Vikram Somaya is GM of Weather FX at the Weather Company, creating localized ad targeting solutions. Follow him @vikramsomaya.
The media publisher world is in an odd place at the end of 2012. After a very difficult third quarter and a slowly clawed-back fourth quarter, most publishers are looking back at 2012 and wondering, “Where’s the beef? Do we have an asset that allows us to effectively ford the rapidly flooding stream of decaying CPMs?”
The truth is, with a good number of publishers, the answer is no.
To most publishers, admitting that they don’t have a specially differentiated audience or create a uniquely engaging experience would be akin to admitting that their little boy was really carved out of wood. Unfortunately, for the media world, there are a fair number of Pinocchios running around in both the ComScore top 200 and the long tail, and they are rapidly running out of time.
A couple of key trends are accelerating at an unprecedented rate and causing this level of self-examination. One is the successful use of audience and other data by the ad tech connective tissue, some marketers and some publishers. A successful transition of a content business to a joint content and data business is even more rare and noteworthy.
The second is the economic disjunction that has occurred with the combination of the influx of a huge amount of new inventory (I see you, FBX) and the conversion of big Web users to mobile consumers.
The third and final piece is the technologization of the media buying/selling platform, resulting in unbalanced market advantage — akin to the evolution of the stock market from a relationship sale business to an automated market.
What this has created is a huge talent and execution imbalance. Publishers are looking with some uncertainty at their sales, product and operations teams and wondering how they can upgrade them in time to ride the wave.
They are looking to their CFOs to ask if they have the cash and goodwill with investors to manage through the transition effectively. The one question they are trying not to ask too deeply is, will it really be worth the effort?
So who will weather the storm? Leaving aside the pure scale players, those that do have an engageable data asset and product set and are able to bring in the right talent have a shot at evolving a digital business to a revenue-happy place. However, there’s many a slip between cup and lip even when the stars appear to be aligned.
Then there are those that don’t really have the magic of a highly monetizable audience or information/data business. If we were to add on a legacy media business cost, they’re toast, and most of them know it. They usually have enough heft that most of their leadership will ride boldly to the bottom and try to show a rational pivot along the way to justify their time at the helm.
Either way, it’s going to be a scramble for talent, market position and a re-assessment of what is core for the business. It’s not all glass half-empty; certain teams are going to go out and take market share with a vengeance. However, for a large number of publishers, there is enough data to make it clear that there will be blood — and plenty of it.