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  5. Minister orders probe into digital advertising markets

UK Culture and media minister Jeremy Wright has triggered an inquiry into the digital advertising markets in an immediate response to the recommendations of the Cairncross Review.

In a Commons statement today (February 12), he said: “Online advertising now represents a growing part of the economy and forms an important revenue stream for many publishers. But this burgeoning market is largely opaque and extremely complex, and therefore it is at present impossible to know whether the revenue shares received by news publishers are fair.

“The Review proposes that the Competition and Markets Authority conducts a market study into the digital advertising market. The purpose of this study would be to examine whether the online marketplace is operating effectively, and whether it enables or prevents fair competition.”

In welcoming the study, SNS director John McLellan said: “The Cairncross review shed valuable light into the darkness of digital advertising  but it must now be subjected to the full glare of public scrutiny so that advertisers and customers know exactly what they are getting and who is being paid for what. The news industry has spent a considerable amount of time, effort and money to be able to demonstrate its effectiveness and deliver measurable  returns for investment, but that’s not necessarily the the case for advertising on social media which is sucking up so much of the revenue.”

The minister has also asked communications regulator Ofcom to look into Dame Frances’ concern about the effect on commercial news publishers of the expansion of the BBC’s written online content. He said: “The Review also questions whether the BBC is straying too far into the provision of ‘softer’ news content, traditionally the preserve of commercial publishers, and suggests this might benefit from the scrutiny of Ofcom.”

Other developments include a pledge to discus removing VAT from online subscriptions with the UK Treasury, and a request that the Charity Commission look into charitable status for some news publishers.

John McLellan added; “We recognise that many of the ideas in the Review will take time to deliver and the Minister’s swift response is very encouraging because the pace at which advertising revenues are migrating to social media channels means there is no time to lose.”

The full ministerial statement can be found here.