Axios' Sara Fischer on the year ahead in digital media
Expect more M&A, only not the blockbuster deals
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Hope everyone’s 2022 is off to a good start. I’m kicking off a new mini-season of episodes this month that will focus on what to expect this year in digital media. To start, I spoke with Axios media reporter Sara Fischer, who has chronicled the industry for the past five years with the Axios Media Trends weekly newsletter. As a reminder, please leave a rating and review of The Rebooting Show on Apple Podcasts.
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I’ve always thought of the opacity of the digital media system as more of a feature than a bug. As a reporter that means sorting out what success looks like in an industry where smoke and mirrors have long been deployed as a strategy.
“The industry is going through sort of a reckoning around measuring success,” said Sara Fischer. “It's hard to quantify progress in the industry, whether it's television or digital. We just don't seem to have a ubiquitous understanding of how to measure success.”
Here’s what Sara expects to be major storylines in digital media in 2022.
Expect more consolidation, only smaller deals
2022 presented a unique M&A market for the digital media industry. With a booming stock market and ample opportunities for financing, the focus was on big corporate moves like BuzzFeed’s SPAC and Vox Media’s purchase of Group Nine. But the year to come will likely be less splashy as big digital media players do smaller deals.
“There's going to be less talk about consolidation happening through SPACs. It's going to be more traditional and that's just because we've seen with BuzzFeed that there are some challenges to doing it that way. The SPAC market is cooled. What you're going to see more consolidation, but it's going to be private. So similar to what you saw with Vox Media, merging with Group Nine. You're also going to see more low hanging fruit continued to get scooped up. We're going to see a lot more of the Some Spider Studios getting acquired by Bustle.”
The pivot from general news
Trump was very good to news publishers. Top news publishers racked up record audience gains and the obsessive attention Trump commanded from those who support and oppose him gave a boost to these publishers’ subscription programs. Of course, what goes up often comes down. For Sara, that means expecting news publishers to follow the lead of The New York Times and diversify their products into lifestyle categories to expand their customer bases beyond political obsessives as people increasingly tune out a “boring” Biden presidency.
“Given the absence of a very volatile news cycle, publishers need to figure out how can to provide some sort of a lifestyle service or a professional service in order to get people interested in paying for content. That's where the New York Times has really shined with Cooking and Games and crosswords. If they acquire The Athletics, then it will also have sports and [tech with] The Wirecutter. Axios is launching Pro, which is really geared towards high-end professionals. The Wall Street Journal Pro subscription model is geared for people who are practitioners. The Atlantic has been a good example of how [relying on the news cycle] can be a challenge. If you're not giving somebody something that they have to pay for to make their lifestyle better and to do better at their jobs, it can be tough to get them to open up their wallets when they're paying for so much other stuff, whether it's Spotify or Netflix.”
Substack isn’t much of a threat
The past two years has seen many prominent reporters and commentators strike out on their own during a newsletter boom led by Substack. The Substack threat was the attractive economics of a low overhead publishing model powered by subscriptions would skim the top talent from publishers’ editorial ranks and weaken their products. In Sara’s view, this hasn’t happened – and is unlikely to be a major challenge to most publishers who adapt to give top performers better deals and more autonomy.
“A lot of newsrooms in the beginning of the Substack boom saw Substack as this great threat and it turns out it really was never a threat. To most newsrooms, it was a threat to this idea that get quality content from a news organization. You can still get quality content elsewhere, but it doesn't threaten newsrooms themselves. If there's a person who wants to have their own autonomy, their own voice, don't you want that person to go off and be independent rather than try to squeeze that person into your culture and your mission? The Substack model is doing a lot of good for traditional outlets. It's forcing them to figure out where to adjust to potentially give writers more money, more autonomy as the creator economy gives them a little bit more power. Certain personalities, people verticals are going independent and that's OK for us.”
Ad tech’s surprising boom
The demise of the advertising technology industry has been a losing bet for over two decades. The duopoly, privacy regulations, the demise of the third-party cookie all turned out to be more bark than bite, at least based on the steady march to the public markets by top players, the emergence of a big independent player in The Trade Desk and a buoyant digital ad market.
“There was this doom and gloom about ad tech. The ad market is really hot and doing well, but also privacy concerns have changed. We’re not threatened by a national privacy law anymore. That seems just completely stalled for the next few years. You've got some state bills, but I think the whole ad industry is kind of coalesced around the lowest common denominator, which is the California CCPA. And so now that we know what we're working with from a regulatory perspective, there's a lot of optimism. The other piece is these little cottage industries that are popping up around the uncertainty of digital advertising. You're seeing these companies like DoubleVerify and Integral Ad Science go public because they're just verifying ads were run the right way. There wasn't an industry around ad verification. There wasn't ad tech specifically for smart TVs.”
Three predictions for 2022
Sara gave three developments to watch for over the course of the new year.
The development of niche audio apps, like what The New York Times is rolling out, aiming for a higher end of the podcast market.
Continues consolidation of entertainment programmers as the streaming wars enter a new phase.
The development of individual-based media brands in new lifestyle areas much like what’s taken place in sports.
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