The Truth About the Digital Display Ad Market

The Digital Display Ad Market Is Doomed | The Sterling Woods Group

If you’re like most content creators, for the past several years you’ve been trapped in a vicious cycle of cutting costs and losing revenue. You spend most of your time putting out fires rather than growing your business. And it’s not just niche publishers and content marketers facing this dilemma. Publishers of all sizes, from Forbes to CNN and Vox, are facing massive layoffs.

Here’s the truth about the current publishing model (and I’m not afraid to say it): The digital display ad market is doomed.

You Can’t Compete on Advertising

First and foremost, publishers have to stop relying so heavily on advertising. Advertising can be a piece of your revenue puzzle, but it cannot sustain your business alone because you can’t compete on advertising.

Unfortunately for content creators, most advertisers are not giving their money to digital publishers. They’re giving it to Google and Facebook, which now account for 60% of all Internet advertising, while no other company in the U.S. market has more than a 5% market share. What’s more, the top 30 companies that earn ad revenue (including TV, digital, and print ads)
now control 44% of all ad revenue.

If you think those statistics are startling now, just wait. This consolidation of revenue by top companies only stands to grow as they get more sophisticated by the day at targeting the right audience. As marketers become savvier, they are demanding more nuanced data from advertising platforms.

The Market Is Saturated

On top of the changing dynamics of the ad industry, there is more content online than ever before. And while that’s awesome in many ways—talk about a free press!—virtually everyone is swimming upstream in the fight for visibility.

Many publishers try to fight the glut of content by marketing to the extreme—sending out too many emails, pumping out tons of low-quality, clickbait content, and jamming their sites with intrusive pop-ups, banners, and auto-playing videos. To do so is to their detriment. Not only does it ruin the user experience (which no one can afford in such a saturated market), the Coalition for Better Ads is cracking down on annoying ad models with the use of ad blockers.

Between the saturated market and the loss of advertising dollars, most of the industry is trapped in this vicious circle, creating lower and lower-quality content peppered with a bad ad experience that drives both their audience and their advertisers away.

There’s Another Way

You can break the cycle (and use your competitors’ eroding user experience as an opportunity). People are sick of annoying banner and pop-up ads. They’re sick of low-quality content, and listicles like “The Top 5 Ways to [Fix a Problem That Can’t Be Solved in 600 Words].” You can take advantage of that.

You can be a safe haven for your users—a place where they can get exactly the content they want without having their experience disrupted by obnoxious promotions. People will pay you to escape the deluge of low-quality content they find online.

We’re seeing it happen already with larger publishers. The New York Times pulled itself from the brink of bankruptcy by switching its strategy from relying on advertising to increasing subscription revenue. Twenty years ago, advertising accounted for 63% of the New York Times’ revenue, while subscriptions contributed 27%. Today, its revenue ratio has flipped: Subscriptions are now responsible for 61% of revenue, while ad revenue makes up 33%.

Medium has launched a new membership program that tosses out the idea of “What’s the most clickable headline,” and instead fundamentally aligns with readers’ needs by promoting good content to consume.

The Digital Display Ad Market Is Doomed

Digital advertising is a dying profitability model. The vast majority of publishers will find that monetizing content directly with the reader is a more lucrative approach to building digital revenues.

Here’s the thing. If you’re a content creator, you’re sitting on a gold mine. You have two huge assets in the digital world: great content and a thriving community. Nearly everyone is trying to generate those two things. If you have one or both already, you’re way ahead of the game. All you need to do is monetize them. In fact, you can achieve double-digit growth, year after year while confidently creating great content.

Want to learn how? Order A Member Is Worth a Thousand Visitors: A Proven Method For Making More Money Online today. Or, if you need hands-on help, contact The Sterling Woods Group today for a free 30-minute consultation.

Order A Member Is Worth a Thousand Visitors by Rob Ristagno

How Sterling Woods Can Help

The Sterling Woods Group teaches clients our five forces to methodically make more money online. The goal: make sure you lock in double-digit growth year after year using the power of digital media. Many companies have experienced over 50% growth using our system. Beyond the financial benefits, clients tell us that – for the first time in years – they feel truly focused.

We offer workshops, coaching, and keynote speeches. Sterling Woods is also an agency that launches new digital initiatives, so clients don’t have to add overhead. Our agency business model is unique in that most of our fees are based on performance.

About the Author

Rob Ristagno, Founder and CEO of Sterling Woods, previously served as a senior executive at several digital media and e-commerce businesses, including as COO of America’s Test Kitchen. He started his career as a consultant at McKinsey. Ristagno holds degrees from the Harvard Business School and Dartmouth College and has taught at both Harvard and Boston College.

Rob is the author of A Member is Worth a Thousand Visitors: A Proven Method for Making More Money Online, set to be published in 2018. He regularly speaks at key media conferences, including at Niche Media events, Specialized Information Publishers Association meetings, and the Business Information and Media Summit.