Are Brands Sending Media Companies Into Extinction?

Companies selling sponsored content or incorporating native advertising into their marketing efforts is the norm today. That wasn’t always the case, however. Traditional editorial content was reserved for magazines and newspapers. Marketing was strictly about promotion and the two rarely crossed paths.

Nearly 20 years ago, I was just starting out in B2B publishing working at Penton Media. It was an exciting time in my life, and little did I know it would spark an interest in content marketing (not even a named thing at that point) that would ignite into a passionate, inspired career in a field that was about to explode.

At the time, companies simply didn’t understand the value of content, no matter what the form. Content wasn’t a priority. In fact, the department I worked in was named “ancillary media” because that’s exactly how we were viewed. We were there as additional support, and if we didn’t exist, the company wouldn’t skip a beat.

My how times have changed. Look at Huffington Post, for example. Their partner studio expanded to around 100 team members over the course of two years, starting off with just 10. The Atlantic boasts that three quarters of its revenue comes from sponsored content. These companies aren’t alone.

Spending on native advertising is expected to expand to over $20 billion dollars by 2018. That’s an increase of $15 billion over a period of just five years. Companies are buying into the practice at records rates, and sponsored content, as a marketing tactic, is thriving. But is that a good thing?

Why I’m concerned about the sponsored content trend

Brands are investing billions in sponsored content, and they’re also buying up media companies. Essentially, many major brands are becoming media companies themselves.

As content becomes more and more critical to achieving business objectives, brands are hiring away the best journalists, writers, broadcast personalities and content creators. Cisco Systems, for example, filled over 200 content roles. 200. That’s a significant number.

While efforts like this can really help brands create high quality content and truly engage with their target market, the trend doesn’t bode well for media companies.

Think about it. If most of the major players, the brands with the deepest pockets, have their own media operations, why would they need to outsource to a media company? What then happens to the media companies? You see where I’m going, right? Brands have moved from buying display advertising to native advertising in a big way.

And then what happens to digital media as a whole? If things go down the way I described, brands are going to stop spending significant money on sponsored content at some point. They’re going to create content in house.

Digital media companies need to be proactive and pay attention to this trend. Look no further than Blockbuster Video for lessons on what happens to companies that don’t pay attention to the trends. If media companies don’t do something now, they risk going the way of the now defunct video chain.

Sponsored content is a huge opportunity for media companies right now.  But that is certain to change.  Media companies need to start thinking about diversifying their revenue streams now.

I honestly hope that I’m 100% wrong on this one, but it’s certainly something that needs to be looked at. Media companies should be on alert, just in case I happen to be right.

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Joe Pulizzi
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