According to Mary Meeker’s 2017 Internet Trends report, Facebook and Google now control 85 percent of online advertising growth. Facebook alone enjoys a 62 percent year-over-year growth rate—significantly outpacing the majority of the industry, which has an average of nine percent.
These stunning stats highlight one of the biggest challenges facing media companies today: uncovering new areas of revenue growth in an increasingly competitive landscape. While companies are investing more money in online advertising, more media companies are competing for a small piece of the pie. At the same time, audience preferences continue to change quickly, putting pressure on media companies to be more agile.
To thrive in this landscape, forward-thinking media brands know they can’t rely on analytics and behavioral data alone. These companies are complementing the trove of hard data they have with contextual data; they're engaging directly with their audience to better understand the evolving consumer preferences and attitudes.
Here’s a look at three benefits companies gain from taking advantage of contextual data.
1. Creating a more authentic relationship with readers
Using data to make smarter decisions is nothing new for media companies. But the brands making the biggest difference are going beyond qualitative data and analytics to gain a deeper understanding of their audience.
Refinery29, for instance, is changing women’s media by understanding the nuances of its audience in a deeper way than other digital publications. By understanding the core values that connect its audience, as well as the makeup of multiple niche audiences within its readership, Refinery29 creates effective long tail content for different audiences.
“We do a lot of qualitative and quantitative research, and we experiment and make tweaks as we go along,” Piera Gelardi, executive creative director and co-founder of Refinery 29, shares with AdExchanger. “We get an insight, we test it and we see where it leads before using it to inform our wider strategy.”
This audience-centric approach of listening to readers seem to be working for Refinery29. It generated approximately $100 million in revenue in 2016, with more investors knocking on the company’s doors.
2. Maximizing value for advertisers
Advertisers are looking for ROI. They increasingly rely on media companies to help them demonstrate the value of their marketing investment. In response, savvy media companies are helping their partners set up more effective campaigns and demonstrate the ROI of their activities.
One example is Allure, the Condé Nast women’s beauty magazine. In an effort to understand its own audience and provide advertisers with more value, Allure created an insight community with 40,000 dedicated readers. In one example, the company tested ads for partners such as Crest and Pantene. In doing so, it discovered that ads with real testimonials motivated Allure readers to purchase at a 70 to 86 percent higher rate. Since every media outlet is different, this type of insight increases advertiser trust, knowing with some certainty what kind of ads perform well with your unique audience.
According to Cathleen Williams, former executive director of marketing at Allure, “ROI is no longer just about whether a consumer is aware. It’s about advertisers saying to us, 'did you help me forge a deeper relationship with my customer?'" The ROI of a deeper customer relationship can’t be achieved by quantitative data alone.
3. Uncovering new revenue streams
This new approach of using data and insights to create new revenue is not just a thought experiment. Just ask Bustle, the leading online publication for millennial women.
In 2016, Bustle launched a research arm, Bustle Trends Data Group, led by political consultant Jessie Tarlov, Ph.D. The group uses an insight platform to uncover how its audience feels about a wide range of subjects, including politics, fashion, and how they make purchasing decsions. Bryan Golberg, CEO and founder, commented in an interview with Adweek, "We already have tremendous reach. Now it's about depth."
This depth of insight is not only being used to sell more advertising—the company also uses it to uncover a whole new stream of revenue. The group plans to monetize and sell research directly to other brands, publishing white papers and taking on new clients on a per-project basis. When the research and advertising streams come together, it creates a virtuous cycle of new business and increased trust. Jason Wiganheim, chief revenue officer at Bustle, tells Digiday, “If clients are running media that is working because of the insights we’re giving them, they’re going to continue to renew business with us.”
Beyond data and traditional approaches
The examples above reiterate the changing landscape of media and the ways innovative companies are gaining competitive advantage. Today, media companies need to provide more than ad space. In many ways, media companies are morphing from merely selling ad inventory to becoming consultants to their advertisers and partners.
“The line between publishers and agencies is eroding,” says Justin Montanino, senior director of branded content at New York magazine, in an interview with Contently. “In this business, you have to anticipate tectonic shifts and be ready to evolve your business before it’s too late.”
Indeed, tectonic shifts call for dramatic changes. Despite the big changes in the media industry, one thing remains true: the companies that know their audience best are set to win. Attitudinal audience insights are arguably even more important than hard data in an industry constantly trying to answer the question, “what kind of content do readers want?” One reliable solution is to engage your audience and build your relationship with them to understand not only how many engaged readers you have, but which topics they feel passionate about, and how think and feel about your content. Marrying this type of insight with hard data and analytics will be key for media companies looking to get a bigger share of the online-advertising pie.