Federal government showering U.S. Internet giants with ad dollars. Canadian media gets clobbered

Canadian media is losing one of its steadiest advertising partners. Over the last two years, the federal government has radically shifted its digital advertising away from websites of Canadian news organizations towards services like Facebook, Twitter, and Google and it's feeding into a grim outlook for the country's journalists.

The shift comes as many Canadian media outlets are facing a crisis because of a collapse in advertising dollars that are being sucked up by the American social media giants. Google, Facebook and Twitter reap the benefits of top advertising dollars in Canada, even though they generally do not produce any journalism and largely avoid having to pay Canadian taxes.

And as the Canadian media loses money and advertisers, many newspapers, television and radio stations are struggling to pay their bills and keep their newsrooms afloat.

“The main reality is advertising is going elsewhere, both at a consumer and business level," said Bob Cox, publisher of the Winnipeg Free Press and chair of the Canadian Newspaper Association, in an interview. "A lot of those advertising dollars have migrated.”

The government spent $3.6 million, just under 24 per cent of its digital ad budget, on news website ads in the 2013-2014 fiscal year. In the following year, that number dropped to just over $2.1 million, or 15 per cent of the annual budget.

In that same period the government more than doubled its advertising spending on services like Facebook, Twitter, and Google, spending over $4.6 million, more than a third of its ad budget.

And after Prime Minister Justin Trudeau's government was sworn in last November, federal departments steered a number of their marketing campaigns away from Canadian media, choosing instead to spend more than $2.8 million over the next five months on social media advertising.

“If the government of Canada spends on ads on Facebook, they send money directly to Silicon Valley," said Steve Lowry, founder of Discovery Media House, an advertising consulting firm. "It’s almost like outsourcing, in a way."

The shift is also part of a larger trend that is moving advertising dollars away from printed products like newspapers and magazines over to the digital world online. Newspapers used to account for 47 per cent of all government ad spending about 10 years ago, but the most recent statistics show that this has now dropped to seven per cent.

Most of the newspapers and magazines have been grappling with the fact that they are making less money selling online ads, when compared to the lucrative ads they used to sell in their print editions. Now the situation is getting worse as the small digital revenues are also fading and shifting to sources outside of the country.

“It’s natural that the government would spend its money in much more places,” said Cox.

"I think that there needs to be steady advertising partners for the media to survive. Other countries have been much more aggressive... They could start by being more selective in how they spend ad money.”

But redirecting the government's ad buy won't solve the problem, Canadian Association of Journalists president Nick Taylor-Vaisey told National Observer.

"I completely understand why government departments and the people who make decisions about advertising would advertise less in traditional media or even the digital arms of traditional media and go straight to [social media]. I understand the rationale," he said.

"Whether or not they should reflect on that decision and deliberately advertise more in traditional brands or media is a much more complicated question. And it gets back to that sensitivity with which the government should approach fixing news media."

To Taylor-Vaisey, any federal strategy designed to increase ads with Canadian media brands would raise questions about whether the government was trying to influence the press.

"I think you would see a lot of journalists throw up red flags if that happened in a concerted, deliberate way," Taylor-Vaisey said. "If the government just said: 'we’re going to take action. We’re going to save you. Here’s a bunch of money.'"

Canadian Heritage Minister Mélanie Joly's office told The Canadian Press earlier this week that it recognizes journalism "plays a central role in a healthy democracy," and the Liberal government has asked the Public Policy Forum to review the situation.

Canadian Crown corporations jump on social media bandwagon

Meantime, government departments and crown corporations continue to increase their social media spending.

The Canadian Mortgage and Housing Corporation stated that it spent around $166,000 on social media and search engines last year and that it hasn’t bought ads on media websites in the last two years.

Numbers released by the National Capital Commission show that social media and search spending more than quadrupled in the last year, from around $12,000 to just under $48,000. During the same period, advertising spending in traditional media websites fell by 90 per cent, down to just over $1,800.

Numbers released by the Bank of Canada show that it increased social media advertising spending by 30 per cent a year for the last three years.

While the Canadian Broadcasting Corporation declined to reveal numbers, it told National Observer that it had increased spending in social advertising compared to other media ad buys in recent years.

National Observer also contacted other Crown corporations such as Via Rail, and the Royal Canadian Mint, but they did not release information. Others, like Canada Post and the Canadian Museum of History, did not respond.

In search of a new audience

All of this advertising is shifting with a market that is also moving over to social media. Last year, 18.5 million Canadians had active Facebook accounts, almost 60 per cent of the whole country, according to online statistics service Statista.

Lowry, the advertising consultant, said that social media advertising also allows companies to target specific audiences to gain the maximum benefits for their ad buys.

“A challenge for a news site is to deliver ads that really deliver at the level that Facebook does, because they really don’t know as much about their audience as Facebook does,” he said.

And a campaign that's designed to engage with the public is also more likely to succeed on social media, Lowry added.

Cox sees it as an attempt to reach a different demographic.

"The main thing that’s happened for consumers is that there’s huge choice in media now. People over the age of 60 are great newspaper customers. People under the age of 20 barely use newspapers. Everybody has different ways of using media,” he said.

“But if this were the aerospace industry and they were buying products from a foreign supplier, they’d make sure there was at least some Canadian components. They should be thinking about how they support Canadian media in the same way.”