A Thin Line Between Flywheel and Doom Loop For Publishers

Some passionate responses (most privately/offline) to my post earlier this week on where I think publishers are getting stuck winning more from more buyers. Given those responses, I think it's worth adding more color to what I see is preventing publishers from winning more often with buyers.

Differentiation

As I mentioned, if financial (insert any category, really) pub A can differentiate itself to a buyer and demonstrate it is 25% more valuable than the next best pub (Pub B), it should command a 25% premium. How does pub A demonstrate that? Awareness/sentiment data about Pub A vs Pub B is one way. Unduplicated audience is another. Site quality metrics is yet another. A simple 'mostly believable' equation would suffice.

'Mostly believable' is where I see publishers and buyers struggling. If Pub A shows 3 ways it is better than Pub B, and that is worth a 32% premium, but the buyer uses 6 criteria to evaluate premium and Pub B wins the other 3 by 30%, there isn't a premium to be given. Sellers won't win showing only the data that benefits them! It's vital publishers both understand exactly what goes into a buyer's evaluation and advises/coaches the buyer how to update their criteria to improve it - overall and potentially in favor of that seller's pub. Sellers must quantify their value and understand the how buyers evaluate in full.

Brand/Category Ownership

A publisher, like any brand, needs to own a position in buyers' minds. For instance, if I say "Volvo," many people will think "safety." There are quite a few other car brands, though, that when mentioned either get a blank stare or such a variety of responses that this other car brand can't claim to really own any position. Flip this around. Ask 100 financial professionals to "name a financial publication." You'll likely get FT, WSJ, and many more. There may be a winner but I'd be surprised if it's a 51%+ winner. What if we narrow this to "earnings report analysis?" Will 100 financial professionals concentrate their response more around one or two pubs? What about "large cap earnings report analysis?" Publishers must find the niche they can own and capitalize on that. Too many pubs fear specializing and purposefully keep their focus too broad. Very few pubs can be all things to all people, so specialize and focus until you're the clear #1 for your niche.

Supply, Demand, and Scarcity

If a baseball stadium is built with 50,000 seats and only draws more than 30,000 fans once or twice per year, it's overbuilt in economic terms. That there are always open seats prevents even the best seats from drawing large premiums because there's always one a few rows up much cheaper if the asking price is too high.

Is each section of your site sold out? If not, you have too much supply given the demand.

"But if we reduce the number of ads we have, we don't even have the chance to make more money!" Who said you can't add more later when you're sold out? When publishers differentiate themselves from other publishers and own a place in buyers' minds AND there is not unsold space available at lower prices, now we're firmly into the flywheel and out of doom loop territory. Why isn't this easier to implement?

Status Quo Bias

As a publisher, if you were to relaunch your site today with no staff and no site architecture built, would you rebuild it exactly as it is today? Likely not. What's preventing you from making all of the changes that would align your site with how you'd rebuild it from scratch? People, jobs, existing org structures, commission plans, etc. I'm not here to say, "just make the change overnight." That doesn't work. But, there must be a defined timeline by when you will achieve that state, and it must align with where the market will be at each stage. Getting there in three years - if the market will have advanced even further in those three years - won't cut it. You have to get ahead at some point.

As a CEO I'm acutely aware of how strong cultural inertia could be. But this is the final requirement for strong leaders and healthy companies. A publisher can have differentiation and scarcity, but if its internal systems don't have everyone rowing in the same direction, it all falls apart and enters doom loop territory. And, guess what? Buyers notice. Buyers sniff this out in the first 5 minutes of a discussion. When they see that they will now have to work hard just to give you money, the chance of closing that business goes from high to next-to-nothing.

Most of us tend to like living in a functional democracy. A functioning democracy requires a free press, and that free press isn't just about hard news. We are a better society with healthy competition, quality publishers, and ads are better bought and sold in an auction-based system (assuming there is scarcity! Otherwise auctions clearly favor buyers.) This scenario is exactly what keeps companies healthy, jobs available, and brands getting value from their investment.