Netflix’s earnings report last week sent a chill across nearly every company with a business model tied to a direct-to-consumer relationship. There are real concerns about the global economy and speculation about whether the massive increase in streaming viewing habits seen during the pandemic will prove to be enduring. However, I wonder whether the insights gleaned from the Netflix situation are unique to Netflix and not a strong indicator for other media companies, most of which are just starting their streaming ventures.
First, let’s acknowledge the macroeconomy. Inflation registering over 8% will impact nearly every consumer market; this is especially true if inflation leads to higher interest rates and the dreaded “R” word. Unfortunately, this will be an ever-intensifying concern.
There has been a great awakening around the globe after two years of Covid, during which we had requirements and excuses to stay home and avoid socializing. There were countless stories in the trade and mainstream press as we witnessed streaming viewership’s outsized growth about isolation’s impact on our insatiable appetite for entertainment – escape. And binge-watching – which was already a trend after Netflix tossed a hand grenade into the linear schedule – only escalated during this period.
Certainly, Netflix finds itself with real competition for digital share of wallet for the first time in its history. Storied media companies have rolled out exclusive offerings that feature everything from hit television programs to blockbuster movie franchises: Batman, Star Trek, Yellowstone, Avengers from HBO Max, Paramount+, Peacock, Disney+, respectively. Many have regained rights to classic television hits that are endlessly bingeworthy. Meanwhile, Netflix has increased its price, nearly doubling its monthly cost ($15.49 from $7.99 when it first launched) while cracking down on password-sharing as it, impressively, has saturated the market.
But while Netflix may have led the way in streaming, it may not be the best proxy for the subscription market opportunity. The company faces its own issues with stagnating growth and should not be mistaken for marketplace indicators.
What is really happening
DCN’s 2021 research into the value of direct, trusted consumer relationships, brands as proxies for this trust, the needs and behaviors of Gen Z vs Gen Y, and the subscription market point to this lesson: Ignore Netflix and stay the course.
Most important are the lessons coming from studying the “next” generation. Consumer behavior is radically different in a world where payment and immediate gratification are merely a double tap of the thumb and face scan away on a mobile device. Paying for access to your favorite news or entertainment product, whether podcast, app or website, is no longer a foreign concept after hitting a “paywall.” Rather, it is little more than a friendly nudge along the way associating value with the products you love.
The number of people willing to pay for access to news and entertainment is increasing. In fact, Netflix’s greatest legacy for the market as a whole may have been leading the horse to the water. Netflix also worked with premium providers and helped build an appetite for great content and normalized paying for it.
What publishers seek
Now, distribution platforms from Apple to Google to Facebook are being pushed to finally act as true partners in driving subscription revenues and monetization for premium publishers. At times this nudge has had to come from regulatory threats in an effort to create more balanced bargaining power.
But what are publishers seeking? Publishers expect traffic to their owned and operated platforms and true ownership over the customer journey including the underlying transaction and customer data.
Publishers also want to take back control over the pricing, bundling, and messaging for their services from the distribution platforms. This allows a trusted publisher to extract and retain more subscription revenues by controlling their highly-valued brands and, importantly, the customer data from before, during, and after their subscription relationship.
Putting things in perspective
For decades, the vast majority of digital content was available for free.
Meanwhile, Netflix built its business on spending (many would say excessively) on licensing and creating content. It helped rebuild the consumer appetite for quality content and experiences worth paying for. However, when we consider the implications of the company’s recent subscriber losses, we should not be so quick to predict a ripple effect across subscription-based businesses as a whole.
While a couple of news publishers, and a handful of other streamers count their subscribers in the tens of millions, the reality is that most publishers count theirs in the tens or hundreds of thousands. Thus, the basis for comparison with Netflix’s 220 million subscribers is specious at best. That’s like comparing a slowdown in Coca-Cola’s beverage sales to my kids’ driveway lemonade stand.
And the behavior of younger consumers points to a healthy appetite for great content and a willingness to pay for it. Now is not the time to panic, pivot, or radically shift your subscription strategy in Netflix’s wake. Instead, trust in the value of quality content well-delivered in trustworthy settings and know that audiences will be right there with you.
Bugs Bunny and Michael Jordan co-starred in Space Jam. Bill Cinton was re-elected to serve a second term as President of the United States. Tiger Woods became a professional golfer. The Summer Olympics were hosted in Atlanta. And washingtonpost.com went live. What do all of these events have in common? They all took place in 1996.
It has been 25 years since those first readers could get their news from The Washington Post online. Back then, Post articles couldn’t be “googled,” since Google — as a company — would be founded two years later. And sharing a news article with friends couldn’t involve Facebook or Twitter, as these networks wouldn’t come to market for eight and 10 more years, respectively… TikTok was only the sound an analog clock made and early-social media adopters were closer to Tom being their first friend on MySpace than influencers going viral and becoming millionaires from creating content on Instagram, Snapchat and/or YouTube.
News consumption was a one-size fits all paradigm: heard or seen via broadcast news on TV or radio, read from printed ink on paper, and skimmed from websites that were effectively static brochureware representations of their print big brothers (with some supplemental content online). There was no personalization. The model was one-to-many: here are the top things reader X, Y and Z need to know to stay informed. That model is changing and has changed. And The Post has shown success in personalizing the news to readers’ interests through My Post, newsletter subscriptions and much much more.
Stay tuned, Washington Post readers are about to see more personalization in 2022!
Creating and distributing the news: then vs. now
An “Apple-to-Apple” Comparison of Reading The Washington Post on December 20 in 1996 and 2021 through then-Modern Apple Technology:
The December 20, 1996, homepage of washingtonpost.com on an Apple Macintosh
Rhe December 20, 2021, home screen of the WashPost iOS app on an Apple iPhone
Change is good. But change needs to be managed. A lot has changed in this last quarter century at the intersection of media and technology. The Post has responded to change by building new systems that manage how content is created, distributed and amplified. But one thing has remained constant — great reporters and editors create great journalism.
Another constant is that quality journalism will be seen or heard by consumers looking to stay informed. And it can shine through the cloudy haze of mis-and-disinformation maliciously shared online.
Although these constants of good journalism from trusted institutional brands and other media players communicating the news remains, how consumers get their news has certainly changed with the times. In today’s digital new media landscape, according to The Pew Research Center, “more than eight-in-ten U.S. adults (86%) say they get news from a smartphone, computer, or tablet ‘often’ or ‘sometimes.’”
As a media AND technology company, The Washington Post has not just followed consumers to their preferred destinations, it has been a leader in creating content and bringing it to readers — readers who may have an interest in politics can get their Daily 202 newsletter emailed to them; food enthusiasts can cook with confidence with Voraciously recipes and guides; podcast listeners can subscribe to Post Reports, Please Go On, Can He Do That, and other audio format news; and over 1.2 million fans of @washingtonpost on TikTok can be informed and entertained by short, witty, videos by a creative team of content creators.
All of this work needs to live somewhere. Platforms, tools and services power this news before it reaches readers’ smartphones, computers, or tablets. The Washington Post has had to understand not just the scalable infrastructure needs of today to deliver this news where and how readers want it, but technology leadership has also had to set the organization up to be successful in the future with new and expanding infrastructure and Infrastructure-as-a-Service (IaaS) resources. It’s like the old sports adage — Wayne Gretzky wasn’t the fastest skater on the ice in the NHL and he wasn’t the biggest professional hockey player. He was the greatest because he played not to where the puck currently is, but where the puck was going.
The Post’s aspiration and northstar is to not just continue to deliver excellence in journalism, but also to equally deliver excellence in engineering and innovation. The Post is playing to where the innovation puck is going by as, Deloitte Insights suggests, “designing systems in which humans and machines work together to improve the speed and quality of decision-making.” The Post is doing this to improve the reader experience through personalization and to allow company leaders to turn more data into actionable intelligence at scale.
“I’ve always understood and appreciated the work that The Post contributes to the journalistic space, but interviewing [for my role at The Post] quickly made me realize the sophistication behind the engineering effort supporting that mission.”
— Washington Post Data Engineer Jack Miller, who joined The Post in 2021.
Data, data, everywhere. Data, data, time to share.
Moore’s Law highlights the correlation of computing power essentially doubling every two years. That’s become more of a rule than a law over-time. Another rule that has held steady is the total amount of data created or copied doubles roughly every two years — therefore, The Post has seen a whole lot of redoubling of total data since 1996 and Post engineering leadership expects that trend continue in the coming years.
Inside-and-outside of the newsroom, The Post — as a business — relies heavily on data-informed decision making at strategic and operational levels. Over the years, in addition to the increased need to approach data management in a holistic way, The Post has experienced a significant increase in subscriptions and traffic across various platforms and channels. This increased data volume and velocity coupled with new sources and complexities has created new challenges (and opportunities) to turn raw, siloed and unstructured data into business intelligence.
To address these challenges/opportunities and gain maximum journalistic and business benefits from reader interests, The Post began to develop a more integrated approach to data management in 2021 under the leadership of Beth Diaz (Vice President of Audience Development & Analytics), Venkatesh Varalu (Head of Data and Analytics), and in collaboration with leaders across Subscriptions, Advertising, Newsroom, Marketing, Finance, Product and Engineering.
This data was available and accessible prior to 2021, but The Post began to manage it in a more innovative, agile and programmatic way. Under this new approach, customer data is being positioned to power various marketing and reader personalization efforts through enhanced workflows, automations and data activations via homegrown tools or services and vendor platforms. The Post is calling this macro-initiative WaPo 360.
“I’ve always been a huge fan of data. Working as a newsletter analyst, I got the opportunity to explore The Post’s various data sets to answer interesting questions about how our readers behave, and to find evidence of what works best for keeping them engaged,” said WaPo 360 Senior Data Engineer Patrick Haney. “It was a fantastic experience. However, while working with these data sets, it became almost immediately clear that they weren’t arranged in an optimal format for analysis. Answering simple business questions could take hours instead of minutes due to the siloed nature of each data set, along with the business logic that needed to be applied in a consistent fashion and often it required reaching out to a subject matter expert for validation.”
“I was ecstatic when I learned about this new data integration initiative because it would solve all these aforementioned issues and enable analysts and non-analysts to quickly and efficiently use our data to answer vital business questions,” said Haney regarding his choice to transfer from one Post team onto another.
According to a recent Deloitte study, “most executives do not believe their companies are insight-driven. Fewer than four in 10 (37 percent) place their companies in the top two categories of the Insight-Driven Organization (IDO) Maturity Scale, and of those, only 10 percent fall into the highest category. The remaining 63 percent are aware of analytics but lack infrastructure, are still working in silos, or are expanding ad hoc analytics capabilities beyond silos.”
WaPo 360 will improve the turn-around time for The Post to turn data and signals into insight-driven business decisions.
WaPo 360 and the engineering experience
When he applied to work at The Post, Jack Miller said his “interviewers stressed the importance of the WaPo 360 project across many different verticals within the organization. Being able to join a growing team supporting that project was a huge reason why I decided to pursue the position and so far it has been a great experience.”
Fellow team Data Engineer Zach Lynn agrees, saying, “the WaPo 360 project struck me as an excellent opportunity to learn and also support The Washington Post’s core mission.” Lynn’s interest included working in several business areas and collaborating with other software teams.
The first step of WaPo 360 has been focused on stitching data signals from various data sources together. Data that previously was unstructured and accessible only to data analysts is becoming democratized for Washington Post engineers and technical business users. This first pillar of work is essentially warming up the oven and organizing all of the ingredients to make it easier for business stakeholders, in different departments, to bake their own pies. Data from site and app traffic, newsletter engagements, ads, subscriptions, and other sources are becoming more structured in WaPo 360 through Customer 360 — our first pillar of the initiative.
A Washington Post data analyst recently presented how his work has been impacted by WaPo 360. In his presentation, he outlined how he experienced a nearly 96% improvement in a SQL query run time by switching data sources from the siloed unprocessed data that he was looking for to the same data signals that were structured and pre-processed in WaPo 360. As noted earlier, different data sets have been accessible before 2021, but with WaPo 360, The Post is turning data into intelligence and making it easier for staff to do their jobs. WaPo 360 is essentially replacing their hand tools with power tools.
WaPo 360 and the business-user experience
The data that is becoming structured and pre-processed in Customer 360 isn’t just going to live on an island to be visited by data analysts and data engineers. The second pillar of WaPo 360 is to make that data accessible to those with a business need to access it, in anonymized ways, through improved self-service tools.
Joshua Zieve, Senior Data Analyst, joined the WaPo 360 team, to “help catalyze The Washington Post’s data sources to better understand and serve our current and prospective readership.” Zieve has been active in coordinating with business and technical users on many fronts. “Working across the Analytics & Engineering teams, I’m grateful for the opportunity to develop systems that facilitate, deepen and expedite analytics for use-cases throughout the organization,” Zieve said.
Good data is the foundation for WaPo 360 and that leads to personalization benefits. Following the team’s work in delivering structured data in Customer 360, WaPo 360 sends relevant data to power the business use-cases that Zieve references into a new Customer Data Platform (CDP). The CDP then works as an engine to allow business-users to perform exploratory data analysis, build audience segments, create marketing and reader engagement campaigns, analyze their success, then deliver an improved personalized experience to readers through integrations with Washington Post-built tools and popular offsite services that The Post utilizes to reach potential readers.
“[I’m] most excited about the self-service potential for The Post’s newsroom and business teams … with data in one place, which is aggregated and ready to be queried, users can get their data without waiting for The Post’s Analytics team to prepare the data. For the Analytics team, this will also reduce time spent for serving ad hoc requests from the newsroom/business side.”
— Sam Han, Director of Zeus Technology and Artificial Intelligence (AI) / Machine Learning at The Washington Post
WaPo 360 and the reader experience
The Post will be doubling down on personalization in 2022 — directly and adjacent to the work being conducted by the WaPo 360 team.
Early work is underway to improve the onboarding experience for new subscribers. And the team plans to unlock significant opportunities to retool, rethink and reshape how articles are suggested to readers — such as through improved content insights and an updated Content Taxonomy System with new article subjects/topics metadata powering future innovation.
Members of the WaPo 360 team recently presented the team’s work at a company-wide virtual forum. Washington Post Organizational Development Consultant Cameron Booher said, “Planning for any What’s Next event involves talking with many project teams about their ongoing and upcoming initiatives. And the usual format of What’s Next is to highlight three projects from different areas of the business. But it very quickly became evident through conversations just how significant of an undertaking WaPo 360 is. It’s extremely collaborative, and has been built upon expertise from almost every department at The Post. It will be rolled out in various phases, which speaks to the iterative process of develop-test-improve.”
“Some of the insights we’ll gain will help us improve reader and user experiences in spades,” Booher said.
This article originally appeared on Washington Post Engineering and is re-published with permission.
True digital natives, Gen Z grew up with smartphones, social media, and video on demand. “Understanding Gen Z’s media experiences and entertainment preferences is a priority for publishers,” Michelle Manafy, DCN’s Editorial Director, observed, “ because they provide a proxy for the future of digital media.”
Not to be confused with millennials, Gen Z’s outlook and media habits are very much their own. A powerful demographic — and audience — in its own right, Insider Intelligence noted Gen Z is expected to constitute more than one in five (20.2%) of the U.S. population in 2022. With nearly 70 million tweens, teens, and young adults falling into this category, “Gen Z is the most racially, ethnically, and sexually diverse generation in history.”
So, what do we know about this demographic, and how can publishers best reach and engage with them?
1. Understand their social media habits
Given that this group was “born digital” it is no surprise they are active users of social media. One key segment of this demographic, teens, spends around four hours a day on social media new research from Piper Sandler shows. This latest semi-annual Taking Stock With Teens survey also revealed TikTok is teens’ favorite social media platform (33%) surpassing Snapchat for the first time (31%). Instagram ranks third (22%). YPulse’s social media monitor reports that, although Gen Z’s use of platforms such as Facebook, Instagram, and Snapchat increased slightly last year, “no platform has seen growth comparable to TikTok’s in 2021.”
Gaming platforms and emerging social spaces also present some intriguing possibilities. For example, YPulse found Gen Z is more than twice as likely as Millennials to use platforms such as Discord (34% vs. 15%) and Fornite (25% vs. 10%). They are also less inclined to use products like Facebook (42% vs. 75%) and Facebook Messenger (42% vs. 62%) although that may change as they get older.
With roots in gaming culture, but not exclusive to gamers, Wilson argued, “digital campfires have become a force defining not only how Gen Z audiences connect, but also how they experience and shape the culture at large.”
“For that reason, marketers can no longer afford to ignore them,” she said. The same argument can be made for publishers and other content creators too. Twitter Spaces, live streams, and AMAs are just the mainstream tip of this intimacy iceberg. Other platforms like Roblox, Geneva, and Discord should also be on your Gen Z radar.
That means “you must earn their trust, as they need to believe in your product as well as your purpose,” according to Erik Huberman, the Founder & CEO of Hawke Media, a full-service, award-winning marketing consultancy headquartered in L.A.
For media players, that may mean everything from providing more behind the scenes stories on Instagram Stories, as well as having a more defined voice on issues that matter to Gen Z. Those subjects include climate change, social justice and the wider uncertainties faced by this generation; uncertainties impacting Gen Z’s economic prospects and their mental health.
Having a voice on such matters may challenge traditional journalistic concepts of neutrality and objectivity, but can be clearly seen in outlets such as VICE, Complex, and The Recount. These are publishers I find many of my Gen Z students naturally gravitate towards because of this.
4. Lean into theircontent preferences
Video, mobility, and short-form content all matter to this cohort. DCN’s research established the primacy of video. Gen Z values video over other media platforms by a margin of around 2-to-1.
More than half of their daily video viewing is on Netflix and YouTube (both 30%) Piper Sandler showed.The research also found 87% of teens own an iPhone; with 87% expecting an iPhone will be their next phone too.
“Gen Z typically have an attention span of just 8 seconds,” the IAB reported, “a few seconds shorter than millennials, who come in at approximately 12 seconds.” From Under The Desk News on TikTok, to Axios’ penchant for bullet points (a format they’ve trademarked as Smart Brevity®) and the emergence of audio “microcasts,” no medium is immune to this short-form trend. Given that it’s not just Gen Z with infinite sources of distraction and entertainment available to them in the palm of their hand, short-form’s prevalence is only likely to grow.
5. Find fresh ways to make it pay
“The number of those [Gen Z] investing in cryptocurrency in the US increased by a whopping 200% since Q2 2020,” GWI highlighted last month. This presents intriguing possibilities for outlets seeking new content verticals, as well as new ways to secure reader revenue.
As I demonstrated in a list of 231 Ways To Make Media Pay, publishers such as the Chicago Sun-Times, Time, and The Marginalian (formerly Brain Pickings) have already been experimenting with cryptocurrency payments. More widely, Gen Z’s propensity to consume media on platforms like Netflix, Hulu, and Spotify may mean they’re more in the habit of paying for premium content.
Examples of tipping on social media, via The Information
In a similar vein, the tipping culture manifest in parts of the creator economy also offers some fascinating possibilities. Publishers may want to tap into Gen Z’s relationship with influencers and above-average propensity to use platforms like Discord and Twitch where this type of functionality is baked in.
Lastly, as more and more publishers seek to add e-commerce into their revenue mix, the emergence of social commerce — and Gen Z’s growing habit of not only drawing inspiration from social networks but then purchasing products and services directly through them — is another area publishers must pay heed to.
Implications for publishers
For content creators chasing after Gen Z consumers, the data suggests it is important to be active on newer, more visual, video-led social networks like Instagram and TikTok. At the same time, YouTube remains the most popular social media channel used by Gen Z and the rest of us, a traditional platform many publishers do not make the most of.
And it’s not just social video attracting Gen Z. Spotify’s data shows that Gen Z (and millennials) actively use audio to access diverse viewpoints and to find out about social issues, potentially creating a space to dig deeper and offer more long-form content.
Embracing these platforms, certain characteristics of the gaming ecosystem, as well as the style and tone of voice Gen Z expects from much of the media they consume, is essential if publishers are to develop long-term relationships with Gen Z. Given their size and purchasing power, Gen Z is a group no publisher can afford to ignore.
As the subscriptions race has intensified, media companies are turning their attention to the substantial segments of their audience who aren’t willing — or financially able — to pay for a full subscription. Some are returning to the tried and true tactic of lower-cost ad-supported offerings, while others have doubled down on putting the plus in premium.
News brands have always run the gamut from super-premium to completely ad supported. And some have speculated that the trend of premium digital news offerings – with the notable success of The Washington Post, The New York Times, and Financial Times – bodes poorly for readers in search of quality and value. And the proliferation of low cost or free offerings can often overwhelm, and even under-inform when consumers actually avoid the news.
It’s possible that a new approach is emerging which may address these issues – and offers premium brands a way to expose a broader range of consumers to their content.
A financial case
Last month, Financial Times launched a new lightweight offering called FT Edit. The app offers readers eight hand-picked stories every weekday for just £0.99 per month.
Though it has amassed 1.2 million subscribers to date, FT has traditionally attracted a certain kind of subscriber due to the high-end financial news it covers. A typical subscriber is of a higher income, with an interest in or working for the financial sector. Its most affordable digital package, which ranges from $40-$69 a month (£35-£55) would be a stretch for those who don’t need specialist financial coverage. If a consumer is after more general news, plenty of other organizations have more affordable subscriptions.
But increasingly, FT is gaining a following outside of its financial journalism. Part of that appears to be the result of making certain facets of its broader scope publicly available. Its coronavirus coverage was the first to be made freely available in March 2020. It currently has a page dedicated to free-to-read coverage of the Ukraine war “to keep everyone informed as events unfold”.
“We are known for financial news, and we’re incredibly strong at our core product. But we produce a wide breadth of news that matters, and I don’t think people really know that about the FT,” Assistant Editor Janine Gibson explained. “We weren’t really sure whether people wanted to read our free stuff more than anyone else’s, but it was very, very, very successful.”
Creating a more affordable product
The team began to see that there was a much wider appetite for their journalism. The conversations started to turn towards what a much lower-cost product would look like for the publisher. Their research about what people wanted came back with a core message: a simple product with a start and end point. Something more reflective, analytical, and deeply reported – but also expertly curated.
“There’s a different thing happening in the world of quality journalism. People understand that paying for quality journalism is vital, but they don’t necessarily have the resources or the appetite for the full, unexpurgated experience,” Gibson said.
Within a matter of months, FT Edit was conceived. Not only is the price point low, the limited offering provides a concise and digestible solution to too much news. The company says “the purpose of FT Edit is to provide an alternative to endless scrolling, allowing readers time to digest eight important stories selected for them each day. It will launch with the strapline: time well read.”
An audience-centric approach
The concern for many publishers considering this option is cannibalization of the existing subscriber audience. But Gibson sees the audience for FT Edit as adjacent to their core subscribers, not competing.
“This app isn’t here to solve a problem for a news organization,” she explained. “So many digital product launches over the last decade have come from a position of weakness, like ‘We need to replace this revenue gap’. This is, is there a wider audience out there at a lower price point for the FT? But we don’t need to offset the cost of what we already do.”
“The price point really reflects the commitment from the board and the chief executive to genuinely saying, ‘I would like to expose a much wider audience of people to some FT journalism.’”
Now, the app will go through some tweaks to find out how many stories each day works best. It is early days, but should the app get a good response in the UK, Gibson said a dedicated US version with content curated for a US audience would follow.
A bracing shot of news
FT is not the first publisher to experiment like this. The Economist’s Espresso app is the most well-known example of a separate, lower cost, lower quantity subscription offering. The recently updated app, launched eight years ago, was introduced as a daily digital briefing to complement the core magazine, with short pieces of news and analysis. It was marketed as a quick ‘shot’ of news to get readers ready for the day.
Espresso is included as part of The Economist’s full digital subscription. It is offered as a standalone app for $7.99 (£7.99) in the UK after a seven day free trial. Those who don’t choose to subscribe can still read one article a day.
The publisher has been working on an upgrade of the app over the past few months. The new version delivers Espresso stories in both written and audio form, alongside charts, facts and quotes each day. It also includes a ‘For You’ tab that lets the user sample four stories a week from the main Economist site, based on their interests.
“The new Espresso is aimed at readers who may not have the time or inclination for the more in-depth Economist experience,” a spokesperson told us. “We see it as introducing a new generation of readers to the Economist brand.”
“We imagine that, over time, some will migrate to an Economist subscription as they come to appreciate the role that our full journalism offerings can play in their lives.”
Is an app the perfect outreach product?
The question of affordable quality journalism is likely to become ever-more pressing as more publishers turn to reader revenue. From the Washington Post to Bloomberg – and even The Smith’s yet unlaunched Semafor – the market is saturated with publications targeting the global elite who barely blink at paying hundreds of dollars a year for news access.
The challenge for publishers looking to attract a wider audience to quality journalism is pricing for access. This is where paid products like apps or even newsletters can be a good way of building a relationship with readers without asking them to pay premium prices.
The longevity of Espresso and the initial success of FT Edit also demonstrate that audiences respond well to content with a start and a finish point. Aside from the obvious parallels to print newspapers, a carefully curated, high-quality set of stories is now seen as a refreshing antidote to the endless scrolling, misinformation, and frantic news cycle. In other words, for a tiny fraction of the cost, you get a tiny fraction of the news: just what you need to know, concisely offered and expertly crafted and delivered.
Now, limited is in demand. A small bundle of stories well-packaged for mobile could be the key for other publishers to unlocking their vast untapped audiences who haven’t yet opened their wallets.
Measuring viewing habits is nothing new in the media industry. However, the shift from traditional TV to streaming has sent the U.S. industry into a tail spin, with 86% of buyers demanding cross-platform measurement. The only thing that everyone can agree on, it seems, is that everyone is confused.
According to Innovid CEO Tal Chalozin, “the biggest frustration in cross-platform measurement is that it’s so hard to understand.” This, from the man who whose company was the first to receive Media Rating Council (MRC) accreditation for its OTT ad impression tracking in 2018.
The problem is that there are multiple new currencies and measurement tools emerging, as the TV industry attempts to blend media platforms and devices, and provide a comprehensive and deduplicated view of media consumption.
Jon Watts, managing director of the Coalition for Innovative Media Measurement (CIMM), describes the industry’s current situation as “messy, but exciting”.
”The biggest change in measurement is that we no longer just use panel data as currency,” explains Watts. “Most TV is consumed in a connected environment and those devices create data about viewing habits, which compliment what panels do. Setting up a currency based on a representative panel is complex enough. But it has got more complex due to the increasingly fragmented audience.”
A storm is brewing
The shift from traditional TV to streaming was accelerated by Covid-19. OTT media revenue is expected to reach over $210bn by 2026, more than double the $106bn generated in 2020. As a result, ad spend on CTV in also on the rise and predicted to hit $19.10 bn in 2022, accounting for 5.6% of total media ad spend.
With the growth of streaming came the inevitable rise in providers. These days, 49% of US households subscribe to at least three streaming services.
“This fragmentation of audiences combined with big data and changing market dynamics has created the perfect storm of craziness,” says Nathalie Bordes, EVP Measurement for Marketers at Association of National Advertisers (ANA). “Traditional measurements are being challenged, so there is room for innovations and new approaches.”
These innovations come amidst criticism of Nielsen (rececntly acquired for $16bn) over its inability to adapt to consumers’ shift to streaming.
“Some would argue it’s a lazy monopolist, who has not done enough to evolve their measurement services,” states Watts. “For at least 15 years the industry has been trying to encourage competition and dislodge Nielsen from the market.”
However, complaints about Nielsen’s measurements aren’t limited to streaming. Confidence in its legacy TV measurements has also been shaken due to accusations of undercounted audiences during the pandemic. As a result, the MRC pulled its accreditation of Nielsen’s national and local TV ratings, which has opened the door for new solutions:
“Nipping at their heals are a new breed of providers, which are slowly gaining traction with alternative approaches to measurements based on TV data,” says Watts.
Measurement independence
Nielson’s counterattack is Nielson One, which is due to launch December 2022. Meanwhile, NBCU has taken a clear stance against Nielsen’s ratings monopoly and has been working with the industry in a bid to create “measurement independence.”
NBCU selected iSpot as its partner in January and they teamed up for a test run at the 2022 Olympic Winter Games and Super Bowl LVI. In addition, the media giant has struck up a number of partnerships with the likes of Comscore, DoubleVerify, and Innovid. NBCU also plans to use iSpot’s data as its national currency for ad buys at this year’s upfronts.
“We must move away from how things have historically been and move towards a future of optionality and interoperability,” Kelly Abcarian, NBCU executive vice president of measurement and impact, told Ad Exchanger.
iSpot claims it can measure audiences for streaming and linear on a second-by-second basis and in real-time. Measurements include ad impressions, incremental reach/frequency and deduplication. Abcarian, who joined NBCU in 2021 after nearly 16 years at Nielsen, says these new metrics will give advertisers more accurate and effective data about their campaigns.
Greater transparency
Deduplication is another challenge of cross-platform measurement as big data provides information on what was watched, but not by who. Simulmedia’s CEO Dave Morgan alleges that 90% of what is claimed in the market about deduplicating audiences isn’t true. However, Morgan cites NBCU as one of the companies “doing really well,” alongside ViacomCBS and Disney. He also has high hopes for Nielsen One and Comscore.
One of the key problems is that media measurement continues to be siloed by different platforms and metrics. A more transparent system is needed, where advertisers can see where their dollars are being spent – and where they can be saved. According to research by TVSquared, more than 90% of U.S. buyers said transparency of metrics across linear and streaming channels was critical in order to devote ad spend to converged TV.
“We need an apples to apples comparison, so we can compare the same person watching on one platform or another,” says Chalozin.
This is what the entrepreneur is hoping to achieve following Innovid’s acquisition of TVSquared. The Scottish company tracks more than 100 million households around the world and more than 75 CTV platforms. Chalozin says TVSquared adds linear TV capabilities to their arsenal, which will provide a complete view of consumer viewing habits, with a currency-grade measurement.
Aside from technological issues, a cultural shift needs to happen in which broadcasters, platforms and marketers work together. This seems to be what NBCU is trying encourage by working with the industry to create a measurement framework for all.
NBCU is not the only major media brand creating collaborations. Disney has been testing new measurement solutions with nearly 100 vendors, and recently named Samba TV as its first official measurement partner. WarnerMedia is also testing with iSpot.tv, Comscore, and VideoAmp.
No single currency
Nielsen has been the industry standard for decades, allowing networks to see how they stacked up against one another. Without a single agreed-upon currency, it is more difficult for advertisers to decide where to allocate their budgets, and for networks to prove their worth.
CIMM is doing their bit to help the industry navigate their way through these turbulent times. The coalition is conducting a deep dive study into the different methodologies of currency-grade provider to find the most effective solutions.
Bordes believes multiple currencies can work, as long as they are fully transparent and the measurement solutions are accredited. “Measurement systems needs to be reformed and there needs to be innovation,” he says. “But the processes must be validated in order to create transparency. We want measurements that go beyond the silo.”
Accreditation throws up yet another challenge in the industry. In 2019, the MRC produced cross-platform measurement standards, but three years later no providers have been accredited using the guidelines. There are companies in the audit process, including Videoamp and ComScore, but as Chalozin states, “people need to believe that you do what you say you do”.
Test and learn
According to Chalozin, another essential cog in the wheel of cross-platform measurement is the buyer. The industry needs their approval – and money.
“Solutions are coming in, but we can’t yet define success,” he says. “In order to say a measurement works we need our customers to agree on a chosen currency and trust how it’s measured. We need to have money flowing on both sides.”
“NBCU put their money where their mouth is by creating a new framework. But the Olympics was a test event, and not as large scale as full blown TV. We have yet to see a solution that can conduct business at a large scale.”
The pros of different currencies is that it has created a more competitive environment which stimulates innovation and drives down profit margins. The downside is, with no established truth state, the industry is in a state of flux as new providers and partnerships barter over solutions. Until cross-platform measurement is solved, the true revenue potential of today’s multiplatform viewing will not be realized. The opportunity is there, as is the level of experimentation.
“We are in test and learn stage,” says Watts. “Come back in five years’ time, when things have settled down. I believe there will be small number of large providers, offering slightly different, but effective, cross-platform measurements.”
For the last two years, social audio platforms have provided space hang out and chat. Businesses, brands, and groups have found that social audio fills a gap they were missing during the pandemic. Media companies have enthusiastically jumped into this format as a way to extend their brand and increase audience engagement and interaction. It’s also been a space for digital content companies like Axios to build their reporters’ on air experience and boost their profiles.
Neal Rothschild, director of Audience & Growth at Axios, says that they primarily use social audio for major news discussions, product launches, or new initiatives within the company. “We’re like, how can we add a little extra boom on top of it? And so we’ll do a Twitter Space for it.”
As Axios is still figuring out how to maximize potential of social audio, they are cautious about topic selection. “What we think is most impactful is you really need to make it about the topic that people care about, not just about Axios,” Rothschild explained.
For example, Axios hosted a Twitter Space in April 2021 about Biden’s first 100 days with reporters Alayna Treene, Hans Nichols, Stef Kight, and Sara Fischer. A few months later, Axios hosted a Twitter Space around the launch of their What’s Next daily newsletter with reporters Sam Ro, Joann Muller, and Erica Pandey.
Audience building
As is the case with the media’s exploration of many social channels, the hope is that the investment pays off in exposure to new audiences.
Reporters and journalists already live on Twitter, Rothschild explained. Thus, they have built-in audiences that carry over to their use of Twitter Spaces. However, those included in the Space – experts or guests – may also be popular on Twitter, which can be beneficial to increase reach and visibility.
“Using Twitter Spaces seems like a good bet for a media company, given the existing audiences and the ability to reach new audiences. If you’re doing a Twitter Spaces and you want to bring someone on as a guest and they have a huge following, you can have some cross-pollination and introduce your following to theirs. The potential is certainly there.”
The sound of success
However, beyond engaging in topical discussions and extending audience reach, Axios has found another interesting use for Twitter Spaces: providing its journalists with exposure and experience in the audio format.
“Some reporters are the type to go on MSNBC, CNN. Others are doing radio hits.” However, Rothschild points out that social audio is “definitely a nice option for kind reporters that don’t have as big of a public profile to have the opportunity to do live, on air experience.”
Digital content companies that want to build a brand for their reporters – many of whom are great, charismatic speakers – can use social audio as a way to introduce those personalities to the world, at a low cost.
“I think it’s important to many journalists — not all — to develop on-air skills. You never know when you might be invited onto a podcast or a radio hit or a TV hit, so getting reps in is valuable,” he said. “From a glory standpoint, it’s also a cool thing to show your friends, family and professional network. There’s a little more shine to being seen or heard than just having a byline on articles.”
Social audio hosting
But there a formula for social audio hosting. Like podcasts, hearing the “voice” of a host – both figuratively and literally – is an important component in social audio spaces. However, effective social audio hosts require a careful balance. While radio and television broadcasters deliver information in a natural voice with well-paced delivery and controlled breathing, this type of performance may sound too rehearsed on social audio platforms. On the other end of the performance spectrum, people who are less charismatic or animated will sound boring. Social audio hosts also run the risk of talking too much and overwhelming guests or the audience.
“I really think that the value of these products is that it sounds like an authentic conversation, and like you’re chatting in the living room among people. There’s cutting in and interrupting, with some give and take,” Rothschild says, “And its not just, here’s me doing my rehearsed two-minute sound bite like they might be used to on TV or radio.”
Many journalists studied writing and never planned for on air-careers. For media brands, it is always a plus to have their most popular writers extend their expertise into formats beyond text[jessica p1] . For them, social audio has the benefit of being audio-only. Hosts (and listeners) don’t have to worry about their appearance. Rothschild says that this comes through on the audio as sounding more relaxed and conversational – unlike Zoom events. “After two to three years of Zoom, I’m done. I’m so done,” he says. (And he’s not the only one.)
Spaces have potential
For digital content companies that need to see more data before jumping into social audio-based spaces, there are some interesting developments in the works. For example, Twitter has added replay stats for recorded events, so digital content companies can see how their audiences are tuning in after the fact, which could affect strategy and broadcast times. Twitter also offers Spaces analytics, which gives hosts access to data on replays for recorded Spaces, how many listeners tuned in, and how many replays the session had. Twitter also reports that it is testing other analytics tools for Spaces including total speakers in a session, duration, and monetization tracking for ticketed Spaces.
Social audio is still in its early stages so monetization and other concrete benefits have not yet crystalized. However, early forays into the format have offered different takeaways and reveal much potential. While Axios is still feeling its way through the new platform, they plan to continue to host spaces for the time being with the hopes that it will deliver audience reach. They also believe that social audio offers Axios’ journalists another way to raise their profile and promote their work as well as audio experience to broaden their skill set for the converged era of journalism we find ourselves in.
To paraphrase L.L. Cool J, “Don’t call it a comeback. Contextual advertising has been here for years.” However, more recently behavioral targeting has been hogging the spotlight because it allowed marketers to hyperfocus their targeting and track individual users across the web — no matter where they went.
As the industry now swings toward a privacy-centric model, publishers have a chance to double down on the value they bring to contextual advertising. Of course, this isn’t news to publishers. But what may be surprising is that, for the foreseeable future, the real goldmine is in contextual ads on mobile and in video.
Contextual advertising: Why now?
Google has been heralding the end of cookies for years, while putting off the actual implementation — which is currently slated for the second half of 2023. More recently, though, Google announced that it is expanding its Privacy Sandbox to Android. While this implementation is years away, Apple has been taking more decisive steps to protect user privacy. Not only did it deprecate IDFA in 2021 — changing the way mobile marketers track attribution and optimize campaigns on iOS — but it also allows users to turn private browsing on in Safari on all devices.
Apple’s shift to a more privacy-centric model has already led mobile marketers to shift spend to Android. But we can expect to see spending shift on Google’s platforms as well.
Mobile marketers — and digital marketers in general — will need to reckon with the changing industry. Publishers have a chance to step in and remind marketers that contextual advertising is a great way to reach potential customers. They also need to let them know that advertisers who have already shifted away from mobile ad spending on iOS have an opportunity to contextually target iOS users in publisher apps.
Publishers and advertisers prepare for the contextual revival
“Publishers are expecting a year of rising demand — and advertiser spend — in the area of contextual targeting,” says the report. “Among our respondents, 84% expect advertiser spend to sustain current levels or grow — and on the growth front, 61% expect to see an increase in buy-side budgeting for contextual-based campaigns.”
This isn’t just wishful thinking on publishers’ parts. The report also surveyed marketers at brands and agencies, finding that 96% of respondents said they would spend as much or more on contextual advertising that year. And 65% of advertisers will be adding to their contextual-based budgets.
So how do publishers win those contextual ad dollars?
The mobile opportunity
Much of the conversation about the resurgence of contextual advertising revolves around cookie deprecation. While we continue to wait for that to go into full effect, there is a hole that needs to be filled for mobile advertisers who still want to reach the estimated 1 billion people who use iPhones around the globe.
The rich data available to apps — especially those with a subscription model — presents marketers with a special opportunity. Forget basic, third-party demographic information, apps that require people to enter actual location data or other granular first-party data give marketers the ability to market to users based on real-time context, like weather conditions, or personally supplied information about their interests.
Publishers who can capitalize on this mobile opportunity now have the ability to build trust and solve problems for mobile advertisers who still need to reach iOS users. For instance, Sheri Bachstein, CEO of The Weather Company and GM of IBM Watson Advertising, says, “By helping mobile marketers drive forward their audience engagement efforts with addressable, performant data sources, we’re confident that this powerful data signal can be a solution for brands trying to solve the identity crisis and ensure consumers derive a more relevant experience across the mobile web and app ecosystem.”
Contextual video is on the rise
When we talk about ad trends, video seems to be a perennial list-topper. And it’s no different when it comes to contextual advertising. Digiday reported that “A number of publishers, ranging from Tastemade and Crackle, have added contextual targeting capabilities for their OTT and CTV inventory.”
Additionally, Xandr — a data-enabled technology platform powering a global marketplace for premium advertising — “launched a contextual targeting capability for CTV inventory, as part of a bid to maintain the momentum behind the video side of its business, which now represents 35% of the spend on Xandr’s DSP.” And at the time of the reporting, Iris.tv, which provides a contextual targeting marketplace, “has been growing 25% per month since the start of 2021 and now handles 28 billion ad requests per month, according to a spokesperson.”
Contextual and connected
CTV — and online video content in general — presents many opportunities for publishers, and, ironically, harkens back to the glory days of television advertising when soap companies advertised on daytime TV giving rise to soap operas. The ability to pinpoint this kind of targeting has only increased with CTV, and opens up opportunities for more interactive experiences that also allow for better tracking.
“I think one of the really powerful arenas, where contextual data will be pivotal, is CTV and more and more people are shifting to an addressable approach with their linear television as well,” Katie Price, programmatic media lead at the agency PMG, said in the Digiday Connatix report. “As contextual data gets more powerful from a digital buying perspective, we will be able to mesh together the efficiencies of programmatic buying and digital buying with that contextual relevance that has been such an advantage for TV advertisers and linear advertising in general.”
The report found that 44% of publishers were already using context-based video ad tools or were working with a third-party partner on a solution. Nearly a quarter of respondents were planning to work with contextual video in the year ahead.
That’s an opportunity The Weather Company is poised to capitalize on. According to Bachstein, “The advanced TV market is a huge growth area for us in 2022, and we’re excited to push deeper into this space. After hearing directly from our brand customers, we know that the market craves solutions that deliver personalization and drive action in this rapidly scaling medium. We’re continuing to improve our offerings to remain flexible across a multitude of platforms.”
Integral Ad Science (IAS) has already recognized and invested in the opportunities for CTV and contextual advertising. As AdExchanger reports, “Most of IAS’s growth currently lies in programmatic, and its biggest driver of that revenue line is a product it calls Context Control, which helps shift ad dollars into brand safe environments.” Through strategic acquisitions, IAS can now analyze video in addition to text. IAS creates contextual segments based on video analysis — detecting everything from language to emotions.
That’s a lot of context!
Mobile video: The perfect storm
If mobile and video present opportunities, then it only stands to reason that mobile video is a perfect storm of opportunity for publishers — and the numbers back it up. Google says three out of four adults report watching YouTube at home on their mobile devices. TikTok is predicted to have 1 billion users by January of 2022 built squarely on the popularity of mobile video.
Platforms that combine the convenience of mobile with the engaging nature of video are rewarded with vast audiences. However, marketers looking for controlled, brand-safe environments may be more likely to turn to trusted media outlets. Publishers who can capitalize on the power of mobile video and combine it with contextual ads will stand out from competitors.
The added benefits of contextual targeting
Consumers have, frankly, had it up to here with intrusive ad experiences — and that includes ads that follow them around the web. Audiences are primed for a contextually relevant, yet unobtrusive experience that provides them more control while still delivering a level of personalization. Publishers can seize that opportunity by embracing, and perfecting, the art of contextual advertising.
Contextual is not new. But these days, there are many good reasons to give it another look. Of course these include increased consumer concerns around tracking, privacy regulation, and big tech’s response.
However there’s more to it: contextual ads are smarter than ever. Natural language processing (NLP) allows marketers a deeper understanding of not only the context but the sentiment of each page, and increasingly, video on the web. With the help of machine learning, advertisers and publishers can go beyond keywords and whitelists to find the most relevant content possible.
Nobody doubts the power of television. It retains huge audiences, commands enormous ad spends, and influences discourse at all levels of society. Those strengths largely remain despite the ongoing issues of the retirement of linear TV, the great unbundling, and new entrants into the space cutting into existing revenue strategies among incumbents. What advertisers and brands doubt is the stability of the modern TV landscape — particularly given the rise of television sets connected to the internet.
The advent of connected TVs (CTVs) was supposed to herald a new era of better measurements, more accurate audience demographics, and better return on investment for advertisers. Some of that has come to pass. Other developments have meant that the CTV landscape is not yet delivering upon its full potential, and that it could destabilize TV advertising more generally.
Options abound
According to industry organization Thinkbox 80% of households in the UK have at least one television that is connected to the internet, either directly or through a third-party device like a gaming console. In the U.S., research from The Diffusion Group has found that the share of U.S. broadband households with CTVs has grown by just a single percentage point from last year, and currently stands at 86%.
That plateauing of growth coincides with a growing number of players within the space. Streaming services and digital video platforms jostle for position on CTVs with channels and broadcasters that are more associated with the medium. The number of CTV apps available on the Roku channel store, Apple TV, and Amazon Fire TV increased by over 38% year-over-year in 2020 according to research from 42matters.
It is a collision of different forms of video that mean advertisers have more choice — but also that there is a lot of confusion when it comes to measuring the success of advertising across CTV.
YouTube, for instance, is betting upon that plurality of choice to grow its own advertising business. Philip Miles, country sales director for YouTube and Display, UK & Ireland, told me after the latest YouTube Festival, “Historically, there tended to be a versus conversation — so YouTube versus television… pitted against each other. [But] our key thing that we were trying to land with Festival is YouTube is effectively part of the UK TV industry now, and increasingly advertisers are recognizing that it’s not an either/or conversation.”
But that entrant of new players, combined with resurgent spend after the pandemic, has led to inflation in TV ad prices. It is a volatile market — and exacerbated by issues around measurements. Nielsen is widely seen as not having adapted quickly enough to audience consumption habits, and its UK equivalent, BARB, only announced an upgrade to measure across subscription video on-demand (SVOD) in late 2021. At the time BARB’s chief executive Justin Sampson said, “It’s great news for the television and advertising industry that we’re upgrading our always-on measurement service to include SVOD and video-sharing platforms. For the first time there is audience measurement for these services that bears all the hallmarks of a joint-industry currency: independence, objectivity and transparency.”
Doomed to repeat digital history
Yet media buyer reticence around CTV suggests that the market is unsure about the extent to which it can reliably deliver upon its promise. And the reasons for that reticence will be uncomfortably familiar to anyone who has kept abreast of issues surrounding digital advertising more widely.
For starters, creating that joint-industry approach to marketing is easier said than done. There isn’t yet true consensus on what metrics should be captured, by whom, and which bodies should oversee the data. In the meantime, the lack of any one default measurement body is leading to non accredited bodies offering services that claim to offer a true yardstick for pricing of ads across CTV.
The European Connected TV Initiative says that, just as with digital advertising, opacity of the supply chains is paramount to making the most of the CTV opportunity. Its second most-important priority is the development of a more transparent and integrated CTV advertising supply chain. The goal, it says, is “to give advertisers and agencies the confidence to know what they are buying and where their ads will run – be it premium TV inventory, secondary TV content or social video.”
It all speaks to confusion around the different forms of video available on CTVs. With linear TV, satellite or cable, there was at least the perception of uniformity in form and quality. With the vast number of services available across CTV, that is no longer the case. Although YouTube might like to claim the quality of its content is on par with that across other CTV apps, is it really?
The problem is extremely similar to that of digital advertising, which also has the unfortunate issue of being undifferentiated. Just as projects like overtone.ai seek to provide a quality score for digital advertising — based on a number of criteria that demonstrate the veracity and safety of sites — there is a need among CTV advertisers to separate the wheat from the chaff.
Data and other dilemmas
Some marketers and buyers believe that, as with first-party data provided by digital publishers, there is an opportunity individual apps and CTV services can provide. Tal Chalozin, chief tech officer and co-founder at Innovid, told The Drum: “More data can be generated and a lot more endpoints can be connected together. Marketers would like to see other forms of measurement, more than just panels, more like a census into website traffic or app downloads.”
And probably most similarly to digital advertising, the potential for bad actors to enter the space is a growing concern. Omnicom has cited a lack of linear TV-level transparency as a major flaw in any attempt to sell CTV advertising, even among the bigger players. The company says “an inability to understand audiences at the household level across partners; and a measurability gap that translates to an open invitation to cyber criminals who are generating millions in ad fraud” is the big problem to be solved.
CTV is an enormous opportunity for advertisers. As different forms of video content collide on connected devices, the line between what is and is not TV content is eroding. With that erosion, however, comes the potential for context collapse around TV advertising and a revision of TV advertising’s effectiveness. And despite many of the challenges being familiar, there is no clear path to ensuring the industry doesn’t replicate the mistakes it made in creating digital advertising.
For far too long, many have falsely equated the value of digital advertising as the ability to track consumer behavior. This belief, and much of the marketing strategy it inspired, eroded consumer trust, which hasn’t been a win for anyone. Regulation is catching up and efforts are now being made to align business practices more closely with consumer expectations.
Regulation is catching up and efforts are now being made to align business practices more closely with consumer expectations. Unfortunately, this has a lot of pundits opining about the negative impact of privacy governance on marketing. The reality is that digital advertising has much more than tracking to offer consumers, marketers, and media companies. The changing landscape is a necessary evolutionary step, and an opportunity to get things right.
CPRA in effect
Later this summer, California regulators will spell out draft rules for how companies should comply with the California Privacy Rights Act (CPRA), which builds on and strengthens existing California privacy law. One of the biggest changes will be the ability for consumers to opt out of being tracked with a single click. The CPRA specifically requires companies to honor an opt out signal generated from a global privacy control in a browser or device.
Interestingly, this new provision in the CPRA mirrors Apple’s approach with App Tracking Transparency (ATT), which it rolled out in 2021 as part of its update to iOS 14.5. Under ATT, apps must ask consumers for permission to track them. The results have not been surprising: 81% of consumers have chosen the option not to be tracked.
So, what will happen when Californians have the same ability to opt out as Apple users have today?
It’s not unreasonable to assume that Californians will opt out of tracking at similar rates. Given that there are more than 39 million California residents, an 81% opt out rate translates to 31,590,000 people. And really, if even half that opt out, it is not a small number. Advertisers will understandably want to find new ways to reach these consumers. The industry is already feeling the impact of consumers’ privacy preferences and advertising must evolve accordingly.
Dominant companies dented
Since the launch of ATT, companies that depend on web-wide tracking of consumers have suffered. Facebook warned investors that Apple’s improvements to privacy will cost them $10 billion in revenue this year.
It’s interesting to note that ATT’s impact is felt solely in Apple’s platform, which has provided Google with the unique calling card to advertisers of being the operating system and browser still “all-in” on tracking. However, CPRA will apply to everyone. Given that Google, like Facebook, has built an advertising empire based on invasive tracking, it seems inevitable that the company will see an impact on its ad revenues as well.
Some have noted that Apple has also seen revenue climb from its own App Store search ads. However, they are quickly reaching capacity constraints in the app promotions category, so this is unlikely to serve as a major growth category for Apple.
Ad innovation
Of course, despite limits to tracking, Apple users still see display ads as those ads just aren’t targeted using behavioral profiles. Apple allows ads to be targeted to cohorts or by using first party data. So, I believe that we will start to see more innovation in how advertising is targeted to consumers. First party targeted ads seem like an obvious winner. In particular, ad innovation on Apple platforms could yield significant success because those audiences have long been seen as a more valuable consumer demographic than Android users.
Premium advertising alignment
Consumers frequently complain about creepy ads that follow them around the web. Those kinds of ads are not subtle. In fact, they are viewed by many as the digital equivalent of junk mail. And, as such, they don’t match well with premium content.
However, ads that are based on first party data might be better suited to a premium environment. For starters, the consumer is likely to realize that they are seeing a certain ad because of data they shared with the publisher. They are also likely to have a more favorable view of that ad because of the context. That’s because – instead of focusing solely on targeting a user at the lowest cost – the advertiser has instead intentionally aligned themselves with the relationship the publisher enjoys with the consumer. The ad is, therefore, likely to leverage that premium context to greater effect. In a world where third-party profiling is restricted, we could start to see higher quality ads in premium contexts – and ads that are more effective as a result.
Valuable consenting consumers
While it is a relatively small number, the 19% of consumers that intentionally opt-in to data sharing with sites and companies they trust will become extremely valuable. Trusted, well-respected brands promise to be the main beneficiaries as they are those most likely to gain consent from consumers. Obviously, advertisers would pay a premium to reach these audiences. It’s also interesting to consider how premium publishers could find new ways outside of advertising to monetize their most loyal consumers.
If past is prologue, big tech lobbyists and lawyers will forebodingly warn that the CPRA will cause irreparable damage to the advertising industry. They will bemoan the impact on small businesses and diverse voices. However, it is critical to remember that their real goal is to blunt the hit to Google and Facebook’s bottom lines, which is already driven by upwards of 70% of the digital advertising market.
The future is good advertising
Ultimately, we need to focus on the fact that consumers want, and will get, more control over how their data is shared across the web. As Carnegie-Mellon economist Alessandro Acquisti points out: When consumers are empowered with more privacy, welfare doesn’t evaporate, it shifts and reallocates towards a new set of winners.
The adaptation required from ATT and CPRA are likely to shake up digital advertising and shift advertising revenue from current channels. Like Apple’s tracking prevention last year, CPRA is poised to have a huge impact on the companies dominating digital advertising by logging every aspect of a consumer’s behavior. At the same time, these shifts promise to expand opportunities for trusted, premium publishers; They will stand out to consumers by offering something consumers actually want: valuable news and entertainment, delivered in a way that respects them and their wishes.
It took The Boston Globe seven years to reach the first 100,000 subscribers. It only took a year to add the next 100,000. They’ve found that the key to accelerating growth is an introductory subscription offer so low, they’re practically giving the news away.
Head to bostonglobe.com and non-subscribers are given the option to read all the content they want for a bargain $1 for the first six months. While the Globe’s generous offer comes with an expiration date, a surprising number of subscribers decide that it’s worth paying more to stick around.
“We’re at the point where 90% of growth and revenue comes from subscriptions,” Tom Brown, vice president of consumer revenue for Boston Globe Media, said of the company’s digital operations.
How The Globe got here
With subscription growth slowing, The Boston Globe decided to try an experiment in 2018. The Globe, which has long believed its product was worth $1 a day, began charging that rate in 2015. It also decided it would try to accelerate subscriber growth with a bargain introductory offer.
In the first few days after making the one dollar introductory offer, Brown said they got thousands of new subscriptions “which was far higher than the 150 or so subscriptions that came in on a normal day.”
Beyond that, though, a higher number of those one dollar introductory offers converted into full-rate subscriptions. The Globe’s 2018 experiment alone led to a tenfold increase in subscriber conversions. “You’re stepping more people to the full rate every week than you ever would have with another other strategy,” Brown said.
“We felt good right away that we had not mortgaged our future in any way to do this test.” In fact, more than 80% of subscribers kept their subscriptions in the first month after prices reset. That fell over time but remained above 60% by the time a subscriber hit their three-month anniversary. And more than 30% of people continue to subscribe to bostonglobe.com after two years.
Attracting young audiences
There’s one almost surefire way to get a new customer to try a product — a discount so good it can’t be refused. That is especially true with younger audiences, which are accustomed to getting news from places like Instagram and TikTok.
“New and younger audiences were willing to give us a shot because it’s almost like a free trial,” Brown said. However, while a free trial might seem an obvious choice, research has found that charging any amount increases the odds audiences will convert from trial to subscriber at the end of the introductory period.
The paper also tried offering a four-week subscription for 99 cents but ultimately found the details of the offer didn’t make a meaningful difference in conversion rates. Audiences are required to enter a credit card to pay their $1 balance and are told their subscription will eventually renew at the weekly rate of $6.93.
Full funnel options
Brown notes that many younger subscribers didn’t grow up with a newspaper subscription so they were unaware of the breadth of the local paper’s offerings. “We’re a general interest news site that has so much and I’m not sure how much everyone knows all that we have,” he said.
Most visitors to bostonglobe.com get at least one free article. This classic move is designed to keep the top of the customer acquisition funnel open and signaling to Google and other platforms that audiences are engaging with the site.
Because an estimated 80% of Boston Globe readers don’t hit a paywall right away, readership – and ad views – don’t suffer because of a strategy aimed at driving long-term revenue growth, according to Brown.
Long-term customer value
It is wise to invest in the lifetime value of a customer. While an offer like this may take cash out of your pocket today, it offers the promise of exponential returns if audiences are happy with their experience.
“We’re making lots of decisions that we know may hurt or may not pay off this year, but will pay off over the long term,” Brown said. “The more subscribers you can acquire now, the better off you’ll be in the future.”
Nowadays, Brown and his team focus on making revenue-maximizing decisions without getting hung up on the small sacrifices it might take to get there. “This strategy is the right one for us,” he said. “The pandemic crystallized that in the sense that we became even more relevant to our readers as advertising became extremely volatile.” Being reader-supported makes the brand less vulnerable to the whims of advertisers.
And while the first few months after a price reset triggers some cancellations, those who stick around tend to be loyal customers. The volume of new subscribers can also make it easier to stomach the churn. “Our model is as tight as it’s ever been, and our audiences are larger,” Brown said.
The pandemic is just the latest thing to show subscription revenue can be much more dependable than ad revenue, Brown said. “It’s certainly not recession proof, but news is very relevant to people in times of crisis.”
Social audio, which came to prominence with the now eerily-quiet Clubhouse, took off during the pandemic. A slew of competitors has emerged during the past 24 months. And just this week, Amazon joined the market with Amp. The company’s pitch is that the new audio app allows users to become live radio DJs, curate playlists, and talk to listeners and guests.
NPR is no stranger to live radio. The Washington-based non-profit media organization hosts two flagship news broadcasts: Morning Edition and All Things Considered. And, in 2020, more people than ever before were consuming NPR content through their website, radio, apps, live streaming, and smart devices, according to Nieman Lab, which pinned its audience around 57 million.
For Matt Adams, engagement editor + social audio at NPR, moving into social audio spaces made sense because it allowed them to meet audiences where they are. Audio also clearly plays to the strengths of their radio roots—but offers added benefits. And, unlike live video, which may take a while to set up or look a certain way, Adams explained, social audio can be set up in minutes. “This is like, get on your Twitter app. You start it. And then you’re just in a conversation. It’s very quick and easy.”
NPR has been doing Twitter Spaces for a year. Adams says that its first Spaces was with the Code Switch team about their fellowship. “I thought it would be a great way to get people who are interested in applying to that fellowship to ask questions and get answers for it,” he said.
And from there, Adams started to experiment. What’s Next: An NPR Conversation Series ran two or three Spaces every day for a week. NPR and member stations would invite their audiences to join on various topics including kids and COVID, climate change, The Supreme Court, and Indigenous community coverage.
Get feedback
Social audio is a great tool for digital content companies to connect with and expand audiences. Adams says it clearly offers a quick and easy way to talk to their social audience. “What I think is cool is it’s we’re not speaking at them; we’re speaking with them. We can bring them on stage and get their questions and thoughts.”
One of the Spaces that worked really well in the What’s Next series, Adams says, was a conversation about the housing market. “There was a lot of back and forth about, how do you buy a house now? Why is the housing market so wild out there? How do you figure it out?” Adams said.
Find new audiences
While engaging with current fans is important, a big goal for a lot of digital content companies is to attract new and younger audiences. Adams believes social audio offers a way to do just that. In fact, over the last year, Twitter Spaces has introduced new audiences to NPR.
One way is through audience referrals. As companies invite speakers to social audio spaces, their followers are notified that there’s a Space happening. When NPR Weekend Edition host Scott Simon interviewed Matthew McConaughey, they did it on Spaces. And that brought Matthew McConaughey‘s fans to NPR’s Space. “They might not follow NPR, they might not even listen to NPR, they might just be there because they’re Matthew McConaughey fans,” Adams said. “But maybe we pick up some new followers… and that’s key.”
“It’s a great way to just interact with people that you might not be able to interact with otherwise. I think that’s very cool.”
Find new content
Adams said that NPR’s social audio spaces have also sparked content and story ideas from the audience. “Sometimes they’ve said, ‘I think you should be thinking about this or doing that. The host’s like, ‘it’s a good idea. We should think about that or add that to our coverage.’”
NPR has opted to record some of their social audio spaces and later make them downloadable—or even broadcast them on air. They have also transcribed their Twitter Spaces into stories that get page views also grow audiences. All of these tactics allow them to better leverage what might be a one time live-only event in a variety of ways, and to reach broader audiences.
Where Adams has seen social audio really work is for trending topics. They can quickly produce Twitter Spaces to discuss current events and issues, like Ukraine, Russia, or the State of the Union Address.
Listen and learn
As Amazon jumps on the bandwagon this month, it’s clear that social audio isn’t going away soon. And, with potential options to monetize it in the future – from in-app tipping features, to sponsorship, to tickets for premium events – it might become a revenue stream as well.
Social audio offers Zoom-weary audiences the intimacy of podcasts but also the ability to participate in discussions, be brought up on the stage and ask questions directly to speakers in real time.
It is interesting the way in which live social audio experiences mirror live radio, but also how they differ. Unlike pre-recorded segments or podcasts, live offers real time audience engagement. But, as the name would imply, social takes it even further. Audience members can “see” each other. They are able to react even if they don’t speak up. And they feel easily empowered to engage. For younger audiences, who may have never listened to terrestrial or even satellite radio, this new format offers the ease and comfort of social media. But for all audiences, engagement and interaction can clearly reach a new level altogether.
Adams saw this firsthand when NPR hosted a Twitter Space based on a story about college students’ experience during the pandemic. Adams asked the reporter to bring her sources into a Space for a discussion. “And then all of the college students in the audience were joining and then jumping up to talk about what was happening at their school and what they were going through,” he said. “There was just this big conversation between the sources and the audience, and we were just directing traffic. It was awesome. It was not what you would do on the radio.”
TikTok, the insanely popular social video app, comes pre-installed on a number of Samsung smartphones. That’s hardly surprising. Samsung and TikTok have a longstanding relationship, with the app finding a place on Samsung smart TVs back in December of 2020. It’s a mutually beneficial partnership: The hardware manufacturer rides the wave of the app’s rapid growth in popularity, the app expands its audience, and the pair have access to a new suite of data between them.
What is surprising, though, is how deeply embedded TikTok appears to be in Samsung hardware. As reported by Screenrant, and as pointed out in Samsung forums, the app is not just pre-installed on Samsung devices. It is in fact deemed “essential.” That means it can’t be uninstalled completely, on par with the Camera app. While workarounds do exist, the message is clear: Samsung dearly wants its users use that TikTok app on its smartphones.
As Screenrant’s Nadeem Sarwar points out, there must be a tangible benefit for both parties – even if that comes at a storage and data cost to the user: “How TikTok is an essential app is unclear. But to the average smartphone user, it is nothing more than a cash-grab scheme between the world’s most popular app and the world’s largest smartphone seller.”
While the partnership between Samsung and TikTok is pertinent for media companies, it is far from the only pre-installed or essential app tie-ups of the past few years. The PlayStation 5 media remote comes with physical buttons for launching Netflix, Disney Plus, Spotify, and YouTube. Samsung also includes Facebook as one of its essential pre-installed apps, which adds fuel to the fire of user accusations of bloatware.
But what does that mean for media companies, news publishers whose apps are not considered essential in their own right? And should those companies be considering pursuing similar exclusive partnerships with hardware manufacturers?
Apps strong together
Newspapers do have a presence as pre-installed apps to some extent already. Apple’s News app has been pre-installed on iPhones for some years now, itself the successor to its Newsstand app. That has been further developed with the implementation of News+, which boasts any number of publishers by now. That means that users, at least in theory, have a pre-installed and essential app through which they can reach newspapers on iOS (provided they agree to Apple’s terms, which have been… tumultuous).
In practice, however, it isn’t the same at all. Access via an aggregator is not the same as having a dedicated app, for both publishers and audiences. Readly, Apple News+, and many of the other aggregators are not focused on media brands creating a direct relationship with audiences. They’re about revenue, not engagement.
Worse still, this bundling robs publishers of the ability to iterate and experiment with an app they own and operate. Mathias Douchet, director of product at The Telegraph, says that freedom is the single most important point when it comes to establishing long-term user relationships:
“Even with a continuous improvement cycle, it is important to celebrate your success as it happens. With the new digital edition app, three out of four users are coming back daily. This is even higher among core subscribers at 95%.”
So even when publishers do have a presence on essential apps, it doesn’t necessarily replicate the benefits of the partnership between TikTok and Samsung. It does not serve the same purpose, nor does it necessarily benefit the user.
Beat the bloat
So why does it matter to publishers if their apps do not appear as pre-installed solutions on smartphone hardware? The answer is that in the battle for attention those pre-installed solutions allow some apps to cheat. They leave the starting line before the firing gun has gone off. This puts the rest of apps – newspapers and magazines included – at a disadvantage when it comes to audience attention.
A good rule of thumb is that unless your app appears in a users’ top five most-used apps, they aren’t visiting it every day. That in turn means that users are unlikely to develop the habit of opening a news app regularly, which creates fewer touch points with your subscriber.
According to research from App Annie in its State of Mobile 2021 report, news publishers very rarely appear in the top five most used apps on users’ smartphones. The few that do typically are state broadcasters like the BBC. The top two most used apps among Gen X in the UK are BBC Weather and BBC News respectively. No news apps appear in the top five most used apps for either Gen Z or Millennials. In the US, the only news app to appear in any of the cohorts’ most used apps is The Weather Channel.
Preferential treatment
There is a self-perpetuating cycle to the issue of pre-installed apps. They get chosen as partners by hardware manufacturers because they are popular; and they become more popular because they are pre-installed. By contrast news apps, which barely account for more than 6% of time spent in apps in total, barely factor in and are unlikely to be considered essential in terms of user priority.
A second factor is that news apps come with political and emotional baggage, which apps like TikTok are unlikely to have. It is unlikely given accusations of bloat and the need to work out partnership deals that any smartphone manufacturer would seek to force users to keep a particular outlets’ news app on their device. It is more unlikely still that they would do so given that accusations of bias and monopolistic practices around big tech companies are rampant.
Consider U2’s “Songs of Innocence” debacle, in which the band and Apple received backlash for distributing the band’s album for free onto people’s devices. Now add in the current supercharged political climate and consumer’s polarized position on news brands. Things could get complicated fast.
Apps, particularly on smartphones, remain a key part of many newspapers’ and magazines’ strategies. Users spend more time on their phones than with television, and time spent in apps made up a significant proportion of that. But despite the value they create for media companies and their audiences, it is unlikely that hardware manufacturers consider them as big a draw for their consumers as entertainment apps.
So, if newspapers want to be included in a pre-installed app on smartphones, maybe they should invest in dancing lessons for their journalists. Because, for better or worse, making their apps a fixture of users’ mobile diet may not come as easily as negotiating a pre-install position.
