I just finished yet another story about how digital is disappointing media companies. I look at these stories and events with a bit of “I told you so,” seasoned with a dash of empathy for an industry that simply won’t or can’t give up the past.
John Paton is apparently embarrassed by his “Digital First” company filing bankruptcy (again). “It’s pretty damn public and it’s pretty damn embarrassing,” Mr. Paton told the New York Times Monday in an interview. But he also insists it was necessary and the right business thing to do. I suppose.
Mr. Paton has become the shining star of those who believe that traditional media can evolve their model to the Web, but he never gave actual numbers about how well his company was doing, preferring instead to offer percentages, like digital revenue at the group being up 235% from 2009 to 2011. Sounds like progress, right?
In an excellent summary of print’s problems, British journalism innovator Kevin Anderson correctly noted that “the reality is that you can make money online but that newspapers are not competing effectively for digital advertising.”
From a business standpoint, this has meant that while digital advertising spend has increased dramatically, news organisations’ share of that digital revenue still remains piteously low. As WAN-IFRA noted:
Overall digital advertising market rose from US$ 42 billion to US$76 billion from 2007 to 2011. Only 2.2 per cent of total newspaper advertising revenues in 2011 came from digital platforms.
What you will continue to hear over and over and over, from the likes of former Guardian editor Peter Preston, is that print still pays the bills. They will tell you that you can’t make money online.
What the newspaper industry (and, frankly, TV, too) just can’t seem to grasp is that the network is not friendly to mass media advertising concepts. There are two systems in place that attempt to duplicate traditional advertising online, and neither is capable (so far) of sustaining the expenses necessary to support a legacy brand: banners and pre-roll video ads. Banner ad systems and networks are supposed to function like print advertising in that they “surround” what must be scarce content in order for them to “work.” The problem is they don’t work, primarily because nobody sees them. This was proven by Web usability guru Jakob Nielsen (banner blindness) nearly ten years ago, but it didn’t stop publishers from staking everything on banners.
Today, banners are the turd in the punchbowl of traditional media’s ad portfolio. I’ve heard a steadily increasing chorus of “nobody’s buying banners anymore” from account executives of media companies. Likewise, I’ve heard from people on the advertising side that banners are worthless except for the Google Juice they can provide. Banners. Don’t. Work. Targeted banners do better, but there still is the matter of banner blindness.
So newspaper gurus pitching a “digital first” strategy are only partially right. Of course the future is digital, but the business isn’t and never will be in banners.
Video pre-rolls are also problematic for numerous reasons. I continue to give kudos to ESPN.com for their policy of not running pre-rolls longer that 15-seconds, but ESPN is the exception to the rule. There’s also the matter of the Web’s inefficiency when it comes to frequency, which results in people having to sit through the same ads over and over and over again. Video advertising is a work-in-progress that stands a much greater chance of success than anything in the display category.
Bear in mind that Madison Avenue is complicit in the turd/punchbowl scenario. Ad agencies care less about the efficacy of banners than they do about maintaining their position within the hegemony, so as long as they toss their (easy) money to media companies that provide banner slots, there’s zero incentive for change.
All of this is going to come to a head some day, and when it does, a lot of people are going to be left in a very difficult position.