On 2023 in Publishing and AdTech

We saw 2022 lay a mile-wide trail of carnage that was just as deep in some places.?Pandemic bumps are now blips appearing as massive dips in YOY rearview mirror.?Companies are finding themselves overextended or overleveraged from the wild markets of employment and credit. ?Those who prepared and stayed diligent are sweet on the year ahead, but many did not heed caution and have taken their lumps. Even still, many are yet to do so.

2022 was exhausting. 2023 is shaping up to be another whirlwind of unpredictability.?

As we look at headwinds blowing down the 2023 digital media and publishing landscape, it is hard to be optimistic about the future of journalism and independent media operators or even conglomerate ones for that matter.?The ways content is discovered and consumed are changing so rapidly that it’s hard to find a rhythm for planning and operating – and that creates uncertainty…lot’s of it.?

Before we jump into trends and predictions, let me tell you with certainty that no one knows what 2023 will bring, but I can guarantee you that 2023 is definitively not the year of mobile.?

TLDR; Amidst the uncertainty, I fear that certain macro trends will overpower even the best laid and executed plans.?Yet, I am optimistic for a hearty 2023 because, well that’s just who I am.

Some Overarching Themes for 2023:

1. The Pendulum: ?Our economy hit an apex in 2022 Q2 and the (wrecking) ball is swinging forcefully back towards fiscal responsibility and profitable growth.?It is hard to stop the momentum of change, but you can get ahead of it.?Keep reading ??
2. Chaos Can Be Good: Amid the cuts and jumps, we are sowing the seeds of the next great resurgence in media. Once dominated by deep-pocketed tech companies, thousands of incredible builders and doers are freshly available to start-ups that have been craving high quality talent since before the pandemic. This reshuffle should invigorate startups and tomorrow’s Unicorns.
3. Platform Dominance: The clashing of social, search, browser, and device is deafening and clamorous. These titans are playing a very high stakes game of poker and the long arm of the law is trying to keep it fair for consumers.?It is beyond onerous to make long-term bets when such large forces are at work, and one should never forget the ancient rule of castle building: Beware of castles built on borrowed sand.?Even Zuckerberg learned that the hard way.

Ancient Proverb:

Beware of castles built on borrowed sand.

1. Up But Down: Confused about market signals, consumer confidence and correlated ad spend trends??Black Friday sales were up, but publisher revenue was kinda meh? Now layoffs, freezes and shaky plans emerge but the agency forecasts are calling for increased ad spend YOY???So… yes, consumers are spending money (great!) and yes, brands are willing to advertise (great!) and thus 2023 forecasts show ad spend growth.?However, that growth is going to search, social and retail media networks and thus general web spend will be down (bad!). More particularly, we will see the 2022 Q3 slump show up in a dearth of 2023 Q1 and Q2 reservation-based buys and I think brands will also hesitate on making big open-web bets in 2023 and direct dollars will be tougher to find than usual.?This shyness though will lead to wild swings in programmatic dollars, as buyers can throttle their campaigns in real time as they see trends changing.?

What’s Hot

1. MarTech as?Growth Industry: Despite the bots and AI, or perhaps because of them, we will see MarTech related jobs continue to grow and dominate pay scales.?You will need a technical acumen and a love for “connecting the pipes”, but this is an area that won’t stop growing.?Marketers need to spend money in order to sell products, and there must be a service community that will help prove an ROI on that spend.
2. DCaaS: Deal Curation as a Service is a fancy term for companies representing supply inventory.?SSPs and similar aggregators have extensive sales teams representing publisher inventory, which help publishers clear inventory at premium CPMs.?Their teams have built optimization layers and creative solutions that steer clients into high performant outcomes across a select set of publishers.?This combination of Scale + Quality and Sellers + Tools allows DCaaS to secure reserved IO’s for their campaigns and usher in millions of high margin dollars to their publishers.?These DCaaS companies look like a marketing agency on the front, and SSP in the middle and a publisher partner in the back (think Kargo, Concert, GumGum, Yieldmo and even Retail Media Networks).?Publishers will seek more DCaaS in lieu of carrying expensive direct sales teams, especially during periods of budget contraction. Further, this class of vendor will gain in popularity as their aggregation powers help buyers coalesce around scaled publisher solutions.
3. Supply Optimization, Regardless of Path: Jounce Media has done a great job highlighting the inefficiencies of publisher’s exploding supply paths, but it remains a dizzying feat to whittle that down beyond a few high-level choices.?Next up, buyers are going to focus on quality of media and making more intentional choices about what they are buying.?More than just a popularity contest now, these decisions will use elaborate understandings of bid streams and business outcomes to justify what media is worthy.?Arbitraging traffic and running suboptimal video units are already climbing the naughty list, so publishers should focus on getting clean before they get SPO’d into oblivion.
4. Data Collaboration: Fragmentation requires coordination and that can be best achieved through Clean Rooms, or as they prefer to be called: Collaboration Software.?Attribution is golden for marketers, even those using PMax despite not getting any back. Publishers have a small window here to exert metadata leverage in negotiations. Tag-based campaign data collection is weak (cookies!) and carries less metadata versus permissioned log level sharing. Marketers should prioritize (read: pay extra for) working with publishers who will share back that data. Publishers should wield that data-feed access like a velvet rope into the Direct Sales Lounge.
5. Platforms Sans Algorithms: Social Media platforms gave individuals tools to create and distribute content with near-zero cost, but they didn't ever really offer a path to owning your audience.?Those platforms exploit creators and publishers alike, enriching themselves walled garden ad revenue and leaving scraps for others. New platforms like Substack, Twitch, Patreon (okay, and Only Fans) are equipping creators with enterprise-grade tools that are reducing the friction of operating a business that owns its audience. As these creators establish better multi-faceted connections with their audiences, Big Media will continue to bleed talent and importance.?One day that pendulum will flip back again, but it won’t be in 2023.

What’s Not

1. Cookie Crumbs: This constant kicking-the-cookie-collapse-can down the road is not only exasperating, but it is also draining the life out of inventive solutions.?Once primed for a specific date, dozens of companies are facing a lack of urgency and thus demand for their new products. Since the industry loves this “bury my head until it’s real” mantra, let’s just get it over with and move on to progress. Rip the band-aid!
2. The Metaverse: I love the promise of VR and the metaverse, but we’re not there yet culturally. Sure, hardware is a gaiting factor, but don’t forget that everyone in America has a smart phone and a computer. ?Now is a great time to learn and explore, but let’s stay off the hype train.
3. Not-In-Stream Video: There is a reckoning looming in the web pre-roll market, but this is a good thing (for some).?Web pre-roll avails have skyrocketed over the past few years thanks to sticky players and auto-generated video content, but recent changes to the IAB definition and increased scrutiny from certain buying platforms aim to give buyers more control over what they are buying. As the trend takes on, sticky players will have to declare themselves as outstream which may flood that market and crash those CPMs.?The buyer preferred click-to-play pre-rolls with sound on will be scarce but clearly identifiable and will carry ultra-premium CPMs. While I’m in favor of cleaning up the industry, I fear that this may decimate some publisher P&L’s.?Google has not adopted this change yet, but please heed this warning and start working on your products now!
4. Probabilistic Graphs: Le sigh… These graphs are finding a path during the cookie-interim, but may have a limited shelf life.?Apple is on a finger-printing warpath and that means Google must follow suit.?I don’t think there is a way to avoid this battle, but hey, perhaps there is a privacy-safe way to track users without their consent?(editor’s note: there is not).

Keep an Eye Out

1. Google is Eating the Internet: Lyrics, Sports, Ratings, Recommendations, Travel and even just basic facts have all been decimated by the Google Knowledge Graph and other Google products that harvest data to lubricate it’s ads business or aim to keep users within the giant’s ecosystem. This is terrifying for operators. Google can build their way into a category, but they are also less likely to make any acquisitions amidst the anti-trust scrutiny. Competing against this dominance is daunting at best and a non-starter at worst. Keep an eye out for lunches being eaten and a lack of innovation here.
2. Podcasting Backlash: Did new behaviors of the pandemic increase the popularity of podcasts??We’ve already seen subscription fatigue, and I think we’re hitting peak podcast saturation, but more importantly we’re going through the unwinding of pandemic behaviors.?With only a big head, a super skinny long-tail of podcasts and no fat middle, what will happen to the ecosystem??Will a soft ad market crash the podcast economy? If you only need to advertise on the top 100 podcasts to reach 6 in 10 of all US weekly listeners, what good is the long tail? Is there a good enough monetization network spreading out to the tail? Keep an eye out for networks not renewing some of its tops deals.
3. The Cablification of CTV: How many CTV services will you subscribe to and not watch??In the 80’s we saw Cable TV channels proliferate and then consolidate into packages with carriers.?The economics of sustaining one-off services and their content production plus marketing costs make for very tough businesses in saturated markets. First we will see bundles across subscriptions and then we will see platform consolidation as services shutter. But who will own that platform – Verizon? Disney? Hulu??Keep an eye on executives wishing for the old school days of theatrical windows.
4. ChatGPT and AI Content Creation: Fascinating.?It will disrupt a ton of industries, but it won’t replace humans outright. Think of these services as helpers, thought starters, perspective providers or slightly better versions of Alexa and Siri. ?They can’t really “invent” things yet, but they can help you work through problems and certainly large data sets. Keep an eye on legal ramifications of image training sets and “paraphrasing services.”?

Want to deep dive on the AI automation conversation? Come see me, Tameka Kee , Jason White , David Berkowitz on a panel hosted by Beeler.Tech and Fastener at the Mediaocean Retreat at CES on Friday Jan 6 at 10AM.

1. Teetering: As Sara Fischer of Axios points out, Google and Meta combined will rake in less than half of all digital media spend for the first time since 2014. We could be discussing how retail media networks and streaming services have bitten the duopoly, or how Facebook suffered 10 billion papercuts by Apple's ATT , but instead I want to highlight a miniscule sliver of that chart: All Other US Digital Advertising.

That little grey line is what is left for news, entertainment, sports, self-help, health and all the other verticals we love online. Publishers are fighting to preserve this tiny slice of ad spend which is their entire livelihood. When we talk about DSP's disintermediating, platform's short-changing publisher content, adtech stealing contextual or how walled gardens create a "dominant" form of advertising, just remember that your favorite site might be the next to call it quits. I heard a publisher recently exclaim, "perhaps destroying the current dynamic will create more room for great content creators instead of aggregators." Here's to hoping...

Hot Tips for 2023:

1. Don’t say Zero Party Data. It may exist but it’s not a party thing, okay?
2. Learn what interoperability means and use it correctly.
3. Remember that clean rooms are software that sit on top of storage infrastructure.
4. Admit that only 40% of the open web is addressable via cookies.
5. Have a learning agenda. Curiosity will set you apart.

One more thing…

I don’t just love AdTech and publishing, I also love working with the people in our community. Please stay healthy and lookout for others.?Be kind and compassionate, lead with empathy and put people first. Without each of you, this wouldn’t be nearly as fun.

Thanks for a great 2022 and cheers to the New Year.?

-Scott