‘The sustainable model’: Rationalizing The New York Times’ plan to go all in on ads with subs-heavy The Athletic

The New York Times-owned The Athletic is in the ads business. No news there. The question is “why?”

It’s not because the publisher suddenly realized that its subscriptions-focused sports title didn’t scale nine months after it acquired it. It is another subscription business leaning on ads to get it through a sticky patch. Ultimately, the best way to make money in media is — and always will be — lots of ways.

Before we dig into the publisher’s plan, here’s a rundown of the basics:

Earlier this week, The Athletic announced that it had introduced display ads to its site and app. For some keen-eyed observers, this was inevitable. After all, the publisher has been in the ads game for a while albeit limited to audio ads in its podcast shows and the odd display ad in a few newsletters. Why stop there? Especially, when the plan is for The Athletic to be profitable by 2025.

“The sustainable model to continue to create the world’s best journalism is a mix of subscriptions and non-subscriptions, which includes advertising, licensing, IP development, merchandise and ticketing, said Sebastian Tomich, chief commercial officer of The Athletic. “Show me a successful media business that has a single revenue stream.”

Subscriptions aren’t a business model

The reality is only a fraction of a publisher’s audience will pay. It’s always been that way, of course, but only seems to have become clear to many publishers over the last two years or so.

Even The Athletic’s owner The Times — the poster child for subscription-thirsty publishers — is clear on that point. So much so that part of its rationale for buying the sports publisher was because it saw opportunities to pull in more ad dollars. As Tomich explained: “Ads were part of the acquisition thesis. One of the areas that The New York Times could add value to The Athletic and make it a sustainable long-term business was to bring its ad strategy over.”

Advertising: making lemonade from lemons

In many ways, ads are a harsh fact of life for publishers. If they want to have any sort of longevity beyond a certain level then chances are they need to sell more ads — even if doing so sucks them further into the proverbial race to the bottom that is online advertising. Smart publishers accept this but try to do so on their terms. For The New York Times, that means ads on The Athletic are sold through direct deals. It doesn’t, however, mean selling ads through the open web where they essentially trade control over how those impressions are sold for getting them in front of more advertisers (albeit of mixed quality). It would be ideal to not have to make that concession, obviously, but Tomich is a pragmatist at heart.

“I don’t want to create some false illusion that just because you work directly with advertisers that every reader suddenly loves advertising,” he continued. “Also, you never say never, particularly when it comes to open market programmatic. We’re a business and sometimes …read more

Source:: Digiday