Navigating the treacherous waters of digital content monetization in 2023 is like a daring tightrope walk for independent publishers, where they must balance the delicate wire of innovation while juggling the fiery challenges of limited data, fierce competition, advertising budgets reduction, demanding audiences, and ever-looming shadows of market monopolization.
Table of Contents
In the ever-evolving landscape of digital content, independent publishers have emerged as powerful players, producing diverse and unique material that caters to niche audiences. However, despite rapid technological advancements, monetizing this content remains an ongoing challenge. In this article, we will explore five significant challenges independent publishers face in monetizing their digital content and shed light on the unresolved issues that persist despite the forward march of technological innovation. These challenges highlight the complex nature of the digital publishing industry and the need for innovative solutions to ensure sustainability.
Decreasing access to consumer data
The challenges independent publishers face due to decreasing access to consumer data and stricter data regulations impact their operations and revenue streams significantly. These publishers heavily rely on targeted advertising for income and require assistance adapting to this changing landscape.
A key challenge is the reduced access to consumer cookies. This data is crucial for delivering personalized content and targeted advertisements. However, privacy and data protection concerns have led to regulations such as GDPR in Europe and CCPA in the United States, imposing restrictions on data collection and usage.
As per the survey findings, the most significant obstacle anticipated by 40% of publishers in 2023 is the reduction in consumer data and cookies accessibility. To overcome these challenges, independent publishers should explore alternative strategies. They can build direct relationships with their audiences through subscriptions, memberships, and newsletters. By offering valuable content and experiences, publishers can encourage users to provide voluntary data and consent, fostering a mutually beneficial relationship.
Shift to Contextual Targeting
Privacy regulations and global privacy frameworks now require publishers to obtain user consent before collecting data. As a result, Advertisers anticipate allocating more of their ad budgets to contextual advertising in 2023. Developers continue to work on refining attribution methods, but the new solution will certainly prioritize app or content signals instead of identifying individual users’ digital traces.
In this context, mosaic data models are likely to become more prevalent. These models leverage data from various sources to provide unified results. As publishers prioritize retaining users and actively engaging them to obtain consent for data collection, they expect the importance of the attention economy to increase.
Regarding data approaches, it is worth noting that there will be a greater emphasis on first-party data as the share of third-party data (purchased data) diminishes. Therefore, publishers who successfully encourage users to share their data will have the opportunity for effective data monetization.
Ad Spending Slowdown
In recent years, amidst the challenges posed by global challenges, several G20 countries have encountered a slowdown in their average GDP growth. Additionally, Europe is currently dealing with significant regional tensions. Moreover, there have been concerns about rising inflation levels and Asian countries grappling with demographic changes. These circumstances indicate significant economic challenges worldwide, resulting in reduced advertising budgets. Basic market principles dictate that companies usually prioritize cutting marketing expenses during times of economic downturn. Naturally, publishers are displeased with this situation. To adapt, they must focus on enhancing the quality and effectiveness of the monetization process.
According to the latest ad spending forecast for 2023, the projected revenue for media owners worldwide is $833 billion, showing a 5% rise compared to the previous year’s $795 billion. The forecast attributes this lower increase to a weakening macroeconomic outlook. It’s worth noting that the 5% year-over-year growth in 2023 is less than the +7% recorded in 2022 and the impressive +23% from 2021.
Growing Market Monopolization
It is logical that if the market is smaller in nominal capitalization, it will no longer accommodate all players. In such times, the wealthy continue to amass greater wealth while the impoverished are disadvantaged. As small and medium-sized publishers become less stable, the giants push them out of the market. Limited distribution channels are among the various factors contributing to this situation. Large monopolistic platforms control the majority of digital content distribution channels, making it difficult for independent publishers to gain visibility and reach monetization goals.
Another example of monopolization is unfair revenue-sharing models. Big platforms frequently determine the terms of revenue sharing, often heavily favoring themselves. Independent publishers may receive a smaller percentage of the revenue generated from their content than larger publishers. We shouldn’t forget about data dependency. Monopolistic platforms have access to vast amounts of user data, which they use to refine their algorithms, personalize content recommendations, and target advertising. Independent publishers have limited access to such data, putting them at a disadvantage in understanding their audience and tailoring their content and marketing strategies accordingly.
The Rise of SPO
In the past, publishers collaborated with multiple exchanges, which posed a growing challenge in comprehending how and prices for their inventory. Consequently, transparency was compromised, as different sellers could sell the same inventory at varying prices. This approach benefited supply-side platforms by achieving a favorable fill rate, eCPM, and revenue but was not advantageous for demand-side platforms. DSPs realized they were paying additional commissions on certain purchases. As a solution, buyers recognized that paying the publisher directly and avoiding commissions would be more profitable.
This is where supply path optimization (SPO) products like The Trade Desk’s Open Path come into play. SPO utilizes an algorithm to evaluate, analyze, and optimize the purchasing process of digital inventory. This evaluation encompasses direct partners and all intermediaries and resellers involved in media trading. Leading DSPs like Magnite also offer similar supply path optimization solutions. At first glance, this approach appears promising since it enables advertisers to deliver funds directly to publishers without intermediaries. It seems to be a situation where all parties involved stand to benefit. However, the crucial question remains: Will the publisher secure enough advertisements to ensure a satisfactory fill rate and keep running the business?
To Wrap it Up
In 2023, independent publishers face five significant challenges in monetizing their digital content. These challenges include decreasing access to consumer data due to privacy regulations, a shift to contextual targeting, a slowdown in ad spending, growing market monopolization by large platforms, and the rise of supply path optimization (SPO). These challenges impact publishers’ revenue streams and require innovative solutions such as building direct relationships with audiences, focusing on first-party data, enhancing monetization processes, and addressing distribution and revenue-sharing issues.
This Article's Ad Tech terms