Last June, a major revenue guy from Medium spoke at AdMonsters’ Ops conference, laying out a fascinating native advertising model transacted on a time-spent basis. It was a bold plan that sparked a great deal of conversation throughout the event.
So you can imagine I was disheartened when reading Ev Williams’ “Renewing Medium’s Focus” announcing that the nascent publishing platform was reconsidering its revenue strategy and laying off 50 people mainly in sales and other business functions. I’m a regular Medium reader and occasional contributor, and I’ve been rooting for the company to succeed, especially after I learned of its exciting advertising strategy.
“We are shifting our resources and attention to defining a new model for writers and creators to be rewarded, based on the value they’re creating for people,” Williams wrote. “And toward building a transformational product for curious humans who want to get smarter about the world every day.
“It is too soon to say exactly what this will look like.”
Ah, so “Renewing” is a bit of doublespeak to hide the fact that you have no idea how to monetize Medium’s content in a way that will satisfy your idealism.
One of the best responses to this news and the idea that digital media is doomed comes from John Battelle, founder and CEO of NewCo (and former founder and CEO of Federated Media), who notes that, “publishing is community.” Basically, the industry needs to take a step back and reconsider the value not of audiences, but specific publisher audiences.
“What broke with advertising was its disconnection from community, just as with publishers,” he writes. “Sure, you can buy audience all day long. But without context?”
The rise of programmatic trading in digital advertising was great in that it offered publishers and advertisers increased control over what they were buying and selling. This was opposed to relying simply on publisher direct sales—in which advertisers had to put all their faith in their publisher partners—or leveraging ad networks, which were devastatingly opaque for both the buy and sell sides.
The biggest downside was that agencies began chasing cookies across the exchanges, not caring about where those impressions showed up until it was too late. (Is that a Toys R Us ad on a porn site? Whoops…) Even then, the trading desks could report back that to the advertisers that they bought SO MUCH INVENTORY at SUCH LOW CPMS! Context be damned!
I’d argue this set off a downward spiral in which publishers (even, gasp, the premium ones) flooded their sites with placements to make up for lost direct-sold revenue. Yes, lots of impressions were never viewed. On top of that, publishers embraced click-bait headlines and stories because those seemed to be pulling in the most views. New operations set up networks of crap sites to take advantage of advertisers’ disregard for context, and fraudsters brought in the bots to siphon off the buyers coffers.
Yeah, it’s been an ugly time, and as a trusted platform (maybe not so much post-2016 election), Facebook has taken advantage of this situation by offering buyers a safe space in their ad network. Brian O’Kelley’s look into Google’s finances found what we’ve all at least suspected for a while: the network business is raking in cash, while the tech/platform side is struggling. It’s a reversion—opaque once again to buyers and sellers. Ad tech isn’t dying, but it has lost the faith of advertisers and publishers.
And yet I find doomsaying odd at this moment are coming out now because for the first time in a long time, I’m feeling generally positive about the digital advertising space. That mainly can be attributed to header integrations (e.g., header bidding).
As I’ve explained in tortuous detail elsewhere, Google’s dominance of the publisher ad server business through DoubleClick For Publishers forced media companies into embracing inefficient demand waterfalls. DFP is for the most part a closed ecosystem, limiting the amount of publisher inventory demand sources could evaluate (particularly on a real-time basis). At one time this made sense, but no longer—which is why header integrations have upended the waterfall.
Through the header, a publisher’s various demand sources can get a clear view of all the inventory (and audiences) available, enabling them to make smarter bids. Publishers can then better price their inventory and make private marketplace deals worthwhile for advertisers—they’re bringing context back into equation. The advertiser gets both the users they want in an environment they trust. And of course, contextual targeting can be leveraged for further granularity.
I keep pointing out that publishers embracing header integrations are seeing an uptick in CPMs, but my agency contacts repeatedly say they haven’t felt any negative effects from the header revolution. That’s because the numerous intermediaries that have been clogging the path between advertiser and publisher are being cleared out.
Basically, programmatic is reasserting its potential, and as faith in the programmatic tubes builds up again, you’ll see an embrace of real-time guaranteed transactions, where a pledged amount of spend is executed programmatically.
In addition, the viewability movement and the ad blocking scare have encouraged smart publishers to double down on user care when it comes to ad experience. E-commerce initiatives have opened up new revenue sources for pubs. And advertising innovation continues with new forms of creative, native content, interesting transaction methods like trading on time spent, and combinations thereof.
Besides that, I believe the fake news epidimic—really user perception of being misinformed on social media—will drive audiences back to “trusted” publisher brands. Context will once again be queen, because content is always king.
There is no mysterious, magical monetization system for digital media waiting to be uncovered. Subscription models are not going to work for the vast amount of digital publishers—especially in tumultuous economic times. And when you compare digital to its print forbearers, you must remember that the subscription revenue for most publishers tended to be a pittance compared to advertising revenue.
Programmatic advertising has always held the promise of advertisers and publishers controlling their own destinies in digital—in relative harmony at that. It’s still going to be rough travels for a bit, but after a long period in the wilderness, we’re getting closer to the promised land.
Digital advertising and media monetization might be broken, but they’re not busted. I argue they’re on the mend.