Evoca focuses on retention, operational optimisation as era of open Web wanes
Conference Blog | 22 July 2024
The open Web based on hyperlinks rather than registrations and subscriptions, and leveraged by third-party cookies, is on its last legs, according to Pepe Cerezo, managing director of the Evoca Imagin.
During the recent INMA Latin-American Conference, he acknowledged the use of the Internet expanded to billions of users worldwide for nearly 20 years, but the real understanding of audiences was very limited: “We intuited, rather than knew, our audiences,” Cerezo said.
“In 2024, it is evident that the open Web is nearing its end, impacted by Artificial Intelligence and its effects on media business models,” he said.
Part of the problem, according to the Spanish executive, is media outlets ceded their audiences to technology platforms, as Cerezo referred to social networks. The open Web has yielded some undesirable results, such as clickbait and low-quality content, to attract audiences at the expense of high-quality articles to foster knowledge.
From a business perspective, this has made it increasingly difficult to monetise content.
Google’s business model is quite closed, Cerezo said, illustrating this point with a SparkToro graph for Europe showing almost 60% of Google searches are general and almost always require another search for users to find what they need without ever leaving the Google platform.
Additionally, 10% of the remaining 40% of the searches typically lead to Google-related sites, call it Maps, News, or YouTube. This means that out of every 1,000 searches in Europe, which shares similar figures with the rest of the world, only 37% go to the open Web.
Another of Google’s moves is to eliminate third-party cookies, which have underpinned online advertising in recent years. This means a radical change in the advertising model, necessitating a deeper understanding of audiences and moving toward more complex advertising models that allow for segmentation and personalised messaging to each user.
Cerezo advised against using the open Web in advertising models from this year on and shifting toward first-party data models, with registrations, subscribers, and a closer, more personalised relationship with audiences.
“It’s hard to believe that in 2024, one of the flagship, most innovative, and fundamental products for the business is still the newsletter,” contrary to what was thought 25 years ago, when these bulletins were expected to disappear soon. Other models that are effective today include apps, surveys, and events organised by publishers.
Cerezo emphasised SEO as part of the strategy to attract more audiences and said he considered this task increasingly challenging, with profiles dedicated to it becoming harder to find. He also noted that social media, while less relevant as a tool to attract audiences to a Web site, remains essential.
In contrast, Cerezo criticised Google Discover, the tool that selects open Web content to present to the user but whose low-quality harms the product itself. He suggested this functionality be updated and improved in the short term.
Artificial Intelligence as part of the business
Editorial sales teams must specialise to the point of becoming advertising market consultants, a transformation in which Artificial Intelligence will play a significant role, Cerezo said.
Diversification is key for companies that establish business models based on registrations and audience knowledge. Cerezo suggested following four main differentiated revenue models, whatever they might be depending on the company: “More than four can lead to a loss of focus, and less than four is a competitive disadvantage.”
The open Web will diminish, so it is essential to focus on data-based models instead. This underscores the importance of the subscription model, which declined in European countries in 2023 due to the unexpected rise in inflation and the consequent increase in the cost of living, resulting in a slowdown in the advertising investment that had been growing since the COVID-19 pandemic.
This is compounded by a bidding war for advertisers, prioritising the number of conversions over other factors and increasing acquisition costs. Despite the obstacles, Cerezo assured attendees that subscriptions will remain an important revenue source for publishers, but the business must be further refined, encompassing a cycle of conversions, optimisation, retention, and winback.
Reconsidering strategies
In 2024, subscription strategies must be reconsidered, Cerezo said, with a stronger focus on retention, operational optimisation, and improvement of cancellation processes, while keeping in mind the relationship between a subscriber’s lifetime value and acquisition cost.
To ensure these processes are successful, Cerezo said it is necessary to appoint someone to oversee and manage the entire operation with a transversal vision, such as a chief revenue officer, someone close to the general management with technical and business knowledge. This should be accompanied by a total revenue optimization process, involving strategic actions for all income sources, where data will be fundamental.
The advent of Artificial Intelligence positions it as a more transformative agent than other previous technological initiatives such as blockchain, NFTs, virtual, and Augmented Reality, and the metaverse.
AI allows for the creation of propensity models (acquisition and abandonment), process optimisation, automation and personalization, and product improvement. Additionally, AI changes the creation and aggregation of content, marking the beginning of a new industry, Cerezo said.
Access to information is also changing with generative searches offered by tools such as Microsoft Copilot, Bing, and Google’s new chatbot Gemini, relegating content creators and advertising to a secondary role, with hypothetical drops in advertising of up to 60%.
To face this situation, Cerezo said, it is necessary to maintain and deepen relationships with interest communities, including readers, subscribers, advertisers, partners, and technology platforms.