Advertising’s existential moment
The past few years have been challenging in the world of advertising. First came the decline of print, with “digital dimes” replacing lost print dollars.
Then programmatic buying turned inventory into a cheap commodity. The “viewability” debate stole another chunk, and ad blocking is an emerging challenge. The rise of social, mobile, video and native atomised audiences and changed the rules of the game again and again. And then there’s whatever happens next. And all this is happening in a market where just two companies—Google and Facebook—now grab more than $60 billion in annual U.S. advertising revenue, which by some accounts is more than the magazine and newspaper industries combined. So what’s going on here—and what’s the long-term outlook? We see at least five powerful trends in play:
• Traditional magazine advertising worked because of supply and demand. Advertisers needed prospects, and magazine companies owned audience. The emergence of digital media changed all that. Now media brands have proliferated, audiences have fractured and advertisers have many alternate ways to reach people.
• Programmatic technologised a sales process that had been built on face-to-face calls, driving down prices and diminishing the power of individual brands.
• Advertisers now buy targeted slices of audience across thousands of websites, including many non-media sites, leaving media companies with less leverage.
• Content marketing made it possible for brands to find and communicate with prospects directly, sometimes without the media at all.
• Most threatening, the entire industry is increasingly driven by technology, and magazine companies have often been a step behind their digital competitors in mastering change. That’s one reason Google, Facebook, and eight other Internet companies plus a host of ad-tech middlemen claim over 75 cents of each dollar spent on digital advertising.
To dig deeper into these trends, Folio: interviewed 18 key players in magazine-media advertising today. On the publisher side, they included 11 senior executives at nine publishing companies: Atlantic Media, ESPN, Forbes, IBT, IDG, New York, Rodale, TEN and Time Inc. We also spoke to people from three ad agencies (SMG Global, Carat, GroupM), two digital scorekeepers (com- Score & eMarketer), plus a leading consultant who has one of the industry’s best-known sales rep firms.
Our research turned up something important: Even with the decline in print, magazine media—that is, brands with multiple channels—are holding their own or even growing advertising despite the tough climate. They are getting out in front of each new digital challenge. And by doing so, they have turned what might have been an “ad-pocalypse” into a new sales opportunity for ad-driven brands.
“The ground shifts under our feet every few months, but we’ll be up more than 20 percent in overall ad revenue this year,” says Bob Cohn, co-president and COO at The Atlantic. “It’s a challenging market,” agrees SVP/Group Publisher Chris Lambiase of Rodale, home to Men’s Health, Prevention and others. But Rodale is seeing gains in both print and digital this year, he says, “so we’ve been able to defy gravity.”
If those guys make it sound easy, don’t be fooled. But understanding their strategies may offer a clue to solving your own ad challenges. So here are eight of the biggest obstacles they encountered— and how they are solving them.
This article continues, discussing:
- The rise of programmatic
- Ad fraud and ad blocking
- The viewability hurdle
- Feeding the data monster
- A closer connection to readers
- Demand for leads and multi-platform
- The decline of print
- Confronting the digital giants
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