Maximum’s plight highlights the many challenges of digital

IT’S probably fair to say that the recent appointment of an interim examiner to Maximum Media, publisher of Joe.ie, took many people within the media industry by surprise. For others, however, the writing had been on the wall ever since the infamous click-farm controversy it found itself embroiled in late last year, when it admitted to artificially inflating the listenership figures of an AIB-sponsored podcast back in 2017.

Then, when the company tried to unsuccessfully offload a number of other websites it owns back in February, in a bid to shore up its dwindling cash resources, even more eyebrows twitched in an industry that rarely misses a beat when it comes to misfortunes faced by one of its own.

But it wasn’t always this way.

Once the darling of the indigenous digital media industry, with plucky ambitions to become the most influential media business in Ireland by 2022 — according to its founder Niall McGarry — Maximum Media could appear to do no wrong as blue-chip brands and advertisers lined up to sponsor a raft of different branded content solutions that included podcasts, video and live events, often for eye-watering six-figure sums. At a time when many traditional publishers were struggling to monetise their own digital offerings, McGarry’s naked chutzpah and burning ambition were, in many ways, refreshing and far-sighted.

Now, however, the fate of the company he founded hangs in the balance with its main creditor and lender, Beach Point Capital, taking a lead role in the examinership process, presumably in the hope that it will recoup as much as possible of the €6m in venture debt it advanced two years ago. On Friday Joe Media, parent company of Joe.co.uk, went into administration with a view to selling it as a going concern.

While the examinership process at Maximum Media still has a long way to go, it remains to be seen whether or not the company will be sold in the coming months or whether its financial backer — which has pledged to advance further funding — views it as a viable short-to-medium term business that it can flip at some stage in the future.

Not surprisingly, some of the company’s financial difficulties pre-date the onset of the Covid-19 crisis that has since wreaked havoc on the wider media industry. Covid-19 has only served to compound these problems even more.

On another level, however, some of the problems that have beset Maximum Media highlight several challenges all digital publishers face in a market that is cluttered with free content, fickle audiences with few brand loyalties and, of course, one which is commercially dominated by the digital duopolies of Google and Facebook.

The most recent IAB Ireland figures, for example, show that advertisers spent in the region of €673m on digital advertising in 2019. However, it is estimated that as much as 85pc of this went to the likes of Google, Facebook, LinkedIn and Amazon, while just 10pc, or €67.3m, went to Irish publishers. This year digital adspend could drop by around 20pc, or €134.6m, to €538.4m in 2020 with the bulk of that again going to the digital giants. Irish publishers will almost certainly see their take of digital adspend plummet to between €50m and €53m which will ultimately lead to even more pain being inflicted on publishers, including Maximum Media.

Maximum Media, of course, is by no means the only digital publisher that has sailed into choppy waters in recent years. Well-known digital brands and publishers such as Gawker Media, Vice, Business Insider, Vox and more recently BuzzFeed have all hit speed bumps in their never-ending quest for scale, eyeballs and clicks.

What many of them had in common with the likes of Joe.ie was content confetti — fast, flimsy, sometimes funny and possibly forgettable content that was spewed out on as many social media platforms as possible in the hope that it would eventually stick with coveted target groups like millennials. With access to VC funding, many were also encouraged to scale into international markets where their admirable ambition knew no bounds. They also pivoted to podcasting, they pivoted to video, they pivoted to social, they pivoted to branded content and of course they pivoted to programmatic advertising.

But none of them, however, pivoted to a business model built on recurring revenue streams and, more importantly, paying customers who value the brand enough to dip into their wallets to pay for the content they are consuming.

And therein lies the ultimate challenge facing all digital publishers, including Maximum Media.

And as for those digital publishers that fail to learn from recent lessons in publishing history, well, they will be ultimately doomed to see history once again retweeting itself.