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Perspectives | Revenue | Supporter Spotlight

Reflecting on 2023: Seven pivotal trends in digital media monetization

As 2023 draws to a close, it’s a good time to reflect on the pivotal consumer and market trends that have shaped the digital publishing world for our content and publisher partners. This year has been a testament to the industry’s resilience and innovation, especially in the realm of revenue optimization. From adapting to a world without third-party cookies to the rise of Connected TV (CTV), these trends have not just influenced our present – they pave the way for the future. For digital media executives, understanding these shifts is crucial to staying ahead in an ever-evolving landscape. To help navigate this dynamic environment, we’ve compiled a list of the seven key trends that shaped the media world in 2023: 

1. Emphasis on brand safety

Brand safety has taken center stage, aligning with the need for quality journalism and trustworthy content. Maintaining high editorial standards will be essential in 2024 to ensure a safe and credible platform for both users and advertisers. In line with this issue, about 40% of marketers expect an increase in brand safety concerns, highlighting the crucial role of publishers in fostering a safe and transparent advertising environment.

2. Sustainable and ethical advertising practices

The growing trend towards sustainability and ethics in advertising calls for a deeper understanding of these practices. In 2024, partnering with those who have sustainable business practices and understand their carbon footprint will be crucial. This shift in consumer preferences is evident as 92% of consumers trust brands that are socially responsible or eco-friendly, and 81% of shoppers prefer eco-friendly marketing and advertising, indicating a strong preference for sustainable and ethical practices. 

3. Subscription models and user experience

The growth of subscription models has highlighted the importance of balancing revenue generation with user experience. In the coming year, the focus should be on providing valuable content while ensuring a seamless and engaging user experience. As an example, one publisher, with more than 9.3 million subscribers, successfully embraced subscriber audiences to power ad revenue in 2023 demonstrating the substantial reach and impact of subscription models on advertising revenue.

4. Preparing for a Cookie-less world

The demise of third-party cookies has reshaped the digital advertising landscape, compelling publishers to embrace first-party data and contextual advertising strategies. However, progress remains slow, with over half (53%) of digital marketing campaigns still relying on third-party data. As we approach 2024, it’s vital to have your cookie-less strategy ready, to ensure a smooth transition and continued advertising effectiveness. Without a cookie-less strategy, publishers risk significant disruption in their ad targeting and personalization capabilities, which could lead to a decrease in advertising effectiveness and revenue.

5. Navigating algorithm changes and maintaining publisher revenue

In 2023, publishers faced significant challenges due to algorithm changes by big tech platforms leading to reduced inventory and revenue, while declining CPM rates further strained publisher profitability. To combat this, publishers should focus on producing high-quality content that their audiences value to regain control of data and revenue streams. This is particularly crucial in light of the recent revelation that social platforms in the US owe news publishers between US$11 billion and US$14 billion per year, highlighting the need for fairer revenue-sharing models.

6. Innovative video and interactive content

2023 saw a surge in demand for innovative, engaging, and non-intrusive video and interactive content. In 2024, working with partners who can deliver such content effectively will be paramount to enhancing the user experience. Interactive content sees 52.6% higher engagement than static content, making it an essential tool for capturing and retaining audience attention. Additionally, interactive content can be used to collect valuable data about audience behavior, which can then be used to inform future content strategies without relying on cookies.

7. Monetizing CTV inventory

As CTV’s exponential growth, driven by a staggering 19.6% ad spend increase in 2023 alone, opens new monetization avenues, finding the right balance in monetization and selecting the appropriate supply partner becomes key. By choosing the right CTV supply partners, brands can effectively target their desired audience and deliver high-quality, relevant ads that connect with viewers, resulting in enhanced brand awareness and engagement.

Looking back and moving forward

As we look back on 2023, the lessons we’ve learned are invaluable. The digital publishing landscape is ever-changing, and staying abreast of these trends is crucial for any media executive. By embracing these developments, preparing for what’s next, and collaborating with the right partners, you can tackle the challenges of the digital landscape in 2024 and beyond.

Advertising | Revenue | Supporter Spotlight

Three ways publishers can grow ad revenue in 2024 

In the past year, publishers have weathered several storms. In particular, they’ve grappled with a downturn in ad revenues due to traffic and signal loss. 

At the heart of this struggle is declining addressability in the open web. Publishers have lost signals for 70% of the internet as Chrome sunsets third-party cookies and users choose cookie-blocked browsers and employ ad blockers. Current forecasts predict that publishers worldwide will lose $54 billion in ad revenue due to ad blocking in 2024. 

Against this challenging backdrop, however, there are tools and tactics that publishers can incorporate into their arsenal to drive success in 2024.

Shifting to direct-sold

As the open web addressability gap widens, budgets flowing through the open marketplace pipes will continue to decline. According to Digiday research, 83% of publishers have experienced significant revenue loss on the open marketplace in 2023. Many of the issues experienced in the open web are alleviated by direct relationships between publishers and advertisers and by addressing all audiences rather than the 30% available in the open. Permutive data from over 150 publishers shows a 62% increase in direct-sold audience revenue in Q2 2023.  

Trusted Media Brands (TMB), whose titles include FailArmy, Family Handyman, Reader’s Digest, and Taste of Home, is one example of shifting to direct sales and seeing success. TMB has been working on their data strategy to ensure it can understand audiences across all browsers, especially in cookie-blocked environments like Safari. 

TMB now delivers direct-sold campaigns 94% of the time using first-party data. The work has resulted in a 140% increase in revenue from deals using first-party data, a 31% increase in RFP win rate when data is on an IO and a 2X increase in deal size when data is present on an IO vs no data. Building direct partnerships with advertisers to increase revenue has never been more important. 

Going beyond collecting first-party data 

As third-party signals dwindle, publishers will become the new data providers. This exceeds a publisher’s ability to capture data across all audiences, including cookie-blocked environments. To grow revenues in 2024, publishers must capture more attributes from a known audience and use advanced modelling techniques to offer advertisers a more comprehensive and scalable audience package. 

The ability to model out niche and hard-to-scale datasets, including high-quality, self-declared ones, is another mechanism publishers must add to their toolkit. Take lookalike modeling as an example. It is the most prevalent technique to extend an interest, behavioral or intent-based audience. 

Classified platform Gumtree employed this technique for its direct advertising campaigns, leading to higher rates and new business, upweights, and renewals. They served over 22m impressions to “lookalike” and “clicker” audiences (users who clicked on other ads), extending campaign reach and improving campaign performance (+27% in CTR). 

For use cases where a brand requests distinct groups, publishers can use classification models that take multiple seed audiences to know all possible classes for a specific category or attribute. For example, users who are labeled as “in a relationship,” users who are labeled as “single” and users for whom no relationship data is available. This model ensures a user is only bucketed into a single class, i.e. not categorized as both in a relationship and single simultaneously. 

Educating buyers

Publishers must continue persuading buyers to recognize the advantages of direct collaboration. To do this, publishers’ go-to-market strategy should and can demonstrate their ability to satisfy advertiser demand by providing quality audiences from interest, intent, and in-market audiences. And showcase their technical ability to scale and ensure reach across all relevant platforms and browsers.  

Publishers should craft engaging narratives about their audiences through insights, spotlighting how audiences are built, and being transparent about audience creation, and publishers must exemplify how their first-party audiences contribute to enhancing performance in real-time, effectively meeting advertiser objectives.

Penske Media Corporation created audience cards for presale analytics for each individual brand sales team in conjunction with the marketing team to capture each brand’s core audience. Post-campaign, PMC helped advertisers understand the real individual behind each impression, using their data to help partners get a holistic view of their target audience. PMC’s campaigns showed a 5x increase in performance (CTR) in campaigns that only used first-party data and a 5x increase in driving effective CPA for a clothing retailer when using PMC’s first-party data. 

As publishers navigate the complexities of 2024, these three paths to revenue will enable publishers to not only weather the storm but emerge stronger and more adaptable for what’s to come.

Advertising | Revenue | Supporter Spotlight

How publishers can unlock the commerce opportunity

Commerce media—advertising that connects shoppers with products and services throughout the buying journey across both physical and digital touchpoints—is on the rise. 

Advertisers are set to spend $125.7 billion with retail media properties and networks in 2023 according to GroupM, growing to represent 15.4% of total ad spend by 2028—even surpassing TV. And that’s just a subset of the larger commerce media opportunity, which McKinsey puts at $1.3 trillion in enterprise value in the US by 2026, which includes $50 billion for publishers.  

While it’s not immediately apparent on the surface, this trend spells big opportunity for non-retailer media owners, too. But what exactly is that commerce opportunity, and how can publishers start to take advantage of this shift in media buying?  

The three strategies below—all being pursued by Commerce Media early adopters in the publisher space—highlight a potential path forward.  

Strategy #1: Adopt a funnel mentality

Commerce media fuses data intelligence with digital advertising to reach consumers across their shopping journeys. As experts in attracting audiences, aggregating their attention, and securing their trust, publishers play a meaningful role in this process. Their properties represent critical stopping points at every stage of a buyer’s path to purchase. To capitalize on this opportunity, publishers need to start applying a funnel mentality to content planning and creation.

At the top of the funnel is product discovery—where consumers first learn about a new product or service offering. “Editor Finds” and “Today’s top picks” work well at driving upper funnel awareness, and because you already have your audience’s trust—they are a natural accelerator for advancing readers to the next funnel stage: consideration.

In the consideration stage, consumers are deciding whether they want to make a purchase, or, if they have already decided, weighing their options about which product to go with. Product reviews, comparisons, and unboxings are all effective at influencing consumers during this stage, providing them with more in-depth information to shape their decision-making and potentially even pushing them further down the funnel, to the purchase stage. 

At this stage, highlighting time-based deals (e.g., “Best Prime Day Deals”) can create urgency for customers, reminding them about products they have had their eye on, but had not yet added to their cart. Similarly, bestowing credible and high-praise designations to products (e.g., “Our favorite Smart TV of 2023”) can give unsure shoppers the confidence they need to advance beyond window gazing to making a purchase.

Making sure you have content for all stages of the funnel is critical to building trust with users and attracting the audiences that advertisers and retailers are looking to engage. Many publishers also use this content (and in some cases build it purposefully) to power affiliate marketing programs, where they receive commissions from retailer partners for the sales generated from the traffic being sent to the retailer’s site.

Strategy #2: Convert commerce content into commerce data

As you build your commerce content library and start to attract more visitors, you will notice you are simultaneously generating a tremendous amount of incredibly rich commerce data. This data is collected based upon important buying signals such as which visitors are reading what content, clicking on which affiliate links, hunting for deals and more.

With the right collection and management tools in place, this data forms the seed of a first-party commerce data strategy. You can then segment this data in all sorts of ways to create value for advertisers. For example, users reading multiple reviews of different smart TVs are highly likely in-market for that product category. Users who consistently read content about Smart TVs, gaming consoles, and green autos are likely “high-tech enthusiasts,” as well as “high price point shoppers.”

Knowing how commerce advertisers want to buy should inform how you shape your data strategy. In addition to wanting granular product category interest and in-market data, they are also always on the lookout for reliable data on life events (e.g., “new homeowners,” “new baby,” “recent retiree); brand preferences (e.g., Nike loyalists); purchase frequency; and shopping habits (e.g., deal-based shopper, frequent online buyer).

Such granular first-party audience signals collected on the publisher side are already considered more accurate and relevant than similar third-party data and will only become more in-demand with the deprecation of third-party cookies. Publishers with direct sales teams should be leveraging this data for deals-based selling as well as offsite reach plays, leveraging audience extension programs and tools.

Strategy #3: Think like a retailer

Once you have started to invest serious energy and resources into leveraging your unique editorial voice and trusted expertise to create high-value commerce content, you will begin to attract more visitors in a purchase mindset. Combine that with a growing and increasingly rich commerce data asset, and, in some cases, it may make sense to start acting like a retailer in your own right.

For some publishers, that mean building editorial-powered storefronts off your main digital properties. There, you can aggregate top editor picks, fan favorites, and best sellers for direct purchase by your site visitors. Others can embed relevant links within their commerce content and leverage their growing commerce data insights to drive in-market audiences to their storefront to create a flywheel effect.

Pushing that concept even further, some publishers might start to embed storefronts at the product level within individual article pages, newsletter communications, or social posts, which brings one-click purchase possibilities to consumers at every touchpoint and stage of the funnel.

Publishers who command serious trust from their readers may decide to parlay their editorial influence into curatorial prowess, in the form of product recommendation and discovery subscription services. Birchbox might have invented this category, but media owners are its rightful heir. They can leverage their trusted editorial perspective to hand-pick and distribute innovative, new, and best-of-breed products to consumers constantly in search of their next obsession. This is as applicable to beauty products as it is to kitchen utensils, books, video games, cooking spices, socks, and fragrances.

Publishers have been merchandisers for a long time, even if they did not know what that function meant in a retail context. Thanks to an acceleration in digital shopping comfort and technology, now they can be both influencer and retailer.

The commerce opportunity

For publishers looking to bridge the gap between media and commerce, building a commerce strategy that spans content creation, data collection and segmentation, product merchandising, retailer engagement, and user experience, will be key.

The relationship between media and commerce has historically lacked a clear strategic connection. Viewing commerce in isolation neglects the huge synergistic potential of content, data, and user experiences. This limitation has traditionally prevented publishers from securing a strong footing in this segment of the digital advertising ecosystem—but things are changing.

The new chapter ahead presents a wealth of opportunities for publishers. By focusing on the convergence of content and experiences through a commerce lens, publishers can forge meaningful and long-lasting relationships with advertisers and retailers alike.

Featured Post | Perspectives | Revenue

If you love them, let them go: the case for easy subscription cancellations

There are countless reasons why consumers cancel their media subscriptions.

It could be as simple as a subscriber deciding their affiliation with a publication has run its course after a change in the tone of the journalism. It might reflect financial circumstances. Or it could simply be too many things to read or watch and too little time. The National Research Group found that 23% of people who cancel subscriptions say they do so because they weren’t using them enough, which in many cases is not a failing on the media company’s part.

The Reuters Institute for the Study of Journalism also found that a proportion of subscribers do not want to feel “tied down” to any one news source. Other media companies – always in competition – might make active efforts to lure subscribers away through aggressive and antagonistic advertising campaigns.

However, there are macroeconomic factors that publishers cannot control that lead people to cancel subscriptions. In the face of challenging financial times, it won’t surprise any newspaper or magazine publisher that “poor value for money” is cited as among the most common reasons for cancellation. That’s a difficult barrier to overcome – although it is one some publications try to address by reminding consumers of the value of their subscriptions through newsletters and content recommendations.

Media companies may have to grapple with more churn in the near future. While suggesting that consumers have not reached “peak subscription,” research from Toolkits has found that a large percentage of people who have taken up news subscriptions expect to cancel some in 2024, for a variety of reasons including those mentioned above.

These factors are likely to be impacted by new legislation coming into force in the UK and EU (as well as proposed legislation in the US), which aims to streamline the process by which consumers can cancel subscriptions. For media companies – many of which argue they are not responsible for the trends that have made such legislature necessary – that presents two main challenges. The first is that they would have to bear the cost of enabling cancellation through new channels, which UK broadcaster Sky says will add significant costs to its businesses. The second is that, at a time when the rush to find sustainable subscription revenue is hotting up, it could increase the levels of churn.

For example, Sky argues the government’s proposals to tackle the problem of customers being billed for unwanted subscriptions were “too prescriptive.” This call is echoed by many media companies, which in some cases still require consumers to call to cancel a subscription.

But there is a growing body of evidence that such pain will be short-term, and that it is in media company’s favor to enable one-click-cancellation.

Proof of value

Research from McKinsey finds that of the 40% of consumers who choose to cancel subscriptions the majority that do tend to cancel do so early in their subscriptions. Those early terminations have a deleterious impact on the data that can be gathered on the consumer, making attempts to prevent cancellation more difficult.

However, it is also the case that the relationship doesn’t end as a result of cancellations. Some media companies, including Guardian News & Media, use a cancellation as a cause for further contact. Its subscriptions and sales teams will often reach out to a subscriber who has cancelled a direct debit or regular payment to find out why.

It is a technique used by other subscription-based businesses, which make distinctions between lapsed and unengaged consumers. While the latter require much more work to bring into an ecosystem, the former already have an emotional connection with the brand. Most importantly for digital subscriptions, many will continue to share their data with a brand following cancellation, making efforts to re-engage and remonetize them quicker and easier.

Given that the maxim that new consumers are five times as costly to acquire as existing subscribers are to re-up, that creates a huge incentive for media companies to continue their marketing efforts towards lapsed subscribers. Doing so mitigates the risk highlighted by McKinsey that lapsed subscribers do not continue to provide data for use in honing subscription strategies.

Cost of cancellation

In the US, the risk of more churn and less certainty around subscription revenue has been exacerbated by what the Federal Trade Commission considers effectively duplicitous activity from subscription-based companies. FTC Chair Lina M. Khan said: “Some businesses too often trick consumers into paying for subscriptions they no longer want or didn’t sign up for in the first place.”

Just as in the UK, media companies in the US feel that their businesses are going to be unduly impacted by the bad behavior of other actors in the subscription space. As a result, they are largely opposed to the implementation of “ease of cancel” rules that could lead to consumers cancelling more easily.

However, there are early signs that such efforts would not impact media companies quite as badly as might have been expected. Toolkits conducted a study of over 1,000 consumers in the US who have subscribed to digital publications. It found – in the face of expectations – that over two thirds (67%) would “more readily purchase new subscriptions if they thought those subscriptions could be cancelled easily”. Over three-quarters (77%) percent of consumers also said they would support the proposed laws requiring “one-click cancelation” mechanisms.

Zamir Walimohamed is head of digital, marketing and subscriptions at Motor Sport Magazine. He acknowledges that as a legacy brand the magazine has an advantage in converting paid print subscribers to digital: however he also notes that even niche titles face challenges around churn and re-upping subscribers.

Despite those challenges he argues that easy cancellations are not necessarily the end to the relationship between media companies and consumers. Instead, he says, it is an opportunity to better understand readers and what makes them subscribe in the first place: “If a customer is on a bundle and cancel a pop up appears saying ‘Are you sure you want to do this? Or would you also be interested in a lower offer’, which is only digital only, for example.”

He states that it is on media companies to demonstrate an understanding of why consumers would want to cancel in the first place. Moreover, he argues that the relationship is better served by making that process as easy as possible.

However, as he and other subscription managers note, the data collected throughout the active lifecycle does not lose its value the moment a subscriber cancels. Instead, the data points about why a consumer has cancelled are valuable not just enticing them into the fold, but for preventing other readers choosing to cancel as well.

Industry-Research | Revenue

Yes, there’s still room for subscription growth

The subscription-based model is is one of the foundational models of the digital media marketplace. It offers predictive and reoccurring revenue, reduces reliance on advertising, and provides a deeper customer relationship. The subscription business also comes with challenges ― conversion, churn, and subscription fatigue. Understanding consumers is essential for subscription-based businesses to optimize customer acquisition, improve customer retention, and stay competitive in the market.

New research, No sign of peak subscriptions conducted by Toolkits and the National Research Group, offers insight into consumer attitudes to publishers’ digital subscription products. The research findings indicate that 29% of subscribers report an increase in their subscriptions over the past year. In contrast, only 7% reported a decrease in their subscriptions during the same period, suggesting a lack of subscription saturation.

The rise of the “power subscribers“

Toolkit’s 2022 research revealed that a relatively compact yet deeply involved segment of “power subscribers” accounted for an outsized portion of subscriptions in the U.S. This group comprises approximately 4% of the population and does not show signs of subscription saturation. Further, this year’s data suggests that consumer’s appetite for additional subscriptions remains strong.

In fact, one-third of current subscribers (33%) anticipate increasing their subscriptions in the future, compared to 27% last year. Conversely, only 21% of subscribers plan to reduce their subscriptions compared to 29% in 2022. The availability of more subscription products and subscriber-only content likely contributes to this trend.

Subscription revenue and audience dynamics

While power subscribers continue to drive demand, reliance on a relatively small audience is not a strong business plan. If power subscribers reduce their subscriptions significantly or fail to add new ones, it would pose a strong risk to the subscription revenue stream.

The research highlights that attracting and converting first-time subscribers is essential to sustain growth in the digital media subscription market. Publishers must focus on reaching new audiences and investing in programs that target younger demographics. Consumers most likely to subscribe to at least one subscription include men, people earning over $100,000 annually, and those 25 to 34-year-olds.  

Thinking about targeting across content categories could offer new subscriber acquisition opportunities. Top subscriber categories include those in news and current affairs (46%) and media and entertainment (41%) for the second consecutive year. Following closely in the rankings are sports (36%), cooking (29%), and lifestyle (29%).

Importantly, unlocking incremental growth depends on attracting first-time subscribers. Increasing investment in programs and strategies targeting younger audiences and educating them about the value of digital subscriptions is essential to sustain growth.

The power of a good bundle

The study shows that 81% of subscribers report owning subscriptions to more than one digital publication, up from 71% last year. As the number of subscribers owning multiple digital publications increases, there is an opportunity for bundled products. However, working with intermediaries offers challenges, specifically relinquishing the direct relationship with audiences to third-party platforms.

The subscription model is a vital and growing business in digital media. The availability of more subscription products and exclusive content contributes to this positive trend. To sustain the growth in direct consumer revenue, digital media companies must attract new audiences while super-serving their core power subscriber segment.

Featured Post | Revenue

How paid podcasts fit into The Economist’s subscription strategy

The Economist is a media brand that has led the way in subscription-based access to its content. But when it was reported by Axios last month that the media company would put its podcasts beyond a paywall, the industry took notice. As one of the first publishers to make such a move, insight into the strategic decisions around the launch are particularly valuable for any other publishers considering doing the same.

Claire Overstall, SVP, Global Head of Customer at The Economist spoke to us about the thinking behind the decision, how they have communicated the change to their millions of listeners, and what the company hopes to achieve with podcast subscriptions as part of its wider subscription strategy.

A value-add and a separate offering

The Economist’s paywalled podcasts will be available to full digital subscribers at no extra cost. “That is entirely in keeping with the general direction that we’ve taken over the last few years where we’ve been increasing the amount of things that are included in your subscriptions,” Overstall explained. “We’ve put all of our newsletters behind a paywall. We now do subscriber-only events. We’re just increasing the amount of value and the amount of things to engage with.”

The podcast subscription is being used by The Economist as a value-add for current subscribers, but also as a separate product offering. This is an unusual move; The Economist hasn’t had a separate product available to subscribe to since launching Espresso, an app which gives five short articles and a global news briefing each day. The decision to create a separate podcast offering – Economist Podcasts+ – is because of the millions of listeners the publisher has accumulated across its 18 different shows.

“There’s a whole audience there that for whatever reason enjoy our journalism but don’t want to pay the full $20 a month to subscribe,” said Overstall. “But in keeping with our belief that subscription should be the way that we fund our journalism, and making everything strategically match, we’ve decided that you can buy a podcast-only subscription in the hope that that might entice some of those millions of listeners who don’t want to pay for the full-fat product to support our journalism through paying for podcasts.”

The podcast subscription is currently the lowest cost offered by the publisher at $4.90 a month, or $49 a year. There is also currently a pre-launch half-price offer for the full year. Overstall noted that although there is every chance they may not have got everything right at launch, the pricing feels fair in comparison to the full-price subscription. “So far, we’re pleased with the response that we’ve seen,” she said of their pre-launch sale.

“There is a business benefit to upselling of course, and moving from one product to another, but also down-spinning; if people no longer have the time or the money for the full-fat products, having somewhere for them to go,” said Overstall of the lower costs options. “But in reality, the most important thing is that we’re meeting the customer at the level that they want to receive us, and with the right amount of information and the right price for where they are.”

Prioritizing the audience experience

The main reason few publishers have tried paywalling podcasts is that the technology to do so smoothly across platforms has only emerged in the past 18 months. It was important for The Economist that people were able to listen wherever they wanted.

“It’s been really, really important to us to make sure that we don’t disrupt the customer experience,” Overstall explained. “If they want to listen on Spotify, if they want to listen on Apple that’s where they should listen. We shouldn’t force people to come on our site or listen on our app if that isn’t where they’re already listening to our podcasts.”

Although Spotify has had tools to work with third-party subscriptions for some time, Apple has only recently introduced the ability for users to connect publisher subscriptions within its Podcasts app in iOS 17. Apple has also implied it may help audiences discover publishers’ paywalled content by surfacing it across the app, mitigating one of the biggest risks for others looking to follow in The Economist’s footsteps.

Since the launch of Apple’s own podcast subscription tool last year, a number of publishers such as Tortoise and Immediate Media have developed subscriber-only offerings (shows, episodes and series) as a way of warming podcast audiences up to paying. In the case of The Economist, however, the transaction is not processed through a third party, such as Apple. Instead, the subscriber signs up through The Economists site and they are then seamlessly connected through their listening platform of choice. 

The pre-launch sale of the Podcasts+tier went live on September 14th ahead of a full launch this month. So far, Overstall says the response from audiences has been positive, despite paid podcasts not being commonplace.

“It completely aligns with our strategy. paying for journalism was one of the things that we led with very early; The Economist has been doing that a lot longer than many of our peers,” she said. “So that’s well-embedded in people’s minds, the way that we’ve articulated how this is supporting our journalism.”

“Even if people are choosing not to pay for it, a lot more understand the need to pay for journalism… and that’s a sea change from where we were 10 years ago where people just didn’t believe in paying for news.”

What success looks like for Podcasts+

The podcast team is keeping an open mind around the paywall, and will be carefully watching the response. Crucially, their daily flagship podcast The Intelligence, which has had more than 630 million downloads since launching,  will remain free. “We are hoping that that continues to be a funnel, and then we increase listenership to that, who then convert to full paid podcast subscribers,” Overstall explained. She also said that they will do sample episodes for the paid podcasts in The Intelligence feed in order to give listeners a taste of the paywalled content.

But for The Economist, longer term success won’t be all about paid subscribers, but also about continued growth to the free-to-access The Intelligence.  “I think how well we are able to swell our listenership of The Intelligence is probably more likely our health indicator,” said Overstall. “If that suddenly dwindles away to nothing, then we may have done an amazing thing right now, but how are we going to continue to grow?”

Podcasts also provide The Economist with a means to broaden its audience base. Therefore, Overstall says that “one of the things we’re also hoping for is that it will begin to diversify our subscriber base as a whole. Podcast listeners skew younger and more female in general, but also specifically our podcast listeners do as well. So we’re hoping to diversify our audience base and reach more people with this subscription.” 

“Fundamentally,” she says, “we are producing good products and hoping that people pay for them. So I think the primary metrics will shift more towards engagement and conversion.”

“Keeping an eye on The Intelligence, and trying to glean any data or customer surveys or anything like that on how many people are listening to sample shows and converting from those, that will probably be a key performance indicator.”

KPIs will also change for new shows the publisher develops. “Our priority of metrics will change now and will probably be on a show-by-show basis rather than just aiming for as many people as possible for every show,” Overstall speculated. “For The Intelligence, getting as many listeners as possible will still be key. But for shows like The Prince, we’ll debate as they come up and as we make them, and how many episodes we choose to sample for non-subscribers.”

Podcast listeners are known to be highly engaged, with more than a third listening daily. This gives Overstall hope that retention for this particular group of customers will actually be fairly straightforward. “[Listening is] natural, it’s already embedded. This is something they have really opted into,” she said. “Being a first mover means that anybody opting in really genuinely does want your content enough to stay. So I’m hoping that retention will be reasonable.”

For publishers like The Economist with hard paywalls, making audio content available for free may have felt at odds with the broader subscription goals. However, given that the technology to enable payments and subscriptions have grown more publisher-friendly, the media brand is able to extend its subscription-first philosophy to its audio offerings as well.  Crucially too, audiences are much more accustomed to the reasons why they should pay for professionally-produced content. Still, given the vast listener numbers (and ad revenue) The Economist’s podcasts have garnered in the past and the relative lack of paid podcasts on the market so far, the move is not without risk.

As a brand, The Economist has not shied from making the clear correlation for its audiences between subscriptions that support its quality journalism. With the addition of premium podcasts, Overstall believes that the brand will continue to make this case, and enrich the value of its subscription bundles as well. 

Industry-Research | Revenue

More people are paying for news worldwide

The way we consume news has dramatically transformed in recent years. Most news organizations adopted a digital news business model and now offer subscription products. Understanding online news payment trends and dynamics is crucial to support this business model.

Recent research from the Reuters Institute, the Digital News Report, shows a marked increase in people subscribing to or making one-off payments for news content. The industry is experiencing subscription growth ranging from 10% to 17% across 20 countries in the last 10 years. It’s worth noting that online news payments are beginning to stabilize in many of these 20 countries, and a notable correlation exists between high cancellation rates and the ongoing cost-of-living crisis.

Regional variances in online news payment 

Authors Nic Neuman and Dr. Craig Robertson point out significant regional differences in consumers’ willingness to pay for online news. In some Nordic countries, over a third of the population subscribes to digital news services. In the U.S., 21% of respondents indicate that they pay for online news.

In contrast, in European markets like Germany and the United Kingdom, which offer high-quality free news options, subscription rates are lower at 11% and 9%, respectively. The variations highlight the interplay between market conditions, consumer preferences, and economic factors influencing online news payment.

The research identifies a combination of five factors that drive news subscribers:

  • access to distinctive and high-quality news and analysis
  • alignment with the brand’s values or political perspective
  • a commitment to supporting quality journalism
  • a premium user experience
  • the inclusion of lifestyle features, puzzles, and games

The U.S. news market is notable for its news loyalists. Approximately 47% of news subscribers say that they do so because to align with specific journalists or the viewpoints of news brands. The U.S. also stands out as one of the countries with a significant portion of its population donating to news organizations, accounting for 4% of the U.S. sample. This contribution includes paying podcasters, YouTube channels, and established brands like NPR and Vox Media.

The report highlights three phases that subscribers often undergo, from interest and intent to subscribe to retention and loyalty.

  1. Subscription triggers: The first phase is a fundamental interest in news. This and other influences often trigger a subscription, including family influence, life-stage changes, enticing promotional offers, etc.
  2. Building habits: The second phase includes engaging new subscribers during their initial 90 days through newsletters, podcasts, and personalization to build daily forming habits.
  3. Maintain loyalty: The last phase is when subscribers develop loyalty to their chosen outlet and consider it their trusted source for information.

Changing payment methods

The way people subscribe to online news is evolving, with 46% of subscribers opting for ongoing digital-only subscriptions. Combined print and digital packages account for 28% of subscriptions, while 34% report someone else pays or it’s bundled as part of broader service packages (e.g., TV, broadband, or mobile).

Additionally, 12% of paying respondents report making one-off or ongoing donations to news services in the past year. These diverse payment methods reflect the changing expectations and preferences of news consumers.

Subscriber demographics 

While most paying subscribers are older, the willingness to pay for online news is similar across age groups. However, younger individuals are likelier to have subscriptions paid for by someone else or make smaller donations.

Interestingly, 60% of paying subscribers are men, and a significant majority (79%) have medium to high household incomes. They tend to have received higher levels of formal education and lean more towards left-leaning political affiliations, especially in the U.S.

Consumer preferences, market dynamics, and evolving subscription models shape the willingness to pay for online news. As the digital news landscape evolves, publishers acknowledge the affordability gap and are crafting solutions in response. They look for ways to remain relevant by partnering and packaging all-access bundles, extending trial periods, and flexible renewal pricing to demonstrate value and commitment.

Featured Post | Innovation | Perspectives | Revenue

Harness the power of generative AI to develop winning revenue strategies 

Throughout my career, I’ve cultivated a deep appreciation for the practice of bookmarking articles and posts. This practice has enabled me to amass and retain knowledge across various subjects, whether it be in organizational oversight, crafting revenue strategies, or exploring financial management.  

I know I’m not alone. We all accumulate fundamental wisdom over our careers, enriched by learning from opportunities, technological advancements, cultural shifts, and environmental events. In the ever-evolving news and digital media industry, preparing for the unexpected is crucial, requiring us to understand how and when to adapt effectively. 

Recently, an epiphany has reshaped my perspective. What if I could synthesize and apply the wealth of knowledge I’ve amassed throughout my career, the content I’ve diligently studied, and even the articles I’ve saved and bookmarked in one seamless strategy? This introspective journey led me to a profound realization about generative AI, enhancing my perspective on its potential and application. 

Initially, the concept felt theoretical, but it soon revealed its significant potential. I envisioned harnessing generative AI to amalgamate career-spanning learnings into practical revenue strategies. Thoughts of organizational structures, compensation plans, mission statements, value propositions, close ratios, and DMA strategies flooded my mind.   

Theory and practice

However, I must note that this is not something that would only work for me or another individual. It suggests an approach that has the potential to revolutionize the way digital news organizations operate, paving the path for a new era of data-driven decision-making, innovation, and growth while also representing a paradigm shift that could reshape the competitive landscape, ushering in a more efficient, agile, and forward-thinking business environment.  

By harnessing generative AI’s power to synthesize accumulated knowledge and adapt it into practical revenue strategies, organizations can streamline their approaches, enhance innovation, and excel in a rapidly changing environment. 

Consider an example of a hypothetical organization aiming to boost advertising revenue in a specific designated market area. Generative AI—armed with local business data, industry insights, and demographic information—can be used to draft strategies suited to the organization’s unique characteristics and needs.   

It might also be used to help craft strategies tailored to specific circumstances, leveraging real-time and historical data. For example, it can be used to systematically flesh out specific details regarding go-to-market strategies, revenue planning, or quarterly and annual goals and break them down into weekly and monthly output objectives in an organized format. These sorts of applications demonstrate the possibility for generative AI to help media organizations shape their futures. 

Generative AI is a rapidly developing technology with the potential to revolutionize the way we develop and execute strategies. While it is still in its early stages, the evidence of its practical applications and case studies is undeniable.  

Responsible use

Of course, it is important to caution that any theoretical or draft strategies developed by leveraging generative AI should be well vetted and assessed among peers and committees. Not everything that generative AI suggests should be implemented, and you should not disregard your instincts and experience-based reasoning. However, the evidence of its potential is clear. Neglecting the potential of generative AI for strategy means potentially missing out on invaluable insights and efficiency gains.  

Like knowledge, generative AI is a tool. And both must be leveraged effectively, in the right hands, with the right guidance to have a positive, significant impact. If you’re considering or hypothesizing about how generative AI may be leveraged within your organization, consider first establishing a guiding North Star mission—a central theoretical outcome that offers purpose and direction beyond mere intentions.  

From there, generative AI can then be leveraged to create or enhance multiple distinct revenue strategies, consolidating them into one comprehensive approach. This AI-driven approach allows for the crafting of specific prompts that guide generative AI to execute precise tasks, all aimed at achieving the overarching goal. 

Generative AI’s ability to tailor strategies to specific circumstances and prompts could be a game-changer in the world of digital media revenue strategy. It may provide a level of precision and adaptability that isn’t always readily available, especially for startups.  

For example, a senior vice president of sales or a chief revenue officer could create a prompt requesting a step-by-step plan to increase EBITDA by 5% and achieve an annual advertiser account and revenue growth of at least 10% would utilize every available dataset and avenue effectively. With this information, you can further clarify and expound upon the North Star mission. This means breaking down goals and objectives into tangible, actionable terms, and translating improvements into practical implications for your organization.   

Practical application

While I can only provide a high-level summary of the most important results and insights from my theoretical exercise, it’s important to note that everyone’s needs and circumstances will vary. For instance, when I created a North Star strategy for a made-up organization and expanded it, I received hypothetical guidance on achieving specific revenue goals. This guidance encompassed expected percentages and insights based on the data used in my prompts.  

Viewing it from a startup perspective, I prompted generative AI on CPM, pricing structures, and product offerings strategies. Generative AI provided valuable input, considering margins, commissions, and salaries. It also offered industry-specific advice and recommendations for advertising in the area specified. Additionally, it provided insights into salary expectations for sales and editorial staff, vital for an organization’s growth, and suggested strategies to increase website traffic and expand our audience base.  

Reflecting on this experience, I found the process valuable for my strategic thinking. What stood out was that the information’s quality hinged on the input. To utilize generative AI effectively for strategy, understanding its limitations, investing time in learning, and acknowledging the input’s importance are crucial. Proper training, domain expertise, and adaptability are key in determining generative AI’s value for less-experienced users in news media or any field.  

Act wisely

Generative AI is already transforming various industries, including digital news media and startups. Through interactions with news organizations of all sizes, I’ve realized that despite naysaying to the contrary, our industry is abundant with innovation, enthusiasm, and focused development. We’ve heard a lot about its use for content creation. However, generative AI can uniquely contribute to streamlining and illuminating the process of uniting innovative ideas, creative concepts, and revenue-generation strategies into one cohesive overarching strategy centered around a clear organizational objective—a guiding North Star for long-term industry sustainability. 

While larger companies often have ample data resources, startups and organizations at different stages may not. And every organization can benefit from streamlining knowledge-based processes. Generative AI can be a powerful tool to guide decision-making and provide insights that may otherwise be elusive.   

I encourage you to take small steps. Experiment and pivot with the wealth of information and ideas at your disposal. Let your imagination run wild. It’s time to transform our knowledge into a deployable strategy, as the potential awaits exploration. This journey is just beginning, and collectively, we are all in the process of discovery.   

Advertising | Featured Post | Revenue

Retail media: Friend, foe, or something in between?

Brands have paid for premium product placement in stores as long as there have been stores. Whether it’s book publishers paying to get their books turned face-out on the shelves or your favorite cookie company splurging for an end-cap display in the supermarket, companies are used to paying for placement. But now, like so much else, that trend has gone digital.

Retail media networks [RMNs] are not exactly new, but they are growing in popularity, especially with U.S. advertisers, where interest has traditionally lagged. As more shoppers move from brick-and-mortar stores to e-commerce, retailers are looking for new ways to engage buyers and advertisers on the web. That’s led to retailers becoming their own ad networks, charging advertisers to promote products on their sites — and this has the potential to impact revenue for media companies.

Sizing the retail media market

According to Bain & Company, “Retail media is expected to be a $61 billion business by 2024—double its 2021 numbers.” This increased spending is indicative of an overall shift toward digital ad spending, says Bain: “In 2019, about 50% of ad spending went to digital campaigns, and by the close of 2021, about two-thirds of US advertising was digital.” But that’s not the end of the story.

While digital ad spending in the U.S. has been on the rise for years, retail media has not traditionally been a big draw. In fact, historically, retail media advertising has been a much bigger player in China. Now, however, interest is growing stateside. Not only is it growing faster than China’s spending, but it’s got more room to grow, according to Insider Intelligence. 

There are a few factors at play here, says Li Lu, Research Director at Digiday Media. First, Lu says, retail media has become a more robust channel, and companies like Omnicom make it easier to get more information as retailers build out their networks. But they say there is another factor at work here: the loss of the third-party cookie.

Digital publishers know the story well: As third-party cookies go the way of the Dodo and the web becomes a more privacy-conscious place, first-party data is imperative. And RMNs have first-party data in spades. Retailers like Amazon, Walmart, and Target are close to the customer at the point of checkout and know the kinds of products an individual user is searching for and often what they may have bought in the past. This makes it easier for advertisers to target users based on their personal preferences and positions retailers as excellent partners when it comes to driving actual sales.

In fact, Lu says, the KPIs are really what’s driving a lot of this change. Retail media traffics in actual sales, while on social media, success is often measured in impressions or clicks. “You’re so close to the customer at their checkout point,” Lu says of retail media networks. People there are “shopping with a purpose in mind.” Naturally, they are further up the funnel and ready to make a purchase.

It’s also important to note that revenue from RMNs is a completely new and discrete income stream, not just a replacement for flagging in-store opportunities. McKinsey reports, “Our research suggests that more than 80 percent of spend flowing into retail media networks is incremental and comes from all sources, including net new spend and reinvestment of brand and performance budgets. So for retailers, RMNs provide an incremental source of high-margin revenue, and substitution for shopper or co-op marketing can be managed.”

Who is leading the retail media pack?

Of course, not all online retailers are created equal — and ad spend can tell us a lot about who the leaders are. Lu says that Digiday’s research found “Amazon was the most popular media retail partner.” A whopping 76% of respondents said they partnered with Amazon, and that Walmart and Target came in next, with more than 30% saying they partnered with these retail giants. Other research backs this up. 

Still, Amazon’s dominance is sure to wane eventually, according to Lu. As other retail media networks improve their search capabilities — search is currently one of Amazon’s biggest benefits over other options — and new competitors emerge, advertisers are bound to shift their spending priorities. In fact, delivery apps like Instacart are already becoming a destination for some brands — and are even driving some of the growth in a post-pandemic world where people have gotten used to shopping online, even for things like groceries.

Increasingly, price is also a problem. Lu says Digiday’s research revealed that the cost of retail media placements was a concern. From CPC models to actual conversions, they are all getting pricier. Lu says, “Advertisers may start diversifying if it gets too expensive and can’t scale.” 

Content and commerce is the way forward 

Publishers may have yet another competitor to deal with when it comes to vying for dwindling ad dollars, but hope is not lost. On top of the price concerns that Lu mentioned, ANA found that “A major concern expressed repeatedly throughout the study was that although [retail media networks] are being credited for driving brand sales, they have not yet convinced advertisers of their ability to drive brand growth. We found that 67 percent of our respondents cited ‘to drive conversion’ as their most important objective with RMNs, while only 7 percent cited ‘to drive awareness.’” This presents an opportunity for publishers.

While RMNs may have an advantage when it comes to down-funnel actions, publishers can still leverage their first-party data to help drive awareness. But publishers also have some potential to become a commerce-driven partner for brand advertisers as well. 

Last December, just after Black Friday and Cyber Monday, Digiday reported, “Hearst Magazines’ total product sales increased by 50% year-over-year” and “Foundry’s U.S.-based brands saw a 57% increase year-over-year in the total dollar amount they generated for retailers through sales.” 

Embracing commerce media may just be publishers’ best bet to help win some of those RMN dollars; while retailers may have an advantage for funneling consumers who are already close to purchasing toward advertisers, publishers may be able to reach people who are still contemplating a purchase. From review seekers to people looking for gift ideas to browsers who are open to discovering new products, media companies can compete if they are willing to embrace new, commerce-driven strategies.

Featured Post | Industry-Research | Revenue

Change, lots of it: Enders Analysis on saving local news in the UK

For the news media industry, the rise of artificial intelligence for is a double-edged sword. While some publishers are using it to churn out news stories regardless of how their audiences receive them, local news titles are considering how it can provide them with a major point of differentiation. For many, that will also be a lifeline.

A report into the state of local news in the UK from Enders Analysis and the News Media Association pulls no punches. It is clear about the extent to which local news publishers did not benefit from advertising spend moving from print to digital. It’s also candid about the likelihood of titles foregoing print entirely in the near future.

However, the report goes well beyond rehashing the impact of technology on the news media business. While it clearly sets the stakes for the industry, the report, “Signs of local life: a new phase for local media” also focuses on opportunities and collaborative strategies for local publishers as we move forward.

The authors note that “publishers have done very little to transition habitual paying print readers—or the next generation—into habitual paying digital audiences”. It also points out that local media have lost the war on digital classifieds and have no realistic path back to reclaiming that revenue.

That is exacerbated by other challenges facing print media. From higher production costs to the “effective monopoly” of the two major distributors, the ability to print and disseminate dailies and weeklies is becoming strained. The report states it expects the number of titles that go digital-only in the next decade will be greater than the previous 10 years.

As a result of that—and the absolute dominance of tech giants in digital advertising—the report states that appetite for external investment is limited: “No one in the industry would deny all this decline has driven investment sentiment away from the sector, and consequently depressed the value of local and regional media.”

Green shoots

But rather than being solely self-flagellation, the report highlights some of the irreplicable strengths of the UK local news industry. Owen Meredith, chief executive of the NMA explains that, “while clearly everything isn’t rosy, there are some positive signs of life. There is innovation there; DC Thomson [for example] is really good at building a membership model and subscription model that genuinely works in local news.”

As the report makes plain, the greatest strength of the local news industry is the direct relationship it has with its audience, and the trust that flows from its original journalism. It states: “At one time all of these distinctions were obvious because they were visible in the physical world: print was plainly different from other content and consumption. Online, these distinctions evaporate.”

So, the report argues that the local media industry needs to “shout these distinctions from the rooftops” particularly in the emerging era of generative AI-created content. Local news has provenance and personality. The report makes the argument that it will be difficult if not impossible for AI-generated content to take its place. In an age where the amount of noise online is to grow exponentially, local news media can provide the signal.

Meredith says local publishers like Newsquest are already set-up to take advantage of that trend: “We’ve got these huge scale audiences… there’s been a perception that a lot of that was driven by non-core local news.

“Actually, there is more data coming to light now… that you really do have deep engagement, multiple pageviews, reasonable penetration and good scroll-through. People are actually coming to local news sites for the local news product.”

That is in line with the recommendation by the report that local publishers move from pursuing digital advertising based solely on scale: “Too much revenue today is reliant on low-yield programmatic advertising” which has diminishing returns—particularly for the newspapers.

Show me the money

In order to survive to take advantage of that strength, however, local news organizations need time and investment, particularly around tech. Meredith says: Tech is a big-ticket item for a lot of smaller publishers. You can’t therefore do everything you might want to do at once. But I think you can do phased-based tech and there’s a lot of off the shelf solutions, frankly, that provide publishers with answers without massively excessive investment required.”

Given the long-term forecasts for ad spend and a lack of philanthropic support in the UK, the report suggests a number of alternative sources of funding.

In line with earlier recommendations from the Cairncross Review, the Enders report points out that direct government funding is basically impossible for any independent press that seeks to hold the government to account. Instead, it suggests alternatives that include more government advertising (already the largest single source of local advertising revenue across its many departments) with the local press.

Meredith concurs with this assessment, stating: “We think a genuine commercial exchange on advertising is fundamentally different to subsidy. We firmly believe that there is a long-term sustainable future for local news in a commercial way.

“We’ve been talking about the digital markets bill for ages. It’s not a silver bullet, but it will certainly help. There’s lots of elements but you [can] combine that commercial vitality without government subsidy or intervention, as well as the Competition and Markets Authority getting out of the way and allowing market consolidation to happen”.

Meredith is also keen to point out that the BBC has a key role to play in the future of the local press. It is a wholly unique organisation by any media standards, and Meredith argues that if it were proposed today its free-to-access nature means it would be immediately shot down by competition authorities. He advocates for a resetting of the relationship between the local press and the BBC, both through the BBC Local Democracy Reporting Service and other means.

Ultimately, the conclusion of the Enders Analysis report is that local news in the UK needs to make itself attractive to investment from outside the industry. That will be like ripping off a sticking plaster, as it has been resistant to change for years – for a variety of reasons. Executives at the major publishing houses have been accused of riding the slow decline of tested revenue sources in service of their payouts, for example.

True change in order to attract investment will require, as both Meredith and the Enders report advocate, collaboration and collective agreements in order to reach sustainability.

Advertising | Revenue | Supporter Spotlight | Video

Here’s why publishers should be thinking about CTV revenue

Once again, the media world has found itself in belt-tightening mode. A number of high-profile media companies have announced layoffs, and ad spend has grown more slowly in 2023 than in the previous few years. Publishers are looking for revenue streams beyond subscription packages – and for those who have video content, CTV offers a lot of promise. 

After all, CTV is where the growth is, in terms of ad spend and audience. For publishers that are already monetizing video on desktop and mobile, CTV is the most intuitive next step for diversifying revenue. For those that aren’t monetizing their video content yet, that’s all the more reason to jump into CTV.

In terms of both viewership and the influx of ad dollars, CTV is growing like gangbusters. Streaming CTV ad spend is tracking to reach $23 billion by 2026 – a double-digit increase from today. Streaming video consumption has surpassed linear TV, as experts had predicted, and there will be 3.5 users of over-the-top (OTT) streaming services globally by 2027. 

Right now, the audience growth is coming from ad-supported tiers, which is an ad inventory source so desired by brands that supply can’t keep up with demand. This sure sounds like a field day for the Netflixes and Hulus of the world. But while the largest streaming platforms get the lion’s share of attention in the industry trades, they won’t be – and, considering demand, can’t be – the sole beneficiaries of this influx of ad spend.

Power to the content owners

According to industry experts, more than 90% of CTV ad spend coming through DSPs goes to around 30 streaming platforms. That’s a much larger number than the handful of big names that get name-dropped most frequently in CTV conversations. Not many of these platforms own all, or even most, of their content outright. They source it through deals with other media creators. And those creators have a distinct advantage: They reserve the rights to sell ads on their content. Streaming services don’t have exclusivity in the same way as the publisher who creates the content. 

Clearly, media companies stand to benefit greatly by partnering with CTV services for video syndication. There are two types of publishers who can most easily grab those ad dollars: those that already stream their content on CTV, and those that have video content on their owned and operated properties that they’re not monetizing via CTV yet. 

We’ve heard about leading publishers who have launched their own video apps on CTV services including The Economist, Vox, the Wall Street Journal, and the Washington Post. But across the broader landscape of publishers who produce the high-quality video content advertisers crave, there’s a great untapped opportunity for ad revenue. 

Good news for publishers: The bar for entering the CTV space isn’t nearly as high as it was a few years ago. Free ad-supported streaming TV (FAST) services have democratized access to the streaming ad market, as it’s not nearly as costly as developing a subscription app – the means of access in the days before FAST. 

Publishers who already have the video content can launch their own channels across multiple CTV platforms and devices, at a reasonable cost. For the great many publishers who already have experience syndicating video across social channels, it’s an intuitive move and it opens up inventory that delivers higher CPMs, is more desirable to advertisers than pre-roll on the video players hosted on publishers’ own digital properties, and presents opportunities for advertisers to connect with viewers in a wider variety of viewing environments and viewer mindsets. 

CTV calls for a strong data strategy

Expanding to CTV will be an easier task for publishers who partner with data platforms that offer flexibility and interoperability. The limited availability of actionable, scalable first-party data remains a pain point not only for advertisers, but for publishers looking to get into streaming. This presents challenges in working across streaming platforms and devices, which have their own data but are reticent to share it. To drive the most revenue, publishers will want to be able to connect their data with any of their ad partners who need it for campaign optimization. That means the ability to solve for identity, and to provide interoperability, are essential pieces of the puzzle.

A solid, well-applied data strategy opens up key advertising functions like cross-platform targeting, frequency capping, and personalization at scale. Publishers don’t have to consider themselves out on their own in sourcing the necessary data, though. Streaming device makers are one place to look, although publishers may need to match the device makers’ proprietary IDs for actionable cross-platform insights. Using IP as a proxy (common in CTV) enables measurement in CTV, although IP may not be the best proxy in other digital environments, or for targeting at the individual level. Demographic, location, behavioral, and other data from data providers will enable programmatic buying, and incentivize advertisers that want the scale and efficiency of programmatic. 

To get the most value from CTV, publishers benefit from having a capacity to break down data silos and unify all identifiers (and the data signals used for ID enrichment). This opens up access – access to inventory for buyers, and to new revenue for publishers. It also allows for targeting across the broader ad ecosystem, while limiting wasted spend. 

A strategy that unifies data from relevant sources, and the ability to solve for identity, enhances a publisher’s value proposition to advertisers in CTV. It presents a great revenue opportunity for publishers. And delivering the value of actionable data insights is central to deepening long-term relationships with advertisers.

Making the most of the opportunity

At this stage of the CTV marketplace’s growth, there’s a real opportunity for any creator with quality video content. Therefore, publishers should be taking advantage of their video libraries. To fully capitalize on those advantages, they’ll need to be able to access and fully leverage the data that advertisers are looking for. 

Publishers who can bring both to CTV will be in a better position to weather economic unpredictability that may come to the digital media marketplace in coming months and years. Resilience hinges upon the ability to vary revenue sources, reach new audiences, and capitalize on an ever-expanding viewer base. And a strong data strategy, based on bringing together data from all relevant sources, will be key to truly realizing the revenue potential CTV holds. 

About the author

For over a decade Hunter has held and managed a variety of sales, consulting, and partnership positions in Advertising/Marketing Technology (#MADtech) throughout the US, Southeast Asia, and Australia. Currently based in Baltimore/DC after six years in the Asia Pacific, Hunter leads Lotame’s Connected TV initiative focusing on household graphing, viewership data partnerships, and data enrichment throughout various supply and demand channels.

Prior to his current role, Hunter led Lotame’s Global Solutions Consulting team solving leading marketer and publisher challenges through identity resolution and data enrichment methods. Additionally, Hunter has helped expand the Lotame Sales and Account Management teams in their Singapore and Sydney offices during his tenure in APAC.

Advertising | Revenue | Supporter Spotlight | Video

5 ways the writers’ and actors’ strike will impact advertising

On May 2nd, the Writers Guild of America (WGA), an alliance of over 11k film, TV, news, radio, and online writers went on strike demanding fair contracts and pay stability. They also stated numerous concerns surrounding artificial intelligence. In June 2023, 65k actors from the Screen Actors Guild (SAG) cast their votes to join the strike in support of their colleagues and to protest how technology has affected their wages as well.

There is much talk about the impact the current entertainment industry strike will affect advertising. The truth is, we are just starting to see its influence. This is mostly due to the timing of the strike. Many scripted shows are on hiatus during the summer and typically advertising is purchased well in advance of their run dates. As the strike drags on, the impact will be keenly felt across much of the media industry. 

Here are five ways we will likely see the strike impact advertising’s bottom line.

A short strike may be a win for broadcasters and streamers

In the short term, broadcasters and streamers are likely to see a boost in their profits. While that may seem surprising on the surface, if the strike lasts under four months it’s a real possibility.

Broadcasters and streaming companies have already sold the advertising that will air during these months. Additionally, contractor and personnel costs declined sharply during the early months of the strike. Hopefully, these early profits are reinvested to buy up the rights to movies and content available for sale – as a way to shore up their audiences regardless of the strikes’ duration. 

However, broadcasters and streamers should be prepared with new inventory, so they don’t lose out to social media if the strike continues until early 2024, as many predict it will. They will want to avoid airing reruns instead of new content, since that will affect viewership and in turn advertising revenue will be lower.

Broadcasters will be hit hardest if the strike goes beyond six months

If the strike lasts only a few months, changes in ad spend may be limited. In the short term, we haven’t seen much of an impact on ad sales. However, if the strike goes beyond a few months, the largest TV broadcasters could be hit hardest. Relative to streaming channels, TV broadcasters have more content that’s prepared “just in time.” 

Unscripted television, like variety shows, reality shows, and game shows have not been impacted by the strike too much. However, we do see a hit to lucrative late-night talk shows, which have already been off the air for a couple of months. This programming relies on writers who have been on strike since early May. 

Prime time advertising is estimated at $13.1 billion during the first half of 2023, which makes up 50% of all national TV ad spend. If the strike is prolonged, we could easily see some weekly prime-time TV shows off the air after a few months of their Fall debuts, as a result of new episodes not being completed.

Media & entertainment advertising will suffer across media

Movies, streaming services, and TV shows (along with others that support the industry) invested over $3.9 billion from January through June 2023. This represents 39% of the total ad spend from media and entertainment advertisers ($10 billion). This estimated advertising investment reaches beyond just TV, to over a dozen media formats. Since the start of the strike, we saw a dip in May YoY (4%). However, in June this segment was already down 26% YoY.  As the strike continues, advertising to promote movies, shows, and streaming services will likely continue to decrease and shift in investment. 

A prolonged strike may even prompt the largest U.S. firms to move more English-language production outside the U.S., to work around the problem entirely. Many countries have none of the protections offered to SAG members in the U.S., offering a viable alternative to production companies. 

Streaming and social platforms may experience a resurgence due to the strike

Streaming channels have significant material pre-recorded, “in the can.” This gives them the  ability to release movies, mini-series, and documentaries. If they have new content while broadcasters are struggling to recreate fall lineups, streamers will benefit. Netflix’s CEO has already said they’ve been preparing for the strike for some time and will stretch out their new releases.

In the event of a longer strike, streaming channels can easily dub content from outside the U.S. and show it here. We saw this during the pandemic. For example, Netflix saw great success airing the South Korean survival drama, Squid Game in the US. Another example, and a personal favorite of mine, was the HBO produced sci-fi flick, Beforeigners. This show  was originally produced in Norway and was dubbed and placed in their U.S. lineup. 

We are also likely to see social video platforms like YouTube, TikTok, and Instagram benefit from a prolonged strike. Their content producers are independent and non-unionized so these platforms will not see a pause in content creation. Viewing hours could easily surge as they did during the pandemic, which will drive more advertising dollars away from traditional broadcasters and toward streaming and social platforms.

Sports and news content will be sold at even more of a premium

Broadcasters with sports rights could do well in this environment because sports content is likely to be one area that isn’t negatively affected by the strike. Broadcasters will likely lean into more active coverage of sports. And they can use the strike as ammunition to defend the high price of sports licensing fees. 

We also predict that news broadcasters will sell advertising at a premium as well. News broadcasters are covered by SAG, but they have their own separate contract. As a result, news programming and advertising supporting it will continue and may even expand. Media like CNBC, NPR, Bloomberg, etc. will be mostly unaffected.

While the full impact of the writers’ and actors’ strike is still very much uncertain, it is expected to result in notable alterations and realignments of advertising investment in the upcoming months. While some may experience short-term advantages due to reduced costs and pre-sold advertising, the long-term impact could profoundly impact advertising investment across media.

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