AdExchanger: You spent time in investment banking before co-founding Mic. How are you thinking about the economics of digital content?
CHRIS ALTCHEK: The macro trend is incredibly positive. There are huge tailwinds behind digital media monetization, both in advertising and subscriptions. There is $69 billion in TV advertising and $3.8 billion in digital video. That’s going to move in a big way, in the order of tens of billions of dollars.
There are headwinds – the constant adoption of new platforms, things like ad blocking – but more money is being spent on digital by advertisers compared to five years ago. Then, CPMs were lower and total ad spend was lower. We’re at the point now where you can run a profitable digital media business with a premium brand. The next 10 years are only going to get better. That’s why you’re seeing people buy up-and-coming digital publishers as aggressively as they can. There are only a small amount of brands with great audiences.
Is the new digital landscape a case of “rising tides raise all boats,” or are those “small brands with great audiences” going to win disproportionately?
There will be a rising tide for all boats, but the big winners will have the scale to work with agencies and brands directly and solve the challenges that brands and agencies have. Others will have to work with programmatic, ad networks. They’re giving up 40% to 50% of their CPMs to third parties, and that’s a harder business.
Are you profitable?
We’re profitable in some months. It’s not a goal right now because every dollar gets invested in content. We’re in the first inning of a long game, and that’s building a lasting brand with a huge, important generation.
What’s the state of your ad business today?
Last year we had one advertiser: GE. We hired a head of sales, Evan Gotlib, at the end of last year, and over the course of the year built out offices in LA, San Francisco, Dallas, Chicago. We’ve worked with 25 brands this year, including Goldman Sachs, Discover, LG, Qualcomm, LG, Lenovo, Microsoft, Dell, Nordstrom, HBO, Comedy Central, Grey Goose. We have a lot of the premium brands that are trying to reach young, affluent millennials.
What kind of advertising aren’t you doing?
We haven’t done banner ads or programmatic. We want high-quality, elegant advertising that works. It’s not interruptive, it’s beautiful. We do branded video and branded articles and we have a hero unit, which is our take on what magazine advertising should be on the web. The exciting piece is that we have the scale to do it. Because we’re reaching so many people, brands are willing and eager to do custom advertising.
How is ad blocking affecting Mic?
On mobile, which is 80% of our traffic, it’s less than 2%. On desktop, which is the rest, it’s 31%. Our branded content does not get blocked. So for ad-blocking users, we just serve them more branded content and we think that’s a win-win. We’re not going to play a hacking battle with people downloading ad blocking in their browsers. It doesn’t feel like a winning bet.
That’s also why we think it’s best when advertisers do comprehensive, sophisticated advertising campaigns that are not all one product, like our hero ads plus branded content text plus branded content video. We find that’s 1+1+1=7. If you’re spending $10 million on 300x250s, I’m worried for you. That’s risky.
One big problem for mobile publishers is slow loading times. Mic loads pretty fast on mobile. Why?
When The New York Times ranked page load times a few weeks ago, we were ninth. My engineering team promised me next time we’ll be No. 1. We invested in building out our own CMS, ad-serving and ad-tracking tools so we have greater flexibility.
If you want those hero ad units to load insanely fast, you have to custom design and template them because they have animation and video. We wouldn’t do mobile videos if we weren’t 100% sure that they would be instantly fast. And if we want to add a new ad-tracking feature, like the number of people that try to highlight the ad, it takes like 15 minutes. You can’t do that if you’re reliant on outside providers.
We also don’t work with 17 ad networks.
People are consuming Mic content on Facebook, Twitter, Tumblr, Snapchat. What are your thoughts on the platformization of content?
You have to build your newsroom around a strategy where you’re not creating the same kind of content and pushing it out everywhere, but building different types of content for different platforms. Doing this efficiently and at a high quality is the secret sauce. It’s where a lot of companies have struggled.
When Snapchat started growing, we put a small team on that to try new different video, interactive quizzes and graphics and see what works. They have the flexibility to create new content for the platform, find 10 things that work and then go on to the next thing.
Platforms sometimes seem to have an advantage over publishers, and many content producers have been uneasy about the prospect of Facebook Instant Articles, which Mic is participating in. Is Facebook your frenemy?
We’re playing the long game. We don’t have a zero-sum game mentality, where they’re going to win and we’re going to lose, because there’s so much open space and opportunity. If you’re in a defensive crouch, you’re not going to fully take advantage of opportunity.
There’s Facebook Instant Articles, but there are other platforms reaching 100 million people a day, including Twitter and Snapchat. The goal as a content producer is to connect with your audience and create incredible stories. Platforms give us unprecedented access to those audiences. Plus, I would rather negotiate with Facebook, Snapchat and Twitter than exclusively with a cable TV operator.
This interview has been edited for clarity and length.