Digital media has never been the most lucrative of industries, but that doesn't mean there's no path for success.
The digital media industry is a crowded field, with new players joining the market on what seems like a daily basis. However, while launching a digital media venture may be easier than ever, building a company that has long-term sustainability isn't so simple. Whether it is developing non-ad-related revenue streams or finding ways to ensure Google algorithm changes don't sink your business, there are significant challenges that digital media companies have to overcome to be successful.
As the CEO of business.com, Doug Llewellyn knows firsthand what it takes to succeed in this hypercompetitive industry. Llewellyn has been in the digital media industry for nearly two decades. Prior to his current role at business.com, Llewellyn served as president and chief operating officer at Purch and vice president of corporate and business development and digital media sales for the SMB community platform Manta Media.
Before that, he spent 12 years with CBS Interactive/CNET Networks, where he held a variety of roles, including vice president and general manager of the B2B portfolio of properties that included ZDNet, TechRepublic and SmartPlanet.
We recently sat down with Llewellyn to talk about what it takes to build a sustainable digital media business, the challenges in this industry and what business.com is doing to separate itself from the crowd. Plus, we got his insights into the technology he finds essential and the most useful career advice he has received over the years.
Challenges in building a sustainable digital media business
Q: Print media companies are struggling because of their reliance on advertising revenue. Do digital media companies face this same challenge? Can you explain your approach to advertising versus other revenue streams?
A: Print media has an enormous number of struggles, and they aren't just tied to ad revenue. On the print side, the way content is consumed has shifted massively. Over the last 15 years, more and more people have been consuming content on their mobile devices. This has made scrolling through a Twitter feed, LinkedIn, or Facebook to get and read news much more efficient than waiting for something to show up in your mailbox or at the newsstand.
The biggest challenge in the advertising world is twofold. On the digital side, there's an enormous amount of inventory. There is an endless supply of impressions across big publishers, small publishers, micropublishers and everything in between.
Then you add in Google, Facebook, Twitter, Walmart and Amazon. They are building a $1 billion ad business. Targeting on Google and Facebook, and the intent-shopping targeting that you can do on Amazon and Walmart, has shown us what we've known for years – advertising is inefficient. It's really disrupted what I would call digital media 1.0 and 2.0.
A lot of publishers, such as the branded publishers that are trying to be the next Conde Nasts of the world, have tried to go into native content, and that's just not scalable. They're doing custom publishing, in combination with an advertising model. You can get paid good money for it, but it's cumbersome and labor-intensive.
So, as business.com looks at how marketers are trying to reach customers, we think about it from a performance perspective. We're building a marketplace that attracts the buyer side. In our case, we're speaking directly to small business owners who are keenly interested in understanding what kind of products and services can help them run their business, and then attracting the vendors that want to sell to those businesses.
We connect them through what we call outcome marketing products. We focus on the types of customer delivery outcome the business.com marketing platform can give to software vendors, service vendors, and anybody who's trying to reach the small business owners that are part of our community.
We are very performance-driven. Whether we are delivering a qualified lead, delivering somebody who's downloaded a whitepaper or listened to a webcast, or delivering a qualified click, our model is very performance-based. We feel like we've got a very long-term sustainable business model around that, because it matches what's working in the market, and we understand our customers so well that we can play in that market, above and beyond just Google, Facebook and the others.
Q: So, do you feel that this is the biggest challenge digital media companies face, figuring out these revenue streams and how to make money? Is that what you have seen as the biggest challenge over the last decade?
A: Oh, absolutely. The interesting dynamic in the marketplace is that it's been incredibly easy to become a publisher. Whether it's through WordPress or Medium or any other way that anybody can start writing, you can quickly have a published result. However, it's becoming harder and harder to capture consumers' and advertisers' attention.
So much of the advertising market has gone programmatic, and that's being run by machines, as opposed to Madison Avenue and salespeople. You've got a different dynamic on both the consumer consumption side of the house as well as the advertiser side. I think it's been a huge challenge in the publishing industry for everyone involved, including digital publishers. It's not just a print challenge anymore.
Trends and the future of digital media
Q: Do you view paywalls as a viable revenue option for digital media?
A: I think it depends on the value proposition. If you look at The New York Times, they've obviously been very successful with their paywall endeavors. I think a lot of it is for the crossword puzzle, but it doesn't mean people aren't also paying for the news. The New York Times has done a very good job of gaining paid subscribers.
I also think Axios has an interesting model. I was a little skeptical at the beginning. But the marketplace, especially in the politically charged atmosphere of the last three years, has helped paywalls become more successful. People are now willing to pay because they believe there isn't fake news on the other side of that paywall.
That doesn't mean new publishing models can't be successful without paywalls. If you look at Skift, the travel industry publication site event company that Rafat Ali started a few years ago, they've been very successful at being laser-focused on a B2B vertical market.
Q: Do you believe paywalls will become more common moving forward? Do you think, as people get more accustomed to possibly paying for this, that it's going to be easier for them to stomach paying for more and more?
A: I don't see a tipping point, because I'm not sure how many different subscriptions people are willing to pay for. I think the big guys who have paywalls will get bigger. I don't see a time where everyone adopts this type of business model and consumers are all willing to pay for it.
I'm not a great predictor of the future, though. I remember I had an analyst once ask me if Yahoo/Go2 was going to beat Google, I said, "Absolutely, I don't think Google has a chance." So, I was wrong on that one.
Q: How do you measure success in the digital media industry? Is it revenue/profit? Brand recognition? Page views and engagement? All of the above?
A: I think it's all of the above. But at the end of the day, if you don't have the profit, the rest doesn't matter.
In the last year, we've seen the fall, or at least the slipping, of the darling media brands of three years ago. If you think about BuzzFeed, Refinery29, Vice and Vox, there's been a lot written about how those guys got huge valuations predicated on them building their brands and hyper revenue growth. Now a little bit of the rubber is meeting the road. Without profitability, they're having to consolidate and lay people off to try to build themselves into those big investing valuations.
Today, the profitability has to be there. Three years ago, it didn't. The reality is you want revenue growth and you want a brand that people know, because there's value there. But if you don't have profit, eventually the music stops.
Q: Many digital media companies rely heavily on Google to steer readers to their sites. Do you see any way to combat this? Or is part of the challenge of being in this industry being flexible enough to adapt to Google's constantly changing algorithm?
A: It's flexibility. The one thing is you should think about is how you can participate and get the most out of Google without being 100% reliant on it. If you have a business that is going to blow with the Google wind and the way Google changes direction, it can hurt you. If you can leverage Google as just one channel for your audience, traffic and revenue, you're in a better place.
We feel really good about our business.com business model because our organic Google traffic is one of three primary channels. We also spend money on Google and Facebook and other online channels where we acquire traffic, and we have a large network of publishing partners where we derive audience and revenue.
To have those three legs of the stool makes me feel a lot more comfortable that if a Google algorithm hits us, our business doesn't go away. It gets hurt, but it doesn't go away.
You saw this phenomenon with Facebook too. A lot of companies over the last few years came up by playing the Facebook algorithm, and when they changed it, that traffic went away. It had serious consequences.
Q: What impact do you think artificial intelligence and machine learning might have on digital media? We've seen some of it in terms of AI-written stories. I've seen it in sports where outlets are using AI to write stories with no reporters involved.
A: It's interesting. Not too much of that has blown up like we thought. We thought there'd be sports score updates, like you talked about, and small snippets around earnings released from AI.
I look at it a little differently, away from text. Voice is going to be really, really big – whether you call that AI or not. I don't think it's there yet, but when voice can be utilitarian to the business world – more than what I would call infotainment for news, weather, traffic in the home world – I think it's going to be a big thing.
Q: How does business.com stand out in the digital media space?
A: From a business model, we practice what we preach. We give what I would call high-utility value, pragmatic business advice, to the small business owners who are using our service and reading our professional journalists who are writing business advice articles, product reviews, etc., to interacting on the Q&A platform.
We focus on providing a high-utility service to our customers – what I would call our user customers, the small business owner, as well as our marketing customers, software vendors, tech vendors and service providers. If we provide high-utility value to both of those, we have a strong and growing business.
When we think about the revenue growth we have and the profit we have, we take a much different approach. We try to think like how a scrappy small business would, and that's how we run the business. That's what will set us apart from a lot of what I call these darling media brands who need to wake up and see the reality of the numbers in front of them.
Rapid-fire questions
Q: What piece of technology could you not live without?
A: My phone, because it's not just a phone. It's sort of a mini work device. I can read email. I can look at presentations. I can read about the competition. I can use Slack. It allows me to have an office anywhere I am. It allows for extreme flexibility, and it would be hard not to have it.
Q: What is the best piece of career advice you have ever been given?
A: To prioritize the people in the company first. When I think about the three constituents, it's people first. If I invest and treat the people well, the customers will be treated well. If the customers are treated well, they'll treat us well, which makes our investors happy. So, it's sort of one, two, three: employees, customers and investors.
Q: What's the best book or blog you've recently read?
A: The best one I've read is The Hard Thing About Hard Things by Ben Horowitz. It's really good. My overall thought on business books is that the first couple chapters are good, and the summary chapter is good, and everything in between is kind of repetitive and a waste of time. This one is not.
Q: What's the biggest risk you've taken professionally? Did it pay off?
A: I spent 15 years living in the valley and working in San Francisco. I think leaving there probably limited opportunities from a career diversification and growth prospect – or seemingly it could have on paper. But it allowed me to come work for Purch, and subsequently business.com, in a more flexible manner and really understand how to put a business together in a way that wasn't just the San Francisco, Silicon Valley thinking kind of way. I actually think it's benefited me to do that. It was risky when I did it, but I think it actually turned out to be a benefit.
Q: What do you do to achieve work-life balance?
A: I don't call it work-life balance; I call it work-life blend. It's really hard to separate them and to say I'm going to work 55 or 60 hours a week and then I'm going to be off. I'm going to work as hard as I can and get the stuff I need to get done when I need to get it done. When I have downtime, I'm going to enjoy that time with my family or myself or my friends and try to be as present as possible. The phone allows me to be connected. It doesn't always allow me to be present in that downtime, so it's hard. I can't get stressed about work-life balance; I just have to figure out a good work-life blend.