KILL THE MEDIA
HOW SPONSORED CONTENT
COULD KILL THE MEDIA
W
BY: JOE PULIZZI
When I started out in the B2B publishing business almost 20 years
ago (working at business-to-business media company Penton
Media), sponsored content creation for our B2B advertisers felt like a
second-class citizenship: Sure, my company liked the revenue, but
sponsored content was not viewed as critical to our business; rather,
it was seen as ancillary. Actually, that was even the name of our
group: “ancillary media.” Right now, it’s probably fair to say that the content being produced
at most media companies is far superior to what's coming from
agencies and brands. And it’s probably fair to say that these media
companies have superior distribution capabilities, as well. These are
two top reasons why brands are investing billions of dollars in
media companies, providing brands with ways to reach their
audiences leveraging valuable and compelling content.
When Penton Media was sold in 2006, its buyers barely even looked
at the revenues coming from content marketing projects and
sponsored content. They believed it was just “one-off” revenue and
not important enough to value in the deal. However, brands are getting better at content every day. And so are
agencies. These businesses are now actively hiring journalists,
skilled writers, broadcasters and expert content creators. Heck,
Cisco Systems hired over 200 content-related roles by itself mid
2016. They are also bringing on specialists to help with audience
development. It only takes a few internal moves like this to turn
disparate corporate databases into powerful content distribution
machines.
Today, a very different story is being painted. In 2016, nearly every
media company on the planet is selling sponsored content or
incorporating native advertising into its offerings. In fact, Huffington
Post, which started their partner studio with around 10 people in
2014, has hired more than 100 people just to work on clients'
content projects; at The Atlantic, three quarters of its digital revenue
is now generated from sponsored content. And for some businesses
(like BuzzFeed, for example), sponsored content accounts for nearly
all its revenue.
In the corporate world, it seems like all the right pieces are being
gathered – they just need to be put into the proper place. And did I
mention corporate coffers? Brands have so much more money to
invest in this, it’s not even funny. Apple, for example, can buy The
New York Times 100 times over and still have $30 billion left over.
As the traditional media model of advertising continues to break
down, publishers are increasingly turning to sponsored content as
their savior. And why not? It has led to some amazing turnarounds
– including those at The Washington Post and The New York Times.
According to research from the Native Advertising Institute (in
cooperation with FIPP), publishers’ price sponsored content
significantly higher than banner advertising, and, on average,
sponsored content comprises 19 percent of total advertising
revenues. Soon, this number is expected to jump to 33 percent. In five, 10 or 15 years, when these brands finally get their acts
together, I'll be genuinely concerned for the future of media
companies. Just as they did with traditional advertising, these
content-empowered brands will likely start to pull back on their
sponsored content investments. When they do (and they will), what
business model will media companies fall back on? Without other
revenue sources to depend on, and with advertising all but dried up,
this pull-back could represent a final, fatal blow to the digital media
industry.
Simply put, brands are buying this stuff … a lot of it. According to
Business Insider, native advertising and sponsored content spending
in 2013 was under $5 billion in total spend. That number has to
grow to over $20 billion. Look, I don’t want to be right about this, but I'm sure as sure can be
that it will eventually happen. Just as we have seen the rise of
content marketing, we will someday see the demise of media if they
continue to solely focus on a revenue source that is, at best, fleeting.
So now, media companies that used to shy away from sponsored
content opportunities are going all-in.
Sponsored content has become the en vogue business model for
media.
But while this shift is certainly exciting, what it's doing is keeping
media companies from seeking out a real business model – one that
will help them achieve success over the long term.
And that's what has me worried.
16 | TULIPMEDIAGROUP.COM
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