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InContext / An inside look at the business of digital content

Digital media’s successful symbiosis of subscription data and advertising

September 14, 2023 | By Chris M. Sutcliffe – Independent Media Reporter@chrismsutcliffe

If content is king, then context is God. As third-party cookies vanish in the rear view mirror, first-party data is moving media companies to pole position for advertisers. So how are they using their subscribers’ data to provide better context than ever for advertisers – and increasing their own return?

News and magazine publishers have always boasted of their relationship with their audiences. Direct, unfiltered access to consumers has always been part of their selling point to advertisers. And that’s never been truer than now.

With Google still making its slow march towards the deprecation of third-party cookies in 2024, brands and advertisers are hungry for alternatives to ensure a good ROI. That has provided digital media organizations with a megaphone to shout about the data they have on their members and subscribers – data which has been freely handed over during and after sign-up, and which avoids the privacy issues related to GDPR and other legislation.

Dave Randall, UK commercial director for Future plc, points out that “Privacy updates have and will fundamentally change the way brands buy media. There is a seismic shift coming to a market that has been inundated with made-for-advertising sites, click farms, contentious user-generated content and questionable third-party data.

“I believe premium publishers with professionally produced specialist content are in the best place to benefit.”

Effectively, the creation of content that Future and other digital media companies know appeals to their audiences provides the context for effective advertising. Those companies, with their vast array of acquisition and conversion data relating to their demographics, can serve up ads relevant to the content against which they appear.

Research has demonstrated that consumers are not averse to digital advertising provided it is of personal relevance, also that they are wary of “creepy” means of determining that relevance. That provides media companies with registration walls with a huge opportunity: they can square the circle between serving up salient marketing and preserving privacy.

“For advertising to be successful, it’s important to build an environment in which both readers want to spend time and advertisers want to invest,” according to Imogen Fox, chief advertising officer of Guardian Media Group. “Too many ad-funded sites place the volume of advertising over the experience that users have when they visit the site. This reduces the likelihood of audiences paying attention to the advertising and the effectiveness of the overall campaign.”

Damon Reeve is CEO of the Ozone Project, a collective of premium publishers leveraging the context of their owned-and-operated properties to sell ads at better rates than would otherwise be possible. He explains that “Advertising in context and with a creative message that is contextually relevant will always produce a better outcome for brand advertisers.

“The current programmatic model emphasizes audience targeting [out of context]. But, as third-party cookies deprecate, that will drive renewed interest in contextual targeting and creative message, which will benefit premium publishing.”

Clearing the hurdles

All of the above is, of course, contingent on a number of factors. For one thing, it is still easier said than done to sign consumers up. For all the progress digital publishers have made in refining their acquisition and retention strategies, even the most successful have registered only tiny fractions of overall internet users.

Moreover, many of those registered users have provided nothing but name, email, and the journeys they make while logged into sites. It’s far better than alternative – unregistered users – but far from the holistic view of a user to which advertisers have become accustomed.

Reeve elaborates: “Registered [and] paying readers create a much stronger data signal than anonymous readers, that creates a better return from advertising as we can provide better targeting and insight to advertisers. This will only strengthen when third-party cookies deprecate, and the gap widens between the quality of the data from registered/paying readers and anonymous readers.”

A second issue is that privacy concerns are not entirely eradicated with the deprecation of the third-party cookie. While the use of data clean rooms or efforts like the IAB’s ‘Seller Defined Audiences’ tool can ameliorate those issues, it still requires investment on the part of the paper or magazine to initialize and optimize.

So, while the very nature of a media brand’s website provides some measure of context to the ads that appear on there, publishers need to invest to truly make the most of it. Products like Piano claim that “value difference between users, pages, referral sources, and other channels is not just two or three times higher but hundreds of times higher” when users are registered – but that requires media companies to partner up or pay for access to those data tools.

Blended future

The reality is that, for most mass-market media brands, neither subscriptions nor advertising alone will sustain them. While subscriptions have come roaring back to the fore for digital publishers, advertising is still on par with subscription revenue in terms of their priorities.

Smart media leaders are therefore thinking about how the two revenue strategies synergize, rather than keeping them separate. Katie Le Ruez, director of digital, Guardian News & Media, explains: “As privacy changes come into force, brands will want to continue to reach relevant audiences at scale as they do today, so they will need to lean into alternative tech and the contextual targeting that it offers. Greater numbers of people visiting websites will be unreachable using traditional advertising technologies, and privacy-preserving tech often relies on contextual signals.”

“At the Guardian, we’ve been testing solutions that serve advertising to audiences who choose to ‘reject all’. We know that multiple ad tech vendors who traditionally offered brand safety solutions are now pivoting to offer contextual solutions too. This is a clear indication that contextual advertising will have greater value in future.” 

And Randall believes that “Contextual advertising will return as a key pillar for brands to connect with audiences authentically. Alongside intelligent first-party data solutions, publishers and advertisers can further collaborate to make the future of advertising more effective and transparent”.

So, while the spray-and-pray approach to contextless digital advertising is unlikely to go anywhere, there is an alternative for more discerning advertisers. Just as the ads that appeared in print magazines and papers benefited from the context of the content around them, so too do the ads that appear on publishers’ websites. Combine that with the first-party data to which they have access, and those titles are poised to further differentiate themselves from the non-premium contextless adverts bought and sold on the wider web.

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