When thinking of a merger, one should consider the impact on customers. Mergers and acquisitions may have significant benefits for the customers. For instance, mergers may bring upgrades within the company, bring new market innovations, and transfer technology between the companies. As such, there are many factors that companies should take into consideration before entering into a merger, as there is high consumer impact and chance of failure. Here are some challenges that merging companies face:

1. Overestimating Cost Synergies 

Synergies happen when two organizations merge in anticipation of cost savings and increased revenue. As such, the consequence of the transaction is increased cost savings and revenue growth. Sometimes, companies overestimate these cost synergies, sometimes by billions of dollars. To avoid such overestimation of synergies, follow a conservative approach. Take a conservative estimate of your cost savings. 

2. Loss of Team Culture 

Sometimes, when a big company acquires or merges with a smaller startup, the employees may lose a sense of team and team culture. Usually, the startup culture is more team-oriented, and employees feel that they are a part of a bigger goal. They lose the sense that they are working for something they have big stakes in. This affects their motivation to work and engage with each other. They become an ordinary part of a bigger company, which drastically affects their productivity and creativity. Despite what people think, employees do not receive large amounts of money during acquisitions (so, it does not benefit them directly). It is just the owners who get the most out of acquisitions. 

3. Lack of Planning Around Integration

One of the biggest challenges media companies face during mergers is the lack of proper planning around integration. Often between negotiations, companies ignore what the business operations of the merged company will look like. An unplanned acquisition can have disastrous consequences, as executives may have to figure everything out right from the beginning. This slows down the entire growth process. Integration is not an afterthought rather, it should be considered while merging. 

4. Losing Trust of Stakeholders

Human Capital is a crucial part of modern businesses. Sometimes, businesses neglect this aspect which leads to a disastrous merger. Higher management may be enthusiastic about a merger, but it does not mean all the other executive members and staff are excited too. Sometimes, mergers may result in the loss of trust of important stakeholders. The companies should be transparent about their mergers with the staff and consider how the merger benefits them. 

Poor Timing: The Case of Dotdash and Meredith

About a year ago, Dotdash, the publishing unit of InterActiveCorp (IAC), made a decision to acquire Meredith, the publisher of BetterHomes, Gardens, InStyle, People, Entertainment Weekly, and 40 other digital brands. The purchase price was around $2.7 billion. Both companies joined to become Dotdash Meredith, the largest digital and print publisher in the US. At this time, both companies were recording 25% digital revenue growth. However, the acquisition was timed poorly as both companies had slow traffic compared to the explosive growth of digital audiences during the pandemic. There are three major challenges that led to a poorly timed acquisition – 

1. Advertisement Markets: 65% of Dotdash Meredith’s digital revenue goes to premium and pragmatic advertising across a range of different industries. This includes home decor, beauty, consumer packaged goods, and retail, all of which were hit really hard in the third quarter. Most advertisers responded to changing consumer expectations and spending patterns by cutting down ad spending, some by 25% vis-a-vis the previous year. 

2. One-Time Costs: When the acquisition was announced, the company bore high costs associated with the messy acquisition and restructuring. It spent around $60 million in real estate impairments, restructuring costs, severance, and other costs. All of these are one-time costs that are limited to the 2022 financial year. 

3. Integration Execution: Dotdash had the experience of acquiring nine entities before Meredith; however, this acquisition was different. More than 90% of Meredith’s digital audience had to be moved to a common technology platform from which Dotdash Meredith would function. However, this process took longer than expected. It also resulted in many eCommerce and ad-serving challenges that drastically affected the revenue in August and September 2022. By reducing ad volumes on migrated sites, Dotdash Meredith has consistently improved ad performance and reached CPM equivalence. As such, the company is expected to experience a stable audience. 

As noted in the above discussion, mergers and acquisitions are complicated business decisions that require a lot of planning and expertise. They come with significant challenges and complications that must be addressed during the merger. 
For major media companies, digital offers a host of new challenges and opportunities. It is a niche space with constantly evolving consumer needs and expectations. As experts in the programmatic advertising market, Publir offers a one-of-a-kind unified platform specifically built to maximize earnings for digital content creators. We provide complete solutions for Ad Optimization, AdBlock Recovery, Subscriptions, and Crowdfunding. Curious to learn more? Visit us here or email us at sales@publir.com to get started today.

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Why Do Publishers Monetize Digital Media?

More than two decades ago, former Microsoft chairman Bill Gates predicted the monetization potentiality of the digital media, stating “Content is where I expect much of the real money will be made on the Internet, just as it was in broadcasting.” 

His predictions came true. While the content is described as a king, data is emerging as the ‘Queen’ for publishers who built strategies and business models to generate revenue through digital advertising, subscriptions, affiliate linking, and eCommerce sales.

By now, it is evident for content creators and publishers that their future lies in monetizing the changing consumer behaviors by drawing insights from the data, which drives their advertising and subscription strategies to fuel their growth engine. 

Publishers have also found new content distribution options in digital media. Digital solutions have reduced or eliminated printing, production, and supply chain costs, providing opportunities to target global markets. The growth of the internet and technology, in general, has had a profound influence on how people consume media and seek diversified content. Given the plethora of choices related to digital media platforms and the content they offer for consumers, digital content publishing has truly come of age.

Content platforms and search engines like Google, YouTube, Facebook, Instagram, WhatsApp, Amazon, Twitch, and so many others have been offering opportunities for creators to make money by following digital monetization practices.

What are the different ways to Monetize Digital Media?

Digital media products are offered in various forms including eBooks, videos, tutorials, audiobooks, newsletters, podcast series, and e-magazines and publishers rely on a variety of business models for monetizing the digital media through which they are offering content. The popular among them are:

• Digital advertisements
• Subscriptions
• Sponsored Content
• Virtual/Hybrid Events
• Affiliate Linking

Digital Ads

While some digital media companies generate revenue by placing display advertising on their websites and email newsletters, others utilize platforms for running programmatic advertising on their websites. Digital ad spending grew 12.2% YoY in 2020, according to the Interactive Advertising Bureau and it is expected to reach $455.30 billion in 2021. While 55.2% of the money will be spent on display ads, 40.2% will go to search.

For the first time, Amazon’s share of the U.S. digital ad market grew more than 10% in 2020, with Google taking a lion’s share of 28.9%, and Facebook making 25.2% digital ad revenue. While Social media ad revenue in 2020 was $41.5 billion, making up nearly 30% of all internet ad revenue, the digital video saw 20.6% YoY growth, increasing its share of total internet ad revenue by 1.3% to reach 18.7%. Programmatic ad revenue was 24.9% at $14.2 billion in 2020 and the global digital ad revenue grew substantially. 

 Subscriptions

Digital media inherited subscriptions as one of the primary revenue generators from traditional media and 2020 saw many digital publishers and media houses that provide political and business news, and entertainment switches to a subscription model. The New York Times garnered a record number of paid subscribers by Q4 of 2020 and the trend continued even in 2021 with a 6.6% rise to $473 million. As a result, the NYT’s subscription revenue rose by 15.3% to $329.1 million. Thomson Reuters, which provides free analytical business news, recently adopted a paywall strategy for its website, reuters.com.

Sponsored Content

Sponsored content, or native advertising, is yet another way of making revenue for digital media companies. Here, sponsored content appears alongside articles on the publisher’s website, social media channels, or in email newsletters. Either the advertiser or the publisher’s staff prepares this content in various forms, including but not limited to articles, videos, tweets, stories, and podcast episodes.

U.S. native ad spend is expected to increase by 21% in 2021 to a value of $57 billion and spending on mobile has more than doubled between 2018 and 2020, reaching $45 billion. Native advertising is the second-best top-performing channel for video campaigns according to U.S. publishers. Advertisers are opting for this format as it is easier to understand than display ads and social ads. They are engaging the readers for a longer time; with a 48% low CPC.

Events

Although events have traditionally been used to promote brands through exhibitions, tradeshows, and summits, virtual events have gained popularity in 2020, due to many in-person events being canceled thanks to COVID-19. Both live events and virtual events are an excellent strategy for publishers looking to diversify their revenue streams but companies measure the success of virtual events differently. In fact, 87% of event planners consider it successful based on the opportunities it generated, while 71% of them are looking at deals closed. 

Affiliate Linking

Like social media platforms, digital media publishers have started inserting affiliate links into their content as a way to promote other products and generate additional revenue. The New York Times has been a pioneer through its product review website, Wirecutter. To keep their journalistic integrity intact, digital media companies should mark any affiliate links they include in their articles.  

Top Challenges for Publishers to Monetize Digital Media

The ever-evolving digital media landscape offers multiple challenges for the publishers and content creators:  

• Several initiatives to ensure user’s privacy restrict companies from relying on third-party cookies, used for cross-site tracking, retargeting, and ad-serving. This would severely impact digital ad revenue.
• Digital ads are difficult for publishers as they have to fight tooth and nail for the ad dollars with many existing and emerging players. Several socio-economic and political factors influence the ad revenue. Google’s ad revenue hit by 6% in 2020, the worst-ever dip since 2008, while Amazon crossed 10% ad revenue. 
• Metrics such as page views and click-through rate are used to measure the ad impact and determine ad revenue. There is no uniform way to gauge the user’s behavior to determine ad revenue.
• Search engine ranking is crucial for digital revenue and to remain in the first or second position for popular keywords. Publishers should have a thorough knowledge of the latest search engine optimization tactics. 
• Not all publishers are successful in mustering subscribers’ support, which depends on the publisher’s ability to win the trust of the readers with quality content and innovation.
• The publisher should have strong customer data and strategies to generate subscription revenue, which is time-consuming. 
• Ad fraud is one of the biggest challenges that advertisers and publishers face. Fake users and bots that boost click-through rates may try to tamper with ad units that need to be tackled.
• The timing and positioning of an ad greatly influence the user experience. Several studies have proved that anchor ads and pop-up ads irritate readers, leading to higher bounce rates.
• Publishers must constantly evaluate the situation and update ad units to serve as a platform to track user behavior and trends.
• Media giant Google and social media giants like Facebook and Twitter are crushing competition through aggressive mergers and acquisitions and not letting many small players thrive. 

Digital Monetization Best Practices

Think Mobile

More than 5 billion people worldwide are now using a mobile phone, most people in the developed world. Consumers around the globe spent an estimated $407.6 million across Apple’s App Store and Google Play. No matter what industry you’re in, it pays to develop a mobile strategy alongside your digital media strategy. 

Digital publishers must gear up to produce formats compatible with mobile to reach all customers right where they’re at–on their phones. Although the staggering figures are appearing very lucrative, digital publishers cannot ignore the other platforms.

Video Streaming 

People stranded at home spent more hours watching videos on demand on OTTs in 2020 and video usage is on the rise on all interactive social media platforms like YouTube. The video keeps people on your site longer and has a 41% higher click-through rate in video search results than text-based content.

User-Generated Content (UGC)

Social platforms like Facebook, Twitter, and TikTok have been on news, making digital media more participative and Apple’s UGC marketing campaign with #ShotOnIphone is a remarkable example of trust-building, showcasing authenticity, and boosting engagement and sales.

Interactive Experiences

Interactive experiences like games, quizzes, polls, surveys, competitions, video making, and events engage the audience better than making them passive recipients.

Winning the customer’s trust

Winning customer loyalty goes a long way for the publisher in building the digital platform. Privacy breaches, information leakages, antitrust behavior is harmful to the digital platform.

Quality Matters

The quality of content in websites, social media, and other digital media is measured by different standards depending on the platform. Although the digital marketing industry uses various metrics to measure its success, a publisher must strive to create engaging content that is capable of holding visitors on their site and platforms for a longer time. Publishers should constantly experiment with format and practices to make it more innovative.

Native Advertising for Content Promotion

Once you’ve decided which content you’re creating, it’s important to ensure it reaches your intended audience. Native advertising is one of the best ways to do this. Research from eMarketer shows that spending on native ads continues to rise, reaching $44 billion in 2020. Find a brand that aligns with yours and negotiate to publish some of your content on its platforms or vice versa. Getting in front of new audiences with quality content is key to building an audience and increasing sales.

Conclusion

Despite challenges, digital media is painting a promising picture for publishers to make money in innovative ways. The publisher, however,  must have to keep pace with evolving digital media publishing trends to remain in the race. 

The post Behind the Curtain of Monetizing Digital Media first appeared on Publir.