DHAKA: Like any other country in the world, digital advertising is the primary source of revenue for online news publishers (including those which are running both print and online version) in Bangladesh. Although advertisers still largely depend on conventional media (newspaper and television) for advertising, their products, with the growth of the digital market in Bangladesh, different brands and advertising agencies, have enhanced their presence through increased spending on digital advertising. While making direct advertising in local online platforms, both the advertiser and the publisher are complying with the country’s laws and policies. By the end of each fiscal year, both online publishers and advertisers take account of their profit and loss account and pay applicable taxes to the government. Interestingly, when the same advertiser is advertising through Facebook Audience Network (FAN) or Google Display Network’s (GDN) programmatic advertising platforms, it is making direct payment to these internet giants through an international payment gateway (credit card). Google then places ads in its search and display networks while Facebook displays these ads through FAN and a bunch of other apps. An online publisher being a part of GDN or FAN, gets a portion of money an advertiser is paying to these internet giants.
From the technological point of view, this sounds like a very efficient and hassle-free advertising system. The advertisers too, find it comfortable to go for such programmatic advertising as it costs much less compared to conventional advertising. But when it comes to financial transparency and compliance with the country’s laws, policies and culture, we get a very blurry picture. These internet giants are doing business in Bangladesh without maintaining any registered office and operating without any kind of accountability. They are enjoying huge sums of digital revenue without paying any taxes to local regulators.
As Google and Facebook do not disclose the revenues earned from Bangladesh, an online publisher remains in the dark about the advertising deals between an advertiser and them. The publisher never knows the percentage of the revenue it is getting from the deal. Nobody except these internet giants know the volume of financial transactions that are taking place every day.
In a bid to make the publishing platforms dependant on them as well as make them non-competitive, both Google and Facebook are pricing at a much lower rate. As a result of this unfair and unhealthy business practice, local publishers are increasingly becoming vulnerable and fighting for survival. Having no office in Bangladesh, Google and Facebook have so far been able to stay beyond the jurisdiction of local laws. They have also created a monopoly in digital advertising.
According to a research study by Visual Capitalist, digital advertising will surpass television advertising (Chart: The Slow Death of Traditional Media, Jeff Desjardins, October 7, 2016) and will become the largest ad market in existence.
The growth may open up a bright future for online publishers. But taking into account the present scenario, the dominance of Google and Facebook, the online publishers will have no choice but to make an unconditional surrender. At present these two companies control 57.06 percent (The Dominance of Google and Facebook in One Chart, Jeff Desjardins, December 9, 2016) of the digital ad market and their slices of the pie are only growing. A rough estimate shows that more than half of each dollar (USD 0.60) that an advertiser spent on digital advertising goes to Google and Facebook. Facebook ran faster than all in terms of digital ad growth—in the first quarter of 2016 the social media company witnessed 57 percent growth to USD 5.2 billion from USD 3.3 billion (Facebook Revenue Soars on Ad Growth, Washington Post, April 28, 2016). The growth slowed down a little in the second quarter of 2017 to more than 50 percent but total revenue rose 44.8 percent to USD 9.32 billion in the second quarter of the same year (Facebook shares hit record high as mobile ad sales soar, Reuters, July 27, 2017). Facebook has more than two billion active users. It has been squeezing more ads into its News Feed. This lopsided growth and the digital monetisation strategy of internet giants are two big threats to the media stalwarts around the world including Bangladesh.