Changes in Online Publishing & Advertising

Nov 18th

Online Ad Networks in Despair

Some ad networks are late with payments and slashing rates. There have been many reports of internet ad networks dying recently, and most of them deserve to because they add no value...they are all hat no cattle.

Publishing Based Business Models in Decline

Like the death of ad networks, many publishing based business models are in decline.

The yellow page companies that were worth billions are facing bankruptcy.

An encyclopedia that costs $3,000 is covering the field of SEO, but with the speed of information online there is going to be a cap on how accurate and deep a generalist volume can be. The same is true for most web publishing business models.

Most content is a commodity, and it is hard to build a loyal PROFITABLE audience if you are in a generic vertical like news. The New York Times is running on fumes.

Some of the most successful blogs now resemble the media they claimed to replace:

Almost all of the popular blogs today are commercial ventures with teams of writers, aggressive ad-sales operations, bloated sites, and strategies of self-linking. Some are good, some are boring, but to argue that they're part of a "blogosphere" that is distinguishable from the "mainstream media" seems more and more like an act of nostalgia, if not self-delusion.

Nick Denton has sold off 1/3 of his blogging empire and claims that we are in for an ugly online advertising contraction.

Domain name owners, which hold an easy to operate passive revenue stream, have seen ad based earnings drop and have been forced to sell off large chunks of their portfolios, as mentioned by Fabulous.com:

“Historically, the domain services businesses. . . . have generated the majority of their gross profit from intermediating advertising revenue. As the advertising component of the industry has declined, industry profitability plummeted. Many service businesses that rely exclusively on advertising are no longer viable and the industry is ripe for consolidation. Going forward the company sees secondary market domain name sales becoming a much more significant component of the industry . . .”

And those who have a lot of consumer driven media inventory are not faring much better:

P&G's Ted McConnell pointed to the drumbeat of complaints about social networks being unable to monetize their sites. "I have a reaction to that as a consumer advocate and an advertiser," he said. "What in heaven's name made you think you could monetize the real estate in which somebody is breaking up with their girlfriend?"

Are Networks the Right Approach?

The web allows you to connect with people and build communities based around a shared interest. Where is the value in going with a no named ad network to sell inventory when you can change your business model from being a publisher into being a publisher & retailer? Each day the network grows more efficient. During the downturn the best voices will keep building relationships, mindshares, and marketshare - even if it is not that profitable. Once the market returns they will grow faster than those who cut spending.

How to Make Your Marketing More Integrated & Build a Community

Advertise the Advertisement

Youtube allows you to advertise Youtube videos on a CPC basis. Rob Snell created a business card that advertised his conference panel.

Get People to Talk About You

The best advertising is not what you say about yourself, but what others say about you. That is why Graywolf launched Viral Conversations, a new blog oriented ad network around reviewing physical products and real world services, marketed by giving away great content on how to keep up with the latest buzz.

Encourage Syndication

Video interviews work well (particularly when you are not as chubby as I am...I soooo need to diet, and am getting on the eliptical machine as soon as I hit publish on this post ;)

And if you can be the host of a great presentation by a guy like Seth Godin that is even better.

Let Seth talk about the importance of ideas like

  • direct communication between the person who uses the thing and makes the thing
  • amplifying consumers
  • the power of speed
  • the long tail
  • product ideas spread...not advertising ideas
  • its about focus, not size
  • be scarce or ubiquitous

And sit back collecting inbound links. :)

Be Original

Give people more data, do original research, quantify that research, write about topics that are not being covered, be quirky, be the first to report on in the news topics from the lens of your industry, bring back the past, or predict the future.

Give it Away

Copyright is losing momentum. Profits are is increasingly associated with social connection.

Rather than accumulating debt to spend on marketing try to create something that is free that you can give away. Sell food? Offer free recipes and a free online cookbook. Sell software? Give away a lite version. Looking to build a platform? Offer a strong API. Sell consulting or information? Offer with papers and/or a blog. As you gain exposure you can give away less and spend more time and effort making your customer relationship deeper and more meaningful.

Change is Constant

As an online entrepreneur you can't be afraid of change.

Published: November 18, 2008

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Comments

November 18, 2008 - 11:41am

I thank that is a great article Aaron - a great prompt for many people operating online to focus on community and interaction on a far greater level...really well put.

November 18, 2008 - 11:09pm

Aaron it might be a bit too broad a stroke to say the increase in domain aftermarket liquidity is due to domainers being forced to sell their portfolios.

Yes, many weaker portfolio holders are being forced to sell, but often not due to advertising revenue declines but the overall decline in available pocket money. The increase in "domaining" led to large numbers of renewals this year for speculative domainers, and those lesser domain investments are not as promising as once thought. Domainers have different business models; some relied on growth of speculative domaining, some hoped to develop, some had grand plans to "own the English language". Late in 2007 there was a general push to increased liquidity in the domain aftermarket, as a means of increasing the life of the domaining industry, separate from the advertising downturn.

True some are choosing to get out because ad revenues are inadequate, but there are many other forces at work right now in the domain industry.

November 19, 2008 - 2:37am

True, but I have also seen a friend of mine getting some bargains recently...domains for a few hundred or a few thousand where they would have went for 3x to 5x that much about a year ago.

November 20, 2008 - 1:52pm

I got a lot of tips for my blog: howtonegotiatelikeapro.blogspog.com

I am glad I am doing this mostly for the fun of it and to keep current.

Mary Greenwood,
Author of
How To Negotiate LIke A Pro,
winner of six book awards, and
How To Mediate Like A Pro,
winner of five book awards.

November 18, 2008 - 12:50pm

Aaron I have an interesting question to ask. (I don’t know if this is the right place to ask or you are the right person to ask or if this is the right post to ask).

Please, anybody can answer.

In your last comment you said that you are fascinated by economics. So here is the question:

It’s a simple rule of economics - “Money can’t go anywhere, it can only change hands.”

In this economic downturn it seems everyone has lost money – individuals, businesses, venture capitals and (surprisingly) even the governments (Zimbabwe, Pakistan to name a few).

There is a severe credit crunch ALL over the world.

So where the hell all the money is gone? WHERE?

November 18, 2008 - 8:41pm

If you study our economics based on fiat currency and fractional reserve lending you would see that most money comes into existence as debt via loans.

When a lot of people go bankrupt and a lot of homes foreclose and a lot of derivative trading instruments lose value then a lot of the money (that came into existence as a loan of some sort) disappears.

Worse yet, many banks had a lot of toxic assets on their books and decided to slow down outbound lending AND increase lending standards. Plus they were less willing to loan money to each other and TED spreads shot through the roof. One of U2's songs says "It's no secret that a liar won't believe in anyone else." :)

The central governments have made up for this credit tightening by bailing out tons of banks and running the currency printing drives in overdrive. More currency would typically cause massive inflation, but we are now entering a deflationary period because so much wealth was destroyed and so much of the past decade's growth was based on mortgage fraud.

Sooo off topic ;)

November 19, 2008 - 9:26am

Thanks Aaron!

Actually I have lost some money due to the recent stock market crash, and am looking for ways to comfort myself and therefore looking for some answers, explanations or excuses as to why, what etc. etc..

But sure, I am not alone and if I compare what I have lost with what these guys have – I feel very lucky:

http://www.fortunewatch.com/if-you-think-you-lost-in-the-stock-market-ch...

Also, here is an interesting post on where the money has gone?

http://www.foxnews.com/story/0,2933,436435,00.html

PS: Frankly your answer was so technical in nature that I think you should start a financial blog as well :-)

November 18, 2008 - 4:01pm

HAHA i love your personal comment about that diet thing ! I encourage you to do exercise !!! here's my fav blog for that : www.synergytraining.ca

November 18, 2008 - 4:34pm

"During the downturn the best voices will keep building relationships, mindshares, and marketshare - even if it is not that profitable. Once the market returns they will grow faster than those who cut spending."
I totally agree with this - I think it has become insanely easy to game the system, and I PRAY that those that have taken the easy road will soon fall off the map. But the thing about this point that rings even louder to me, is to do things that put value first - even before profitability. This is one of my hardest sells - to convince a business that SEO is a long-haul effort, and those who stick to their guns and create solid content will win, every time. They tend to want immediate gains (like PPC) and sometimes don't grasp that SEO happens constantly, and will continue long after you stop paying for AdWords.
Great stuff Aaron.

November 19, 2008 - 8:16pm

I never comment just to say I liked something. But I will comment to say I loved this piece, which was, to paraphrase Dave Naylor, f00kin brilliant! Loved the piece from Nick Denton too.

BTW, do you have links to ad networks folding?

November 19, 2008 - 9:48pm

I do not keep up with all of them...I leave that sort of stuff to the likes of TechCrunch. :)

Thanks for the kind comment Gab.

November 21, 2008 - 2:36pm

Another great post and thank you for posting that Seth Godin vid. I've read a number of his books and it was great to see him talking as enthusiastically about the topics he covers as when he writes about them.

Given me a nice burst of energy (ready for the weekend!) to change parts of our business to be fantastic rather than just what they should be.

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