Recent bad news for a number of digital-born news outlets (including BuzzFeed, HuffPost, Mashable, and Vice) is a symptom not only of the intense competition for attention and advertising online, but also of a digital content bubble where most news providers continue to operate at a loss — losses that cannot be sustained indefinitely.
Most of the digital-born news publishers who have sought international expansion have neither subscribers, members, nor offline revenues to sustain their operations. They rely on digital advertising. As Jean-Christophe Potocki, general manager at HuffPost France told us: “If we don’t fight this battle, given our model, we’re dead. Diversification is to provide extra, but our model is advertising and we need to fight it directly.”
Not all of these outlets will win this fight and be able to sustain itself on advertising alone (just as not every newspaper or niche news site will make pay models work). The challenges they face are clear, and include:
- low average revenues per user, especially with the move from desktop to mobile accelerating;
- the rise of programmatic advertising, widely seen as depressing CPMs for display advertising;
- the competition from large technology companies, most significantly Google and Facebook, that attract a large share of online advertising;
- the use of ad-blockers as users are frustrated by intrusive ads and long load times
Many expansionist digital-born publishers are struggling to effectively monetize audiences that are sometimes a mile wide and an inch deep. What could be the first step to building a more engaged audience abroad looks to critics like “dumb reach”.