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The Federalist's Missed Google Opportunity

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The Federalist's Missed Google Opportunity

July 27, 2020

Last month, NBC News and the U.K.-based Center for Countering Digital Hate alleged that Google had formally decided to demonetize the conservative digital publication The Federalist over controversial articles about Black Lives Matter. It quickly emerged that NBC's initial reporting was inaccurate, with Google subsequently announcing it had not yet prevented The Federalist from using its third-party advertising product. Eventually, The Federalist discovered that Google believed the site's unmoderated comments section violated its advertising policies. In response, The Federalist removed the offending section, though comments are set to eventually return.

Given our increasingly short and vitriolic culture war fueled news-cycle, it would be easy to dismiss the case of The Federalist vs. Google vs. NBC News as just another illustration of the increasing tensions between Big Tech and the conservative movement. In the words of Ben Domenech and Sean Davis, co-founders of The Federalist, the incident "should serve as a warming about the unchecked power of big tech companies, particularly when they can be manipulated by partisans." By all appearances, NBC's inaccurate reporting and Google's unclear and seemingly arbitrary enforcement of its rules represent everything conservatives bemoan about the power of the tech industry. Yet, reducing the kerfuffle to the standard story of tech and media bias would be a mistake. In retrospect, the lack of follow-up from The Federalist (beyond removing their comments section) represents an enormous missed opportunity. As publishers big and small limp from pivots to videos to pivots to subscriptions and newsletters, not to mention the end of formerly lucrative live events and advertising declines related to COVID-19, any publisher or entrepreneur focused on the media space, must learn from the The Federalist's example, regardless of their ideological background.

Before delving into the broader lessons from The Federalist's experience with Google, it is important to delve into the mechanics of the third-party advertising business. Putting aside accusations of bad faith and bias, it is completely reasonable in the abstract for Google to refuse to serve advertisements to websites that do not meet its criteria. For example, no company, brand, or small business would advertise with Google if there was a chance that their content could appear on the White-Nationalist website Stormfront. Unlike traditional TV, newspaper, or radio advertising, advertising clients never know exactly where and when each ad will appear before its placed. The advantage of this programmatic advertising is that it enables Google to efficiently place third-party advertising alongside the billions and billions of searches it facilitates or on the millions of websites that use its AdSense product. Compare Google's process to the complicated (and expensive) process of placing and approving an advertisement in a magazine or newspaper.

Given the lack of pre-placement, Google (and other advertising networks) maintain the trust of advertisers by setting and enforcing rules for which sites are eligible to use its products. For example, during the COVID-19 pandemic, brands, advertising networks, and publishers demonetized sections of websites dealing with grim news such as the daily death count. Ford reasonably does not want its positive spring-summer advertisements next to news about nursing home death-spikes. One needs to delineate the critique of bias at Google and inaccurate reporting at NBC News from the idea that third-party advertising networks are required to serve anything or anyone. Oftentimes, demonetization is not driven by conspiracies or bias, but rather by the nature of the digital business model.

The central lesson from The Federalist's experience is that publishers need to diversify their revenue sources, not over-relying on any advertising, search, or social media platform. From this perspective, the issue at hand is not necessarily Google's power, but rather a publisher's decision to rely on an advertising platform whose rules allow for demonetization. The Federalist has podcasts, a Shopify store, and a variety of paid subscription newsletters. An events business is obviously out of the question for now, but it needs to further develop direct-revenue sources that are not controlled by third-party platforms whose whims can shift with the news cycle. To protect its long-term financial viability, The Federalist should expand its paid-subscription content and delve into the membership support model pioneered by NPR and recently implemented by Vox and BuzzFeed.

One of the unfortunate effects of the culture wars subsuming tech and media is that they obscure commonalities of experiences and lessons that have nothing to do with partisanship. Left-leaning publishers like BuzzFeed, Elite Daily, Mic, and Vice (among countless others) learned that building their business on the back of the Facebook algorithm or their ability to consistently divine the Google search algorithm was a terrible strategy. Those that survived either by pivoting or a hasty, firesale acquisition, learned to not tie their fate to a single platform outside their control. There is plenty to criticize in Big Tech platform's conduct towards digital and legacy publishers over the past few years, but ideological bias clearly did not drive the business model changes described above.

There are no silver bullets for publishers. Section 230 reform has little to nothing to do with third-party advertising policies. Native advertising is often difficult to scale, especially during an economic recession. Instead, publishers, conservative or otherwise, should focus their attention on what they can control: their relationship with the audience and community that they serve. Monetizing that direct relationship is key to avoiding the trap of relying on powerful platforms with black-box algorithms outside of scrutiny.

With the election less than four months away and the COVID-19 pandemic's unabated spread, expect more demonetization, both legitimate and illegitimate. The next time one occurs, the publication in question must be ready with a membership drive. Who knows, maybe "Google Doesn't Fund The Federalist" could have been the shirt of the summer?

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