In digital news,  no-one hit their number last year. Ad revenues were down across the board. But predictably, inside newspapers it’s business as usual. Most are carrying on like the numbers don’t really matter, like consumers and advertisers will always need them regardless. At least that’s what they’d like you to believe. Meanwhile the pure-plays are busy pointing fingers elsewhere, anywhere but at themselves. They’re blaming the advertising dominance of Google and Facebook, and they’re blaming millennials and their apparent hatred of advertising. Although those opinions are fast becoming conventional wisdom, the problem isn’t the Duopoly or millennials. The problem lies in how digital news companies themselves go to market, and in how they sell their advertising.

Okay, that’s it. I’ve finally had enough. At some point everyone has faced that moment when they know the day ahead is going to be fraught with misery, bad-temper and cursing. You know that moment has come when you get into the office, turn on your laptop…and it crashes. All morning I’ve fought the dam thing – then I got on the phone for what felt like a lifetime with my ass in the air, pleading with the woman to please go back to the bit about the Tools in the Options list and talk me through the reset for the umpteenth time.

The problem is that the laptop is actually a Toshiba Satellite. It was quite effective back when it was introduced to President Eisenhower.

Finally, by the middle of the afternoon, it was fixed. My face slowly lost its crimson blush and resumed its characteristic off-white pallor. I took a nice cup of tea – Dilmah, only the best for me – and began to read the stuff that had flowed across the transform since morning. And damn, the first article I read set me off again. ”Farewell to advertising” was the headline. “The business of media sales is dead,” the article began. “It is dead because millennials hate advertising. The only revenue stream for digital media that makes sense now is subscriptions.” The outburst this nonsense induced had my assistant race to call the Geek Squad lady again, thinking we had another laptop collapse on our hands.

“It’s okay,” I told her. ‘You can hang up. It’s the cant, the endless bullshit, it’s driving me nuts.”

Just because the wunderkinder running the new media news business still haven’t figured out how to sell digital advertising doesn’t mean the business of media sales is dead. It simply means they’re not half as smart as we’ve been led to believe. Last year total digital adspend in the United States was around $110 billion. That’s more than 51% of the total advertising pie. The media research company MAGNA says paid search advertising grew by +16%, social media ad sales grew by +33%, and online video ad sales by +26%. 

Doesn’t look like a failing business to me.

Makes me wonder if the writer ever talked to an actual advertiser.

And there’s still a looong way to go until adspend is commensurate with the amount of time people spend on digital platforms. According to Mary Meeker’s 2018 Internet Trends report, there is an outstanding $7 billion opportunity from mobile digital advertising alone.

But the commentariat thrives off conventional wisdom like this. Each myth is recycled and expounded upon until it becomes the anointed word of the herd.  Call me a contrarian, but the idea that digital advertising is no longer viable as a source of revenue for the digital news business is as erroneous as all the other fashionable opinions around right now…

Like, the Times is worth its premium price. It’s not. It continues to under-deliver in key audience segments, particularly millennials, because it still thinks it’s a newspaper. So it has still not figured out digital – and there are legions of tales about that. These are the people who gave back their 10% of for nothing, saying “we own New York, we’ll do it ourselves.” Within a year New York was the best-performing market for Every morning and night these people should set aside their liberal pretention, get down on their knees and thank god for Trump. Within three weeks of his election, the Times added a hundred and thirty-two thousand new subscribers. I bet they signed up not for “objective” coverage but rather for the joy of seeing the president they loathe getting conked on the head every day

Like, fake news is a new phenomenon. It’s not. Saint Benjamin Franklin wrote fictional reports about murderous “scalping” Indians working with King George III, in an effort to sway public opinion in favor of the American Revolution. No, it’s not new, and it’s time we figured out the nature of the problem and fixed it. Here’s one AI-based approach from Frederic Filloux, a colleague whose work and thinking I have long admired:

Like, Facebook is the single great privacy invader. It’s not. It’s just an easy mark. The greatest invaders of privacy roaming the world today are credit monitoring companies like Equifax. Banks and credit card companies are a close second. Then telephone companies – AT&T, T-Mobile and Sprint have been selling customer location data for years to just about anybody, including bounty hunters. Retailer databases are very well developed,  and not just those of Amazon. The mashing of far-flung databases to profile individuals and their purchase habits has been going on since the mid-1980s and consumers – who not as half as dumb as the commentariat and the envious socialists who run the European Union assume – have long been willing to trade “privacy” for convenience or financial advantage.

Like, it’s a fact that consumers hate advertising. It’s not. Every piece of research I’ve seen in 40 years in the media business said that consumers hate advertising – but they use it, and because they use it, it works. What a consumer hates when she’s not in the market for a car is an interruptive car ad. She doesn’t mind it half as much when she’s actually in the market for one, which is precisely what makes data and predictive modelling so important. See? Well, that and she hates stupid programmatic ads that follow her around the net even after she’s purchased what triggered them in the first place

And like in digital media, brevity is mandatory. It’s not. The length of a post is contingent upon subject, audience and intention. At least I hope it is, or you’ve left already…

channelsLet’s return to the notion that in the digital news marketplace there needs to be a shift away from advertising. We should start by  regarding the sorry state of the marketplace as we head into 2019. It is in that sorry state that this particular myth originates, for like most conventional wisdom, it is entirely self-serving.

We’ll begin with a symbolic point. This month, the building on Pennsylvania Avenue that houses the Newseum was sold to Johns Hopkins University.  I was at the Newseum opening in 2008, excited by the debut of an institution dedicated to news and the First Amendment. Not everyone shared my excitement, it seems. It has posted a deficit in every year of its existence. 

There have been layoffs at Vox. Word  on the street is that Vice is planning to lay off 10% of its workforce, that’s about 250 people. This month Buzzfeed announced it will also cut 250 jobs, about 15% of its workforce, including jobs within its news division. In the fourth quarter of 2018, Mic, once valued at $100 million, sold for five million. Verizon took a nearly $5 billion write-down on its digital media unit, which includes AOL and Yahoo. (What is it with AOL? Remember the Time-Warner write-down?) 800 jobs will be shed, including many in news operations. HuffPost is owned by Verizon now, too. It took in a hundred and forty six million dollars in advertising revenue in 2018 – and failed to turn a profit.Reuters announced plans to lay off more than 3,000 people. Across the pond, The Pool, a relatively popular site for women in the United Kingdom, was shuttered.

Meanwhile, back here in the U.S., newspapers continue their decades-long slide into oblivion, most trying to disguise their cashflow problems and long-term economic prospects with adroit use of EBITDA. About that Buffett once memorably said: “People who use EBITDA are either trying to con you or they’re conning themselves.” McClatchy, which owns the old Miami Herald and other papers including The Kansas City Star, the Idaho Statesman, The Fresno Bee and The Charlotte Observer, was reported to be offering buyouts to 10% of its workforce as January drew to a close. And Gannett laid  off still more newsroom personnel as it tries to shed costs amid hostile buyout talks with Alden Global.

Venture-capital darlings or legacy properties, local news or national news, digital savvy or digital stupid, no-one in publishing, it seems, is immune from the struggle to build consistent revenue. Hence the desperate leap to the next big thing, which is usually – this being the land of anti-history – an old idea wrapped up in new-age gobbledygook. Native advertising (sponsored edit). Service journalism (news you can use) Events. And conferences. And subscription revenues, now known apparently as “member” revenues.

I hear what you’re thinking. You’re thinking you should feel sorry for digital publishers, because they’re up against the Google and Facebook duopoly. After all, the two of them took in more than half of all the dollars spent on digital advertising last year. To make things worse, about 12% goes to the next five – Amazon, Microsoft, Oath, Twitter and Snap. But the problem is more complex. It’s more than media buying consolidation at the top of the food chain, and it’s more than the simple-minded excuse that millennials hate advertising.

And it’s a problem that must be fixed. It seems obvious only those news publishers with a strong and highly differentiated subscription proposition could afford to step back from advertising. I can’t think of many in that position. Can you? That being the case, the very first thing digital publishers have to do to capture a greater share of the advertising pie is just that, differentiate their product and with it, their audience.

I wrote about this challenge a year or so ago: Shakeout? I understand the magnitude of the task but it is the essential first-step in the battle to claw back advertising share. The primary reason to overhaul your product offering and set it apart is that to advertisers, digital news products all look pretty much the same – and address the same general audience. Vox, Vice, Buzzfeed, and the rest are each chasing educated millennials with the same kind of commodity news product. Any differences are out on the edges. And it’s not just me that thinks it:  Market and media buyers say the lack of identity is a real problem.

A recent Digiday survey of 280 media buyers looked at digital media channels and whether spend would increase, stay the same or decrease. The channels included the usual suspects – Facebook, Google, Amazon, Snapchat, YouTube, Instagram, Pinterest, YouTube, LinkedIn and Twitter. They placed publishers at the end, in one big bucket called “Open Exchange,” relegated to low CPM, programmatic buys. In the game of moving consumers through the funnel to purchase, publishers offer only raw impressions tonnage. The high-end, high-value advertising investments are being made where you would make them if you were a client – in the private marketplaces. You can read more about that here: The State of Digital Media

Part of the problem is that from national products all the way down to local markets, the news offering has been developed by people with editorial or advertising backgrounds, not people with design or product backgrounds. And journalists have tunnel vision. When it comes to invention, they’re stuck in the same perspective, stuck in the same language of print, trapped in the one-size-fits-all media model.

But the key to media differentiation today is understanding that mass reach is over. You don’t want mass scale, you want niche scale, you want vertical market reach, reach acquired through insight, a particular voice, and an owned political position with which your target audience can identify. Now, while this will radically change the economic expectations of your business, it might not be as bad as you think; As a general rule, the more focused your offering, the more valuable your audience. Of course, if you’d rather lock yourself into the cesspool of low-quality, low-CPM, banner sponsorships for an ill-defined general audience, have at it. 

What were newspapers anyway, but a collection of vertical markets? Take a moment to look at It’s based on a digital newsletter model with expert, well-connected personalities delivering “smart brevity” in a number of  vertical markets, including news, AI, media, and business. Only two-years old, in 2018 it came within $56,000 of profit, on revenues of $25 million. Axios is the one bright light in digital news today. 

There’s a couple of other things digital publishers need to do, too.

First, they need to become the expert in their audience. This is one of my pet hobby horses. One of the most bewildering things I encounter when I poke my proboscis into the operating characteristics of digital media companies is the exclusive focus on the front-end of things, on the content mix, and the failure to focus with equivalent passion on the back-end, on the user database. In the age of data, how can this possibly be?

The application of customer data to product development began in the late 80s. By now even the apocryphal MAGA member of the flat-earth society knows the secret to the success of FB and Google: It’s the audience data, stupid, and it keeps feeding the ad sales operation in an endless virtual loop.

It is never too late to build the database.

Second, to build targeted scale, particularly for CPM-based brand advertising, digital publishers need to look for premium alliances with companies pursuing the same audience from a different angle. That word “premium” is really important. In most advertising networks, the tendency is for the participants to allocate only secondary inventory, the low-value stuff, to the network. They like to keep the high-value inventory for themselves,. This is the most common reason why advertising networks fail.

When we built the first-ever news aggregator, New Century Network, the intent was to create a seamless, painless way for national advertisers to buy deep into local markets. But participating newspaper websites often made only secondary placements available. They simply were not prepared to cannibalize their prime inventory to build national advertising market share. So Yahoo! and AOL happily stole it away.

And here’s a radical point: Don’t restrict participation in your advertising network merely to other publishers. If you have worked through the process of identifying and spec’ing a vertical market – or a series of vertical markets – you will already have seen who else is chasing it from a different sector. It may be a retailer. It may be a financial services company. Everyone’s moving into the advertising business now. Amazon advertising was just the start. Now Walmart also sells digital advertising against product searches on its site.

petsmartIn 2014, even Bank of America entered the ad business. Those old bill stuffers that would fall out of the envelope when you opened your bank statement have been replaced by “BankAmeriDeals” within electronic statements. They’re based, of course, on a customer’s purchase record. I got a $5 coupon from PetSmart just this morning – against a record of a debit payment to the vet that I made yesterday. Using the database analysis and marketing technology of Atlanta-based Cardlytics, the offers are customized geographically, down deep into local markets. So New Yorkers see Duane Reade discounts for their drug store needs, while Ohioans planning on grocery shopping may seek cash back for purchases at of america

The business purpose of any media company is to aggregate an audience – and then sell it. Newspapers used news and information as the aggregating magnet. But I’ve seen research that said readers picked up the paper because of the advertising in it, too. That’s why the emergence of Amazon as a media company and significant advertising platform is not that surprising to me. Same for Walmart and Bank of America and the rest.

This broadening of the media marketplace marks a profound shift in the way advertising is delivered. The worst word ever coined by the pretentious digerati was the word “disintermediation,” but is this case I have to admit, that word works; Traditional media companies stood between the consumer and the merchant and thrived on the advertising messages they brokered between them. Now the merchant speaks directly to consumers with no intermediary in the middle – and even delivers the ad messages of other merchants, too. But new kinds of vertical ad networks are beginning to emerge because of this phenomenon, and there is no reason why digital media companies cannot participate in them. If you’re not a platform that brings a huge aggregated audience to the table, this is perhaps one way to participate in building segmented reach in targeted markets at the scale that big advertisers need.  

These are big ideas. In any legacy media company, it would require a change in culture to pull them off. Culture is one of a company’s most powerful assets right until it isn’t – the same underlying assumptions that support a successful enterprise constrain a change in direction like this. But a pure-play digital media company? Please. You’re young, still fresh, surely your culture isn’t ossified yet?

So, let’s do this.

Or at least let’s start figuring out how you’re going to produce video advertising cost-efficiently. Soon, that will be all that matters anyway. By the end of 2019, almost every major TV network and provider will have rolled out their version of an addressable ad product. NBC Universal says its new streaming service will create a lot of new addressable ad inventory. Viacom just acquired a digital ad-supported video streaming company. AT&T says the ability to build an addressable ad product for its DirecTV customers was a driving factor behind its decision to buy Time-Warner last year for $85 billion. 

Personalized, more relevant video advertising? I wonder what consumers will think of that?





Posted by Peter M. Winter

Peter is a traditional media veteran and a digital media pioneer. He is an active angel investor and occasional consultant. He advises established companies on cultural regeneration and also consults to digital start-ups, helping them incorporate management process without sacrificing speed. He holds five technology patents. Peter is an award-winning public speaker and writer. His new book, "The Cannibal in the Room," will be published soon — it is the ultimate insider account of the battle to find a digital future for newspapers when the Internet came to town. He blogs on media and leadership here at and publishes his unconventional ideas about management on his LinkedIn page: His collection of short stories can be found at

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