How the Ad Business Changes in a Post-Traffic Era

Not a week goes by where I don’t hear from an operator saying that they’re seeing traffic drop to their websites and it’s not getting any better. In many respects, it’s another way of describing the death of organic search.

It has become a mainstream issue now. Last week, The Wall Street Journal published a story titled News Sites Are Getting Crushed by Google’s New AI Tools. While traffic has been shrinking for some time—social media deprioritized the link years ago—it’s become way worse with the rise of AI. As the WSJ writes:

Social-media platforms such as Facebook and Twitter helped funnel online traffic to publishers, but ultimately pivoted away from giving priority to news. Search was a stalwart traffic driver for more than a decade, despite some turbulence as Google tweaked its powerful algorithm. 

Generative AI is now rewiring how the internet is used altogether.

“AI was not the thing that was changing everything, but it will be going forward. It’s the last straw,” said Neil Vogel, the chief executive of Dotdash Meredith, which is home to brands including People and Southern Living.

This means that our business needs to evolve to account for that. For the vast majority of publishers that monetize primarily with advertising, things are going to change. With less traffic, we’re going to have to make more on each reader than before. If we’re going to survive, we need to understand the core mechanics at work.

A reason for the rise of programmatic advertising in media was an attempt to solve the unpredictability of traffic on the internet. Thanks to a story going viral—we’re talking the era of Digg, Slashdot, Delicious, StumbleUpon, etc—you might suddenly get bombarded with a ton of traffic. The problem was two-fold:

1. You didn’t know it was going to happen, so you might have no committed advertising sold for all those extra impressions.
2. The traffic might not be contextually relevant to the advertising you’ve sold, which could hurt your advertiser’s performance.

Programmatic advertising solved for that because it was content-agnostic and it could scale up automatically since it was following the reader and advertisers were bidding on every available ad impression. While it inevitably hurt publishers because it completely devalued content, it was a solution to a legitimate problem.

The issue is that because every ad impression could be monetized, much of the focus became how to get more of it rather than making that traffic more valuable. And it sort of worked for a while. But now traffic is shrinking and just creating more content to get more traffic isn’t a viable strategy like it might have been in the past (and let’s be real, it probably wasn’t).

The ad business needs to become significantly more data-friendly if we’re going to be able to survive on less traffic. For the people that come to our sites, we need to do a much better job valuing them and maximizing the ad potential on them. So, what does that look like in practice?

In May, I moderated a panel at the Omeda Idea Exchange 8 event. And sitting directly to my right was Ariscielle Novicio, the CTO & SVP of product and digital strategy at the New York Post. I asked her how they are better monetizing with traffic dropping 32% year-over-year. Here’s what she said:

Traditionally, we have programmatic, we have PMP (private marketplace) and then we have direct sales. We’re highly programmatic in our business. We never used to think about building out our data pipeline to support those [programmatic] businesses… every sale from programmatic, sending programmatic signals to the bid stream, we have a huge foundation on that. Creating audiences and interest-based audiences and product-based audiences for PMP, fairly new thing for us, but we’ve put more support and more resources to make that happen and we’re seeing that business grow.

The Post isn’t about to stop running programmatic ads, but if it can push audience data into the programmatic stack so that bidders know who, individually, will see that advertisement, the amount they’ll pay will increase. On the private marketplace side, building out these pre-built audiences so that they can be easily accessed is also incredibly data forward.

Another way of saying this is that we need to expose to our advertisers the value of our audience. But that also means that we need to do a better job understanding when our audience is most valuable to our advertisers.

A big way to accomplish that is better understanding where our audience is in their marketing journey. I’ve got a number of SaaS companies that advertise on AMO where the contracts are multi-year. Therefore, if someone is considering making a switch from one platform to another, they need to be in the right part of their current contract. I don’t care how badly you want a new customer data platform, if you’ve got two years left on your current agreement, you’re not changing.

This is why I’ve advocated since the launch of AMO for publishers to understand not only who is reading their content, but what they’re reading and if you can get good enough, why they’re reading it. Understanding those points unlocks the potential for you to drive highly targeted readers to your prospective advertisers.

And that doesn’t mean that the future of advertising in a post-traffic era is 100% performance marketing. Brand still matters. What it means is that we’re going to have to get more advanced with our offerings and work with marketers across their objectives.

That means continuing to offer brand-forward solutions, but promoting it to the right decision makers. That means offering targeted lead generation opportunities, but promoting it to key readers, not just whoever. That means offering 1:1 meetings at live events where we can articulate that the attendees taking those meetings are actually in the market for the product.

In other words, if traffic is going to drop, then we need to better monetize each of the readers that we do have. For a SaaS company that might generate $50,000 a year on a three-year contract, they will likely pay many thousands of dollars to get in front of a single, high-intent user. We need to do a better job of delivering that data to our partners.

Advertising isn’t going to die for publishers; it’s just going to become much more focused. That means we need to do a better job of knowing who our audience is and delivering the right advertiser message to the right reader.