| 11 hours ago
Media companies are struggling. They’re missing revenue targets and laying off employees. Cash is drying up.
In 2018, Vox missed revenue targets by approximately 15%, Verizon Media Group laid off 7% of its staff, BuzzFeed laid off 200 employees and Condé Nast plans to paywall all digital content after reporting losses of $120 million in 2017.
To combat these challenges while still satisfying investors, the media industry is looking to new business models, predictable revenue streams and increased customer lifetime value. As a result, media pivoted from video to podcasting to subscription models.
But here’s the bitter truth: Subscription models will only work for a small number of differentiated media companies, like The New York Times. Most media companies don’t have the culture, the personnel or the brand affinity to pursue a subscription model.
Once the promise of subscription media fades, media companies will make their next move: the pivot to owned commerce.
Ad costs lead to owned commerce
Companies of all sizes are investing more than ever in digital marketing. Competitive bids for scarce inventory addressed to the same audience drives up demand for the same real estate within a feed or a story, causing ad prices to skyrocket.
Here’s the bitter truth: Subscription models will only work for a small number of differentiated media companies.
Advertising on Facebook became 70% more expensive between 2017 and 2018 while ad spend on Facebook grew 40% during
Read more here: https://www.adweek.com/digital/media-companies-need-to-pivot-to-owned-commerce-models/