How acquisitions of agencies by publishers, and vice versa, are altering the advertising-publishing complex.

By William Dunkerley

"Agency Buys Publisher" is an Advertising Age headline from January 9.

A week later "Publishers Snapped Up Marketing Agencies at Unprecedented Rate in 2016" was the AdAge story.

What's going on here? Why is this happening? And what does it mean for the average magazine publisher?

A Blurring of Lines

It used to be that our competitors were principally other magazines in the same field. But with the advent of brand-sponsored magazines, native advertising within our own pages, free Web-based content, and now with agencies buying publishers and vice versa, the traditional lines are blurred.

Global marketing consultancy R3 reported: "Publishers are looking at different ways to extend their revenue stream," noting that "a lot of publishers [are] struggling with generating revenue."

R3 seems to believe branching into the ad business isn't a bad strategy. Its report continues, "If you're a good publisher you service both your audience and also your advertisers. Those who can combine the two the best are the ones who are going to survive."

That's questionable advice, in my view. I agree with the premise. Certainly providing ad development services to advertisers offers them a convenience and can serve as an ancillary revenue stream. But it's not the ultimate survival answer R3 makes it out to be. More on that later.

Recent Acquisitions of Note

Here are some of the acquisitions reported in the AdAge story:

"The New York Times purchased martech outfit HelloSociety for $21 million and design agency Fake Love for $11 million, R3 said. The Financial Times snagged Alpha Grid, a content marketing studio, for $7 million. Time Inc. and Vice also made acquisitions totaling $50 million."

The story continued: "Acquisitions made by tech companies like Google and Snapchat can be viewed as more publisher-like, too, [R3's] Ms. Tang said. 'Google and Snapchat are tech firms, but they are buying other tech firms that will help them with content generation,' she added."

The tables were turned on publishers, however, with VaynerMedia's purchase of PureWow.

AdAge asks if that acquisition is the start of a trend. It quotes Jay Haines, founder of Grace Blue: "No question, this is the start of a very significant trend." That was followed by Seth Alpert, managing partner at the investment bank AdMedia Partners, who asked "Will a relatively small agency buying a relatively small media company turn into something significant together? Who the heck knows?"

In the plain light of day, though, a single data point does not a trend make.

An Evolving Advertising-Publishing Complex

So let me speculate on the questions I posed at the start of this article:

What's going on here? We're seeing a blurring of the lines between the various participants of the traditional magazine publishing paradigm. Advertisers are placing native advertising in established publications. Some are venturing out on their own to create sponsored publications. And some publishers are looking to increase revenue by vertically integrating the process of ad development in a significant way.

Why is this happening? In my view, it is a result of a frenzy that prevails in much of the advertising-publishing complex. The frenetic initiatives are spawned by widespread befuddlement over the technological and social factors that influence how consumers now want to consume media information. There is no blueprint for what's happening today, let alone a map for the future.

What does this mean for the average magazine publisher? It means a lot. But in all candor, I've got to admit that most publishers I talk with are underestimating the magnitude of the transition they are being swept up in.

My best advice is to approach the ongoing changes with agility. While ten years ago creating a page-flip digital analog edition was innovative, it is passé for most publishers today. Now the imperative is for user-friendly cross-platform content.

But there are even more fundamental issues at stake. For instance, some posit that the whole magazine concept -- that of a curated selection of articles delivered periodically -- is an artifact of historical technologies that has increasingly limited relevance today. But who knows?

It's agility, not profits squeezed out from an in-house ad agency, that will be the ultimate survival answer.

William Dunkerley is principal of William Dunkerley Publishing Consultants, www.publishinghelp.com.

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