Is content marketing the only choice left for publishers?

Thanks to digital advertising and its tools, companies are now able to target their customers better. Better in this case means that they can decide who they want to target, at what point of the day or the purchase process they wish to convey a message and whether or not this message "converted" into an action. Combine this with the assumption that the potential space for internet is infinite (e.g. number of websites), and it results in a purely demand led market.

Behavioral targeting and programmatic buying both had a non reversible impact on advertising, driving the cost per 1,000 impressions from $12 to $5.40 just a few years ago. While existing companies have gained negotiation power against publishers, it is no secret that a new kind of market player has risen: the Tech giants. Google, Facebook and similar beasts are the new recipients of blue chip companies' advertising spend for three reasons: Scale, knowledge about consumer (which used to be the unique capability of publishers), and the fact that they are engaged in fierce competition against each other.

While Google's revenues from online advertising are four times as big as Facebook, all the cards have not been dealt yet. The Tech giants are racing each other mainly on two dimenstions. First, whoever will have the best measurement system to prove the effectiveness of the advertising dollars spent through them will win. Acquisitions and investments in big data / measurement firms are hot right now (e.g. Google => Adometry; Facebook => Datalogix). The second dimension these Tech giants are racing on is to create a unique customer identity across the entire web ("uber" identity), eventually knowing everything its customers are doing. Google+ has been less successful than the Facebook login for apps and websites so far.

So, what can the publishers do in response to the decline in advertising dollars directed to their media, may it be online or offline? Compete with Google and Facebook doesn't seem realistic. Partnering up with one of them could be another option, but it might end up in a one-sided partnership. Differentiate themselves is the most likely and safest path to follow.

Publishers are currently investing more and more in creating customized content for advertisers - also known as content marketing. They hope to be able to sell it a higher price to make up both for the lost volume as well as the increased investments. Red Bull is one of the pioneers in the field by producing an endless number of extreme sports videos. Will publishers be nimble and smart enough to catch that wave or has YouTube already taken over that field?

Source: The Economist - Publishers: Virtual beauty parade