Building a Brand: For Publishers

All publishers will not survive the latest onslaught of Facebook changes and GDPR compliance. At least not with an advertising model. But should they? The combination of an almost limitless content  supply of sometimes questionable quality, the “Amazon effect” on brands, and the intolerance of consumers for slow-loading pages and interruptive ads will cause a Darwinian contraction among publishers.

The internet saw the rise of almost countless niche publications, each one fighting for ad dollars. That led to a proliferation of targeted ads, which in turn led to the need to collect personally identifiable information. The fact that 65% of companies weren’t ready to comply with GDPR shows how complicated the ecosystem has become.

That number includes brands and publishers. The brands have already taken steps. P&G cut its ad spend last year by $200 million, and said its reach was 10% greater. It will take more steps this year. In related news, WPP lost 15% since last year.

What will happen? Only the fittest will survive.

We think a combination of things will move the ecosystem forward, including the decline of publications who bet the farm on Facebook to get traffic, as Little Things did, the introduction of more transparency in the media buying system, and a diversified revenue stream will keep the best publications in business.

Mixed revenue streams have already begun to keep the largest publications, such as the New York Times and the Washington Post afloat. Some sites (The Information and Stratechery) do well by subscription alone, although the subscription model won’t scale across the entire industry because there are a limited number of sites to which any one human can subscribe.

That’s why after all is said and done, advertising will remain the best way for keeping content free, and those sites who design for the new ad formats recommended by the Coalition for Better Ads and IAB will see less competition for ad dollars and probably higher CPMS. The new site designs will be cleaner, pages will be faster loading, and desired content will be easier to read — all of which should have already happened.

The internet presented a temptation to put too many ads on too many sites, resulting in the digital equivalent of a swap meet and what we are seeing is a natural fallback of the market from excess to normalization. A market with too much merchandise is just as difficult to shop in as one with too little.

This is not very different from what happened to the cryptocurrency space lately as Bitcoin’s price fell from $19,000 to $11,000.

Bitcoin is a good analogy here, both because the regulators are coming both for digital media and for cryptocurrency, and because its price did not fall to nothing, just like advertising won’t go away. What we are seeing in advertising, as in blockchain, is the adoption of new technology inducing a hype cycle, and the market coming off the hype cycle into something more normal.

The quality publishers will still succeed, most supported by advertising. Publishers, just try to keep the flight to quality in mind. We’re here to help.