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Insights and News /

15 September 2017

Will Silicon Valley Be Delivering My Newspaper?

The pace at which the online world is consuming our lives shows no sign of decelerating, drastically changing our preference for how we consume news. Readers have rapidly migrated to online sources, proving a significant challenge for traditional publishers who have historically relied upon print advertisement sales, which have been in freefall since the crash in 2009[1] and further exacerbated by the shift towards digital and the erosion of barriers to entry for new, digital savvy, players in the market.

Whilst this shift has created opportunities to reach new readership segments via online and social channels, capitalising on this growth has so far been difficult for traditional news publishers. Although digital advertising spend is increasing substantially (now reportedly 10 times larger than it was in 2001 and accounting for 33% of worldwide advertisement spend[2]), the benefit to news publishers has been limited given the Facebook and Google Duopoly has claimed the lion’s share of this uplift[3].

These tech giants do generate additional traffic to publisher’s proprietary websites, but are increasingly focusing on their own content distribution platforms (e.g. Facebook’s Instant Articles and Google’s AMP) which offer content creators a sophisticated, fast loading and responsive mobile platform, and huge existing user bases.

However, the cons of using these platforms could outweigh these benefits as publishers lose direct control of monetisation and readership data, which is increasingly relied upon for targeted advertisement - particularly attractive to marketers (although this in itself is also under threat from ad blockers and regulation such as GDPR).

Perhaps even more worrying is that the readership’s association with brand is also eroded, as content becomes diluted within a wide range of sources aggregated for users based on preference algorithms or genre.[4][5]

News publishers are now at a critical crossroad: one option is to accept Facebook & Google’s dominance in the digital ad space and embrace distributed content platforms, trusting in on-going efforts to improve the current disparity in revenue share[6].

A second option is to snub these platforms (as The Guardian did[7]) and place greater focus on cutting costs and investing into growing digital presence.

The question lies in what creates brand loyalty: is it that the content produced provides a unique point-of-view, complemented by in-depth, trustworthy analysis keeping readers returning to the source regularly? Or perhaps it is the scale of the brand’s demographic reach and ease of which it can be consumed?

The challenge ahead will require different approaches depending on the model the publisher affiliates with most.

The former should be prepared to back the strength of their content, confident that readers will return without the need for distributed content platforms and justify to marketers that their advertisements will be reaching a more targeted audience. They should be wary of being lulled into a false sense of loyalty from their existing ageing readership and engage with younger audiences, increasingly exposed to news at an earlier age, to ensure the longevity of their brand, not just their content.

Those publishers with demographic scale should look to these disruptive technologies as opportunities to further expand their reach and maximise returns on snappy, cheap to produce, consumable articles.

The majority of publishers who sit between the two extremes will need to consider where Silicon Valley can serve them best. Making the right choice about how much the reader values their brand could determine which news organisations are still creating content in 2020.