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What Harry Potter And The Deathly Hallows has in common with the digital media industry in 2018

Posted 7 months ago by Angus

If there’s one thing Harry Potter And The Deathly Hallows and today’s digital media landscape have in common it’s a creeping sense of darkness descending. There are challenges on all sides.

Display advertising, which 38% of publishers recently ranked as an important revenue stream for 2018, is totally dominated by Google and Facebook. Worse still for publishers, Amazon is capitalizing upon swathes of conversion data at its disposal to capture remaining share in the market.

Readers are more demanding too. Bad ad experiences don’t only risk losing ad revenue. Indeed serve a reader a bad experience and publisher may risk losing them forever. Ad-blocking is a symptom, but ad quality is the real problem. Interruptive ads that fail to add value to the experience and prevent users accessing the content they care about will only encourage more people to switch off.

These issues have led to significant incoming changes to the legislative landscape publishers operate in, foremost of which is the implementation of the GDPR from May 2018. Further regulations from the tech giants themselves, like Apple’s Intelligent Tracking Prevention, will create further hoops for publishers to jump through in order to earn revenue from advertising. Such measures place platforms in the role of judge, jury and executioner, with the only losers from the new state of affairs being publishers.

Reports of the imminent demise of publishing are however, of course, exaggerated. Not least because of the continuing growth of online advertising. Global spend is more than $200 billion, and with 17% year-on-year growth, the size of the market open to publishers is expanding. Advertising itself is evolving too: the same survey that saw 38% of publishers rank display ads as important, saw 39% rank branded content and 40% rank video as important revenue streams. This can only advantage publishers in 2018 as the experience they offer to readers’ improves.

Likewise the unintended side effect of incoming legislative changes, will be a greater emphasis upon trust as the highest commodity that publishers can trade in. Trust will be central to securing consent for the data collection that will power future advertising and underpin alternative revenue streams to advertising. The more trust someone in has in your publishing brand, the more willing they are to support your work, whether that means a subscription, micropayments for content, or purchasing content through sponsored or affiliate-powered commerce content.

Those secondary revenue streams will be forced to the fore by increased difficulties in generating substantial revenues from advertising alone. Group Nine CEO Ben Lerer spelt out the opportunity for publishers in 2018 in AdExchanger: creating a diverse portfolio of revenue streams. A single revenue stream is no longer enough. Instead publishers need to look at their revenue streams as a portfolio, with streams to be embraced or discarded, as their success ebbs and flows. Much thinking is focused around alternative advertising formats, but brands are rapidly evolving beyond this too, encompassing events, subscriptions, ecommerce, affiliate and micropayments. Publishers that can embrace this portfolio revenue thinking stand to reap the rewards, outflanking the challenges placing pressure on more traditional advertising revenue streams.

The start of the blog suggested only one similarity between the Deathly Hallows and today’s digital media industry, but the two share another commonality too: hope on the horizon. If advertising can evolve to a place where it provides a valuable service, publishers can augment their experiences to reinforce the trust readers place in them, and routes to profit for publishers proliferate into new avenues such as ecommerce, there is a bright future for the digital media industry to seize a hold of.

(This blog is adapted from a speech by our CEO Alicia Navarro made during Noah Conference 2017. You can watch it here on YouTube)

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