News Corp builds online ad network
NEW YORK (Reuters) - News Corp's (NWSa.N: Quote, Profile, Research) Internet division plans to launch an online network to sell advertising across Rupert Murdoch's sprawling empire and even to other media companies as early as the first half of next year.
Context & Ripple Effects
News Corp has spent the second half of 2007 assembling the pieces this ad network ties together: the completed Dow Jones acquisition, with Murdoch publicly making the case for a free WSJ online, and the Hulu video joint venture with NBC launched in October. A free or freemium Wall Street Journal and an ad-supported video portal both live or die on ad sales at scale — which is exactly what a cross-property network is built to provide.
The move also lands amid open friction with Google: News Corp president Peter Chernin criticized the company in October over pirated video on YouTube. Building first-party ad infrastructure is the structural answer to that dependence — sell your own inventory instead of routing it through the platform you are fighting.
First-order effects
- Fox Interactive Media's properties, MySpace chief among them, shift toward unified first-party ad sales, and opening the network to outside media companies puts News Corp in direct competition with the third-party ad intermediaries its sites currently sell through.
- The just-launched Hulu joint venture with NBC gains a monetization channel that does not run through Google, whose YouTube practices Chernin had publicly attacked weeks earlier.
Second-order effects
- The network supplies the revenue engine for Murdoch's push to take WSJ.com free — still an unsettled internal debate after the Dow Jones purchase — since dropping the subscription wall only works if audience-scale advertising replaces the fees.
- Media companies that join the network gain reach but cede some control over pricing and data, forcing rival publishers to choose between joining a Murdoch-led coalition and building or buying their own ad stacks.
Third-order effects
- If the pattern holds, the industry polarizes into platforms that own advertiser demand and publisher coalitions that own content supply, with Hulu-plus-ad-network emerging as the template for media alliances trying to keep monetization in-house.
- Publisher-owned ad infrastructure becomes a bargaining chip in negotiations with search platforms, shifting leverage toward whoever aggregates scarce premium video and news inventory.
The trend: Large media companies are answering platform dominance by building their own advertising infrastructure, converting audience scale into directly sold inventory instead of renting distribution from search giants.