Today’s media industry often seems like a shadow of itself. A handful of national media organizations are profiting from a bump in subscribers. However, many more metro and community news publishers continue to suffer and close shop.
While some media companies have created meaningful revenue streams, most local media organizations have been burned by the empty promise of digital advertising. Since 2007, total newspaper revenues have fallen by 45% and magazine revenues have fallen 42%. Print revenue is steadily falling, and digital advertising has failed to fill the revenue gap. Today’s digital advertisers have chased eye balls, valuing the right user on any site over the right user on a quality site.
As a result, local media has suffered. Although there is some evidence advertisers are worried about brand safety and fraud, buyers have avoided smaller news sites that can’t offer scalable audiences.
National-level solutions don’t work for smaller publishers
The smartest national publications are building in-house ad units and utilizing first party data engines that allow them to create true walled gardens. Publishers that own their ad products and user data can sell access to their audiences at a premium and avoid ad networks.
However, most of the 10,000+ publishers I work with aren’t so lucky. Many small to mid-sized publishers can only sell 25-50% of their online traffic in a given month.
For many publishers, that leaves the majority of their traffic unsold or undersold. Valuable users visit local news sites every day, but there aren’t enough of them in any one demographic bucket for advertisers to target. These small to mid-sized publishers are forced to send their remaining impressions to ad networks that pool audiences together.
While the publisher can make anywhere from a $10-30 CPM through direct sales to advertisers (During political season, I heard from publishers who sold pre-roll avails for upwards of a $100 CPM), they make pennies from remnant ad networks. It’s not uncommon for publishers to make as little as a $.30 to $1 CPM from these networks.
Current platforms aren’t built for local
I first heard the founders of LION Digital Media articulate this problem a year ago. As someone who had primarily worked on the editorial side, the numbers were discouraging. In every newsroom I’d worked in, the digital content teams were striving to build quality audiences. We all believed traffic was essential to the newsroom’s business model.
Hearing from LION revealed the harsh reality of the industry, but the company’s solution also showed incredible promise. When LION offered me a job, I jumped at the chance. I packed all my belongings into my Hyundai Elantra and drove 1,800+ miles from Kansas City to Seattle.
The dream LION shared with me that first day is the same one that’s has been driving me for the past 8 months – Can we build a platform that helps publishers capture lost digital ad revenue?
Taking steps in the right direction
In 2014, LION received funding from the Reynolds Journalism Institute that helped the company build part one of the LIONshare platform. Today, LIONshare is a fully-functional media planning tool containing location, traffic and ad size data for more than 10,000 local news sites.
When the platform was first built, media buyers were still reliant on the traditional RFP system. When an agency wanted to advertise a deal for a fast food company, they would call LION to make the buys in specific markets. LION’s media planners would spend minutes instead of hours building out the plan using the LIONshare database.
Unfortunately, the industry moved faster than LION’s platform. In 2014, buyers still relied on RFPs and agencies for inventory. Fast forward to 2017 and the old RFP processes are obsolete (Although many local advertisers still use email RFPs to buy from local publishers).
LIONshare’s first iteration as a media planning tool no longer fully meets the needs of the industry.
Building a marketplace for the future
With new access to ad tech platforms, an increasing number of brands are abandoning agencies all-together and bringing their buying efforts in-house. Today, planners can easily buy remnant, below the fold inventory on most sites.
While some platforms (such as Rubicon’s Orders and Centro’s Brand Exchange) offer premium, above the fold inventory, buyers only have access to these ads on the largest national sites. Most of these platforms also only offer lower-performing units such as banners. (Planners relied on LION during the political season to buy pre-roll that was unavailable in the automated space).
The idea behind LIONshare 2.0 is this – Build a transactional tool that allows 10,000 local and regional publishers to create a walled garden for their premium, undersold inventory. The benefits of this kind of platform are numerous:
- Offer advertisers access to premium, fraud-free inventory on local news sites at scale
- Allow advertisers to capture location-based engagement in specific DMAs, cities and zip codes
- Help publishers divert valuable inventory away from low-paying networks to a high-yield platform (LION currently offers publishers $5-$15 CPMs depending on ad type)
- Create a protected marketplace for better-performing ad units including homepage takeovers, leave behinds, pre-roll etc.
- Slow the commodification of premium ad inventory by reducing the inventory available on remnant networks
- Incentivize publishers to lessen the number of ads per page by offering a quality marketplace for higher yield units
- Provide new product, data, buying integrations as needed for agencies, brands and publishers
Today, LIONshare 2.0 is still a dream. Our company is actively working to secure funding for the platform, and it turns out mission-driven solutions don’t always win in the cut-throat investor world. I’m still hopeful, though, that the platform will soon become a reality.
As for me, moving to Seattle for a project that matters has been well worth the risk and uncertainty. I don’t mind the mountain views from my office either!