The tectonic plates have shifted profoundly for the insurgent born-digital media in the past two weeks. The pace of deal-making and executive change has accelerated. Among the moves are Vice Media’s acquisition of Refinery29, Group Nine’s acquisition of PopSugar, Vox’s acquisition of New York magazine, and the departure of founder Kevin Delaney from Quartz after it was acquired a few months ago by Uzabase. (It was reported that for the first half year, Quartz lost more than $16 million on nearly $12 million of revenue, despite having 20 million unique users). There were also significant reductions in force for media stalwarts such as Sports Illustrated (a 30 percent reduction in the number of journalists) under the new ownership of Authentic Brands Group.
I had a conversation with Steve Rubel, our media futurist, and Michael Wolf, CEO of Activate, about these developments. We conclude the following:
- House of Brands, Not Branded House—The media company of the future will be a roof of the house with multiple rooms serving distinct audiences. There is a need for scale in order to afford a salesforce for advertising and sponsorship. The success formula is niche and neat; for example, BuzzFeed’s food-centered Tasty, which has only a light touch of its main brand.
- The Disruptors Have Not Disrupted—Fox News has taken the traffic away from Breitbart and other more conservative sites. The Washington Post, The New York Times and MSNBC are all gaining traffic while some of the disruptors have flatlined.
- Video Is Key to Success—Vice is a video producer, no longer a media company.
- Digital Business Not Necessarily Profitable—Even companies that have gone public, such as Uber, continue to lose money. A handful, such as Facebook and Google, are hugely successful.
- Diverse Sources of Income—Vox has B-to-C, B-to-B and conferences and is relying less on advertising. Look for more media brands to experiment with affiliate marketing as an additional source of revenue.
Many in the PR industry thought there would just be a dispersion of journalists from mainstream outlets to born digital platforms while maintaining the same numbers. Instead, the entire sector has shrunk, and platform business models built on advertising and sponsored content are failing.
What is the playbook for PR firms and communications professionals in the current context? We are more convinced than ever that every one of our clients need to become its own media company. We must create shareable, engaging content with influencers. We are partnering with clients to fill in the holes left by the winnowing of reporters, with massive gaps in important areas such as healthcare. We must recognize that a depleted reporter force will lead to bad reporting, leading to the spread of misinformation; we must ensure that our clients are equipped with a lightning-fast response mechanism. The NBA’s reaction to the China crisis this week revealed the dangers of insufficient crisis protocol. There is absolutely a premium on relationships with reporters and editors to ensure a court of appeals on facts. Finally, we need to direct readers to rivers of interest, which could be sub-verticals, chaining your story to adjacent topics.
Richard Edelman is CEO.