The question is, what does the continuum of maturity look like for digital-first premium publishing, and how can a publisher move along that continuum to digital-first renown?
The Maturity Curve for Digital-first Publishers
The continuum of maturity for digital-first publishers spans from the nascent to the Yahoos, and from the fledglings to the VEVOs, based on the publisher’s maturity of inventory, monetization strategy, and audience development.
The most nascent digital-first companies are content producers who have a website, app, or YouTube channel and are still “finding” an audience rather than strategically developing one. These publishers are often focused on building an audience through content and distribution with no real monetization strategy or roadmap to scale. These are concerns these digital-first companies handle later or never.
A level up from there, we see more evolved companies, content producers who have intentionally established an audience or niche. These publishers have a consistent, if not obsessive audience that they can leverage. They are exploring monetization models, media sales, product placement, and subscription services to optimize that audience. Publishers such as DramaFever, Maker, or Machinima are a few examples.
Finally, there are the most mature digital-first publishers, those with defined audiences, robust distribution, and large-scale media sales operations. Those who play at this level would certainly include Yahoo, AOL, VEVO, and Sony Crackle.
What Can We Learn from the Top Tier
In looking at what drives digital-first maturity, what specific things should a nascent publisher do or not do to move along the continuum and enjoy the success of a mature business? From our point of view, there are clear best practices.
Lessons on the Content Side
Build your audience by giving them great content. Mature digital-first publishers know that chasing dollars is unwise. First things first: create compelling content. Mature companies know that branded entertainment doesn’t attract or keep an audience. If you’re worried about content costs and try to defray those costs by creating branded entertainment, you’ll never move beyond the nascent end of the maturity curve. Audiences want authentic voices and well-produced content, which explains why established digital-first companies have broadcast quality content.
Targeted audiences mean targeted advertising. Digital-first content can be incredibly niche, and that’s often a great thing. The audience associated with any targeted content is valuable to some category of advertiser. The key is to understand that niche comprehensively and sell accordingly.
Listen to your audience. Take advantage of what makes digital better than traditional media: interactivity. Digital content allows publishers to have a close relationship with their audience, giving them both the dialogue and data they need to improve based on feedback. The democratization of digital content can allow for really wonderful and unanticipated results. For instance, one of our partners works with foreign dramas and brought them to the U.S. with english subtitles. It turns out that this content resonates not only with the original nationalities of the dramas, but with other ethnic groups that no one really considered. This data has provided new opportunities for growth in content, but also makes their audience exponentially more valuable to advertisers.
Build elegant ad experiences. Audiences hate intrusive and unexpected ads. Accustomed to seeing full-page ads between articles or photo galleries and video ads before video content, and in premium environments, audiences are willing to watch an ad in exchange for free content. Slowly, they are also accepting videos between game levels, but there is a reason engagement rates in banners and videos not next to video content are so much lower. When the ad experience is congruent with the content experience, audiences are more receptive. Seamless experiences trump intrusive ones.
Lessons on the Business Side
High CPMs > 100% fill. If your company and ad sales partner can get you to 100% fill, that’s great, but don’t focus on fill as the number one goal. The most important metric is CPM pricing and the content peer group. Companies may be able to get 100% fill by adding as many ad networks as possible, but this will almost certainly result in lower CPMs and lower ad quality. 100% fill might sound like a great thing, but if you are only netting $0.20 CPMs… was it really worth it?
Keep sales direct and premium. It is always easier to lower prices than to raise them, and the selling approach in digital-first media is critical to keep CPMs high. By limiting the number of media sellers in market, publishers can stabilize pricing. A common mistake of less mature publishers is to keep too many sales teams in market—multiple ad networks and direct sales—creating a competitive situation that ultimately drives down CPMs. Mature digital-first publishers know that while multiple partners provide higher fill in the short term, it’s better to keep partner sales to the bare minimum, preferably using only direct and premium ad sales partners.
Monetize for the long game. Monetizing 50,000 users and monetizing 5,000,000 are very different propositions, and there isn’t one switch you can flip in your strategy to monetize a significantly bigger audience. Think about what the company needs to look like now, in several months, in a year, and further in the future when creating CPM pricing, sales strategies, and working with partners. The answer might be different for each stage (and may change), but it’s important to have a plan.
The most mature digital-first companies can teach us how to build a great media brand; it’s all based on the fundamental concept on which the media ecosystem is built: scarcity of quality product. Mature companies have figured out how to drive audiences to a targeted content destination, and they are able to keep audiences there with premium (scarce) content their audiences can’t or don’t want to find elsewhere. Once they have their audience, it’s just a matter of monetization and continuing to deliver on the promise of the well-targeted, authentic content and programing their audience has come to know and love.