The more things change the more they stay the same
Two years ago, I put forward seven 2016 predictions for the publishing industry. In looking back now, I see that many of them came true (or were on their way to be so), but not all in a good way. Here’s a snapshot of those forecasts and what actually happened.
1. The double-edge sword of advertising automation will continue to be wielded by publishers as they look to harness its huge potential, but all they’ll end up doing is further alienating their audiences.
In early 2016, the automated buying and selling of advertising in mainstream media was still somewhat in its infancy (especially on mobile). Today it’s fully mainstream with a 2017 global display advertising value of ~US$100B. Unfortunately ~US$40B of that was lost due to ad blocking.
Advertising automation is fraught with problems, not the least of which is the alienation of audiences tired of the barrage of disruptive ads, poor online experiences, and often seen as creepy behavioral retargeting. The rising tide of programmatic is lifting many boats, and that includes adblock usage by discontented consumers.
A number of publishers have installed ad blocking walls to persuade visitors to whitelist their sites, but only 26% of people are willing to disable their blockers when asked; 74% just walk away.
Advertising automation truly is a double-edge sword. On the one hand, you can only reach a large audience efficiently with programmatic, but on the other, the true costs of automation (e.g. loss of revenue due to ad blocking and abandoned websites) are, in my opinion, beyond what most publishers can afford.
Speaking as a user, who appreciates an engaging user experience and beautiful design, and a judge of Canadian websites’ UI/UX for the past five years, I believe solving the ad blocking problem really comes down to building a better online and mobile experience for visitors. People are far more likely to trust you with their time and attention if you provide them with an attractive and enjoyable digital experience. And as we have learned the hard way over the past two years, trust is what monetizes the attention economy.
Bottom line is…we still have a long way to go to make digital advertising a viable revenue stream for publishers, if that is even possible.
2. Big Data and Artificial Intelligence will blur into Smarter Data to exploit behavioral analytics so publishers can better predict how people will discover, consume and engage with content. It won’t solve the problems of prediction #1 this year, but it’s a good start.
We are, as an industry, talking more and more about algorithms and Big Data. I remember interviewing Ken Doctor back in October 2015 and his advice for publishers was to invest in business intelligence/ analytics. Two years later, he gave the exact same advice.
The new start-ups that are popping up and the established pioneers have been focusing on analytics a lot and using Smart Data (a combination of data and machine learning) to analyze user behavior at a very granular level. Not only does Smart Data provide insights into individuals’ content preferences, it also helps publishers understand what elicits specific reactions by users (e.g. read, register, subscribe).
Big media companies (The New York Times, The Washington Post, The Globe and Mail, The Guardian, Financial Times, Schibsted, etc.) invested early in Smart Data and are seeing promising results.
The Globe and Mail alone has over 30 data scientists working on predictive analytics to understand what triggers a user to register, a registered user to subscribe, and a subscriber to upgrade.
Schibsted is able to predict gender, age, location, interest, and intent to look for a job. They also use
machine learning to detect users’ content preferences so they can better deliver relevant recommendations to them.
But we’ve also seen the opposite with some publishers who seem to ignore what the data is telling them. One example is the erroneous missile alert in Hawaii in January. The story was spread far and wide across media and although no one had anything exclusive to report, one publisher (who shall remain nameless) put that commoditized content behind a paywall when they saw that the story started getting a lot of traffic. Personally I would have used that opportunity to drive even more traffic and encourage readers to share the content.
Some publishers collect terabytes of data, but struggle analyzing it, reverting back to what they understand — page views, clicks, likes and shares. They group people into demographic silos which can’t help them understand their audience as individuals. How can publishers deliver a person the content they want, when they want it, how they want it, and where they want it, if publishers don’t know that person intimately?
So despite all the hype and encouragement, the rate of adoption and use of Smart Data to serve audiences’ needs has been much slower than we hoped. I can’t stress the importance of this; we must “collect to connect” with individuals if we ever expect them to connect with us.
3. To adapt to a world that is moving from a knowledge-based economy to a passion-based one, more publishers will look to segmenting their content based on people’s passions.
The magazine industry has been ahead of the curve when it comes to serving the passions of its readers through content segmentation (e.g. Future plc, Tangible Media, Hearst, etc.).
But we’ve also started to see more and more newspapers (e.g. The New York Times, Boston Globe) and digital-first pureplays, that started out as a brand for all (e.g. BuzzFeed), embracing more diversification of content and it’s paying off.
I expect we’ll see more of the same going forward as other publishers see the potential and embrace Smart Data to help them to zero in on what individual readers want to consume — when, where, and how. But we’ve still got a long way to go.
4. More publishers, particularly in the magazine industry, will diversify their businesses to try and attract and engage with audiences between page flips.
In addition to content segmentation, many publishers are also looking to further diversify their revenue streams through a variety of experiences (podcasts, communities, branded content, design agencies, ecommerce, stores, cafes, etc.) — the most popular, and stickiest, being live events.
Events come in all sizes, forms, and costs; some are just out of this world. By understanding the passions and interests of its audience, The Globe and Mail selectively targeted a small segment of their most engaged readers and invited them to an exclusive river cruise in Europe that would cost each of the 151 travelers several thousand dollars. In just a matter of days, the cruise was sold out without the need for any further promotion or enticement. Forget the millions the publisher made from the event and just think about the real gold they unearthed — the intelligence data collected from passengers as they listened to special speakers and interacted with journalists and editors for a whole week.
To be fair, the Globe has a very enviable demographic. Would most publishers be able to do the same thing? Probably not. But with some creative thought (and Smart Data) every publisher should be able to find ways to offer unique experiences that people are willing to pay for — experiences that will further engage them and grow their trust and loyalty.
With circulation decreasing and digital advertising not compensating for lost print ad revenues, it’s no longer enough for publishers to stick just to their knitting (i.e. content creation).
They must start monetizing the whole relationship with their audiences through diversification — finding new ways to engage with them at more personal level.
5. After dabbling in gamifying news for a few years, larger publishers will look to integrating unique content with immersive entertainment, including Virtual Reality (VR) and Escape Games.
This is a prediction that has not come close to what I expected to see by now. The big players from 2016 continue to dabble in VR, but beyond that, I haven’t seen much in the way of media gamification. There have been a few flickers of ingenuity like Al Jazeera’s #Hacked game on the Syrian cyberwar and its use of gamification to conduct audience research, but little else is happening in mainstream media.
The gamification market is projecting hockey stick growth. Healthcare, education, HR, and other industries are already employing gamification techniques to drive user engagement.
Looking at this data, I was not surprised to see its application within marketing being so large and growing so fast. Building trust and loyalty with consumers is more challenging today than ever before, especially with today’s younger generations. I can definitely see gamification being a useful tactic to draw them in and keep them engaged with brands, including media brands.
So hopefully, now that the cost of the technology has become more affordable, 2018 will be a year where more publishers start to experiment with gamification. But given the results of my next prediction, I expect it might be more wishful thinking on my part.
6. More experimentation will emerge, but the gap between those publishers willing to experiment and those just riding the wave will widen.
There is an emergence of “leaders” in the industry that go after opportunities rather than waiting for them to come to them — typically larger publishers with deeper pockets. The level of experimentation depends on the culture of the publishing house. The industry spans the full spectrum of that culture, from The Washington Post that runs in a constant state of experimenting to the many that run away from it.
In a letter to the shareholders of Amazon, Jeff Bezos once said, “To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment. Most large organizations embrace the idea of invention, but are not willing to suffer the string of failed experiments necessary to get there.”
There is a middle pack that wants to be leaders — publishers that think their previous brand stature almost forces them to be leaders. But they haven’t the funds, the ambition, the strategy, or the courage to do it. Sometimes it’s a combination of those weaknesses.
So they end up following others without considering how it applies to their own business. Or they dabble in new opportunities without actually committing to them. Seth Godin, an American best-selling author, entrepreneur, and marketing expert, would probably say they don’t “embrace the work of doing things that might not work.”
Because there are finite resources available in these organizations, the number and size of experimentations tend to be very small. A good example is what happened in 2010 when the iPad hit the market. The fascination with the device had publishers running off to develop apps for iOS, ignoring everything else, including Android devices which were predicted to own a large share of the market, and which ended up owning 85% of the global smartphone segment in 2017.
They banked on one small project to manage scale in a desperate attempt to get lucky and win big. That’s a high stakes gamble destined to fail.
In both the newspaper and magazine worlds, we saw some experimentation over the past 2 years in the launching new apps and new products (e.g. The New European), local community engagement, pivoting to video, mobile journalism, citizen journalism, new forms of storytelling (e.g. podcasting), diversification, new business models, crowdfunding, corporate accelerators (e.g. Plug and Play by Axel Springer), media accelerators (e.g. Matter), chatbots, artificial intelligence, virtual reality and more.
Some experiments have shown promise, but most have not had the results publishers hoped for. But I still applaud their efforts for taking risks for a better future.
After Facebook pulled the plug on news, the CEO of Cycle Media, Jason Stein, predicted “a drawn-out period of experimentation.” Unfortunately it’s more out of desperation than a move motivated by a culture of innovation.
The gap is still too large between those that truly embrace experimentation and those that see it as a last resort when the easy road gets too rocky.
7. Publishing will continue to make for strange bedfellows as more transnational and cross-industry consolidations occur, further disrupting the publisher-journalist value equation, mostly for the better.
In terms of consolidation we’ve seen a couple of things. One, a number of very lateral consolidations like what happened at tronc, Gannett, Meredith and Time Inc., and the recent Postmedia and Torstar title swap.
Then you have vertical consolidations. But apart from Jeff Bezos buying The Washington Post, most of the vertical consolidation has taking place from the publisher side, such as The New York Times buying The Wirecutter. So that’s been interesting and a good thing — that’s diversification.
Now, my point back in 2016 was that this consolidation would be mostly for the better. There are legacy inefficiencies that consolidation can help resolve. Does the city of Vancouver need two paid-for titles and two or three freesheets? No. It is inefficient and none of them can get the economies of scale they need.
The benefit of vertical consolidation is that there is cross segmentation of content. I mentioned in Mastering the three pillars of a successful monetization strategy how Hearst saw an opportunity to redefine the local experience for readers in Russia by creating a network of independent urban portals. This vertical consolidation combined with diversification has allowed them to plug in their content into various sections on those portals and drive the traffic back to their other sites.
Despite the value in consolidation, there is a fear associated with how redundancies can be resolved without affecting the quality of editorial. The other fear is that the powerful are becoming even more powerful and controlling the flow of information on a much larger scale.
But let’s face it. We do need a new wave of investors in the industry — a new generation of Buffets.
Unfortunately what we’re seeing is growth in private equity and hedge fund acquisitions that are taking out value instead of putting it in. Over the past three years, 200 newspapers sold for over US$1.3B, with 2017 being the busiest year for transactions in almost two decades.
These investors typically pay little attention to the media companies they own except for buying up user data and using it across their other investment portfolios. They also extract tens of millions of dollars in management and incentive compensation fees, confirming their lack of interest in investing in the industry and quality journalism.
Is Facebook already a publisher or about to become one?
With the recent newsfeed changes from Facebook, I still have this feeling that Facebook may become a publisher in its own right — buying out several big media houses, and basically saying to the rest, “This is all the content that we need, thank you very much!” Part of me is surprised that it hasn’t done it already.
But why did Facebook address its issues with the newsfeed by reducing its reliance on content in general? Can it survive purely on pictures of friends and family or comments on how they spent their day? I don’t think so.
That may be how the social giant started, but Zuckerberg quickly learned that he needed more content to retain the interest of members. So, starting in May 2015, with the introduction of Instant Articles, he started seriously wooing publishers onto the platform. Shortly thereafter, he introduced Facebook Live, the Facebook Journalism Project, and the promise of paid subscriptions (which are finally supported across iOS) — temptations media couldn’t resist. The results for publishers have been less than stellar, but the strategy made Facebook the No. 1 discovery source for news.
Facebook has to come back to news in one way or another. It certainly has the cash to inject into content creation if it were so inclined. But who knows what the social media mogul will do.
Given its long history of reneging
on promises, newsfeed flip-flops, abusing user privacy, and, of course the constant carrot and stick game played with media, we can only speculate if a move to content creation would be at the level of Jeff Bezos and The Washington Post or just another self-serving Facebook experiment.
If Facebook were to pursue this course, what type of content would it produce and what would the quality of that content be? Because if its sole purpose is to enhance the user experience within Facebook to lengthen a person’s time on the site to grow ad revenues, without furthering the mission of journalism, then that’s a problem.
I’ve often criticized publishers for constructing one-way communication streets and little has changed in the past two years. We’re still not seeing, at least not in action, publishers reversing the course and turning conversations into two-way boulevards. And I’m not just talking about with readers, but with experts in other industries, or players working in media beyond just other (legacy) publishers.
Too many publishers continue to demonstrate a complete lack of engagement with anybody but themselves. And that's a very dangerous slope. Just look at their reaction to the recent Facebook changes (Seriously, jumping to LinkedIn?). This just underscores the industry’s habit of knee-jerk reactions and rash decisions, characterized by what Frederic Filloux describes as, “a deep sense of entitlement (“We are the news, you owe this and that to us”), a lack of technical competence (they expect FB to come up with ready-to-use products), and, in Europe, a propensity to call on Daddy (the [national] government) and Mommy (Brussels) when things go awry.”
Well, Facebook just showed them the door and said, "You're actually meaningless." Now, I’m not condoning what Facebook has done, is doing, or may do, but I do recognize that Zuckerberg knows how to grow a business using other people’s money. And he’s not done yet.
I’m not going to make any predictions for 2018 because too much of what I predicted in 2016 isn’t finished yet.
But I will tell you what I wish. I wish that we, as an industry, would starting working better together and stop treating each other as the enemy. I still want to believe that all of us are committed to quality journalism, but not all are committed to customer service and collaboration. If we could get those last two in our mission statements I think we just might see a much brighter future for all of us .