Articles by: "Rande Price, Research VP – DCN"

Navigating nine consumer paths to digital subscriptions

November 4, 2019 Rande Price, Research VP – DCN

People are motivated to subscribe to their news digitally for a variety of reasons. It’s a personal path that often takes time. Some people are driven by a topic of passion. Others subscribe to support journalism, yet others opt to subscribe because of a lifestyle change. In the Paths to Subscription Report, the Media Insight Project , an initiative of the American Press Institute and the Associated Press-NORC Center for Public Affairs Research, identified nine distinct paths to subscriptions based on consumer motivations and conditions. This study surveyed 4,100 recent subscribers to 90 US local newspapers to understand their motives and mindsets at the time of the deciding to subscribe.

The nine paths to subscriptions:

1. Digital Paywall Converters

The majority of these subscriber groups (61%) buy a digital subscription because they hit a limit of free stories they can read online and wanted unlimited access. Demographically they tend to be younger, high-income, highly educated, male, and Democrats. This group is twice as likely to subscribe to large metro papers as other subscribers. Improving the user experience of the subscription sign-up page, especially a short frictionless experience, may help to increase conversions in this segment.

2. Topic Hunters

This segment is highly interested in one or two particular subjects, which helps drive them to subscribe in order to access this content. Topic Hunters are often so engaged in content of interest that when they hit the meter limit, they immediately opt to subscribe. They tend to be highly educated. Publishers may see a lift in conversions by promoting and messaging specific topics of interests like politics and sports with a direct call to action.

3. Locally Engaged

This group is interested in content about their community. They want to be locally informed. In fact, all Locally Engaged subscribers report accessing local news is important to their decision to subscribe. Similar to Topic Hunters, the Locally Engaged are interested in news alerts and email newsletters regarding local government, their neighborhood, and other local civic news.

4. Social Media-Mobile Discoverers

These subscribers engage with their newspaper and its journalists on social media and read the articles on mobile devices. Demographically this group is much younger than the others and tends to be slightly more female and more likely to identify as a Democrat. The Social Media-Mobile Discoverers are also likely to follow individual reporters on Twitter, Facebook, and Instagram. Publishers can message these readers to like, follow, comment, and share articles to fully engage these subscribers.

5. Journalism Advocates

This group is motivated to subscribe because they want to support journalism. Nearly all Journalism Advocates report they value supporting news organizations and like that it keeps a check on political leaders. Demographically, this group is younger and more digital-focused than others and are also likely to identify as a Democrat. They are also more likely than other groups to live in urban areas and subscribe to large metro papers. Similar to the Digital Paywall Converters’ path to subscribing, this group values unlimited access to content.

6. Life Changers

This group decision to subscribe is due to a transition in their life. These subscribers may have just moved to the area, started a new job or encountered a change in their lifestyle allowing them more time or money to sign-up for a subscription. Importantly, publishers should target readers who are new to the geographic area, recent graduates, retirees, or someone with a new job or promotion.

7. Coupon Clippers

This group is driven to subscribe because they value coupons, “I subscribe to get coupons and ads…not the news” or “… coupons, but then I actually started reading it.” Publishers can engage this segment by promoting a newspaper’s coupon section. Digital coupons should also be tested for a positive user experience impact on subscriber conversion and engagement.

8. Print Fans

This segment, while they prefer print, now access their news subscription digitally as well. Print Fans tend to be female (56% vs. 46% of other subscribers) and more than half live in the suburbs. Publishers can promote the print edition to this segment but also attract them digitally by providing exclusive content of interest online.

9. Friends and Family

This group subscribes as part of the social circle in their lives. Often friends or family introduced them to a new publication. Friends and Family look for high-quality and interesting articles in their subscription package. A great way for publishers to engage and attract this group is through referral programs, where subscribers can refer friends or family in order to receive a discount or a free gift.

The Media Insight Project offers insight consumer motivates to sign up for a subscription. While subscribers value quality journalism there are also many other important drivers of subscriptions. Some factors sit in the background and take time for a person to act on, while others immediately trigger subscriptions. Publishers need to understand the segments of potential subscribers in detailed to maximize on opportunities for conversion

Industry-Research

Distribution, operations, and reporting key in newsroom transformation

October 28, 2019 Rande Price, Research VP – DCN

Traditional news channels are transforming into hybrid newsrooms, combining digital platforms into an integrated business model according to The 2019 State of Technology in Global Newsrooms Report. In fact, half of the newsrooms in six of eight global regions are now hybrid. This research was conducted by the International Center for Journalists (ICFJ) in 149 countries, in 14 languages, and completed by more than 4,100 journalists and news managers.

Some of the ICFJ ‘s key findings include:

Newsrooms mix formats to distribute their content with social media as the dominant platform.

Content distribution increased with two-thirds of news organizations distributing content in at least four formats, compared to 40% that did in 2017.
In terms of social media tools, Facebook (90%) and Twitter (73%) lead the pack. They are followed by YouTube, which grew to 60% usage from 48% in 2017 and Instagram, now at 48%, which is up from 33% in 2017.
Instant messaging apps as content distribution channels have declined in seven out of eight regions over the last two years. Eurasia/former USSR, Europe and North America registered the largest declines, 20 percentage points, 16, and 10, respectively.

Security and new technologies are part of the day-to-day workflow.

More than two-thirds of journalists and newsrooms secure their communications while only half did in 2017. In fact, in North American newsrooms, the percentage of those that secure their communications doubled to 82%. The preferred method of security is encrypted messaging apps.
One-third of news organizations employ dedicated fact-checkers. In addition, 44% of newsrooms and 37% of journalists said they engage in more fact-checking activities than they did the previous year.
More than twice as many journalists use social media verification tools today compared to 2017.

Most news organizations aim to dismantle misinformation and work to build trust.

Seventy-five percent of managers worry about the impact of misinformation. However, less than half of journalists believe that it impacts their day-to-day work.
Almost half of newsrooms are better at separating news stories from opinion pieces.
More than three-quarters (37%) of news managers in North America report building trust as a major challenge, up from 29% two years ago.

Government and politics dominate news coverage.

Government and politics dominant news journalism with the exception of news radio. Radio is more likely to cover specialized beats. In fact, 42% of news radio covers education and 43% covers health compared to 27% of websites that cover these topics.
While nearly one-third of journalists do some investigative reporting, this group appears to be quite limited with only 12% identifying as investigative reporters.
Smaller newsrooms appear to offer a community focus news and are twice as likely to report on local news as larger outlets. Twenty percent of small newsrooms cover local and hyperlocal events, compared to 10% of larger newsrooms (26+ employees).

More women are leading in journalism.

Women hold half or more of newsroom management positions in four of the eight regions. On average, one-third of management jobs globally are held by women. However, female leadership varies greatly by region.
Leading with women in newsroom management are Eurasia/former USSR at 62%, North America at 56%, Europe at 51%, and Latin America/Caribbean at 49%.
Women comprise 56% of newsroom employees in North America and 51% in Europe.
On average, women are 40% of the journalists in newsrooms worldwide.
Interestingly, more women (25%) compared to men (15%) report not having digital experience at the time they were hired.

This ICFJ study offers insight into the transition of traditional news outlets to hybrid news outlets with digital platforms integrations. It identifies the newsroom journey to improve the quality of news reporting. Newsroom operations must now include the fight against disinformation, the promotion of trusted news brands, the addition of heightened security, and the usage of enhanced data analytics.

Industry-Research

Understanding how young people consume news: It’s personal

September 25, 2019 Rande Price, Research VP – DCN

The role of news for Gen Z and Gen Y appears to be individualized, rather than characterized by broad generalizations, which is tricky business for news providers. According to new research from Reuters Institute for the Study of Journalism, How Young People Consume News and The Implications for Mainstream Media, adults aged 18-35 view the news from the perspective of what it can do for them as individuals, rather than for society as a whole. The study took a multi-faceted approach of tracking news consumption in conjunction with in-depth discussions groups among 20 young adults, in the UK and US.

News values

Reuters identified two specific themes reflecting the motivations and values of this cohort regarding their engagement with news and news brands:

Using news to progress your personal development:
- Status: Provides value and allows you to feel confident.
- Identity: Builds and communicate your identity. The news you engage with contributes to defining who you are, and your views.
- Learning: Allows you to better yourself, increasing your knowledge and success.
Consuming news to increases your enjoyment in the things you do:
- Connections: Eases your daily conversations with others,
- Entertainment: Provides fun and original moments.
- Passion: Helps fuel your passions and interests.

While Gen Z and Gen Y recognize the positive role news can play, its value does not necessarily translate into greater relevance for traditional news outlets. Unfortunately, today’s 18 to 35-year-olds are more distracted and less motivated to seek out news.

Consumer news segments

To build engagement with Gen Z and Gen Y, it’s essential for news publishers to understand content interaction in each moment, medium and for the individual. Reuters identified four consumer news segments to provide news publishers with insight and opportunities to generate content with the intent to build a meaningful relationship with those under-35.

Heritage News Consumers

These users consume a little of traditional news brands. However, this kind of consumption is very limited due to the lack of time available in their busy lives. Their user profile shows high access to news brands but low news consumption. Newer technologies, like podcasts and social media feeds, are more desirable and a fit better with their packed schedules. News publishers should think about how to make news easier to access by using innovative technology.

Dedicated News Devotees

This segment consumes news throughout the day but mostly on alternative and third-party platforms. Their user profile shows high access to news brands and high news consumption. This segment is the most engaged with news brand apps, the most dedicated to appointment news consumption and they believe in the value of news. Given this segments relationship with quality news, they are more likely to become subscribers. Publishers should think about unique benefits to target and promote to this demo.

Passive News Absorbers

Members of this segment are not interested in a relationship with news brands. They receive their news with little effort and take in information that surrounds them. Interestingly, they do feel the need to be informed but do not look to premium publishers for their news. Their profile shows low access to news brands (self-led) as well as low news consumption. Publishers should find ways to increase brand fame and name recognition with this cohort. In addition, allow for easy access to bold headlines, news summaries and short videos to attract Gen Z and Gen Y to quality news content.

Proactive News Lovers

This segment is committed to news consumption. While they know news brands, they prefer to curate across multiple sources than rely on a few specific branded ones. Proactive News Lovers often skim news content. Their profile shows low access to news brands (self-led) but high news consumption. Given this segments passion for curation, news publishers should seek to offer new technology to help them process a collection of news articles.

Building a future

Understanding Gen Z’s and Gen Y’s motivations and values in news consumption offers insight into how best to build their brand loyalty in news brands. News formats, native to mobile, may also help news brands reestablish their relevance with adults under 35 years old. Connecting to this audience, above all else, is critical to the survival of news publishers.

DCN-Research | Research

New DCN research explores consumer appetite and satisfaction for digital subscriptions

September 19, 2019 Rande Price, Research VP – DCN

Digital Content Next (DCN) has released findings from its new research, DCN Digital Subscription Economy*, that indicate a healthy and rapidly-growing digital subscription marketplace. The DCN study surveyed 1,000 U.S. consumers regarding the array of direct-to-consumer paid digital subscription offerings across numerous media sectors and genre.

On average, digital media subscribers are paying for more than four unique subscription services. And two-thirds of subscribers (64%) perceive high value in connection with their subscription(s). Consumer value is high no matter how much they spend, how many services they have or how much they earn.

The market is transitioning with several big-brand entrants like Disney+, Apple TV+ and HBO Max joining the booming marketplace. However, it doesn’t appear that consumers are anywhere near reaching a tipping point of “too much” spending or “too many” services.

Streaming subscription value is driven more by video streaming services than by live TV streaming, digital audio or digital print subscriptions. This is fueled, in part, by big-budget original productions, significant media publicity, “must have” status and consumer’s attraction to bingeing content.

Value also appears to be driven more by consumers enjoying the ability to choose from among a variety of streaming services than by desire to shed their cable service. For those who continue to subscribe to cable, their driving reason is that they’ve always had it and are “used to it.”

Subscription spending

A majority of digital media subscribers are not immediately sure how much they spend on their digital subscriptions each month. This is another indicator that they have not yet reached a sense of over-spending. When asked to think about and to calculate their monthly spend, their $54/month average expense suggests a willingness to add to their news and entertainment budget. In other words, pricing of many of the most popular digital streaming subscriptions – particularly video subscriptions – seems to be perceived as reasonable and affordable, at least for the time being.

Drivers of subscriptions

Across the board, subscribers of all digital media types (video, audio, print) prize their control(direct, personalized, anywhere/anytime access) above everything else. Propensity for show bingeing, a manifestation of control, also means consumers are frustrated when complete seasons of what they want to watch aren’t available. Content discovery appears to be a non-issue with just one-quarter of video streamers (28%) reporting difficulty with discovering video content worthwhile to view.

DCN will continue to track this dynamic and shifting marketplace of digital assets consumed à la carte to provide publishers with insight into the dimensions of consumer value and to help inform their subscription strategies, offerings and messaging.

* An abridged version of the findings from the DCN Digital Subscription Economy Study is accessible to the public. Please note the full 48-page DCN Digital Subscription Economy Study is only available to DCN members. If you are a DCN publisher member, please be sure to log in or register to access this special members-only research, which will appear below this notice once you have logged in.

Industry-Research

What to expect from disinformation during the 2020 elections (and how to respond)

September 11, 2019 Rande Price, Research VP – DCN

Most academic, media and political analysts forecast the likelihood of disinformation playing a large role in the upcoming 2020 presidential election. The NYU Stern Center for Business and Human Rights echoes this projection in its new report, Disinformation and the 2020 Election: How the Social Media Industry Should Prepare. In fact, the analysis predicts that more disinformation will be generated state-side than the volume generated by foreign entities.

What to expect from disinformation

Deepfakes increase in volume. Deepfakes are easier to produce now due to advancements in deep-learning and editing systems. A deep-learning system produces a persuasive fake video by studying photographs and videos of a target person and merging them with images of an actor speaking and behaving in the same manner as the target. Once a preliminary fake is produced, a method known generative adversarial networks (GANs) makes it more believable. The GANs process detects any inaccuracies and corrects them. After a few rounds, the new fake video is complete and ready for amplification.
Disinformation spreads to the political left. While domestic disinformation comes most often from the political right, the left is also engaging in its creation and spread in social media.
Misled American staged events. Americans are now being recruited by Russian organizations to stage real-life activities to spread of disinformation. From deceptive IRA social media personas to anti-Muslim and pro-Muslim demonstrations, these events are promoted online to American followers to attend and draw media coverage.
Instagram, owned by Facebook, will be used more to spread disinformation. Image and video services are ideal for spreading disinformation via memes; photos combined with short, punchy text, and video clips.
WhatsApp, also owned by Facebook, will be used to amplifying disinformation. WhatsApp was used to send false content to large populations in the elections in Brazil and India. It could be a very active force in the U.S. 2020 presidential elections.
Increased international activity. Not only is Russia involved in the creation and spread of falsehoods but Iran and China are also suppliers of disinformation.
Digital voter suppression continues as a threat in 2020. Election manipulation to continue in 2020. According to the University of Wisconsin, users tried to suppress voter turn-out in 2018 creating Twitter campaigns. One post tried to tell Trump opponents incorrect voting day information. Another tried to intimidate liberal voters by saying that NRA members and Republicans are bringing their guns to the polls.

Responding to disinformation

Social media companies put a few new measures in place since 2016 and 2018. They are now communicating more with each other, the government, and outside experts in an effort to address disinformation. Regardless, more has to be done to prepare for 2020. The NYU Stern Center for Business and Human Rights suggests the following recommendations for social platforms:

Detect and remove deepfakes. Improve efficiency in removing deepfakes before they do their damage.
Remove content that is provably false. Purge content that is definitively untrue.
Hire a content overseer. Hire a senior official to oversee the process of guarding against disinformation.
Make changes at Instagram. Act assertively to protect users from disinformation. Instagram doesn’t remove or down-rank a user’s main feed if disinformation is found. While the service does make it harder for new users to access the false content, it’s not a forceful enough action to stop the problem.
Limit the reach of WhatsApp. WhatsApp now limits the reach of a message to 1,280 users (5 chat groups x 256 members in each) versus the previous maximum reach of 66,536 users (265 chat groups x 256 members in each).
Defend against for-profit disinformation. Social platforms need to pay close attention to false content distributed by corporations, consultants, and public relations firms. Many companies specializing in clickbait manage successful businesses alluring naïve and intrigued consumers attracted to conspiracy theories and fake items.
Support legislation on political ads and voter suppression. Push the Senate to approve the Honest Ads Act, to include political disclosure standards to online ads.
Improve industry-wide collaboration. Form a permanent inter-company task force devoted to fighting disinformation.
Teach social media literacy to the public. Educate users about questionable content and what to do if they come across it.

NYU cites findings from The Oxford Internet Institute and from four universities, Princeton, University of Exeter, Washington University and University of Michigan. This body of research shows a decrease in disinformation between 2016 and 2018. However, with the 2020 being a presidential election year, all anticipate intensified interference by both foreign and domestic U.S. actors. Continued efforts are needed to combat disinformation and protect the electoral process.

Industry-Research

Disinformation is profitable. That needs to change.

August 21, 2019 Rande Price, Research VP – DCN

The business of publishing disinformation, inaccurate information spread purposefully and/or maliciously, is more profitable than ever according to a new study from the Global Disinformation Index (GDI). Analyzing website traffic and audience information from 20,000 domains it suspected of disinformation, GDI estimates the sites generated at least $235 million in ad revenue. GDI is a nonprofit that evaluates and rates websites’ risk of spreading disinformation.

A fertile environment

The existence of disinformation predated the internet. However, social platforms offer a new level of amplification. Social media coupled with a programmatic marketplace provided the perfect environment for malevolent actors looking for reach, a target audience, and revenue.

Ad-tech companies’ opaque practices make the environment even more attractive. Some connect buyers and sellers while others collect, aggregate, package and sell data. The result is a black box of operating systems. These shifts in the digital ecosystem offer a golden opportunity for marketers of fraud and disinformation.

Focused approach

Disinformation actors rely on each another to amplify their messages. Interfering with one actor could potentially make it more difficult for the others to spread their disinformation. However, despite their inter-reliance, disinformation actors each have a distinct focus:

State actors include governments as well as state-linked actors to spread inaccurate information and promote government propaganda. They are centralized actors using digital virality to amplify their message.

Private influence operators are for-hire companies (e.g. Cambridge Analytica) that run commercial marketing and public relations campaigns that aim to disinform the public. They use targeted campaigns to identify a specific psychological, behavioral or politically affiliated audience to amplify their message. Their misleading and false content sites look professional. These ad-supported domains mimic traditional journalism.
Grassroots trolls are individuals or groups that band together for a specific issue or cause. Their content and activities often focus on hate speech or try to push a false narrative. Their messaging often starts out on forums like 4chan or 8chan, move to other intermediate platforms like Reddit and then finally into mainstream media.
Pure rent-seekers are all about clickbait. They churn out sensational disinformation to drive visitors (and bots) to click on their site in order to collect revenue.

It’s not surprising that today’s digital marketplace offers an effective delivery system for disinformation actors. Unfortunately, the internet is filled with disinformation that is rapidly amplified via social media. And it is human nature to find drama attractive. Disinformation is loud content that demands our attention. It also claims advertising dollars in an efficient and expedited programmatic manner. As an industry, we need to de-incentivize disinformation actors by removing financial and amplification motivators.

Advertising | Industry-Research

What Pew’s latest industry stats say about the media marketplace

August 7, 2019 Rande Price, Research VP – DCN

Pew Research Center has just released its latest State of the News Media report, which provides an annual briefing of the news media marketplace. Pew aggregates data from reputable experts to produce a concise industry profile. It offers a succinct yet comprehensive analysis of the media industry.

This year’s highlights include:

Newspaper circulation decline. News outlets today offer several digital options to reach consumers, including apps, newsletters, podcasts, and aggregation platforms like Apple News. Unsurprisingly, the majority of U.S. adults now get at least some of their news online. As a result, compared to 2017, total daily newspaper circulation declined, revenue from print circulation was flat and ad revenue from print declined 13%.

Digital revenue growth. Overall, digital advertising registered strong revenue growth year-over-year. Reflecting on the total digital ad market, revenue grew 23% from $88 billion in 2017 to $109 billion in 2018. Driving this revenue growth was mobile advertising revenue’s increase from $57 billion in 2017 to $71 billion in 2018, comprising almost two-thirds (65%) of all digital advertising revenue. Digital ad revenue for news publishers also grew and closely resembled the total digital ad market.
Cable news revenue growth. Cable news (Fox News, CNN, and MSNBC combined) continued to experience revenue growth this year. It’s one of the only sectors, outside of Local TV, to register a revenue increase (4%) in 2018. Further, since 2015, cable news revenue grew 36% and ad revenue grew 58%.

Usage flat for news sites. For the second year, both newspaper sites and native news sites usage remained flat (4Q 2016, 4Q 2017 and 4Q 2018). Time spent also declined on news sites (newspaper and native). It appears consumers now engage with news brands offsite using apps, newsletters, podcasts and aggregation platforms like Apple News or Flipboard and other platforms.
Local news viewership decline. Local news audiences are on a decline across multiple dayparts. According to Comscore StationView Essentials data, the average audience for local news declined 10% for morning news and 14% for late night and evening news. However, over-the-air ad revenue for local TV rose 12% to $19.3 billion in 2018, on par with a midterm election year.

Digital native employee growth slowing down. In 2018, reporters, editors, photographers or videographers in the newsrooms of digital-native now equal 13,500 employees with a median annual salary of $62,000 according to data from the Bureau of Labor Statistics’ Occupational Employment Statistics (OES).

The key data points included in Pew’s State of News Media point to the continued shift in audience consumption of digital news and information and the challenges of monetization. With mobile now the access point for 24-hour news coverage, it’s no wonder that print and local news usage declined. Further, digital is no longer limited to onsite consumption, which creates new opportunities and challenges. News publishers have several touchpoints – including newsletters, podcasts and their content on aggregation platforms to – reach and engage consumers.

Advertising | Featured Post | Industry-Research | Perspectives

The halo effect is real: New research confirms that ads perform better in quality contexts

August 1, 2019 Rande Price, Research VP – DCN

Media companies have long declared that it matters where advertising campaigns run. Unfortunately, when the ability to micro-target users at scale became available, particularly on massive social media platforms, it was simply too attractive for advertisers to ignore.

Despite countless media reports on the risk for brands running alongside toxic, user-generated content on YouTube or Facebook, behavior has never changed for the long-term. Instead, many advertisers used unsophisticated keyword blocking strategies or stopped advertising in the news category and considered themselves “safe.” Regrettably, that something amounted to little more than throwing the baby out with the bathwater. Last week, however, two new research studies released last week clearly demonstrate why this short-sighted strategy needs a serious rethink.

Reports from World Media Group (WMG) and Integral Ad Science (IAS) found that digital ads viewed on trusted editorial sites generate a more engaged audience for advertisers. These reports confirm comScore’s 2016 research that showed ads viewed within a premium publisher environment drive significantly better advertising effectiveness, particularly for mid-funnel consideration.

comScore’s independent research came at a time when the industry was in the midst of proving the basics to the market: that ads were being delivered to real computer screens and being seen by humans, not bots. comScore’s empirical research showed that running ads on “premium” publisher sites had significant impact on brand effectiveness and the lift to advertiser brands was attributed to the “halo effect” from the premium environments.

Quality context delivers real results

Fast forward to 2019 and WMG, a global alliance of a dozen leading news and media companies (e.g. The Atlantic, Bloomberg Media Group, The Wall Street Journal, and The Washington Post) commissioned Moat, a digital marketing measurement service, to conduct research on the quality and engagement towards premium inventory across desktop display, mobile display and desktop video.

The findings showed that premium digital inventory running across quality content brands in Q3 2018 outperformed Moat’s benchmarks by between 13% and 144%. WMG’s research also concludes that the primary driver of increased engagement is the “halo effect” that comes from the value of the contextual environment in which the ads are seen.

Key performance metrics

Desktop display ads viewed achieved an active page dwell time of 66 seconds, 39% higher than the industry average. The in-view rate (where 50% of the ad is viewable for 1 second) and in-view time both exceeded Moat’s benchmarks by 27% and 25% respectively.

Mobile display performed 35% more interactions than average. Viewability rates were 32% higher than the benchmark and engaged consumers for 13% longer.
Desktop videos viewed achieved 22% higher-than-average rates for viewability. Consumer attention to videos was also high, with audible and visible completion rates at 144% higher than the Moat Q3 2108 benchmarks.

People react to context

Additional biometric research by IAS, a technology company that analyzes digital advertising placements, identified the impact of high quality and low quality mobile environments on people’s reactions to digital ads. This neurological research – looking at the brain centers responsible for positive and negative affinity – further substantiates that the environment in which an ad appears has significant impact on consumers’ reactions to that ad.

IAS’ research found that ads viewed in high-quality mobile web environments are perceived 74% more favorably than the same advertisements seen in low-quality environments. Advertising in high quality content environments resulted in 4% greater favorability, 20% greater engagement, 7% greater emotional intensity, 29% memory encoding detail, and 30% memory encoding global.

For several years now, advertisers have struggled to use digital advertising to grow demand and desire for their products, particularly as direct-to-consumer brands and other low-cost, “brandless” options (see Amazon Basics) are starting to flourish. Like the earlier comScore Halo Effect research, these new studies prove that advertising on high quality content sites drives higher brand attention and engagement for both display and video advertising. Context matters and research continues to prove this: Ad performance is better in a premium content environment.

The only question is when brands will act.

Industry-Research

Highlights and Insights from Mary Meeker’s annual Internet Trends Report

June 25, 2019 Rande Price, Research VP – DCN

In total, more than half of the world (51%) or 3.8 billion people were internet users last year, up from 49% in 2017. Overall, internet growth slowed to about 6% in 2018. In response, sales of smartphones—a a primary internet access point—are declining since most of the world is already online. These are just a few of the major headlines from Mary Meeker’s annual Internet Trends Report 2019.

The highlights

The report identifies market growth and concerns across the different business sectors. Highlights and trends include:

Americans are a mobile-first society. In fact, U.S. consumers spend more time their mobile devices than they do watching TV. YouTube and Instagram are gaining the most online platform time (up 27% and 19% respectively in Q4 2018), and digital video now comprises 28% of the average daily viewing time.
People increasingly communicate visually using images captured on their cellphones. More than 50 percent of Twitter impressions now include images, video, or other media.
Marketing spend is necessary to attract new customers. However, Meeker believes these acquisition costs are unsustainable and, in some cases, surpass the long-term revenue of the customers. She suggests using cheaper ways to acquire customers like free trials and unpaid tiers. Both enable more usage, engagement and social sharing compared to premium models which drive monetization and product innovation.
Concern over problematic digital content continues to climb as 42% of U.S. teens report some type of bullying online. YouTube also remains central for recruitment of radicalized terrorists and social media still serves as a playing field for political polarization.
Google and Facebook continue to register steady ad revenue growth. Overall, Internet ad spend is up 22% in 2018, slightly higher than the 21% growth in 2017.
On-demand products and services increased from about 40 million in 2017 to 56 million in 2018. Online marketplaces are the most popular, followed by transportation, housing, food delivery and health/beauty.

Digital data and insights can improve user experience

Meeker believes that the use of digital data and insights can improve the user experience. She outlines the following plan:

Collect Data

Understand customer wants and improve business processes
Increase customer input/improve products
Manage direct customer/subscriber relationships
Improve consumer decision-making

Manage Connection

Organize internal and external communication
- Communicate with customers via multiple channels
- Organize customer data across all systems

Optimize Data

Improve analytics/recommendations/personalization
- Respond to customer events at scale
- Discover business insights and optimize fulfillment
- Manage data growth and eliminate inefficiencies

Meeker sources industry research throughout the report to support her findings and offer forecasts in the tech and venture capital world. She continues to examine the marketplace as an analyst would, identifying the new trends, companies, and business models for investment and her report is an annual industry-insider must-read.

Industry-Research

How people find news and what they’ll pay for

June 19, 2019 Rande Price, Research VP – DCN

While consumers look to reputable news organizations and quality brands for trusted news and information, many still use search, social media, and aggregators to find and consume news content. In fact, according to Reuters Institute Digital News Report 2019, just under one-third (29%) of consumers worldwide prefer direct access to a website or app for their news and information compared to 55% who prefer search engines, social media, or news aggregators.

However, this behavior varies by country. In the U.S., consumers regularly take a number of different paths to access news content. Reuters refers to this as the “pick and mix” model with 27% of U.S. consumers preferring direct access, 20% preferring search, and 25% using social for their news content. Regardless of the route taken, 26% of people rely on “more reputable” news sources (40% in the U.S.). An additional 24% also report they stopped using sources with a less accurate reputation. Others stopped sharing reports with potential inaccuracies (29%).

Trust

Trust remains an important factor in selecting news content. Overall trust for mainstream news sources is 42% globally and 32% in the U.S. Trust in news sources people sought out themselves is 49% globally and 50% in the U.S. Trust in news found in distributed environments such as search and social media is much lower.

While the news media faces challenging times, people believe it’s doing a better job at keeping them up to date (62%) and helping them to understand the news (51%). Unfortunately, almost one-third of consumers report actively avoiding the news because of its negative effect on their mood (58%) and say that they feel powerless to change events (40%).

Reader revenue

Subscriptions are gaining momentum in the U.S. Reuters reports almost one in ten (8%) of their U.S. sample are digital-only subscribers (up from 3% in 2016). Notably, The New York Times now has over 3 million digital subscribers, the Washington Post has about 1 million, and the Financial Times has more than 700,000 digital-only subscribers.

These subscription models—plus alternative ones like the Guardian’s membership model—are strong performers for the year. Each employed successful marketing strategies, be it ongoing payments, unique product offerings, or bundles.

Reuters does raise concerns about subscription fatigue. Defined as the idea that people are becoming frustrated with being asked to pay separately for lots of different services online. The average (median) number of news subscriptions per person among those that pay is one in almost every country. This is the same even among the most interested in news, the wealthiest, or the most educated.

Further diversification

Notably, podcasts are gaining traction and adding a fresh new audio component and on-demand access to gathering news and information. In fact, 35% of U.S. consumers listened to a podcast last month. The Guardian, Washington Post, The Economist, and the Financial Times are among the forerunners of news publishers that have launched successful daily podcasts in the last year.

It’s important for news publishers to continue their strong branding efforts to differentiate their quality and reputable journalism from the misinformation on the internet. Further, while subscription revenue is important, there are also other avenues to try for revenue diversification. This is a good time for news publishers to test new formats (podcasts, videos, live, group chats, etc.) and communicate their brand personality to a younger audience.

Industry-Research | Innovation

The future of media will be personal, according to PwC

June 12, 2019 Rande Price, Research VP – DCN

Consumer interaction on digital platforms is a key driver of revenue for entertainment and media companies. With increasing affordability and availability of broadband, mobile continues to be a strong contributor to the growth of this segment. However, according to the new PwC’s Global Entertainment & Media Outlook 2019–2023 Report, further innovation and personalization will significantly change how we access and use the Internet.

PwC predicts that creative new offerings and business models will increasingly revolve around people’s personal preferences. New applications will involve artificial intelligence in combination with digital assistants. Media companies will strive to build products that empower consumers to set their individual preferences and curate their own context.

The PwC Outlook Report cites personalization as a central theme in overall entertainment and media revenue growth. Global spending is expected to rise 4.3% over the next five years, with revenues hitting $2.6 trillion in 2023. The report provides a strong and notable resource for revenue estimates in the both the US and global markets.I

Additional forecasts from PwC’s Outlook Report include:

Subscription TV revenue in the U.S. will experience a 2.9% CAGR (compound annual growth rate) decline to from $94.6 billion in 2018 to $81.8 billion in 2023. Much of the loss comes from cord-cutting and SVOD competition. Interestingly, the US remains the biggest Pay-TV market accounting for 46% of the total global revenue in 2018.
SVOD’s continues its popularity as more streaming services are introduced and unbundling continues to grow. Newcomers to the market will need to differentiate themselves to attract subscribers.
The OTT market is also dominated by the U.S., contributing to more than half (55.6%) of global OTT revenue in 2018. OTT video revenue in the US reached $14.5 billion in 2018 and is set to double by 2023.
The U.S. virtual reality (VR) market registered $934 million in revenue in 2018 and is expected to grow at a 16.6% CAGR to reach S$2 billion by 2023. Gaming remains the primary application of VR, accounting for 57.4% of total VR revenue in the US in 2018. VR video, however, will see the most growth in the forecast period, climbing at a CAGR of 22.4% to reach $861 million in 2023.

There’s an important effort in today’s entertainment and media marketplace to meet consumers where they spend their time and to deliver what they need wherever they are. These sorts of personalization efforts cut across OTT, SVOD, and VR. While evolving business models around customer behavior is far from new, the renewed focus amplifies the importance of placing consumers at the center of the media experience.

Industry-Research

The podcast market is booming. Research offers insights into monetization and the marketplace

June 5, 2019 Rande Price, Research VP – DCN

Podcasts are not a niche market. One-third of Americans listen to podcasts monthly with one-quarter of these listeners tuning in on a weekly basis, according to a new report Investing in the Podcast Ecosystem in 2019 from Andreessen Horowitz. In fact, listeners now spend over six hours each week on podcasts, consuming approximately seven episodes per week.

While the term podcasting was first coined in 2004, it wasn’t until the creation of the iPhone podcast app in 2012 that podcast listening captured mainstream appeal. To date, Apple has 27M monthly active podcast users in the U.S. and accounts for the majority of podcast listening.

The five segments of podcast producers are:

1. Media Companies

Larger media companies with a variety of content formats (broadcast radio, newspaper, magazine, etc.), which monetize podcasts primarily through ads. Other monetization channels include circulation revenue (e.g. iHeartMedia, The New York Times, NPR, Slate, The Washington Post).

2. Podcast-Only Production Companies

Podcast production studios create their own content and distribute on other listening platforms like Apple Podcasts or Spotify. They monetize podcasts through ad revenue, licensing to TV/film and exclusives with listening platforms (e.g. Wondery, Gimlet, Cadence13, WaitWhat).

3. Large Indies

These are primarily personality-driven talk shows with celebrity/influencer hosts. Often these podcasts are monetized mostly through donations, ads, and merchandise (e.g. Joe Rogan, Sam Harris and Tim Ferriss).

4. Non-Media Businesses & Non-Profits

Most often these have a stated goal behind their podcasting initiative. These are largely brand-building marketing efforts, rather than focused on driving revenue and are often reliant on working with a 3rd party.

5. Hobbyist Creator

Any individual creating and posting content. Often unmonetized.

Monetization

Podcasts are primarily monetized via ads, sponsorships, listener donations, membership, and subscription models. However, ad revenue is quite small (0.3B), as compared to other media revenues. I

Currently, podcast advertisers pay per guarantee per download. While this can work for direct response advertisers, it is not effective for brand advertisers that want to form an impression on consumers over a period of time. The accounting in this report shows that 56% of podcasts use dynamic ad insertion.

Still, podcasts are an attractive environment for a hard-to-reach audience. Some podcasters charge listeners for early access to content, ad-free listening, or exclusive bonus episodes. Apple Podcasts does not yet enable this, which has led to some creators to turn to iTunes or third-party sites to sell their content. Podcasting is still in the very early stages of developing monetization strategies for long term growth.

A new model of monetization comes from a company called Patreon, a membership-based platform that provides the tools needed for creators to run a subscription content service. The system allows podcasters to receive funding directly from their fans, aka patrons, on a recurring basis. Patreon charges a commission of 5% for each donation and 5% in transaction fees, leaving the podcasters with 90% of the donations. While a positive model for podcasters, profitability at this time appears limited.

Apps and the larger marketplace

Interestingly, the report suggests that users do not feel passionately about their podcast app. At the end of the day, the audio content is the core element users are engaging with, not the application. The app is a utility and, while Apple maintains the largest share of listeners, its market share dropped significantly last year from over 80% to 63% with the launch of Google Podcasts.

However, apps are being developed that offer new approaches to enhance the podcast market. For example, Castbox offers translation and transcription. This means that consumers can search within podcasts via the transcribed text. Other apps are add context with visual links to the podcast. Entale is a “visual podcast app” that uses AI to showcase relevant visual links for uses to view as the podcast is playing. Further, podcast publishers with larger follower base are creating their own platforms for distributing content. Slate Plus and The Athletic are great examples of using an established fan base to build a strong brand extension. Clearly, there’s an opportunity to build a network of creators and listeners.

New interactive podcasts talk shows and call-in shows, with social elements, are part of podcasting’s future. However, for the podcast market to flourish, podcasting needs to concentrate on finding new and easier ways for creators to distribute their own content, own their customers, and to monetize through alternative sources besides advertising and off-platform donations.