing.

Wieser calculates that if the 60 members of GARM allocated half of their $1 billion budgets to digital advertising, that would add up to $30 billion. And if 5% of that amount of money went to Twitter, that would be $150 million.   

“It’s hard to imagine that if all of them withheld money from X it would possibly amount to more than a few hundred million per year,” he said.

X/Twitter’s peak revenue year of 2021 reported $4.5 billion in total revenue, with $2.5 billion attributable to US billing.    

The social media platform had $114 million in total revenue in the US during the March quarter this year, according to a report in the New York Times.   

That would mean the company was on track to $500 million in total US revenue this year including non-advertising activities

“To the extent that’s correct, it’s plausible that GARM members were responsible for some of the drop in revenue, but far from all of it,” said Wieser.  

“More practically, advertisers collectively voted with their wallets to stop spending on X/Twitter whether or not they were members of GARM.

“This occurred not only because of generalised brand safety concerns but also because of practical issues around whether or not X would be capable of operating and servicing marketers’ needs, not to mention concerns around whether or not ceasing advertising (on what is practically a non-essential platform) might at some point in the future lead to a name-and-shame by X’s CTO or, as was the case … a lawsuit.”

Have something to say on this? Share your views in the comments section below. Or if you have a news story or tip-off, drop us a line at [email protected]

Sign up to the AdNews newsletter, like us on Facebook or follow us on Twitter for breaking stories and campaigns throughout the day.


link

Copyright © All rights reserved. | Newsphere by AF themes.