The 3 Hard Truths Publishers Must Face in 2018
With monetization pressures mounting, publishers find themselves at an industry-wide crossroads, and the endless predictions about what next year holds reflect as much. Everyone agrees 2018 will be a year of significant change, but few agree on the best strategy and direction. Is 2018 to be the year of last-ditch battles for survival, or will we see the first generations in a new, evolved publishing industry?
Either way, what happens to publishers in the coming year could likely determine their futures beyond it. In an ever-changing industry, it’s becoming clear that publishers must work to find their long-term solution, not a quick fix that addresses problems in the short term.
While there’s no one-size-fits-all solution, a publisher’s path forward must recognize some fundamental strategic truths about the publishing business model. It’s through these truths that publishers can start planning for 2018 -- and beyond.
Truth #1: Facebook Is Not Your Friend.
While some publishers have seen Facebook success, the relationship between the platforms and the content creators that sustain them could hardly be called a friendship. After all, Facebook has made it clear that they prioritize friends in the News Feed; they don’t extend the same courtesy to publishers.
Historically Facebook has delivered significant traffic, but the boundless reach Facebook once offered is long gone. Some publishers have altered their strategy to game Facebook’s rules, tailoring their content to what they think the algorithm wants, but with mixed results.
Chasing platform traffic isn’t viable in the long term when it leads publishers to commit to a strategy likely to be rendered irrelevant by the next Facebook algorithm tweak. Publishers are left with large “audiences” they can’t directly reach, while being in an industry increasingly reliant on meaningful audience engagement. The reality is that Facebook has become a pay-to-play game. For publishers to establish direct relationships with their audience, they must focus on direct channels—like email—and not rely solely on the platform.
To be sure, Facebook has made some concessions to publishers, and 2018 will bring more. Still, no matter how Facebook tries to placate the publishing industry, it doesn’t change the fact that Facebook competes for the same ad revenue as publishers, and in a game that Facebook controls. And control they do: Google and Facebook command 61% of global online advertising spend. That speaks to another pressing issue facing publishers.
Truth #2: Ad Revenue Won’t Be Enough to Sustain Quality Publishers.
In recent years, much of digital publishing strategy has focused on propping up the ad-driven business model, but the problems facing the industry go beyond finding new ways to drive ad revenue. The problem is with the ad-driven business model itself.
With two platforms absorbing a growing majority of ad spend, publishers with an ad-driven business model must fight for a diminishing pool of dollars. At best, publishers have found short-term solutions to increase ad revenue, such as boosting yield with header bidding. At worst, chasing ad revenue has led to the much-maligned “pivot to video”.
When the ad dollar pie simply isn’t big enough for everyone to get a slice, publishers should look beyond a reliance on ads and diversify their revenue. Many publishers are doing so with ecommerce, events, and lead generation. This will continue in 2018 as the major platforms take the lion’s share of ad revenue.
The past year also saw many publishers combat declining ad revenue by monetizing their audience directly with a paywall. Still, if publishers want to drive revenue from their audience, they must build strong relationships with that audience first. Connecting with them outside of the platform is a good start, but it may also require publishers to face a tougher, more existential truth.
Truth #3: Publishers Must Choose Between Pursuing Quality and Chasing Scale.
In an attempt to make the ad-driven model work, some publishers made scale their strategic priority, sacrificing quality in favor of lowest-common-denominator content that appeals to the broadest possible audience. But chasing scale has sent the industry in the wrong direction: when meticulous journalism (expensive) drives the same amount of ad revenue as commoditized content, the ad-supported model naturally favors low quality publishers and reposted cat videos (cheap).
A select few publishers have proven capable of producing digital quality at scale, but they have also benefited from diverse revenue streams and strong direct ad sales, not to mention a lasting legacy. For the non-New York Times publishers of the world, the focus will be on finding the audience and building strong relationships with it.
The future of publishing lies with the audience—with engaging, nurturing, and monetizing that audience. But for publishers to effectively build a strong audience relationship, they first must decide who they themselves are. Publishers can enlist themselves in the fight for fleeting attention with mass-produced content, or they can align themselves fully with a (smaller) audience, pursue subscription revenue models, and then devote themselves to creating content those audiences are passionate enough to pay for. What will that content be? Some publishers finding success include:
- Publishers playing to their strengths, focusing on delivering quality in a few select verticals;
- Publishers who go all-in on a single, specialized vertical, offering authoritative quality in a niche topic;
- Local publishers who foster strong community ties with strong reporting that can’t be found elsewhere.
Macro trends in the publishing industry suggest that when the dust settles, there will be three main types of digital publishers who weather this shift in the industry: large-scale commodity publishers with low production costs, high-quality publishers with paid subscription models, and niche-content producers with small audiences that can be sold to advertisers directly. Of course, this correction won’t all happen in 2018, but for publishers to truly find success in 2018, they’ll have to think a little further ahead and decide now which type of publisher they want to be.