Content sites are the new big media
I wrote this article summing up the state of the digital publishing business for WIRED’s 2014 trends issue, which came out this month.
Publishing will come back from the dead in 2014, as companies finally work out how to make money from online content. Think “zombie apocalypse”, but with less gore and more civic value.
As Ken Lerer, cofounder of The Huffington Post Post, executive chairman of BuzzFeed and managing director of Lerer Ventures, put it at paidContent Live, a media conference in New York in April, “The world is ending for traditional media companies, but it’s just beginning for digital-media companies.”
And for such companies, the numbers are looking good. In 2012, Time Warner bought sports-newssite Bleacher Report for almost $200 million (£130m); Vox Media, a web content firm which publishes SB Nation (a sports blog), The Verge (technology news) and Polygon (gaming), reportedly earned $25 million in gross revenues; and, in September, Gawker Media CEO Nick Denton told his staff that news and gossip site Gawker had booked $2 million in revenue in a single day – more than what they’d once hoped to make in a year. Buzzfeed is expected to generate revenues of $40 million in 2013.
In 2014, these companies will continue to grow. According to eMarketer, a US consultancy, spending on US digital brand advertising – the type of advertising that most publishers sell – is expected to grow 17 percent in 2014, to $20.5 billion,on top of 18 per cent year-on-year growth in 2013. Spending on “native advertising”, such as advertorials, is also expected to grow– by 20percent year-on-year in 2014 to $2.25bn.
According to Trei Brundrett, chief product officer at Vox Media, this will lead to an improvement in quality in both editorial and advertising. In 2014, he says, both established and new premium brands will focus on “fully utilising the medium for premium digital storytelling. Quality and value willmattermorethanever.This will apply to the editorial product, but will be even more important in helping advertisers tell their stories and pave the way for premium-brand advertising to make the leap to digital.”
The trick, he says, will be to couple the ability to produce high-quality, customised content with data about audiences. This will allow a publisher to demand higher rates from advertisers and will improve the look and feel of advertising itself.
The music site Pitchfork has embraced the strategy – now at least 80 per cent of its ads include a custom execution. Jarret Myer, cofounder of pop-culture news site Uproxx, says advertising products will begin to merge. Display will look more like advertorials and both will be integrated into the site both in terms of design and content.
The ads will be “actually good and relevant to the site,” he says. “2014 is going to be a year when ads get better.”
Purists will argue that this feels like blurring the line between editorial and advertising, but it isn’t – at least, not any more than any sponsored article always has. “Having quality over the dregs is a good thing, regardless of whether you’re analogue or digital,” says Jim Spanfeller, former CEO of Forbes.com and founder of the Spanfeller Media Group, which publishes foodie site The Daily Meal. “From that point forward [building a publishing business online] begins to get radically different,” he says. The right cocktail of context, content, integration and data is just beginning to emerge.