It's An Arbitrage Media World -- Premium Publishers Just Die In It

Market forces are funny things.  They travel in the direction they want to travel, no matter how much they are told not to.  

Despite trying to reverse the direction of these market forces listed below at industry conferences, business meetings and trade columns, these forces have not veered from their original flight plan.  As a result, the turbulence they create is causing the premium publishing industry to crash and burn.

Market Force #1:  People won’t pay for premium (digital) content.

Millennials will never fork over money to subscribe to the print versions of the New York Times, or other traditional publishing brands the way previous generations did, and Millennials will certainly not pay for content online.   Pay walls are easily climbed — and if not, users stop trying and check their Instagram instead.  Subscription revenue for premium publishers is disappearing.

Market Force #2:  Competition for ad dollars comes from everywhere.



I spend a lot of time with media buyers spending gazillions of digital dollars, and what surprises me the most is the ease in which sites that have no traditional publishing principles, take ad dollars away from sites that do.  When I sold ad pages at Newsweek, I worried about Time and U.S. News.  Today, the circle of competition for online dollars has grown so large for traditional publishers there are no campaign “gimmes,” and publishers are battling against competition they can’t see.

Market Force #3: Digital ads are about performance. Branding never had a chance.

While the industry talks about the nonsensical nature of clicks and the value of branding online, the evaluation of digital media purchased starts with one and ignores the other.  Despite pundits’ protests and desires, the click is the first and easiest calculation buyers report back to their clients, the advertisers who spend fortunes developing their own sites and need to show their bosses people are visiting.

Clicks start the performance conversation through the conversion tunnel, and there was never really a lane for branding to drive through.  Web pages are too cluttered, time spent on each page view is too short, mobile ads are too small, and too much of online video is smoke and mirrors.  Native is not the savior, either. This “ad format” is leading a funeral procession for branding value — while so many think it’s leading a parade.  

Beyond these publishing struggles to deliver branding online, the reality is that branding value never had a chance in digital because it conjures up higher prices, while performance drives prices down.  In a market flush with supply, buyers hold all the cards. By focusing on ad-campaign performance metrics to determine the value of a publisher, buyers are holding aces, and publishers are folding on rates.

This last market force was always going to take down traditional premium publishing, because premium publishers expend energy and resources to obtain, nurture and hold consumer attention — while ad dollars get awarded to sites that are better at losing it.

This business is killing this business.

6 comments about "It's An Arbitrage Media World -- Premium Publishers Just Die In It".
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  1. Bob Gordon from The Auto Channel, July 2, 2015 at 11:31 a.m.

    How sad but true Ari, as a 20 year on line publisher of automotive information and entertainment we are suffering from the competition of billions of wothless impressions, proven by a clickthrough rate of 0.01%, while The Auto Channel is able to generate just a million monthly. It seems to be irrelevant to advertisers agents, that our viewers are engaged, proven by our historical clickthrough rate of almost 2%. It seems to be irrelevant to advertisers agents, that the only audience we have are 100% interested in car stuff. It seems to be irrelevant to advertisers agents, that our editorial and images are G rated. It seems to be irrelevant to advertisers agents, that the context and relevance of our viewers can be monetized in the long term. Being an an old media guy in the Internet space for 23 years, I am saddened that virtually all digital buyers have no concept of the value difference between a quality impression and one that is not. Oh by the way, legitimate editorial  publishers that accept and promote "native" advertorials are helping to hasten the death of journalism and unbiased editorial... oh well after 50 years in media I am now totally disheartened because the web, as the democratization of mass communication just ain't gonna make it.

  2. Ari Rosenberg from Performance Pricing Holdings, LLC, July 2, 2015 at 11:53 a.m.

    @ Bob -- feeling your pain.  Hit me up at when you have a chance.

  3. Paula Lynn from Who Else Unlimited, July 2, 2015 at 4:22 p.m.

    The person in the media department is called algorithm and to date, computers still do not have the programming for human insight, emotion or instinct. There is too much money shifting around too few people (that pool getting smaller) to do anything differently. Ari, you are so on the mark, you scare people. 

  4. Chris Elwell from Third Door Media, July 2, 2015 at 4:59 p.m.

    I'd ask you "Why all the gloom, Ari?" if you didn't articulate the reasons so well.

    Silver lining: Slitting my wrists now means I won't hear the dog barking at the fireworks.

  5. Ari Rosenberg from Performance Pricing Holdings, LLC, July 2, 2015 at 5:44 p.m.

    @Chris -- funny stuff -- my brother's dog goes nuts during those fireworks.  And Paula thank you as always for chiming in with your insight and support.  I don't mean to be "gloomy" but I can't help sharing what I see and the picture keeps getting worse by the quarter for an industry I grew  up in, respect and am a part of. 

  6. Matt Keating from MainAd, July 3, 2015 at 7:39 a.m.

    Agree with a lot of that Ari, especially regarding "native" advertising aka the programmatic advertorial, to borrow a phrase from a friend.

    Personally, whatever the lofty ambitions of 'best in class' native, and I'm sure there are or will be some good executions out there- if so then great- overall I remain sceptical for a few reasons:

    - most of what is in practice being sold as "native" is frankly trash and is clogging up otherwise half-decent sites

    - "native" is a fluffy, unhelpful word that grandly purports to newness and superiority whilst being neither new in any sense (despite what we are sometimes told) nor necessarily superior. Ad tech needs less fluff and not more in order to attract more brand spend.

    - the basic pitch behind native's supposed better performance than display- that it allows advertisers to 'borrow' a publisher's 'story-telling' tools, and to ingratiate itself into the fabric of the site as some sort of benevolent force- is also exactly why it is both flawed and intellectually dishonest. I'm with John Oliver on this one- it is extremely damaging to editorial integrity (if that is still a concern to any "premium content providers" anymore) and it doesn't say much for advertisers' opinions of their audience's intelligence.

    There's two issues behind this to my mind- native as it generally works in practice - i.e. dressing up ads as editorial to trick people into responding more- would not be needed if standard advertising was done well enough (a discussion in of itself). Deteriorating response rates to display in developed markets (as yet not seen in growth markets in e.g. Africa) will inevitably catch up with native once the novelty has worn off. Then we'll be left looking for the 'next big thing that is definitely not just an old thing given a glitzy revamp'.

    Secondly as you state, native would be getting less traction if publishers were able to effectively monetise their operations via paywalls/micropayments/subs etc- this is a big subject about generational shifts, the 'deal' between readers and publishers, and how digital originally positioned itself and is now being hoist by it's own petard (same applies to why brand dollars are late to the party) etc. Plus it feeds into the fundamental causes of the current issues around ad blocking, which will not leave native unscathed either.

    The above said I am always willing to be proved wrong and native perhaps has a time and a place if done well and real-world results back it up. But I can't stand marketing fluff, 'techy' obfuscation and blatantly saying one thing while in reality doing another- it does the industry no good and doesn't help bring in sustainable revenue in the long run.

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