Steve Dempsey: Medium's malaise indicative of all publishers' problems
Last week the publishing platform Medium announced it would be cutting jobs and moving away from what it has been doing to date. The platform had been attracting major publications and offering incremental improvements on the current ad-supported publishing model. But it wasn't working.
Ev Williams, chief executive of Medium (and one of the founders of Twitter), said that the dominant ad-driven approach to online publishing wasn't rewarding quality or originality. "It simply doesn't serve people," he wrote. "In fact, it's not designed to. The vast majority of articles, videos, and other 'content' we all consume on a daily basis is paid for - directly or indirectly - by corporations who are funding it in order to advance their goals. And it is measured, amplified, and rewarded based on its ability to do that. Period. As a result, we get … well, what we get. And it's getting worse."
It's a pretty bleak statement. Perhaps deliberately so. Regardless, Medium's malaise is indicative of the distribution and monetisation challenges all digital publishers now face. Technology has democratised publishing, reduced the barriers to entry and created an abundance of information. But it has also commoditised news and undercut users' desire to pay for content. Why pay, when everything is free?
Many think subscriptions are the answer for quality news outlets. The deputy editor of The Economist, for instance, recently suggested that display ads will have disappeared by 2025, and that publishers need to learn to tap readers up directly for their revenues.
The current darling of the subscription-based approach is The Information, a site that covers the technology sector. The company deserves its darling status - it reportedly has 10,000 subscribers paying $399 a year. Jessica Lessin, the woman behind The Information responded to Medium's predicament, saying too many publishers pay lip-service to non-advertising business models, but are afraid to change. "Publishers - unwilling to embrace and prioritise subscriptions - are still serving advertisers over readers," she said. And in Lessin's mind, subscriptions don't mean one-off payments. "Micropayments have never worked in the history of news," she wrote.
But let's be clear. Ads do still work. But only well enough for Google or Facebook. Analysis of the IAB's US ad spend figures for Q3 of 2016 shows that all the growth in digital advertising is effectively going to the search and social giants. There's virtually no year-on-year growth for anyone else.
Without Facebook's ability to target based on interest, and Google's ability to target based on intent, publishers are left with a suite of limited ad formats that are less relevant than Google or Facebook's ads and pale in creative comparison to those on TV, print or outdoor. So could they be improved?
That's what Axios, a political and business news service soon to be launched is aiming to do. Forget banner ads and long-form native advertising. Axios will only offer advertisers a type of branded content that fits with its bite-size, short and shareable output.
Maybe Axios is onto something. Research from Kantar Millward Brown found that all generations are broadly positive about traditional advertising. But are less positive about digital ad formats. Generation Z in particular (that's 16- to 19-year-olds and 27pc of the world's population according to the AdReaction global study) are unforgiving in relation to invasive, unskippable ad formats. They prefer short content, ads they can interact with and rewards for interacting with those ads. Humorous and indirect marketing approaches, like Snapchat filters, work far better than the hard sell of other formats. And while Gen Z is in the vanguard, generations X and Y have similar preferences and behaviours. So shorter, sharper ads seem to be the way to go.
But regardless of whether an online platform is putting its faith in subscriptions or in advertising, there's one other thing that's required for success. It's the brand.
Audiences will pay for brands they love or trust. It doesn't matter whether they're paying through a subscription fee or paying in terms of attention, they need to feel a strong affinity with their publications of choice. So while Medium, Mashable, or any media outlet is grappling with ads and/or subscriptions - and there's plenty of grappling to come before a successful, sustainable model is found - they need to remember to maintain an emotional connection with their audience.
Sunday Indo Business