The ‘false divide’ between traditional and digital publishers
Brian Jacobs, VP business development at Enreach, asks: Are traditional publishers clear what business they are in (or want to be in)?
A recent article (‘The False Traditional-Digital Media Divide’ published in Digiday on 20 March) brings what the authors refer to as the ‘false divide’ between traditional and digital publishers to the fore, arguing that technology platforms such as Facebook may soon have much more in common with the likes of Condé Nast than might appear obvious today. This might perhaps be a logical conclusion when assessing the situation from a media demand perspective, looking at digital media forms through an agency lens. However, if one considers the issue as a content producer, or publisher, the argument starts to break down.
At Enreach we believe that the real ‘Media Divide’ is not about traditional and digital media, but about vision and ambition. On the one hand there is the publishing company, and on the other there is the internet company (that happens to offer advertising opportunities). Both have an audience they serve with content, along with advertising that supports the creation of this content. However, when assessing both groups of companies based on their vision and ambition, they suddenly have very little in common. This divide is furthermore amplified when assessing their core competencies.
Some scale-obsessed digital advocates argue that as we understand more about audiences online, where they are reached becomes less important than who they are. Whilst there is obviously some truth in this proposition, it dismisses the premise of combining the two, and instead treats them as alternatives, not complements. Reaching the right people at the right time, and in the right context delivers better results than just reaching the right people.
“The most established properties tend to draw the biggest audiences, and every marketer, brand and/or manufacturer wants to have a presence there, bigger than their competitors,” said Adam Schlacter, managing director at MEC. “Knowing that, those properties seem to be able to dictate pricing better than others as a result of their offering, and the scarcity of space and opportunities, whether actual or perceived.” (Publishing’s Privileged Class’ published in Digiday on 13 March)
There’s a danger that traditional print publishers can lose their way, what they stand for, and what has made them successful as traditional media forms as they metamorphose into online publishers. When these publishers arrive in the online world they find themselves surrounded by an entirely new breed of competitor, playing by different rules. These new competitors have intrinsically different business and revenue models, but even more importantly they also have a radically different cost and technology foundation built around new and different competencies.
Can traditional publishers cross this print-to-digital chasm, or will they struggle?
These publishers need to ensure that their online revenue gains at least recoup their print revenue losses. In contrast to print, in online many internet companies enjoy a distinct competitive advantage over their premium publishing peers: the marginal cost of producing content. As the cost of creating high quality editorial content will never be able to compete with the close to zero cost of user generated content, those wanting to support their editorial teams in future, will need to offer a differentiated – and higher value – offering to advertisers. This has to justify a price premium for those advertising messages that sit alongside high quality editorial. There is in our opinion a real, and critical, need to reinvent what has become something of a commoditised display
advertising offering.
This might sound as if we’re arguing that advertisers should be prepared to pay a premium rate as some sort of philanthropic act to support poor struggling journalists, but we’re not. We know, and we have the evidence to support our case that a premium environment simply works better for premium brands’ messages. A premium environment engages the audience, it can surprise, annoy, delight and above all involve. And this leads to better results for those advertisers appearing within it.
Whilst RTB and ad exchanges may reinvent – and disrupt – the intermediary business (i.e. the ad network model), they have already proven to be far from a silver bullet for publishers struggling to make their online revenue gains match up to their print revenue losses. Experimenting with RTB sales, and more importantly with RTB’s more controlled and premium publisher friendly derivative ‘the private exchange’, is certainly something worth encouraging, yet premium publishers should acknowledge that automation alone only lowers transaction costs, it does not increase value.
“No advantage to dropping inventory into a pool where its bought for the lowest price possible” (Tim Gentry, Guardian News & Media at Admonsters’ OPS Markets in London on 9 February).
Enreach believes that premium publishers should stop looking at the online advertising market as defined by internet companies’ business models (where high quality content has never been a topic of any interest), and, rather do what they need to do to take control of their own destiny. A key element in this future is to create a market-place within which the industry metric is not ‘blind CPC’. The reason we argue this way is because we believe in the power of quality environments, created by quality writers and photographers. It is sad, not to say crazy, to watch editorially acclaimed publishers desperately trying to morph into internet companies. This is a strategy that does not fit with the strong editorial reputations they have spent the last centuries creating.
Enreach provides cutting edge technology to help premium publishers secure premium rates for premium inventory. In this way we help fund the successful migration of quality journalism onto online channels. We provide our clients with the means to create an advertiser value proposition that plays to their strengths of quality and engaging content, and that differentiates them from the commoditised, UGC-fuelled internet display advertising market at large. This is accomplished by repositioning publishers’ display advertising proposition away from selling undifferentiated clicks, and towards selling rich audience engagement insights that sit alongside robust measures of advertising impact and effect.