How Publishers Can Survive the Great Content Value Dilution

Inplace #2

ADOTAS – A recent Wall Street Journal piece titled “Content Deluge Swamps Yahoo” paints a bleak picture for web publishers and the online media world in general. The article belabors the diminishing value of web content, citing falling CPMs and market share at Yahoo! and AOL, as well as challenges faced by other prominent publishers.

As web content proliferates, CPMs fall. Mathematically speaking, it’s inevitable. But content hasn’t become worthless. Whether it’s Shakespeare or the deep introspections of Mommy Bloggers, any content that someone besides the author is willing to pay attention to has value greater than zero.

And don’t buy into the myth that value has all shifted from content producers to content discovery. If there is no content, there is nothing to discover. “Discovery” is a derivative while content remains the underlying asset.

So, good news! Content’s value is still intact; it’s just been spread thinner and thinner as the web has grown.
Given that web content still has some value, the urgent matter before us is: How can publishers stay in the game while facing the commoditization and dilution of content?

Here’s one news flash for you: you no longer need a bloated corporate apparatus to sell ad space. If you own a web property (or a collection thereof), count on its value decreasing steadily with time, at least in terms of advertising revenue (subscriptions being an alternative source of revenue, but one that has no direct bearing on CPMs or ad sales effectiveness).

And don’t think you can gain the upper hand by expanding your web property or building a bigger media empire; you won’t ever come close to matching the web’s exponential growth rate.

Instead, focus on what you can control: costs and efficiency. If CPMs are in freefall, then your cost to sell each thousand impressions has to drop even faster. In a prior post for Adotas, I focused exclusively on automated ad creation as a means to streamline the sales process, but the need for cost reduction goes much further than that.

How do companies sell a commodity product, the value of which is declining? They develop standardized, automated processes that operate more and more efficiently at higher and higher volumes. They keep fixed overhead low, and per-unit margins high. In my corner of the online advertising world, this translates to self-serve platforms for creating and trafficking ads.

But there’s even lower-hanging fruit that doesn’t require an army of software developers to pluck. Think about it for awhile, and you could probably list dozens of anachronisms that are begging to be retired.

Rate cards are a perfect example. You might as well etch your prices in shekels on stone tablets.

The mere existence of a rate card implies a lack of variety in what you’re selling; it’s like opening a brokerage and only selling two stocks, then updating the prices of those stocks once a year in a downloadable PDF that’s mostly filled with overly contrived stock photos of businesspeople shaking hands. And then you’d wonder if your slowdown in business might be at least partially attributable to that newfangled E-Trade thing you’ve been meaning to check out…

Publishers also fall victim to the Fallacy of the Perfect Campaign, which leads to misguided and expensive investments in hands-on, consultative account management (in contrast to the completely hands-off, yet massively successful approach of Google’s self-serve AdWords platform). This quaint school of thought holds that campaigns will perform better if the media plan is hand-stitched and baby-sat by account reps and media gurus who’ve got first dibs on “premium” inventory.

Let’s assume that a personal touch does give a boost to campaigns. Guess what? Advertisers don’t want or need the best possible campaign performance!

To illustrate my point: someone shopping for a suit could pay $3,000 for a sublimely-tailored garment that will fit perfectly and be superior in every way to something made in an overseas sweatshop, but in this Technological Wonder Age of mass production, 99.999% of suit buyers are completely satisfied to buy 3 for 1 suits off the rack for $1,000 at a Macy’s Fall Sale. It’s called the Law of Diminishing Marginal Utility, and it certainly applies to online advertising.

Even the negative connotations around the term “remnant inventory” speaks volumes. This is the inventory that’s arguably monetized most efficiently and powers scores of highly effective campaigns. Will publishers still call it “remnant” inventory when they’re selling a majority of their impressions through exchanges?

Don’t be travel agent in the mid-1990s. The age of the expert media intermediary is coming to a close, to be replaced by easy, automated and highly efficient (if imperfect) solutions.

Web content and ad space are still worth money, but the more mysterious, precious or inaccessible you make it seem, the fewer advertisers will choose to buy from you over more straightforward alternatives. Not to mention that your business will be built around complexity, when the rest of the industry is moving towards standardization, automation and simplicity.

At some point, it will be too late to turn back. You’ll be the last lonely travel agent trying to book Hawaiian vacations for customers who are about as inclined to visit your shabby little office as they are to cross the Pacific in a canoe.