March 12, 2024

Long-Tail Is Seeing Less Traffic From Referrers

Hello from Spain… I’m at the MX3 Barcelona conference this week, so I look forward to meeting any of you who are also in town. Please don’t hesitate to reach out to me. I’ve already met three readers, and it’s been an absolute blast. This week’s action-packed newsletter features several pieces by AMO writers and the next episode of the podcast, so stick around!

If you never want to miss a future AMO piece, become an AMO Pro member today.

On May 15-17, Omeda is hosting its seventh annual Omeda Idea Exchange in Chicago. I went a couple of years ago and had an absolute blast, and I’ll be attending it again this year. 

This is a great opportunity to meet other media operators who are taking an audience-first approach to their businesses and prioritizing the acquisition and activation of 1st-party data. When I went a couple of years ago, I learned a lot and met some unbelievable people who have gone on to become guests of the AMO Podcast. 

If you want to attend, be sure to buy your tickets now. I hope to see you in Chicago!

It pays to be big

That’s not often a statement you’ll hear me make here at A Media Operator, but at least in the case of referral traffic, bigger really is better. According to a great, in-depth research study by SparkToro and Datos:

It’s already happening. In the 13 months of this study, the Long Tail lost ~3.2% to the top 170, equivalent to tens of millions of visitors and billions of clicks. And while the number of monthly unique visitors (among Datos’ fixed-size, stable US panel) to the top 170 grew by 0.299%, referral traffic only grew at 0.103%, suggesting that, on the whole, the most powerful, popular sites on the web are sending out a shrinking share of the traffic they receive.

While this is irritating—real specialization happens at the long tail—it’s also not terribly surprising. For example, over the last few weeks, there has been much discussion regarding a piece written on HouseFresh about the cornucopia of product review-type content on major platforms like Forbes, Rolling Stone, etc. I won’t talk about the piece in much depth, but this paragraph stands out:

Savvy SEOs at big media publishers (or third-party vendors hired by them) realized that they could create pages for ‘best of’ product recommendations without the need to invest any time or effort in actually testing and reviewing the products first.

So, they peppered their pages with references to a ‘rigorous testing process,’ their ‘lab team,’ subject matter experts ‘they collaborated with,’ and complicated methodologies that seem impressive at a cursory look.

Since these massive sites have very strong domain authority, ranking for these keywords has become much more straightforward. The affiliate business is big money, so it’s unsurprising that publishers decided to chase this model down in a quest to find any dollar they could. But it, naturally, has left the long tail with an ever-shrinking piece of the pie.

Now, the SparkToro/Datos data does not explicitly call out the product review business. Still, the reality is that the top 170 sites are getting a growing percentage of the available referral traffic out there. And so, it pays to be big.

However, it’s not completely doom and gloom for us niche operators. While Google remains the heavy hitter across the board, Reddit is becoming a big player, accounting for 2.39% of traffic to the non-170 sites. As SparkToro co-founder and CEO Rand Fishkin said on Twitter:

If you’ve got a strategy for Facebook, YouTube, and Twitter… Well, Reddit’s in the middle of those and climbing almost as fast as Twitter’s shrinking!

One final thing worth exploring in this research study is that OpenAI’s ChatGPT is the 29th biggest referrer—likely because of the increased use of citations. It’s only 0.21% today, but let’s not forget that this platform is still very new compared to other referrers. Could this become a much more significant percentage of the pie as time goes on? It’s certainly possible.

The question I have, though, is whether there’s a strategy for it. As we’ve seen with other audience development approaches like search and social, developing a plan is important. But I don’t think that’s as clear with tools like ChatGPT. But the fact that it’s now 0.21% of referrals—at least according to this study—is fascinating in and of itself.

G/O is obviously available for parts

Late yesterday, multiple reporters published the memo that G/O Media CEO Jim Spanfeller sent to the team announcing that Deadspin had been sold to Lineup Publishing, a European firm. In the memo, Spanfeller said:

Lineup Publishing is a newly formed digital media company described in their words as “dedicated to creating, acquiring and managing high quality media brands across a variety of sectors.” After careful consideration, the G/O Media board of directors has decided to accept their offer. I do want to make it clear that we were not actively shopping Deadspin. The rationale behind the decision to sell included a variety of important factors that include the buyer’s editorial plans for the brand, tough competition in the sports journalism sector, and a valuation that reflected a sizable premium from our original purchase price for the site.

While he says in the memo that “we were not actively shopping Deadspin,” you don’t have to explicitly say “we’re for sale” to know that you’re for sale. It has now sold three properties over the last 12 months. According to Adweek:

In March 2023, G/O Media sold one of its properties, Lifehacker, to media company Ziff Davis for an unspecified amount. According to two sources, the sale fetched a high enough price for Great Hill to make back its original investment. 

“They sold Lifehacker, made a good return and are looking to get out,” according to a person familiar with the matter.

The Jezebel sale followed in late 2023. You don’t sell three brands in 12 months without it being an obvious signal that you are for sale. So, the team can say they’re not actively for sale, but I look at actions rather than words when possible.

However, I think the two possible scenarios for a roll-up like G/O are worth exploring. If we step back, the strategy here was for private equity to fund the acquisition of multiple brands, allowing the portfolio to reach efficiencies of scale. There are numerous roll-up portfolios where the brands, on their own, might not be able to survive, but when merged, they can share services and each contribute.

As with all P/E-owned media companies, the end goal is to take the portfolio, grow it, optimize it, and then sell it to a larger buyer—hopefully a strategic one, but more often than not, another P/E firm. This is the first scenario for G/O Media.

However, what happens when no one wants the entire portfolio of brands? Well, I think that’s what we are seeing with G/O today. In this case, the private equity owner has to generate its ROI by selling the business for parts. You may not maximize your return, but if you can generate enough, so be it. But it has its risks.

“No one wants to sell their assets piece-by-piece because it shows weakness. And then, the buyers that decide to bid act as if there is blood in the water,” said one seasoned operator who has been on both sides of the private equity table.

But if Adweek is correct and Great Hill made a good return on the sale of Lifehacker, then at this point, it’s about moving as quickly as possible to maximize its IRR irrespective of any perceived weakness. And so, I would not be shocked if there are additional announcements over the coming months for additional G/O Media assets.

G/O may not be actively shopping, but the team is very much for sale—that much is obvious.

Annex Business Media’s Scott Jamieson on the AMO Podcast

I had the absolute pleasure of interviewing Scott Jamieson, CEO of Annex Business Media, a B2B publisher in Canada, for the AMO Podcast. We talked about how the business has transitioned from print to digital, how its shared services support the portfolio of brands, why every site looks identical, and so much more. I highly recommend you listen to it.

You can listen to the podcast wherever you choose or on the AMO website. AMO Pro members also get the full transcript if they prefer to read over listening.

Click here to listen.

PRO: The Ankler’s Janice Min Sees a Path to $10m in Revenue

After spending years working on magazines, including Us and The Hollywood Reporter, Janice Min has decided that it’s time to focus on something that she owns directly: The Ankler. And things are going well.

According to her:

  • The Ankler booked more than $1 million in revenue in the first two months of this year.
  • “Our revenue for the first six weeks of this year has exceeded all our revenue for our first year of business, 2022,” she says.
  • Sixty percent of that revenue is coming from ads, and 40% is coming from subscriptions.

Since she’s building on Substack, she doesn’t have many of the inherent costs that other media companies—including her former employers—have. All in all, she sees a path to $10m in revenue next year thanks to the rapid growth that The Ankler has already seen.

By: Jim Edwards

Read the full piece here.

PRO: How Have Publishers’ In-House Creative Agencies Adapted to Changing Advertiser Priorities?

In the early 2010s, when the need for revenue diversification really began to bite, many media companies launched in-house creative studios. By leveraging their content capabilities these teams were able to capture large amounts of spend from advertisers looking for bespoke creative – and teams like Guardian Labs and Vox Creative have contributed significantly to their parent organisations’ bottom lines ever since.

Since then, however, the digital advertising ecosystem as a whole has changed dramatically. The usurpation of mass reach by tech companies, the rise of retail media, and the death of the third-party cookie have all changed advertiser priorities on a global scale.

Faced with those changes, how are in-house agencies altering their pitch to advertisers, and what strengths of their parent organizations can they now leverage? Between pre-existing work that demonstrates strong ROIA, first-party data and AI capabilities, and demonstrable content creation capabilities, is now the time for in-house creative agencies to take their place at the top table for publishers?

By: Chris Sutcliffe

Read the full piece here.

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