The Dangers of the Digital Advertising Echo Chamber & How to Get Out
Seismic shifts are underway in the digital advertising world. While some publishers cling to the ad-driven revenue model that has sustained the industry for generations, others are furiously working to branch out from this crumbling paradigm.
Regardless of which side of the divide a publisher falls on, one truth remains: To survive in an industry relentlessly racked by change, publishers must establish performance-driven relationships with marketers and invest in technologies that put publishers back in charge of their business models.
The Digital Advertising Echo Chamber
The most insistent idea that echoes around the digital publishing sphere is that CPM-based advertising will somehow return as a growth driver. But with marketers now able to reach targeted audiences in myriad ways online, publishers are struggling to keep ad dollars flowing to their sites.
Publishers are also preoccupied with investing in new content and external platforms — most notably social platforms like Facebook and Instagram — to extend their brand footprints. While such investments aren't necessarily bad, they're at least partly made in the hope that a larger audience will translate into more ad dollars. Yet, because platforms largely control monetization, publishers can’t be sure that their investments there will pay off. What's more, in the process of committing to platforms, publishers are losing control over their business models.
Breaking Out of the Chamber
The best way to move forward in the face of these shifting market forces is to accept a truth that many in the publishing industry have yet to fully embrace: the fundamental nature of marketing is evolving, and we must evolve with it.
Gone are the days of spray and pray marketing campaigns; all successful digital marketing is now performance marketing. If marketers don’t find clear-cut, measureable value in their relationships with publishers, they'll find that value elsewhere. As publishers, we need to lean into this kind of accountability, not work around it.
Build a Marketplace
One way to foster a new, performance-driven marketer-publisher relationship is to create marketplace dynamics, or ecosystems, in which publishers position themselves not just as brands, but as branded services. The publisher-as-branded-service model is exemplified on sites like Houzz, which upended the traditional "shelter" magazine industry by combining content and commerce in a novel way, or Trip Advisor, a site that has done something similar for the travel industry.
To succeed as branded services, publishers must create content that naturally bridges the gap between consumer interest and commerce experiences. Creating content that serves audiences' needs — whether by helping them choose a light fixture or plan a vacation — enables publishers to establish a one-to-one connection with those consumers. And this connection spills over to marketers’ relationships with consumers, as well.
We know, for example, that marketers find value when their ads are adjacent to content that is somehow related to the product or service that they are promoting.
Take Control of Your Tech
Another way that publishers can take charge of their own destinies in the digital era is to invest in the technology that affects their bottom line. Much of the investment that traditional publishers have made in technology is related to producing and disseminating content. But that's left little room for investment in technology to facilitate monetization, yield optimization, or data management. As a result, many publishers have given away the keys to the castle; outsourcing this critical technology to the ad tech community means that publishers are losing control of their first-party data and losing out on essential revenue opportunities.
Nowhere is the lack of publisher control over ad tech more obvious than in the world of programmatic advertising. While programmatic is certainly beneficial to many publishers, it's also led to the devaluation of publisher inventory. Publishers that use third party SSPs have lost insight into bids, leaving them with little to no grasp on the actual value of their ad inventory. By outsourcing ad tech, these publishers also have forfeited some measure of control over user experience on their sites. But luckily, there's a solution to the ad tech problem: in-housing ad tech.
Publishers that invest in building out their own technology stacks can capture the true market value of their inventory and deliver better experiences to users. Investing in ad tech also means taking control of first-party data, the value of which cannot be overstated. In retaking control of this resource, publishers gain valuable insight into consumer behavior, such as consumption patterns and intent. This data forms the foundation of the kinds of marketplaces that successful publishers should be building in the digital age.
Constructing marketplace dynamics and building in-house technology to fuel monetization and data management may sound like tall orders for some publishers, but seismic market shifts call for aggressive action.
As publishers move ahead with initiatives that allow them to regain control of their business models, the biggest challenge they are likely to face may be breaking out of the echo chamber that exists within publishing organizations. Overcoming cultural resistance to change and getting existing staff to fully embrace new ideas and business models can be difficult. These cultural obstacles leave little choice but to aggressively refresh talent to form standalone, fully resourced teams that can pursue new internal initiatives or M&A to accelerate transformation.
Greg Mason joined Purch as Chief Executive Officer in 2012, bringing over 20 years of product development and innovation in technology media and digital publishing. Over the past several years, Greg and his team at Purch have created a digital publishing and marketplace platform that is defining the future of publishing through its unique position at the intersection of content, commerce, and customer. Purch combines high-quality content, product reviews and services with cutting-edge technology to create a seamless connection between intent-based buyers and sellers.