The digital media industry is in the midst of a transformation. As my partners at The Daily Beast often say, digital media is “facing extinction level pressure,” and while that poses a risk to our business, the opportunity to arise from this with strength is apparent and attractive. As the traditional pillars of revenue (advertising) and traffic (search) becomes less reliable, publishers are grappling with the need to rethink how they operate. What was once a straightforward model built on ad dollars has now become a complex web of revenue streams, content formats, and consumer expectations.
This blog post kicks off what I hope to be a multi-part series exploring the critical elements that modern digital publishers must consider to survive and thrive. From the erosion of traditional ad revenue to the importance of building diverse revenue streams and producing content across various formats, each piece will delve into specific strategies that can help media businesses navigate today’s challenges. I hope to not only educate with this series of blog posts, but I hope to use them as a way to collect my thoughts and embolden my convictions as to the future that lies ahead in a space that I am passionately interested in.
I’ll start by examining how the digital publishing landscape is changing—and why diversifying both your revenue base and content formats is essential for long-term success.
The Erosion of Traditional Ad Revenue
For decades, advertising was the backbone of digital media. Publishers built their entire business models around banner ads that could be directly sold to brands and agencies that represent them. Later, the move towards programmatic monetization grew and the battle between directly selling one’s own advertising space, to relying on third party systems and networks sales practices ensued. For the most part, programmatic ad buying proved more efficient and more scalable to brands, so the majority of dollars that did not get scooped up by Google, Facebook and Amazon, fell to publishers through programmatic channels like The Trade Desk and a few others that were able to claw some market share. Direct brand sales became largely focused on high-impact, sponsorship deals that were not available for execution via traditional programmatic channels.
While advertising was and still is a large revenue pool for publishers to swim in, that model alone is no longer sufficient. Several factors—ranging from ad blockers and privacy regulations to changes in how people consume content—have eroded some of the effectiveness of traditional digital advertising. Furthermore, the large percentage of ad dollars being pushed towards data-driven, programmatic channels has made individual publishers less important to the landscape as buyers can reach their audience at the lowest cost location through data-based buying and targeting.
Platforms like Google and Facebook dominate ad budgets, leaving smaller publishers to fight for scraps. The rise of ad-free new media services, like Netflix, has further drawn from the pool of ad dollars that traditional digital media publishers used to feed off of. Ad-blocking software has further slashed potential ad revenue as consumers grew wary of disruptive advertising formats that proliferated as publishers tried to make their platform more compelling to marketers. Simply put, relying on ad revenue alone is no longer a sustainable strategy for most publishers, as evidenced by the declines in valuations, investment dollars and, sadly, the downsizing and loss of many of the prime publishing brands we grew to know and love.
So, while “extinction level pressure” seems like a reasonable thing to say about the industry, how will modern publishers survive and, dare I say, thrive?
Building a Diverse Revenue Base
As ad revenues have declined, media companies that are still around and growing have adapted by diversifying their revenue sources. A multi-stream approach allows for more stability and resilience, even when one area (i.e. ads) faces pressure. Key revenue streams that publishers are tapping into (and which I hope to write in more detail about at a later time) include:
- Subscription Models: Paywalls, membership programs, and premium content offerings are growing in their popularity. These models allow a brand/publisher to develop and nurture a direct relationship with readers, giving them more control and a (hopefully) reliable income stream.
- Syndication Partnerships: Licensing content to third-party platforms like Apple News, Yahoo, MSN, Flipboard (and more) creates new ways to monetize existing work without reinventing the wheel. These platforms also allow publishers to expose their talented writers and premium content to a larger audience, which can help build direct relationships down the line (think future subscribers, readers, and fans).
- Events and Conferences: Bringing audiences together through live or virtual events can not only drive revenue but also deepen audience engagement and loyalty. While events and conferences are crowded and expensive lines of business to dive into, some brands have found their niche and turned this into a significant part of their overall revenue.
- IP Licensing: From books to TV series and film adaptations, intellectual property derived from media companies’ archives or successful franchises has the potential to open up a lucrative revenue stream. Investigative reporting is expensive and often doesn’t yield the revenue it takes to support, but if just one of those investigative reports a publisher invests into can turn into a monetizable piece of IP (think a streaming show or movie), it could fund a publishing business for years to come.
- Affiliate Marketing and E-commerce: Partnering with brands or selling products directly to audiences has emerged as another way to generate revenue, particularly for niche publications with a dedicated readership. News publishers have had varying degrees of success with their e-commerce units, but those that have leaned in to write quality reviews that appeal to their already large audiences have been able to make this a significant line item in their businesses P&L.
Leveraging Multi-Format Content Distribution
Alongside revenue diversification, how media companies deliver their content is also evolving. Audiences today consume content across multiple platforms, and the most successful digital publishers are those who meet them where they are. No longer limited to written articles, media brands are increasingly producing content in various formats, such as:
- Podcasts: Audio storytelling has seen tremendous growth in recent years. Podcasts offer a way for publishers to build deeper connections with their audiences, often in a more intimate and engaging manner. At The Daily Beast, we saw the need to bolster our podcast content offering and moved to launch a podcast (The Daily Beast Podcast) to try and take advantage of the format as a way to deliver the best of what our newsroom produces.
- Video: The demand for video content, especially short-form and live video, continues to soar. Video allows publishers to tap into platforms like YouTube and social media to reach new demographics. Video itself can be a very expensive proposition for most publishers to undertake, but it is table stakes in a media environment that leans more heavily towards visual content over written content. A publisher does not need to produce 30 minute long TV shows to participate in the video movement, as short-form 2-5 minute content has quickly become a preferred format thanks to TikTok, Reels and YouTube Shorts.
- Visual and Interactive Content: Infographics, data visualizations, and interactive storytelling can drive engagement and present complex information in a digestible format, appealing to increasingly visual audiences. Who doesn’t like a good infographic?!
By diversifying content formats, publishers not only engage their audience more effectively but also create more opportunities to monetize that engagement.
The Role of Data and Analytics
In today’s digital media environment, understanding your audience is key. Gone are the days when we had to rely on a Nielsen panel to tell us who was watching and what they wanted to see or hear. Data and analytics are available at staggering levels to digital media publishers, and they provide us with invaluable insights into who our readers are, what they want, and how they consume content. Armed with this information, a successful publishing business must tailor its content and revenue strategies to better serve their audience’s needs and preferences, improving both engagement and $$$.
I hope to write more about personalization and segmentation in an in-depth piece later, as I believe it plays a vital role in the diversification of both content and revenue streams and further believe that the winners at the end of this “extinction level” period will be those that became data-first organizations, unafraid of the power of data, AI and responsible uses thereof.
Why Audience Loyalty is More Important Than Ever
AI is another paradigm that is going to increase the pressure on publishers. In a time when readers will have even more countless options for consuming content, building trust and fostering a sense of loyalty is crucial. Successful media brands are those that can create a direct relationship with their audience, bypassing the gatekeepers like social media platforms and search engines that can siphon away audience attention (and divert them away from your content with the flip of a switch). Strategies such as newsletters, membership programs, and social media engagement can help build a loyal following in an increasingly fragmented landscape. Brand and audience loyalty is so important, that were it not for the incredible loyal and sticky audience at The Daily Beast, I can say with certainty that I would not have thrust myself back into the publishing sector and taken the role as it’s President & COO.
What’s Next?
Well, hopefully a lot. I am excited about leading the charge to turn around the fortunes of one The Daily Beast, which I have long viewed as one of the most well-recognized digital-first publishing brands in news and entertainment. I see an exciting path forward to not only survive but thrive in the modern publishing world, and I will no doubt be busy working with a number of talented people at The Daily Beast to achieve this. That said, I would like to use my blog as a way to scratch my own persona publishing itch, as well as to help me organize my thoughts and opinions as we work to take the Beast to new heights.
For purposes of keeping a list for myself, some topics that I hope to write about in the future include exploring the following critical areas in depth:
- Ad Revenue Erosion and the Future of Digital Advertising: Analyzing why advertising is no longer the reliable foundation it once was and how to adapt.
- Diversifying Your Revenue Streams: How publishers can build resilience by embracing subscriptions, events, and more.
- Content in Every Format: Meeting Your Audience Where They Are: Why podcasts, video, and interactive content are essential for modern publishers.
- Data, Analytics, and Personalization: Using data to create more relevant content, increase engagement, and boost revenue.
- Building Audience Loyalty in a Fragmented Digital Landscape: Creating direct relationships with readers to ensure long-term success.
Thanks for reading and (hopefully) more to come.
–KB
