“The Sell Sider” is a column written by the sell side of the digital media community.
Today’s column is written by Michael Zacharski, CEO at ENGINE Media Exchange.
A new browser war is here, thanks to how Google, Apple, Microsoft, Facebook and a slew of startups have positioned themselves in the data privacy debate.
While the third-party cookie is the obvious casualty, we can’t overlook the Balkanization of the internet and the hard choices small and medium-sized publishers will have to make to compete.
The internet was intended to be a great equalizer for consumers and content creators – a series of open gardens – but the walls have been rising and the open and free internet as we know it today is at risk.
Why this browser war is different
Historically, publishers made modest investments to monetize for each browser, but the premise of that model – leveraging user data to monetize content – was universal. The pace of change was ferocious, but from the 1990s until recently, publishers could rely on the model.
Today, each browser has its own business model, and the ecosystems they create have very different rules about whether, and how, that data can be monetized.
And so the value of consumers from each browser is different. Managing through this fragmentation is difficult. It’s time- and resource-consuming and requires the segmentation of a publisher audience based on consumption and monetization, which can create a frustrating set of choices for publishers and lead to fragmented experiences for consumers that want to access the same bit of content.
Big publishers have an outsize advantage here
The larger the publisher, the more resources it has in terms of engineers, business analysts, sales and content creators. Big publishers can build custom solutions for a Balkanized internet, analyze ROI across walled gardens and even leverage exclusivity by pitting browsers against each other.
Small- and medium-sized publishers don’t have the resources for this game. It is becoming increasingly difficult to operate if you are an SMB. Although there are many companies that provide managed solutions for monetization and analytics, more and more time is required to manage monetization and user experiences, which of course can take time and resources away from content.
Small- and medium-sized publishers must ask what business they want to be in
It’s too costly to be everywhere, so smaller publishers need to pick the most valuable lane. But the answer depends on what business they’re really in.
The product remains content, but are they selling ads, subscriptions, experiences, utilities or something else? The answers will determine which pockets of a divided internet publishers will have the most success monetizing. For example, a smaller publisher may develop an app to offset some of the revenue decline they’ve been experiencing with Safari. But while the app may help recapture some of those dollars, it will also require the publisher to migrate Safari users to its app and manage both the app and the app experience for its audience and advertisers.
To prepare for the impending Chrome cookie crisis, a smaller publisher could create an e-newsletter or other exclusive content only available to consumers who opt in with an email address. Subscription-based business models have proven lucrative for certain creators, and publishers could invest in required paywall technology and elevate the experience to incentivize consumers to pay for the premium content. Publishers have the strongest understanding of their audiences to determine which of the variety of user experiences will be best received by readers to sustain their business.
Consumers have indicated that they accept the bargain of free content in exchange for advertising and so the implications of deflating the ad-supported model also challenge this norm. The cost of content may increase, presenting publishers and consumers with difficult choices.
CTV provides a ‘safer’ haven
Audiences are flocking to CTV and advertisers are meeting them there. CTV CPMs have been more resilient than other formats during the pandemic, and audiences are looking for new content as studios are still recovering.
Although CTV is an app environment, it is one that for now remains mostly outside the influence of the traditional walled gardens. In this format, consumers have become accustomed to providing consent and authentication. However, TV and CTV devices also provide a new dimension of fragmentation as these new “browsers” also add a new level of complexity to the digital advertising ecosystem.
So, while there are new places to invest in a content strategy that may be more resilient, they present similar challenges and demands to the fragmentation issues of the open web. The current climate offers publishers looking to invest in CTV the opportunity to partner with platforms that can provide access to audiences and monetization. Strategic partnerships allow smaller publishers and creators with video production capability the freedom to participate in this format. However, for both larger and smaller publishers, directing their existing audiences to CTV, along with content discovery, will still require investment and a strategy.
What do smaller publishers need to be successful?
Browsers that are able to provide publishers with the ability to offer consumer privacy and relevant content while still making money will help both small and large publishers win. But with so much at stake and so many powerful players in the mix, it will take some time and a period of uncertainty and shift before a clear winner or path forward for smaller publishers emerges.
Publishers of all sizes need to ensure that they understand the value of the consumer within each environment and have a plan forward to maximize monetization. There should be a reasonable trade-off – perhaps above and beyond what the consumer is getting today – in return for consent to data sharing or the collection of an email address or mobile number. Publishers are faced with thinking about how they are going to reestablish the age-old bargain of free content, now coupled with the exchange of data, not just advertising.
It’s important to note that the open and independent ad tech market is pushing back with initiatives such as The Trade Desk’s open source Unified ID, the Partnership for Responsible Addressable Media, ad tech’s petition of the W3C board and the IAB’s Project Rearc. All of these initiatives are designed to normalize the playing field and diffuse the coming browser war to the benefit of small and medium-sized publishers, as well as the independent ad ecosystem that supports all publishers and content creators.