Advertising extinction - the next shoe drops

Profile picture for user gonzodaddy By Den Howlett March 25, 2020
The media business remains firmly wedded to advertising based business models. That looks to be all but over. What next for tech companies?

gapingvoid advertising

When we founded diginomica the basic investment thesis was that advertising was a zombie economy and therefore we needed to find alternative routes to market. We decided that we would support the technology industry in a different way, allowing our partners to publish content in their own 'zones' but with our maintaining editorial control.

Is this content marketing by another name? Perhaps. We preferred to view it as a mechanism by which tech companies could learn about the things readers are truly interested in rather than using media as a relentless drive to pass on marketing messages. We also knew that it would take time for tech companies to understand how the model works and so didn't establish a pay as you go model, nor did we focus on click through and other metrics that ad-driven marketers love.

Instead, we focused on engagement across a variety of channels. The idea was simple. Network effects would do the job of amplifying the best stories to the most important people in the decision making chain. But there's a catch. In order to make network effects work, you need a network of valuable people whose authority matters and who in turn respect the work that you do. They don't have to agree with you, they simply have to respect the work. In short, you need to act as a hub to whom those who care about topics are attracted and who, in turn, would serendipitously amplify content, even when they disagree.

This turned out to be a good working thesis that over time has garnered a reliable readership of practitioners, consultants, decision makers, developers, market experts and people who are more broadly interested in the value that technology brings. 

Today, that readership is more important than ever and, more demanding of receiving reliable information. This is very different to advertising where messages are largely scattergunned in the hope that something will stick. It also means that as the Coronavirus pandemic deepens, we have to be more discerning than ever about what we say. That's very difficult at a time when the basics of how you measure things is questioned. 

It also means the advertising industry and the media upon which it relies just took another body blow. According to Buzzfeed, The Coronavirus Is A Media Extinction Event, noting that:

While some advertisers have halted their online spending altogether, others have turned to keyword blocking to stop their ads from showing up next to articles about the coronavirus. As a consequence, publishers can’t turn the surging traffic into revenue as easily, and when they do, ad rates are lower than would be otherwise expected. Fisco said the amount the Seattle Times receives for ads placed via online exchanges is now 40% lower than normal.

Particularly hard hit sectors include entertainment and hospitality where tech companies like to sponsor events or whole stadia. The airline industry is all but at a standstill, which, in turn, means that all those corporate billboards in expensive real estate locations like London Heathrow, Frankfurt and San Francisco are useless. I argued some time back that airport advertising was pointless to all but a tiny fraction of passengers. I was told that airport advertising was deemed 'essential.' I wonder if that theory still holds true in a locked down and WFH world?

Noting how LinkedIn has:

created a Daily Rundown of editorially-curated Coronavirus resources. The US Daily Rundown is distributed to over 47 million individuals in 96 countries and 9 languages, 

Axios suggests that 

It's taken a global pandemic for some tech companies to really take a bold stand on accurate versus blatantly inaccurate information.

Hell yeah. 

Where to now? Media businesses are seeing a massive ramp up in the download of their apps, many of which are free as ad-supported. Some apps require a subscription and no doubt firms like the WSJ, WashPo, FT and others will see a rise in subscription revenue - at least temporarily. 

Tech companies of all stripes are scrambling for new ways to reach their markets, whether that be paid content, opening up their own platforms for a variety of rich media, or providing access to free for use apps. Some are effectively seeding future markets through free offerings.

In last night's email, I received this novel idea: 

Avaamo released Project COVID today, an Intelligent Virtual Assistant that allows a user to have a conversation with millions of pages of information from: CDC, NIH , WHO and more. During this extraordinary time it is clear that our technology could have a role to play in providing a vaccine against misinformation by empowering the user to have an interactive dialog to get answers...

...It is updated in real time as updates flow in from all over the world.  Project COVID-19 is a public health effort by Avaamo and is now available for all and can be accessed at

The tool can be embedded in websites but for that you need to contact the Avaamo team

I've taken a quick peek and at first glance, it offers something useful. Elsewhere Zoho has gone above and beyond in providing free access to its apps for Coronavirus impacted businesses. 

A report from BusinessIT notes that a portal from the

Australian Information Industry Association, lists free tools from Microsoft, Cisco, ServiceNow, Adobe, Telstra, Google, Facebook, SAP, Salesforce and others.

Earlier in the week, Derek duPreez dug into the efforts being made to help business and individuals, offering advice about how best to proceed. 

The common thread among these techco efforts is the 'direct to market' approach that largely eschews a reliance on advertising to get over the right messages. In turn, these efforts will generate their own network effects. In the long term, people will remember those who put out their hands to help striken businesses and individuals. They will also remember those who unduly profteered or wallet fracked. 

For our part it is business as abnormal. We are continuing to source the best information as we move from a chaotic landscape to one where adjustment to a new world demands a variety of fresh tactics and strategies. We plan to ramp up our podcast content since we know this is popular and provides readers with two ways to consume content: audio and text. That in turn means adjustment to what we do and how we do it. Tomorrow, Den is scheduled to host a webinar that promises to challenge assumptions about how to manage the supply chain in uncertain times. There is more to come but perhaps the most important thing we're doing is not panicking but instead making sure that our contributors continue to earn.

Thank goodness we don't rely on an advertising model. 

Disclosure -, Zoho, ServiceNow and Salesforce are premier partners at the time of writing