This will be part of an ongoing series about the future of the display advertising business for digital publishers.
We are fortunate enough to work with publishers across the business-model spectrum, from those that rely exclusively on programmatic to others that are deeply focused on native content creation to "freemium” or mixed publishers. The display advertising business model for publishers evolved as a way to translate the existing print or billboard formats to our computer screens. In order for anything to successfully be bought and sold in a truly scalable fashion, there needs to be a consistent unit of measurement. Within internet advertising, the banner ad is that unit.
Over time, dollars will flow to the top-end of the publisher spectrum for content creation and to the middle with audience data overlays. The bottom end long-tail publishers will continue to see downward price pressure as advertisers optimize toward higher-value channels. Now more than ever, context is relevant. If an advertiser can buy video ads at scale for an efficient price, but they run adjacent ISIS-promoting or racist videos, is it worth doing? The differentiating aspect of digital versus other forms of media is its measurability. Eventually, everything becomes independently trackable and measurable, and those platforms or publishers that refuse will lose out on significant opportunities.
For publishers, there are several key disciplines to focus on when it comes to monetization:
Context: the brand, the user-experience, the types of content created. The old adage that content is king has been challenged in recent years with the rise of social networks and the black hole of user-generated content, but premium brands still want to align with premium environments. Audience is important, but again if you deliver the right ad to the right person but its in an environment antithetical to the advertiser’s brand, it likely has a negative impact in the long run.
Audience: publishers with a specific audience will maintain an advantage in their sales strategy. A few examples would include VICE, which owns the millennial audience, any number of finance sites that attract affluent males or an organization like XO Group, which owns TheKnot (weddings), TheNest (newlyweds) and TheBump (pregnancy and parenting). These publishers have much less heavy lifting to do in proving the value of their audience to potential advertisers - it is apparent through the content they produce and backed up in ComScore. One approach is the VOX model where you have standalone brands with clearly defined identities. Another would be to create channels or franchises that live within (or are powered by) the parent brand but resonate with consumers on their own. Regardless of the specific strategy, creating content that serves the cravings of a particular audience with a unique voice and brand creates loyalty and ultimately leads to growth.
Data and optimization: it is rare for a publisher to have a functional, fully optimized data and reporting platform that captures all relevant metrics in real-time and presents them in a way that allows for strategic decision making. Often the publishers that are best at this are smaller, without direct sales teams, and have spent months or years optimizing their indirect ad stack because it makes up their entire revenue stream. We work with lots of companies in this category and if the top publishers approached their data in a similar way, they would have a distinct advantage.
Much has been written about the fact that nearly every new dollar flowing into digital is going to Facebook and Google, with little more than scraps left over for independent publishers. However, I believe that publishers that win at more than one of the above will be well positioned to capture an increasing share of the budgets flowing into digital media.