Emptor

by Andrew Boer

News Flash: Publishers are finding it challenging to create quality content and monetize it.

You know the story by now: Search and online distribution has vastly lowered the barriers of entry for publishers who seek to distribute their content, while ad networks have allowed for easy (if not particularly remunerative) monetization for new entrants. Content supply goes way up, Advertising demand stays steady, and prices drop.

At the same time, the proliferation of the ad networks and their (lets face it) superior technology has changed the game for advertisers  -- by targeting individuals by context and behavior across thousands of sites, advertisers no longer need to pay high CPM rates for direct display either in print or online. And in many cases, advertisers are able to secure placements on the same high-quality sites they are refusing to buy at  retail prices. 

But this proliferation of content has led to another interesting trend...According to a recent post from Comscore's Gian Fulgoni, search query length has continued its rapid growth -- from two word searches, to an average of three words.  Searchers seem to be getting better organic (and perhaps paid) results by creating more detailed searches.  The proliferation of content has to be a root cause of this change in search behavior...there is simply more relevant content out there to find.

Which makes it exceedingly difficult for any publisher to create quality content online and monetize it.  If one's publication needed to optimize for, say, 100 two-word combinations, it may now need to optimize for 500 three word combinations. But Google really optimizes well for one keyword set at a time:  If you search for  "Baseball Songs" and "Baseball Tunes" you already get very different results. But now a niche site dedicated to Baseball music needs an article called "Best Baseball songs", "Top Ten Baseball songs", etc...

What does this mean for niche content creators and Publishers? It means that anyone who is publishing needs to have much more scale and breadth of content within their niche to reach their intended audience, especially through search. 

Companies who have something to sell are in much better shape than traditional publishers, because they may still be able to eke out a decent ROI on content creation by attracting traffic.  For this reason, one might expect we will consume a great deal of search driven niche content on branded custom publishing sites. In five years you may well expect to go to Nike.com rather than Runner's World for quality, expert running advice.

But for everyone else who is creating content dependent on Advertising (or Lead Gen), something has to give -- supply of content has already far outstripped demand for online advertising, and prices aren't going back up time soon because content supply is just not contracting appropriately in response to demand.

Why not? It is due to some peculiar new entrants.   

Publishers are no longer just competing against each other for share of voice: They are now competing against content creators with very different cost structures, including social media enthusiasts who create content for free, and businesses (ie. Nike) who create content to attract their target audience. Not to mention content spammers.

To survive, publishing businesses have one of two choices: They either have to reduce the costs of content creation (editors, printers, overhead, distributors) or the quality of content itself (with cheaper, less knowledgable writers). 

Businesses that successfully solve the first problem (About.com is a great example) or enable new entrants to become quality publishers (Movable Type) should do very well.