Web publishers are falling on hard times. Houghton Mifflin Harcourt recently announced plans to lay off hundreds of employees. International Data Group laid off more than 90 people in its tech-industry publishing division, less than two months after completing its sale to a Chinese conglomerate. Telegraph Media Group just completed a round of job cuts. Yahoo, IBT Media and Mashable announced lay offs last year.
There are several irreversible trends that are pulling publisher profits down. Facebook and Google are reeling in over 75 percent of ad spend by promising reach and granular audience targeting at competitive prices. Traditional ad revenues are being squeezed by the increased user adoption of ad blockers. Ad buyers are looking for deeper deals with a handful of partnerships, cutting off many publishers.
Move toward direct monetization
In an effort to boost revenues, publishers are becoming more like ad agencies. They are creating paid content for advertisers. Publishers like BuzzFeed, The Atlantic and The New York Times now look at sponsored content as a major source of income. The Times is looking to its T Brand Studio to help it generate $800 million in revenue by 2020. News UK, which owns The Times, The Sunday Times and The Sun, found that time spent reading sponsored content was occasionally equivalent to editorial content.
The problem with the higher percentage of sponsored content is that it threatens the…
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