Just a few years after raising more than $100 million in financing and making plans for a blockbuster initial public stock offering, SAY Media appears to be in retreat. It has put its blog properties up for sale — including Read/Write and xoJane — and admitted that its attempt to create a new kind of media entity by blending traditional blogs, branded content and an ad network has failed.
For those who don’t know the company, SAY Media was created in 2010 when a video-content operation called VideoEgg bought what was left of Six Apart, a small but influential blog-software company.
The vision at the time appeared to be to use Six Apart’s software to appeal to brands and advertisers by offering them their own platform for content creation, as well as the opportunity to sell ads or do sponsored marketing promotions with a network of sites that SAY Media had roped together, a network that it expanded by buying sites like Read/Write, one of the original tech blogs.
This vision was shared by many industry insiders, and it was based on the idea that blogs could become a potent marketing and advertising channel because they were often written by passionate non-professionals or “influencers” interested in certain topics, and therefore stood a good chance of connecting brands with consumers who were also interested in those topics — the rise of “mommy blogging” being just one example.
A number of companies tried to go after this same idea at around the same time as SAY Media was being formed: Federated Media, founded by John Battelle, was based on a similar concept involving an advertising network of premium sites (and appears to have suffered a somewhat similar fate), and so was Glam Media, a network that is focused on sites catering primarily to women.
In a sense, this concept was very traditional, in that it looked at blogs — whether written by everyday people or by brands — as a stand-in for, or the digital version of, traditional publications like newspapers and magazines. Lots of content, a somewhat targeted audience, and a bunch of banners or in some cases sponsored posts (the equivalent of old-fashioned advertorial). It’s just that it was digital, and relied more on search for its content to be discovered, rather than the usual print distribution methods.
The ad market splits in two
In the meantime, however, the advertising market itself was still in the process of being disrupted — by Google, primarily, but also Facebook — and what SAY Media and others were trying to do became less and less effective. What has happened over the past couple of years is an acceleration of what I like to call the “barbell effect,” which has forced the advertising market to split in two, with most of the value moving to the opposite ends, leaving the middle to starve.
At one end of that barbell is “programmatic” advertising of the kind that Google does with AdWords and AdSense, which are high volume but low margin (not for Google, of course, but for brands and publishers) and driven entirely by algorithms, with no real requirement for human involvement. The other end is custom content — high-concept advertising of various kinds, whether it’s native advertising or magazine-style ads that are designed to create a mood rather than just accumulate as many clicks as possible.
This is the kind of advertising that VICE magazine has its eye set on, as does Vox Media, where CEO Jim Bankoff has been pushing sponsored content but also large-format custom ads that he calls “fishtank” ads. These appeal to advertisers and brands because they are distinctive, and because they require some semblance of human creativity.
In explaining the decline of SAY Media to Digiday, CEO Matt Sanchez said that the company simply couldn’t be two things at once — in other words, it couldn’t be a traditional media owner as well as a tech company building content sites and strategies for brands. So the company is giving up the media part of its original vision and focusing on the advertising platform part.
Google owns the low end
Does that mean companies like VICE or Vox or BuzzFeed are also doomed? I don’t think so. I don’t know the inner details of SAY Media’s operation, but I have the sense that it got caught in the middle of the barbell — unable to offer something as cheap or efficient as programmatic advertising, but also not equipped to produce enough high-value native content to attract large brands.
It’s also worth noting that SAY Media didn’t have nearly as much reach as either VICE or Vox or BuzzFeed, in terms of visitors — its latest pitch was that it had 400 million global uniques (not that much more than the 345 million it boasted of when it formed the company four years ago) but in the U.S. its market was dramatically smaller than either VICE or BuzzFeed’s.
In effect, the low end of the ad market has been colonized by Google and Facebook — it might as well no longer exist, because those massive operators are the only ones who can compete on the basis of scale and algorithmic ability. And the middle of the market is a dead zone, filled with rapidly-declining banner ads and other gimmicks. All that is left that’s worth focusing on is custom content, and that is a tough game that requires 100-percent focus.