Digital Consolidation: Here for the Long Haul or Another Passing Fad?
By Rich Routman, President & CRO of Minute Media
The following is an article that originally appeared on Publishing Executive.
In the world of digital publishing, mergers and acquisitions have become almost commonplace, with consolidation dominating the 2019 headlines. From Vox Media’s acquisition of New York Media to Bustle Digital Group’s purchase of Inverse, and from Vice Media’s $400 million acquisition of Refinery29 to Group Nine Media’s $300 million acquisition of PopSugar, the digital media sector is experiencing a major shake-up. But are M&As here to stay or just the industry’s latest way of handling the ever-changing media landscape?
I would argue that the answer is two-fold: I think consolidation is the wave of the future while also being a way to weather the storm of changes that digital publishers have been feeling for quite some time. The fact is that there are a host of solid reasons why these mergers and acquisitions are a major plus for the digital media landscape. Here are the top 5:
Why Consolidation Is a Good Thing
1. It can boost and broaden audience.
One of the major benefits of consolidation is expanded audience reach. When Vice acquired Refinery29, Vice’s mainly male audience merged with Refinery29’s millennial female audience, providing Vice and its advertising partners access to a brand-new audience for its content and products. In short, broader reach and frequency provides more opportunities to deliver content at scale.
2. It can offer expanded capabilities.
Rather than building new capabilities and technology solutions from scratch, mergers and acquisitions mean an easier way to beef up offerings and margins. For example, Refinery29’s expertise in creating experiential marketing solutions offers Vice added multimedia capability that Vice and its ad agency Virtue didn’t previously have. Nowadays, many publishers prefer buying partnerships over building them from the ground up, making M&As even more attractive.
3. It can combine assets and resources.
Consolidation supports the idea that there is strength in numbers — more shared assets and resources goes hand in hand with cost savings and increased reach. Vox’s acquisition of New York Media, including New York Magazine, helped Vox fill a print hole in its multimedia portfolio while providing New York Magazine with much-needed resources to combat a recent staff lay-off. Shared resources are also better for infrastructure. With infrastructure requirements constantly in flux, publishers have to find multi-purpose and cost-effective technology and tools that work for them. But with consolidation, sharing technology and infrastructure makes it possible for publishers to save time and money and more effectively distribute content.
4. It can provide necessary push-back on digital advertising giants.
With Google, Facebook, and, now, Amazon, dominating the digital advertising industry, combining forces may be just what’s needed to negotiate better terms with these major platforms. BuzzFeed CEO Jonah Peretti said, “If BuzzFeed and five of the other biggest companies were combined into a bigger digital media company, you would probably be able to get paid more money.” Consolidation may offer a viable way to challenge the dominance of these players in the coming years.
5. It can yield better, customized content.
In an industry where content is still king, consolidation provides a critical opportunity to deliver more robust, customized content at scale. Taking it one step further, I would argue that consolidation will help identify the strongest content providers in the marketplace and say adieu to the weaker ones. Of course, it will be interesting to see how content evolves, especially among the diversified Group Nine portfolio that includes the PopSugar audience.
Will Consolidation Last?
Although some may think consolidation is just a passing trend, I believe that it’s here to stay. While media consolidation is not novel, these latest deals provide an important glimpse into the future of the digital media landscape.
As companies continue to diversify revenue streams and rely more on non-advertising portions of their business, the landscape may change even more. But in the meantime, consolidation offers today’s publishers enough benefits to make navigating the ever-changing industry more manageable. And at the end of the day, consolidation will be critical to weeding out those companies that can’t scale on their own during this crucial stage.
Originally published at https://www.pubexec.com on January 27, 2020.
