The Biggest Threat to Publishers? Surprise, it’s not Facebook or Google
There’s been a lot of talk at the beginning of 2017 about the idea that all digital media spend growth is being directed at Google and Facebook. Jason Kint, from DCN, presented some numbers on the infinitesimal growth of EBGF (Everything But Google and Facebook). AppNexus’s Brian O’Kelly laid out a nice retort on the idea that Google and Facebook are eating ad tech. I agree with Brian. As he states, Google’s Display Strategy is a mess and Facebook is getting out of ad tech. Brian also outlines the web scale opportunity I’ve spoken about to our investors and team. The scale of content on the open web can build a company with as much revenue as Facebook in the next 10 years.
At Yieldbot, having worked directly with publishers on header bidding monetization for five years, we have a unique and different perspective. Our machine learning at the ad slot level creates incredible intelligence about monetization across the web. What I can tell you is publisher inventory is yielding better than it has in years. Header Bidding immediately and irrevocably shook the industry. Publishers are finally having transparent auctions and direct relationships with their monetization partners. This is essential for any business to succeed and a boon for publishers vs acquiescing to Google’s Black Box over the last 5 years.
With the amazing advances and choices publishers now have – namely bidding frameworks and monetization partners – I don’t see the real threat to publishers being one about technology, workflow or even price and yield. The most dangerous threat to publishers, and importantly a free ad supported press, is brands.
Historically, brands have seen publishers as a gateway to an audience. Today, brands are becoming publishers, attempting to cut out the middleman and create direct access to their desired audience.
- A publisher is nothing without referrers. Their traffic comes from 2 sources predominantly – Google and Facebook. (oh yeah, it’s funny the companies some people think will put publishers out of business are keeping them in business – a very precarious model regardless of ad tech).
- There is more content than ever on the web and that record gets broken every minute. Almost all of it is available to be used by someone other than the creator. Google and Pinterest implicitly license publishers content for free in exchange for sending traffic.
- Distribution on the web is easier than ever. YouTube, Facebook, Snap and one heck of a lot of “branded queries” on Google – all of this distribution can be earned or paid.
There is nothing special that publishers do to create content or drive site traffic that brands can’t do themselves.
Now let’s discuss the economics.
If I’m a brand, the reason I buy media space from a publisher is so that I can rent the attention (hopefully) of that publisher’s audience.
Something is happening to that audience.
It’s getting more and more fragmented. The big media companies? They are getting smaller and smaller. Pick up your favorite magazine on the newsstand and chances are their digital audience is microscopic compared to the category leading sites on the web.
So why spend so much money on buying the fleeting attention of a consumer going to someone else’s website? The sole purpose of ads is to engage with that consumer and get them to buy a product. It makes much more economic and strategic sense to just become a media company.
We’ve seen this already happening across a number of fronts in one form or another. NFL Network, Pearl Jam Radio and Turner Classic Movies are just a couple examples. The product or brand becomes the media. There’s a good chance consumers actually prefer this direct relationship. It extends the possibilities of what the brand can do for the consumer (NFL RedZone anyone?)
Brands want to be closer to the consumer. Having publishers and the publisher relationship with the consumer sit between the brand and the consumer is a cost. A large expense with lots of middlemen and little transparency. So what are pubs to do?
Show the value of content!
Of course this answer glosses over the major issue of scale – a serious issue for pubs. Even the largest publishers don’t have the scale advertisers want from the web (they want web scale, duh). This is how networks got created in the first place and is not a digital problem any more than networks are a TV problem.
But there is something to be said for the value to consumers of authentic third-party journalism, information and content. It can help influence, it can help people act and it can make consumers engage and discover in a way a brand’s message by itself simply cannot.
There is also the relationship that can be developed between the publisher’s brand and the consumer that can be deep, influential and impactful. Unfortunately, many publishers have been doing their best to destroy UX for consumers so there is quite a bit of trust to be built back there. Combined with zero switching costs, this is the opportunity for new digital properties.
There is indeed value to be added by content + ad, but is has to be measurable. This may be the hardest part of all for pubs. Publishers have had little experience in digital brand performance metrics, relying on measurement like impressions/delivery/CTR rather than measurements like Sales Lift and ROAS.
The good news is pubs are more concerned than ever about UX (thank you Ad Blocking) and creating the right content that helps consumers and builds trust is something that can be tested and measured. The results of the content to what brands care about most of all – sales, can also be measured by a number of firms.
At the end of the day, a publisher business is no different than a general store. Have what consumers are interested in and treat your customer right. Publishers just need to remember who are their customers. In the crazy world of ad tech and middlemen that’s something that gets lost far too often. If publishers’ advertising dollars stop growing, it will be as much for losing sight of the people that pay them as it is for the people who consume their media for free.