What you need to know:

• SMI data shows most parts of publishing – bar print magazines – have had a tough year, with underlying double-digit declines.
• OMG investment chief Kristiaan Kroon predicts that may continue for all but specialist publishers with high value, niche audiences. “Relationship rationalisation”, he suggests, has arisen as advertisers and their intermediaries react to sustained macroeconomic pressure.
• Rationalisation favours scaled players and smaller generalists will find revenue continues to shrink.
• Will Hayward, CEO at Private Media, agrees with Kroon’s assessment, though sees “green shoots” emerging, particularly within small business and public sector niches.
• But he forecast display revenues to continue to slide across the board.
• Alex Light, MD at indie publisher Concrete Playground, said at least one holdco-owned agency investment chief is buying into deeper, more engaged audiences over reach, and likewise sees signs of ad market recovery.
• But Luke Spano, MD of native content platform Avid Collective, suggests large media buying firms have competing incentives, agendas and structures that effectively push smaller publishers off the plan.
• He thinks aggregating those publishers and removing friction is the key to enabling independents to compete with the likes of News and Nine – those now benefitting from rationalisation.
• Avid, he said, aims to be “The Trade Desk” of native content, and is already in conversations with media agency holding companies to white-label the platform locally and globally.

Latest SMI ad spend figures show just how tough the current environment is for publishers – and the big spenders appear to be culling media supply chains locally and globally in a bid for efficiency.

“Relationship rationalisation” will be a key 2024 priority for OMG, Chief Investment Officer Kristiaan Kroon told Mi3 as last year’s upfront season wrapped up.

While some holdcos, including GroupM, have in recent years talked up media diversity, there is growing risk that all but the largest publishers face being squeezed out as agencies seek scale, ease of transaction and efficiency.

Sustained macroeconomic pressure, said Kroon, is driving a “flight to safety” that will “increasingly put pressure on the mid- to long-tail [publishers] who can't provide necessarily those strategic products and services that the large publishers can”, nor market them at scale.

Asked in recent weeks if those comments have borne out – Kroon said his assessment remained unchanged.

OMG will spend with circa 600 media businesses this year, “everything from Google to Mining Monthly”, per Kroon, with around 100 independent publishers making up part of that mix. But he said that number and diversity is unlikely to grow – and the prospects for “generalist” publishers are becoming increasingly challenged.

“There’s no Machiavellian behaviour at play, it’s just that market forces push everyone in that direction. There is a subset – like DEI and CALD [Cultural and Linguistic Diversity] audiences – that is on the agenda for large business and governments, and there are targets to reach those diverse audiences. So if you are a specialist publisher and reach diverse audiences, you will see growth,” said Kroon.

“If you are a generalist – you will get squeezed. It’s the squeezed middle that is challenged. Having worked publisher-side, I can see how the market dynamic over time is stacked against generalists.”

In a world of scale, go niche

Will Hayward, CEO at Private Media, agrees. While he and other independent publisher bosses told Mi3 that FY25 is looking better than FY24, that’s off a crunched base, with most publishers last year “seeing double digit percentage declines in ad revenue year on year”, per Hayward.

“Irrespective of the macro economy, the market is only going to get worse for general interest news publishers to try and monetise through advertising – the tech platforms have greater scale with better targeting and lower cost. Even with some sort of rapid recovery of the economy, I wouldn't expect that revenue to improve,” he told Mi3.

“For the indies, the real successes that we'll see are those that are really focused on valuable niches that bigger publishers don't care about and the tech platforms haven’t got time for.”

Niche publishers “with valuable audiences that you can’t buy elsewhere”, will likely see a “single to low double digit recovery” in FY25, per Hayward. But even with a “slow recovery” already underway, and advertisers more “open to specific conversations”, he said that “the timelines for getting things signed off is far greater than it used to be”, putting pressure on publishers grappling with cash flow constraints.

Private Media makes “40-50 per cent” of revenue from advertising, “depending on the strength of the [ad] market at any given time,” per Hayward.

“Our two biggest categories are those advertisers seeking to reach a small business audience – which surprisingly is fairly significantly underserved in Australia – as well as the public sector community through The Mandarin,” he adds. “Those audiences are really valuable niches to certain specific advertisers – and we think there is opportunity for significant growth in both.”

Private Media is also recording significant event revenue growth, which Hayward predicts will more than offset ongoing declines in high margin advertising segments like “standard display”, which he forecasts will “make up a smaller and smaller share of total revenue for all publishers”.

Hayward, who was once Europe vice president for BuzzFeed, suggests the woes of once-vaunted disruptors provide a salutary lesson for any publisher thinking beyond deep, valuable niches.

“I’m just repeating myself… but it was 2017 when Mashable was sold for a fifth of the $250m it had raised just a year previously. BuzzFeed is about to be delisted and is trading at something like revenue, and Vice has gone bankrupt. To put it softly, I think the model of mass media monetisation through advertising has quite clearly been shown to be extraordinarily difficult to achieve,” said Hayward.

“So the businesses that will survive and thrive over the next 10-20 years are those that can build very specific audiences and then monetise those audiences in a variety of ways.

“What is critical is to create content that is really valuable, so that people are prepared to pay hundreds of dollars to read it, and they are prepared to pay hundreds of dollars to come and watch it at an event,” he said.

“If you do that well, you should also be able to build an advertising product that delivers huge value to advertisers. So there is a good model out there – and we’ve seen businesses across the pond do that well – Future plc and [Informa-owned] Industry Dive in the UK are both driving thriving businesses. But in Australia, it's all still to play for.”

While forecasting a better FY25, Hayward said it would be foolish to downplay the structural headwinds facing many publishers – particularly those that have become reliant on bargaining code cash.

“These businesses are going to have to be very lean, very hardworking and build as much operating leverage as possible. I think it is going to be a very hard couple of years, but we have seen some green shoots. So we are cautiously optimistic, but very, very focused on execution.”

Packaging niches for scale

While some holdcos may be focusing on streamlining relationships, others remain open to diversification of media, per Alex Light, one time Vice Australia boss, now MD at independent publisher Concrete Playground.

After a tough year for publishers across the board, Light sees “green shoots” emerging for FY25 and said one large holdco-owned agency investment director in particular is interested in “deeper, more meaningful campaigns with the right type of publishers … seeking engagements with customers through the right targeted media first and then reach second.”

Which is the essence of what independents must successfully package if they cannot compete with scaled plays.

Yet despite pockets of appetite, agencies simply aren’t set up to genuinely deliver diversity of media, per Luke Spano, MD of native content platform Avid Collective.

“Agencies are such big organisations – you have the investment director, who at the end of the day just cares about rates and efficiencies. The CEO and the MD are thinking about staffing, headcount, timing and trying to influence channel selection [on that basis], because of what their resource has time to execute and what they don’t. Then you have different financial agreements – and if you are operating on a percentage of media spend, what's your incentive to execute something that's going to take five times as long?” said Spano.

“If you challenge the client teams and the people in strategy and planning that are out in market representing clients, they are incentivised by the best media solution. So they are the ones more interested in diversification of media [within the buy]. But they're the ones who are getting their options limited by above [top management] or other teams just because of what makes sense [for the agency bottom line],” he told Mi3.

“So you can’t just tick one box, because there are different incentives throughout the agency. You have to tick all of them, or it just doesn’t move enough within those big organisations.”

Spano’s trying to change that – and is in discussions with holding companies locally and globally to white-label Avid’s platform, which effectively packages together deep publisher niches to deliver aggregated scale.

He thinks Avid can become “The Trade Desk” of native content and London, per Spano, is calling. While locally it has connected up supply and demand, with circa 140 publishers on the platform, he thinks the end game is for media buying groups to take the platform and fill those pipes and for Avid to act as “the ecosystem for all of the market ... rather than the access point for some of the market.” Per Spano, “Some of those conversations, which offer massive scale opportunities, are moving quicker than anticipated.”

In the meantime, Spano sees increasing advertiser appetite – and briefs – to pay for active attention “rather than trying to hit [audiences] when they are half asleep and scrolling through a hundred other things.” He suggests a growing cohort of advertisers are actively trying to “counterbalance the reduction in effectiveness of what they are buying across display or the social platforms” with buys in environments “that can be a bit more immersive”.

It’s just a case of making it easier for them to do so at scale.

“That is a big part of what we are trying to lean on – the ability to let [advertisers] be much more segmented, much more personalised and be spread across the market, but have one point of contact and one resource to get the efficiencies they need,” said Spano.

“And that is what is fuelling growth. Previously, if you wanted to do a range of content, or a larger volume of content, you were limited to a Nine or a News Corp, because they were really the only ones who could execute on that.

“What we are trying to do is combine the impact and return on investment from time savings and therefore reduction in costs, as well as the ROI impact of having more engaged audiences and trusted publishers.”

It appears to be landing: Spano claims all growth metrics – brief volume, budgets, spend through the platform – are up “between 65-80 per cent” year on year. While off a low base as a relatively new company, “we’re getting to that critical mass stage … and the last few months have definitely seen the highest volume of opportunities, briefs and revenue coming through the door.”

Which suggests the green shoots of recovery may yet mature – for some.