Publishers Survive Multiple Challenges

We’re always looking at ways publishers have found to monetize their content in this brave new world. This week, with summer already under way and advertising models still under scrutiny, we’ve looked at a number of different “solutions,” none of which could be called a category killer.

For example, Medium founder Ev Williams, who also co-founded Twitter and Blogger, has been funding the company on investor money (his own and that of friends), but had begun an effort to sell ads when he abruptly pivoted and began to sell “memberships.”

The trouble with the internet, Mr. Williams says, is that it rewards extremes. Say you’re driving down the road and see a car crash. Of course you look. Everyone looks. The internet interprets behavior like this to mean everyone is asking for car crashes, so it tries to supply them. His goal is to break this pattern. “If I learn that every time I drive down this road I’m going to see more and more car crashes,” he says, “I’m going to take a different road.”

Williams decided that the different road for Medium would be premium content for people who pay $5.00 per month. This effort has been characterized as “underwhelming” in a recent NY Times article.

Jessica Lessin, the former Wall Street Journal reporter who founded The Information, borrowed her business model from the Wall Street Journal and went even further: Lessin sells subscriptions and allows no advertising. While she has grown rather nicely,  her model involves a high enough annual subscription price that she cannot scale. Also, she’s in a vertical that people will pay for: financial information.

The only scalable new media models for big brand buyers who want scale seem to be Buzzfeed and Vox, two very different publishers. Vox does aim to compete with Google and Facebook, with a slightly different philosophy: It has 8 different vertical sites, including SBNation, Vox.com, The Verge, Recode.net, and Eater. The company is trying to build big audiences in all of those big verticals, and remains committed to distributed platforms.  To accomplish this, Vox relies on advertising, but the conversation about advertising always starts with content supplemented by native ads or branded content, rather than the “ads first, news hole with what’s left” methods of the past.

Vox is shifting to programmatic, which it views as a means to an end, a mechanism through which brands can execute at scale — not just as a remnant, low CPM business. Although many VC-backed media companies, including Buzzfeed, don’t do programmatic (yet), Vox simply views the automation platform as a way brands can buy what they want.

“Our media becomes no less valuable because it’s sold programmatically, ” says Vox VP for Revenue Operations Ryan Pauley. “In fact, it becomes more valuable; that’s how we’ve approached it.” To increase distribution for marketers, Pauley and his team created Concert, a partnership among NBCU, Conde Nast, and Vox, which leverages the ad tech Vox has created across a premium set of inventory. All three sales forces are then selling the same custom ad products. That’s how marketers can get to scale without driving the CPMs into the basement.

Advertising remains the only way to achieve scale for now, but tomorrow’s advertising industry is evolving to look very different from that of the past.