2018 Media Trends: An Analysis of the Modern Media Landscape

Pelcro
Pelcro
Sep 2, 2018 · 5 min read

It’s no longer news to anyone that the media and publishing industry is going through a rough time. BuzzFeed laying off over 100 employees, The Salt Lake Tribune laying off a third of its employees, and LaPresse restructuring to become a non-profit in order to benefit from Canadian government funding are just a few of the latest examples.

It seems like all content industries have gone through some disruptive cycle (the music and film industry have had their fair share of disruption), but publishers and media especially have had a complex set of issues to navigate with not just one but two major cycles of disruption.

First Disruption: Advertising Budgets Moving Online

It started with the rise of the internet which hit the print business hard, resulting in declining circulations for newspapers and magazines and hence also a decline in print advertising revenue. As illustrated below, newspaper advertising revenue dropped from $67 Billion in the 20th century to $16.4 Billion in 21st century.

Second Disruption: Advertising Platforms Winning BIG with Data

While everything was moving online, publishers and media industries figured their advertising revenue would follow, but the rise of Google and Facebook took them all by surprise. The data and targeting capabilities possessed by the tech duopoly were simply incomparable.

Dylan Curran from The Guardian explored just how much data Google and Facebook really have on individuals, and the results are fascinating. He requested to download all of Google’s data on him, and the file size was 5.5GB. That’s roughly 3 million Word documents. With all this information, it’s no surprise advertisers flocked to Facebook, Google, Linkedin and Twitter with all their advertising budgets to leverage the targeting data.

Google and Facebook capture a combined share of 64% of the internet advertising market and share 99% of new digital ad spend. All the media companies, other advertising technology companies, publishers, bloggers, and the rest of the online content creators are fighting amongst themselves for 36% of the market share.

Clicks and Pageviews Are the Wrong KPI’s for Quality

Not only did the new business model fail for publishers, but it misaligned its key metrics and objectives. The advertising business model forced publishers to set their key metrics as pageviews and clicks over the quality of the content. Clickbait articles, short form articles, and plagiarism all led to the degradation of the industry.

The rise of Taboola and Outbrain was another stepping stone in the wrong direction. All large publishers adopted clickbait ads as they were scraping for sources of revenue and distribution, simply making the web even worse.

Rise of Ad Blockers

Obviously this downward spiral of the web experience was going to come to an end. Spammy sponsored content, video ads, and audio ads made the web experience so bad that users protested by downloading adblock extensions promising to give them a seamless web experience. As if publishers were not going through enough trouble, now 600 million users (and this number is growing at 30% M/M) have downloaded ad blockers. According to a study conducted by Adobe, 27.6% of US internet users said they use AdBlocking software. AdBlock removes ads, speeds up loading times, reduces data consumption on your device and more.

Google and Facebook were impacted less than publishers as they controlled the entire web experience and were able to circumvent ad blocking to a large extent. Publishers’ advertising tags were the easiest targets since third party Javascript tags are the easiest to block.

Fake News and Brand Safety

To add to this, Facebook’s latest story with fake news and clickbait content made matters even worse. Early in 2018, under a lot of pressure, Facebook decided to change their news feed algorithm threatening to destroy multiple media companies and publishers. Little Things, a 4-year-old media company, shut down right after Facebook changed their algorithm putting 100 people out of work.

Youtube also had its fair share of scandal. Their advertisers realized that advertisements where being displayed on YouTube channels promoting white nationalists, Nazis, pedophilia, conspiracy theories and North Korean propaganda. Youtube reacted quickly and built an AI tool to flag offensive content on their platform. Some of these creators’ videos might have colorful language, but nothing unsavory, and yet with YouTube’s new ad policies their videos are being swept up with the real muck.

Phil DeFranco, who has about 5.6 million subscribers on YouTube, saw ad revenue drop by 30% within the first month. H3h3Productions, which has about 4.7 million subscribers, said it was only making 15% of what it typically makes month to month on YouTube.

Enter #ReaderRevenue

With the landscape looking bleak, however, there is room for innovation, which is just what we have seen as publishers rethink their entire business models and break their reliance on advertising revenue. This has been the main impetus behind the move towards reader revenue, and with this shift publishers are swinging back to objectives that put content quality firmly front and center.

The New York Times was the first to learn from its mistakes and react accordingly. In 2016, the company made more money from its 1.85 million digital subscribers ($232 million) than from all of its 122 million non-subscribing visitors ($208 million). The move towards a more user-centric business focus is in line with how digital revenues have developed over recent years.

Digital circulation revenues are growing at a considerably faster rate than digital advertising revenues. Though it will take time to figure out all of the ins and out, the tools and strategies that will make these new structures succeed, the future is bright for publishers who are willing to adopt a more diversified approach to their revenue streams.

Looking to implement a reader revenue strategy to achieve your business goals? Contact us to learn how we can help you increase your subscription revenue.

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