The word “pivot” has become a buzzword in the media space: pivot to Facebook, pivot to video and now pivot away from advertising altogether.
The decline and ultimate sale of Mic for $5M just one year after its $100M+ valuation in 2017 highlights a broken system that is floundering for help. Mic and many competitors like them relied on Facebook and other platforms too heavily to drive audiences so they could sell ads. When the algorithm changed, they no longer had a business that could operate in the same way. Brands were paying Mic for views of their ads (banners, pre-roll) and in return Mic had to use that money to advertise on Facebook in order to be able to drive audiences to get those page views.
There are plenty of great articles examining the timelines and the doomed natures of media companies that relied on Facebook to grow their businesses and capture venture funding. These are the same companies that followed Facebook when they said video would be best for their businesses.
While brands in general are becoming more comfortable telling great stories that live outside of the interruptive ad, product-pushing world, they continue to be focused on renting audiences, paying groups like The Player's Tribune or The New York Times or Axios to tell that story on their behalf.
Disruption in today's economy, however, has been based on going directly to the consumer. The media companies that have been "successful" recently are those that have understood how to develop a meaningful relationship with their audiences. This is done by engaging them with valuable content versus trying to sell a bunch of interruptive ads. And it won’t be easy: the cost of creating great content is not cheap. Just ask Netflix with its annual cash burn of $3bn.
The next great pivot won’t come from media companies, though. It will come from brands. Brands will have to look in the mirror and understand that they must transform into media companies. They don't need their media companies to be profitable from a standalone basis right off the bat, because they can use the engagement, influence and data to fuel their actual core business of selling services and products. And with all of the disruption in the journalism space there is amazing talent available to join their teams.
Brands have relied on these media companies to build audiences so that they can rent some time with them. Brands need to understand the investment in building an audience and owning it and the long-term value they can provide by not being reliant on others to talk to those who will drive their business. This is not new for brands. At inception, these brands had to build a customer base from nothing. So brands, pivot back to your roots.