A Brief ‘Are You Kidding Me?’ Coda to the Ad Stuff

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I want to do a brief follow up to the last few posts I’ve done on the changes in the digital ad market for news. First, I published the charts and a description of what it meant. Then I did a follow up. In those exchanges one of the people taking me to task was a guy who runs a tech site who was saying basically, this is sensationalism and hyperbole! We’re making bank on ads. It’s awesome!

I’m not getting into names, though you could easily reconstruct that from what I’ve discussed about it here or on Twitter. This is because I’m not trying to get into a brawl or grudge match with anyone. But the topline is instructive about the broader issues I was discussing. A colleague mentioned to me that the site in question is owned by one of the public-equity-backed VCs in the space. So I did some hunting around. And GOOD LORD! In about five minutes I pieced together that the site was bought by said private equity player a bit less than three years ago after raising $300 or $400 million to buy up “undervalued” sites and make a ton of money by outwitting the ad market and the incumbent owners in the space.

Basically for the last two plus years this company has been shuttering sites and laying off staff because of the “challenging advertising market.” They actually closed down one of the oldest science publications in the U.S. and they’re pivoting it to video. According to the media and trade presses the whole fund now appears to have blown through a few hundred million dollars with little or nothing to show for it. And again, all due to the unexpectedly “challenging ad market.” When I was pulling this together I was legitimately gobsmacked, thinking, “Are you kidding me, dude? You’re saying ads are doing great and this is who you work for?”

As I said, I’m not looking to fight about this. So whatever. And really what do I have to prove? Who are we kidding? Everyone knows news sites especially are dropping like flies. My only rejoinder is to say this is why I share these numbers. Because most companies for good, bad and often just reflexive reasons won’t. But it’s good to get out there the numbers behind these stories. Owners, management, VCs, what have you, often get a lot of grief when we see these announcements. And in a way they should because often they bought up those sites thinking they were smarter than everyone else and just ran the sites into the ground. And some of those could have survived, as long as they had dedicated staffs and audiences, and were willing to operate at just a small profit. But at the end of the day these places are being shuttered for the same reasons. They are owned by people who see them purely as earnings drivers and the advertising economy which they were built for simply doesn’t exist any more. It is a structural and unforgiving reality.

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