RBM: Premium Digital Media: The Future May Be Brighter Than We Think - Andrew Leinicke

RBM has a longstanding relationship with some of the publishing industry's most venerable brands, including Condé Nast, Hearst Magazines, the Financial Times and the Los Angeles Times. Working for these clients has revealed to us unique insights into online content consumption: from the fluffiest entertainment to the weightiest news analysis. How content is discovered, bought and sold is rapidly changing—the effects of these changes affect all marketers.

It comes as no surprise that in the last five years the print journalism industry has been struggling to find its place in the media marketplace. Print circulation for major US newspapers has fallen steadily over the last decade, and now less than half of US adults read any print edition in a given week.

Yet it's also important to bear in mind that only in 2010have interactive advertising spends overtaken print newspaper (not including magazines or other print ad vehicles) amounts at $26B according to the IAB. In comparison, at the beginning of the last decade, newspaper publishing was a $50B business.

Until the advent of the Web, newspapers controlled customer relationships via the newsstand and direct subscriptions. Now, however, two new channels dominate content discovery: search and social media. As a result, a new breed of content has emerged online to take advantage of these channels. Publishers' reverse-engineer audience demand with low-quality content farms. The two most obvious examples, AOL and Demand media, are now serious players in online news. The Google Finance charts below illustrate recent revenue declines at The New York Times and rapid rises at Demand Media (AOL has not fared as well, but that is a long and complicated story).

Previously, content quality was a requisite for owning relationships. In the last few years, online publishers have learned that they can instead master the nearly free discovery pathways of search and social media. This spring, a horde of AOL journalists, Paul Miller, Joshua Topolsky and others, left after learning that they would be required to produce content based on trending interest according to Google and Twitter reporting.

Ironically, it is this approach to audience marketing that appears to worry Google. In recent weeks, Google announced its +1 listings feature, which allows account users to rate both organic and paid listings, increasing their favorability by the engine directly or indirectly. Meanwhile, earlier this year Google also announced changes to its search algorithm meant to mitigate the effect of low-quality content pages. Quantcast and comScore reported significant traffic declines for the standout content farm, eHow by Demand Media, shortly afterwards. I believe that Google realizes that the quality of its listings is critical to its continued success as the defacto navigational and discovery tool for online content. As Matt Cutts recently stated on the official Google Blog: "Our goal is simple: to give people the most relevant answers to their queries as quickly as possible."

In the long run, we believe there will be plenty of opportunity for high-quality content. The Wall Street Journal, the largest newspaper in the country with a print-and-digital paid circulation of 2.11M, charges for access to its content. Likewise, the risky and much-criticized move by the New York Times to gate its content has resulted in year-over-year gains in digital ad and circulation revenue, stemming the ongoing sales loss faced by this incredible brand in recent years. This event has particular meaning to RBM because in the past, the major media brands able to survive with gated content were large financial news outlets. The New York Times, by contrast, is squarely general interest.

Despite the high profiles of free and user-generated content brands, we believe professionally produced content looks forward to a long and profitable future in the digital media world.

Andy Leinicke is Media Director at RBM. He manages all aspects of our Paid Search Practice. Andy is in charge of organizing, developing and overseeing every aspect of a campaign from message and testing strategy to media buying and segmentation. He can be reached at aleinicke@redbricksmedia.com

Read all Andy's MediaBizBloggers commentaries at The Brickwire.

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