Companies that have invested in cultivating a loyal audience and delivering more efficient media spend for advertisers are thriving amid the pandemic.
A crisis has a way of revealing an organization’s true colors, and never has that been more apparent than right now in the media industry.
The coronavirus pandemic is ravaging the world economy and the media industry has not been immune. Brands are pulling back on advertising spending — analysts project a 30% decrease in digital ad spend in Q2 — and outlets large and small are furloughing and/or laying off large portions of their staffs to compensate.
But we’re also seeing many publications thrive amid this economic tumult, and their success is a testament to the time, money and effort they’ve put into building sustainable business models over the past several years.
The media companies finding success during this period of upheaval are the outlets that have spent the past several years…
- Producing high-quality content (the type of stuff people are willing to pay a subscription for).
- Investing in their ad tech infrastructure, such that their ads deliver a sizable return for their brand partners.
- Or both.
The job cuts in the media industry over the past several weeks have been drastic.
Absolute bloodbath coming for social media, search, and digital publishing companies, per @eMarketer.
— Alex Kantrowitz (@Kantrowitz) April 23, 2020
Vice — once considered the “fastest-growing” media company in the world, with a valuation of nearly $6 billion — plans to lay off 300 people because of the pandemic. And that’s after laying off 15 percent of its workforce in November 2018 and another round of layoffs in 2019.
BuzzFeed, the other digital media cool kid, has cut salaries amid the pandemic to avoid a reduction in staff, and that comes on the heels of laying off 15 of its employees in early 2019.
Even Vox, one of the few digital-first success stories, has had to furlough 100 employees to stay afloat.
Conde Nast — the publishing company behind iconic magazine titles like Vanity Fair and Vogue, and arguably the most glamorous media company in the world — has enacted steep pay cuts, too. (You know things are bad when Anna Wintour has her salary slashed.)
At the same time, some media companies have shown they have business models strong enough to withstand the pandemic.
Some Conde Nast titles, such as The New Yorker and WIRED, are doing well. Netflix’s business is through the roof. Traffic to the Washington Post and The New York Times has increased by more than 50% since the pandemic, and the Times added 600,000 new digital subscribers in the first quarter, its largest ever quarterly increase. And independent podcast producers are seeing their advertising revenue increase.
What do all of these companies have in common?
- They all make high-quality content — so high-quality, in fact, that people are willing to pay for a subscription to access it (a rare occurrence on the web).
- Their ads convert at a higher rate than other media properties, making them a more attractive option for brands.
Netflix’s investment in original content has made it a must-have media property during the long hours of quarantine. People are willing to pony up for it, even during a recession.
That stands in stark contrast to Quibi, the new mobile-only streaming service that launched this year to much fanfare but has failed to gain any traction.
Event programming tonight:
No event programming — ever:
— Zak Kukoff (@zck) May 4, 2020
WIRED and The New Yorker have done a wonderful job converting casual readers into monthly subscribers, a testament to the caliber of journalism they produce on a regular basis.
The Post and Times have also had success with digital subscriptions, and they supplement that income with robust digital advertising operations.
And then we have the independent podcast creators. It seems bonkers that a brand would increase its media spend with a small podcast show during a recession, but that’s exactly what’s happening.
The pandemic has caused brands to be selective about where they spend their money, and many brands have found that advertising with small, independent media properties is often a more efficient use of their advertising budgets.
Independent media creators (be they podcasters, Twitch streamers or YouTubers) tend to have smaller but more loyal followings. That loyalty often translates into higher conversion rates for advertisers, which is a huge competitive advantage as brands look to cut costs.
Creators can also use advertising technology to target and track their audiences more precisely than larger media companies, thus delivering a better return on investment for advertisers.
The publications that are struggling right now are ones that took shortcuts. Instead of producing high-quality, originally reported work, they resorted to clickbait-y articles, sensationalist hot takes, aggregating other people’s reporting and other cheap content production tactics. Good luck getting people to pay a subscription for that, or monetizing it once advertising dollars dry up.
It’s pretty simple really: for a media company to succeed, it needs to cultivate a dedicated audience by creating quality content, and then monetize that audience by either selling subscriptions or developing an ad tech stack that results in high-performing ad units. Better yet, do both.
The days of selling lazy content and canned-air sponsorships are gone, and we as consumers are all better for it.