Ad Recession: A Reality Check and a Game Plan for Brands and Publishers

TL;DR

  • The advertising recession is here, with media companies experiencing drops in digital ad revenue ranging from 9% to 30% and even tech giants like YouTube reporting declining revenues.

  • Reader revenue and subscriptions are crucial in this phase, with data showing that newsletters can significantly help reduce subscriber churn.

  • During economic downturns, marketers focus on channels that demonstrate a clear return on investment (ROI). Publishers should shift from programmatic ads to channels linked directly to sales, such as affiliate marketing, e-commerce offerings, and lead generation services.

  • Tech platforms can be unreliable partners for content creators, particularly during an advertising recession. Publishers should be cautious, prioritise owning their audiences, and focus on meaningful metrics like homepage visits and newsletter subscribers.

We're living in an age of paradox. While the economy presents a mixed bag of high inflation, low unemployment, and persistently growing GDP, one thing remains unarguably clear: the advertising recession has made its entrance. As brands and businesses, we are no strangers to the ebb and flow of economic tides. Yet, in these particularly challenging times, we must understand the new landscape and learn how to navigate it with resilience and strategic foresight.

The Advertising Recession: An Overview

At the time of writing this [2023], the advertising industry is currently navigating a stormy sea. Ad sales have seen a significant decrease across various sectors, including media and tech giants like YouTube. The digital ad revenue of publishers has plunged, with declines ranging from 9% to 30%. This downturn is not a momentary hiccup but rather a lasting phase affecting virtually every publisher and brand in the market.

But is it all doom and gloom? Not necessarily. Even in this challenging environment, there are opportunities for adaptation and growth. Let's delve into some strategies that can help brands and businesses mitigate the effects of the advertising recession.

Why Brands Should Focus on Reader Revenue

In an era where ad revenues are dwindling, alternative revenue streams come into the spotlight. One such alternative is reader revenue, particularly subscriptions. Even as ad revenues are falling, subscription growth has been relatively resilient.

This shift is not surprising, given that the average consumer still has enough money to continue their media expenditures.

Consider the New York Times. Despite the ad recession, their digital subscription businesses witnessed significant growth in Q1 2023.

This is a clear indicator that brands should pay closer attention to their subscription offerings, focusing not only on acquiring new subscribers but also on retaining existing ones.

The Power of Newsletters in Retaining Subscribers

Newsletters are not just simple email blasts; they are a powerful tool in your arsenal for subscriber retention. A case study from New York Magazine reveals a 10% improvement in annual digital subscription retention thanks to their subscriber-only pop-up newsletters.

Another study from The New York Times confirms a clear link between subscribers who receive newsletters and their retention rates.

For instance, let's look at how brands like HubSpot use newsletters. We don't just use newsletters as an avenue to share links to our content. Instead, we provide value-added content that engages our subscribers and encourages them to maintain their subscription.

In the current climate, it's time to revamp your email strategy, create engaging newsletters, and keep your subscribers coming back for more.

Emphasising ROI-Focused Marketing

In an economic downturn, marketers need to be more prudent with their budgets. This caution translates into a greater focus on channels that provide a demonstrable return on investment (ROI).

Brands need to build out editorial products directly linked to sales, providing a tangible impact that justifies their marketing expenditure.

For B2C brands, consider expanding affiliate and e-commerce offerings. Use your brand's reach to guide your audience towards product purchases and earn a commision on those transactions.

For B2B brands, focus on offering lead generation services like free webinars and live events that allow you to collect attendee contact information and turn it over to sponsoring vendors.

Navigating Tech Platforms with Caution

Tech platforms offer tremendous reach to outside audiences and can sometimes directly drive revenue. However, they can also choke off distribution unexpectedly.

This unpredictability, coupled with the souring ad market, makes it crucial for brands to approach tech platforms with caution. Brands should examine how they're allocating their time and resources to these platforms.

Meta's recent layoffs in its media partnerships team are a telling sign that these platforms might not prioritise relationships with content creators moving forward. This reality emphasises the need for brands to own their audiences rather than rely solely on platforms.

Prioritise metrics like homepage visits and newsletter subscribers over the fleeting benefits of programmatic advertising and drive-by traffic.

Conclusion

The advertising recession might seem like a challenging phase, but it also presents an opportunity for brands to reevaluate their strategies and prioritise what truly matters: building a genuine and lasting relationship with their audience. By focusing on reader revenue, leveraging the power of newsletters, emphasising ROI-focused marketing, and navigating tech platforms with caution, brands can not only survive the current advertising recession but emerge stronger and more resilient.

Remember, resilience isn't just about weathering the storm—it's about learning to dance in the rain. The advertising recession might be here, but so are we, equipped with strategies to not just survive but thrive.

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