Web publishers are falling on hard times. Houghton Mifflin Harcourt recently announced plans to lay off hundreds of employees. International Data Group laid off more than 90 people in its tech-industry publishing division, less than two months after completing its sale to a Chinese conglomerate. Telegraph Media Group just completed a round of job cuts. Yahoo, IBT Media and Mashable announced lay offs last year.
There are several irreversible trends that are pulling publisher profits down. Facebook and Google are reeling in over 75 percent of ad spend by promising reach and granular audience targeting at competitive prices. Traditional ad revenues are being squeezed by the increased user adoption of ad blockers. Ad buyers are looking for deeper deals with a handful of partnerships, cutting off many publishers.
Move toward direct monetization
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In an effort to boost revenues, publishers are becoming more like ad agencies. They are creating paid content for advertisers. Publishers like BuzzFeed, The Atlantic and The New York Times now look at sponsored content as a major source of income. The Times is looking to its T Brand Studio to help it generate $800 million in revenue by 2020. News UK, which owns The Times, The Sunday Times and The Sun, found that time spent reading sponsored content was occasionally equivalent to editorial content.
The problem with the higher percentage of sponsored content is that it threatens the quality of reporting, especially if editorial staff are used to create content for advertisers instead of doing unbiased research. When the Atlantic published, then removed, a much-criticized sponsored post promoting the Church of Scientology, they admitted they had crossed the line. There needs to be limit to maintain a quality and integrity of content that will keep readers engaged and loyal.
There is another solution that can help publishers receive more money for their inventory. Publishers can behave more like Facebook and Google by leveraging user data to sell audience packages.
Selling audiences to maximize revenue
Publishers can move from selling ad units and a position on a web page to selling audiences based on age, gender, household income, consumer habits, tastes, and preferences. They can categorize their users based on life stage (getting married or having children), buying patterns (luxury or discount), lifestyle (tech enthusiast, fitness buff, yoga mom etc.) and engagement behavior (video completion rates, click-through-rates, etc.). With the digital age of mobile devices, advertisers want to pay only for the specific audiences that are relevant to them, and publishers can provide them with the segmentation they need.
The data is there – it’s just a matter of harvesting, aggregating and then creating audience packages. Publishers can combine their own first party data with third-party data from data management platforms (DMPs), along with data about engagement across devices and publishers from exchanges, such as CTR, viewability, completion rates, etc. If the data is provided by a supply side platform (SSP), the publisher can access all the data in one place and pay based on a revenue-share model, instead of investing and managing several integrations with different data sources.
If publishers sell audiences with rich user profiles everyone wins. The publisher receives higher CPMs for their inventory, and the advertiser can increase ROI by reaching the right audiences with more precision and efficiency.
Today, publishers are struggling more than ever to compete with Facebook and Google. But for publishers, knowledge is power, and defining and selling their high demand audiences will let them price their inventory based on its real value. By providing audience segmentation to media buyers, they will be able to increase revenues, rely less on sponsored content, and invest in developing more independent editorial content.