There may be trouble ahead
LAST year was another turbulent year in digital publishing. It was a year when fake news was big news and social echo chambers reverberated louder than ever before. The term “pivot to video” became less of a strategy and more of a bad joke. The monumental scale of digital ad fraud became clear. And Google and Facebook hoovered up more and more digital ad revenue, leaving everyone else to squabble over an ever-decreasing share.
So where does it leave us, and what will 2018 bring?
Well, it leaves successful digital news creation and distribution in a perilous position. Quality journalism — like everything else — is increasingly consumed on smartphones, which offer less room and less time for a brand to connect with audiences. As a result, the more effective an ad is, the more disruptive the ad format — pop ups, overlays, preroll video and so on.
No surprise then that many legacy media outlets are turning to paywalls. But this strategy may not be suitable for all. Chris Duncan, managing director of Times Newspapers Ltd, recently said a paywall-based business model was only viable for a small number of international news brands — no more than 10, he believed. Everyone else, Duncan said, will be forced to rely on advertising, and will struggle achieve the scale required to fund a newsroom.
And this tale of woe isn’t unique to legacy media outlets. Previously cocky digital upstarts are beginning to feel the pinch too. Vice Media and BuzzFeed are reported to have missed their most recent revenue targets. Ziff Davis bought Mashable for $50m — that’s a fifth of its former valuation — ouch! And Univision is trying to flog a minority stake in the Gawker Media sites — now known as Fusion Media Group.
So in a landscape where there’s not enough money to go round, where old and new media outlets alike are struggling, where revenues are down and titles changing hands, can we be optimistic at all about what 2018 brings? I think we can. But it will take two things that often seem in short supply from publishers and advertisers: improved collaboration and a commitment to quality over quantity.
The good news is that collaboration seems to be happening. In December the German media giant Axel Springer announced it would be joining the News Media Alliance, a US trade group for the print and digital news industry. This is a sign that publishers are coming together to combat the monumental scale of Facebook and Google — and traditional boundaries of languages and geography are being broken down. There are also a host of advertising alliances like the Pangaea Alliance; Skyline in France, and Concert, a private marketplace for ads on Condé Nast, Vox Media and NBCUniversal sites.
When it comes to content, a commitment to quality means ongoing investment in unique content. Economic pressures may drive some publishers to reduce content costs. But I suspect this approach will only lead to the further commoditisation of content. In the long term, owning unique content that audiences want and advertisers want to appear alongside is a no-brainer. But publishers don’t have to create it, they could also license it. Take sports. The PwC Sports Outlook gives an overview of the sports market in North America through to 2021. It predicts that media rights will soon surpass gate revenues for the first time. Revenue from media rights will rise 5.6pc to $20bn in 2018, and hit $23bn by 2021. It’s no wonder that Facebook and other technology companies have started bidding on sports rights.
For advertising, a commitment to quality means a commitment to viewability standards and eliminating ad fraud. A recent study that used data from 16 publishers including The Daily Mail, Washington Post, The New York Times and USA Today found that advertisers spent $3.5m a day on fake video inventory on the participating sites. This would amount to about $1.3bn a year. The solution? Using the ads.txt initiative, that defines who can buy and sell inventory on any site, barring resellers and refusing to sell video on an open exchange. While they’re addressing online advertising’s ropey supply chain, they could also do something about the standard of creativity in online advertising.
The net effect of a commitment to quality and collaboration would be to differentiate online publishers from the platforms like Facebook, Google and co. Publishers offer something that platforms can’t: the ability to appear alongside quality culturally relevant content, and to strategically build brands rather than tactically generate leads.