Hasta La Creative!

Elsewhere in this, the Digital Issue of Advertising Age, my colleague Michael Sebastian writes about digital publishing companies — specifically, a half dozen upstarts in various stages of youth, including BuzzFeed (born 2006) and Vox (2011).

It’s an eye-opening report that looks beyond the hype surrounding these companies. Some of them are profitable (or at least claim to be), some aren’t, but all of them have raised serious cash from starry-eyed investors (e.g., $96.3 million for BuzzFeed, $110 million for Vox). The business press tends to regard such hefty sums as implicit evidence of success and/or promise — why would venture capitalists risk so much scratch if there was no there there? — but Michael reminds us that all of these companies rely, somewhat harrowingly, on advertising for revenue.

Which means these new-media challengers have, at their core, basically the same business model as the publishing incumbents. They’re selling eyeballs to brands (though sometimes they put a different spin on it; e.g., they’re actually selling “engagement”). Everyone is competing for the same digital dollars, and thus the same digital-advertising issues that dog legacy media companies (declining CPMs, the rise of programmatic, the challenge of monetizing mobile, etc.) apply to the new kids on the block, too.

Continue reading at AdAge.com