Digital media executives scrambled last year to tell their boards about their new subscription products, but something strange happened: Their old, unfashionable advertising businesses exploded as consumers stayed home and shopped online. And now, travel companies, liquor companies and basically everyone else hoping to capitalize on a wide open summer and the marketing dream of a post-pandemic Roaring Twenties economic boom have begun pouring money into advertising on virtually every platform, but digital media most of all.
"Ad spending is red-hot right now," says Henry Blodget, a co-founder of Insider (formerly Business Insider), which was early to introduce a subscription tier in 2017. "The economy is cranking up, travel and leisure are coming back, and consumers are emerging from their pandemic cocoons."
Several privately held publishers said their first-quarter ad revenue was up strikingly over the same quarter last year, which was the last one largely unscathed by the pandemic: Insider by more than 30 percent; Bloomberg Media was up 29 percent; Vice, 25 percent; Bustle Digital Group, more than 25 percent; and Axios's quarterly ad revenue nearly doubled, executives at those companies told me.
[...] There are plenty of reasons to be cautious about this revival. One is that, for all the political pressure on Google and Facebook, they continue to be the behemoths of the American advertising market. About 87 percent of last year's growth went to those two companies, according to an estimate that the trade group Digital Content Next did for me, based on figures from the Interactive Advertising Bureau. Facebook alone brought in more than $84 billion in advertising revenue last year.
[...] One of the legislators who has pushed to rein in the power of the tech giants, Representative David Cicilline, a Democrat from Rhode Island who heads the House Judiciary Committee's antitrust subcommittee, said the improving advertising business would not dampen the appetite in Washington for a crackdown on "monopoly power" in Big Tech.
"These are structural problems in the marketplace, and none of that will be changed by a few strong quarters," he said.
[...] And paradoxically, one of the forces driving the digital advertising boom is the shift toward subscriptions that was supposed to replace advertising revenue. Selling subscriptions, it turns out, is pretty expensive and the streaming entertainment companies "need to spend a ton of money on marketing," said Matthew Segal, a co-founder of ATTN, a Los Angeles-based media company.