Here's how to build a viable publishing business in 2018

Why a channel strategy is important and how to consider monetization options

Seems like publishers never get a break. Ever since the internet eliminated their ability to dominate specific geographies via physical distribution while profiting from classified ads, the landscape has relentlessly changed under their feet. From an ever-shifting mix of platforms and channels, the emergence of a duopoly in online advertising, and the rise, demise and resurgence of paywalls, the publishing world has seen a lot of turmoil since the internet arrived. With a continuous stream of changes, how will future publishers build large and sustainable businesses?

Answering this question starts with knowing your audience: Who they are and where they spend their time online. In turn, this allows you to understand how your content can be discovered and consumed by that audience and how you can monetize that content.

The good news is that the big seismic changes have already occurred and there’s, at least for a while, stable ground upon which to strategize. There’s a framework of a value-chain for several years to come and the changes will mostly be within and around this framework.

Your channel strategy

The cat is out of the bag: Users like getting content in a variety of channels, and that is not going to change. They subscribe to newsletters; go directly to their favorite media sites; receive push notifications; find stories on social media. The composition of channels will keep changing, but the need to produce content in multiple formats will not, as publishers need to be where the users are and adapt as these channels evolve.

Another likely constant will be the different platforms’ shifting strategies that give (or take) preference from specific content types. This puts the onus on publishers to continuously make choices whether they should be jumping on the latest bandwagon or not - be it video, AMP (Accelerated Mobile Pages), specialized formats for specific aggregators, new interactive story mediums, and the other “latest and greatest” trends that will surely come.

Thankfully, publisher don’t need to “be everywhere”. There should be a clear reason for presence and investment in any given channel. The choices of what channels to leverage will largely depend on the audience a publisher is trying to attract, and its monetization strategy.

For instance, is the publisher seeking mass appeal to the broadest audience, and monetize reach at scale? Such publishers could build on the "serendipitous discovery" of stories - the viral power of certain types of stories on social channels. Some publishers, such as Buzzfeed and Huffpost, have perfected this to a scientific level. Such an approach may require more continuous investment in keeping up with the various platforms’ agenda, to ensure you’re always benefiting from their priority and trends du jour. This means continuous investment, so it is not a cheap strategy to execute.  

Other publishers may choose to go deeper into topics, which produces engaged, loyal, and passionate repeat viewers/readers. In this case, a focused choice of a limited number of channels may serve them better. Perhaps they’re a trade publication and users would be best served by the vanilla web + newsletter combination. Sure, they should still have basic social presence for spreading content around, but more than that might be a distraction.

There are plenty of other choices across the channel strategy spectrum. A mobile app with highly-relevant push notifications can do wonders to mobile engagement. Making content available in mobile aggregators such as Apple News and Flipboard may also be appropriate. Web push is a low-cost channel that does not require going through any platform. Publishers who offer content in AMP format get rewarded by Google (who created the standard). Chat-based news delivery (more on that below) does work for some verticals. And the list goes on.

The basic question, however, remains: Where does your audience go and what kind of relationship are you hoping to build with them?

A discussion of channels would be incomplete without a word of caution about those channels that you cannot control - e.g. social networks, third-party aggregators and so forth. These platforms have their own priorities and you are not one of them. All other things being equal, a platform you largely own - web, newsletters, your own app - is always better.

Having said that, the huge discovery boons such platforms can offer are enough to tempt almost anyone. For instance, one hot topic not long ago was video. Someone has probably asked you, “what’s your video strategy?”. Unfortunately, this was mostly driven by platforms experimenting with video for their own strategic reasons (why else?) and trying to incentivize and “recruit” publishers to their efforts. Persuasive as the platforms can be, the record shows that publishers who are enchanted to go along are not always rewarded for their efforts. (Need I mention the days where getting more “likes” to your page was considered to be sound investment?)

Of course, it’s not that video does not make sense. If your audience demands it, video can be a great format to have in the mix. And if playing the “what’s giving me more distribution now” game makes sense for you, by all means go ahead. But always start with the reader or viewer in mind.

Monetizing via ads: Coping with big tech

There is now a de-facto duopoly over online advertising: Google and Facebook dominate with a scale of data and and audience reach never before seen.

There are a few forces that could change the situation: Header bidding technology (which enables real-time competition over every ad impression) could create a more equitable environment, and Amazon’s attempt to break into the duopoly’s rarified ranks could create competition as well. Yet, the bottom line remains: These major ad networks have precise, proprietary data about who they’re targeting. This data is what makes a given ad impression valuable, since it tells them who the person seeing the ad is. Since publishers are not privy to this data, they're essentially selling commoditized white space.

In other words, for an ad coming from Google or Facebook, the content against which it is displayed is virtually interchangeable, since it doesn't make the difference for the ad - what makes the difference is the person seeing the ad.

Audience, of course, is not interchangeable. If you have a unique and/or focused reach into well-defined (and valuable) segments, you have an asset. And unique content does breed unique audience reach. The question is, can you extract the value from this unique reach?

There are still other ad plays out there: While the portion of online advertising that is not controlled by the duopoly has not shown great growth in recent years, many publishers do successfully live in this gap. With a proper mix of scale and quality audience, there is a play in this zone. Many ad tech companies are still eager to work with publishers and monetize their inventory.

The challenge is that despite any sweet promises to the contrary, most of these companies are facing the same non-trivial conditions that publishers do: It is very hard to compete with the data and scale combination offered by Google and Facebook. Of course, there are exceptions. For example, LinkedIn’s ad exchange should be able to hold its own due to their terrific proprietary data. However, by and large, a publisher shouldn’t expect performance that is substantially different from the usual duopoly’s performance here, simply because its position in the value chain is the same as with the major ad networks.

If monetizing via ads sourced from third parties doesn’t seem promising, it is natural for publishers to ask - what if we had our own ad sales team? Managing such a team is an art in and of itself: There are relationships to be nurtured, unique formats to be innovated upon, and per-advertiser customizations to be made. This is working for some publishers, and here you need to have a clear brand, as that is essentially what you’re selling.

The open question here is, as more and more digital ad spend gets sold, targeted and measured in an automated way (rather than manually), is there true growth in the direct ad sales strategy? The answer used to be “no”, but due to “fake news” and inappropriate content across the platforms, there is a pushback and reinvigorated emphasis on a brand-safe environment. Time will tell if this is a true change. The combination of the platforms working hard to re-prove their brand safety, and the great temptation of the scale and targeting abilities they offer, leads me to guess that this is more of a temporary setback and that automation will ultimately prevail.

Other revenue streams

There are other revenue streams that some publishers are successfully deploying, including conferences, events, lead generation, affiliate links and others. These type of revenue streams are made possible mostly by having access to a unique, well-defined audience - or by having very targeted content that answers a specific need (for instance, a product review).

Operationally, such revenue streams are a world in and of themselves and require thought and consideration on how to implement. In any case, since this category of monetization is very broad , delving into it is outside of the scope of this article. Truth be told, many of the strategies in this “extra-publishing” category are probably outside the scope of many publishers at this point in time.

One model that has previously fallen out favor but is now powerfully resurging is the paid subscription model. This model is very alluring: You get to serve an ad-free product, which means offering a more elegant experience you can be proud of. Subscriptions are a clear and manageable revenue stream, and generally experience less seasonality than ad-based monetization does. More than all of that, though, the beauty of this model is that it aligns the incentives of the publisher and its readers: readers pay the publisher to consistently produce quality content. There are less (or no) advertisers to please. There are also fewer incentives to produce clickbait content, since users subscribe out of trust and desire to receive continuous value, whereas clickbait content does not build trust and provides only fleeting value, if at all.

This model requires having differentiated content and a clear audience that trusts you - but this is just the cost of admission. The cost of success is being patient and developing the expertise in creating and optimizing a conversion funnel for paid subscriptions.

This payment model is being successfully executed across some blue-chip publishers such as The New York Times, Washington Post, and of course those who have used this model from the start like the Financial Times. However, you don’t have to be The Gray Lady in order to make this work. Young industry-specific publications such as The Information are successfully executing this model.

The future, and a few things to think about

So what could change all of this and upend the ecosystem yet again? There are always the “unknown unknowns”. We don’t know where the next big shift will come from. However, there are a few important trends, the impact of which cannot be fully estimated yet.

Chat-based interfaces: While there’s been a lot of hype around chatbots, the actual impact has been mostly underwhelming. For now, it  seems like chat-based interfaces could provide a good channel to deliver content, but they fit comfortably within the ‘multi-channel’ aspect of the framework we’ve discussed rather than represent some kind of revolution.

Voice-based interfaces: This one has definitely seen more success with users, and for many publishers, it’s not a bad idea to experiment with this channel sooner rather than later. However, this too is just another channel, and is currently severely lacking in discovery and monetization. Investment here needs to clearly make sense: For instance, if you’re a industry publication relying on subscription-based monetization, unless your subscribers are begging you for a voice offering, there’s probably no compelling reason to pursue this just yet.

And lastly, artificial intelligence (AI) and blockchain. I almost feel bad for bringing these two up in this article, but I promise that I’m not going to monger buzzwords. Personalization technology is gradually evolving into AI that can personalize the content mix, delivery time, and delivered formats as appropriate for any user and channel. This is meaningful, but this is probably not technology most publishers should develop on their own. Mark this then as a space to watch, and explore what vendors are currently offering.

Blockchain and cryptocurrency can play a role in making subscription-based models more accessible and user-friendly. If you have a particularly tech/crypto-savvy audience and an existing subscription model, offering an immediate subscribe-via-crypto experience (simply implemented via the in-browser Ethereum wallet APIs) could be a worthy experiment. Otherwise, you’re probably better off waiting on this one.

In summary, I can only wish things were as clear-cut as I’ve tried to lay them out here. Reality is messier than this: you experiment; you test different approaches; and one goal (for instance, distribution) might be at odds with another (for instance, getting more paid subscribers).

However, the landscape is as clear as it ever has been in the age of digital media. Creating a viable online media business will require navigating this landscape and answering a few core questions, from which the overall strategy emanates naturally. It comes down to understanding who we’re aiming to serve, what content we can offer them, and what’s the right way to offer them that content.

So at the end of the day, it’s still all about the readers and viewers. And there’s some comfort in knowing that this one principle is not going to change.

(Image source: socialsmiling.com)