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Perspectives | Revenue | Supporter Spotlight

How publishers can ride the retail media wave

It ain’t hype anymore—retail media is real, and it is spectacular. eMarketer calls retail media the “third wave of digital advertising,” with U.S. ad spend expected to hit $41 billion in 2022. Boston Consulting Group predicts retail media will account for 25% of digital media spending by 2026. 

The channel has arguably revived Criteo’s fortunes as the third-party cookie dwindles into irrelevance. Walmart, Target, Kroger, Best Buy, Home Depot, Gap, CVS—it seems like every other week another major retailer carts out a brand-spanking-new retail media network. 

All that ad spend sure sounds great for retailers. But what about publishers? Are retailers siphoning spend away from the already beleaguered publisher set? 

Quite the opposite, in fact. The retail media revolution is helping line the pockets of premium publishers.

Cautious journey to digital advertising

In a nutshell, retail media is when retailers offer advertising access to their customers on-property (or off-property). It’s not a new concept by any means, but it’s been mainly relegated to advertiser campaigns in actual brick and mortar stores. (Think about specialty brand displays at department stores or supermarkets.)

While retailers’ online traffic grew with the rise of ecommerce, many were reluctant to plunge into digital advertising because of their hyper focus on user experience. A 2006 Amazon study famously found that every 100ms in extra load time cost 1% in sales; a 2017 Akamai followup suggested that every 100ms of latency cut conversions by 7%.

Unfortunately, digital advertising has a bad reputation for latency, as well as other factors that ruin user experience: gauche creative, code that breaks a page, open doors to device-infecting malware, etc. All those issues can arise before programmatic enters the picture. With bad user experience being detrimental to online sales, digital advertising simply wasn’t worth the risk for most retailers.

Yet they no doubt had their eye on Amazon’s flourishing ad business. There should be an asterisk by eMarketer’s $41 billion in 2022 US ad spend figure: about 78% of that goes to Amazon. However, the $9 billion left over is nothing to sneeze at, and you may have noticed Amazon does a fair deal of third-party media buying. 

U.S. retail mainstays like Walmart, Target, and Kroger have been ramping up their digital retail media operations for the last five years. And then came the Covid pandemic: Suddenly consumers weren’t in stores; they were flooding websites and apps and racking up online orders. The opportunity to monetize this traffic was just too good to pass up, especially as major retail brands had proven that integrating ads wouldn’t necessarily harm user experience.

Advertiser appeal

Retailers have the kind of high-quality audience data that make advertisers swoon. Through tools like loyalty programs, many retailers boast comprehensive customer profiles that can be used for precise targeting. Retailers are stocking up on data scientists to drive customer insights and behavioral trends, and for many advertisers measurement goes all the way to point of sale. 

In addition, retail sites and apps are a data oasis in the increasingly untargetable mobile ecosystem. The presence of emails and other deterministic identifiers make retailers ideal partners for identity solutions like LiveRamp and LiveIntent in finding audiences on third-party properties.

On-property advertising is really only the jump-off point. The huge gains are in audience extension, or when retailers start finding their customers on third-party sites and apps. 

Quality quest

That’s where premium publishers come in. When asked at the IAB Annual Leadership Meeting in January if she felt that retail media networks were a threat to revenue, BET EVP and CMO Kimberly Evans Paige replied, no—we’re partnering with them. 

Advertising revenue is incremental for retailers. Therefore, advertising must be accretive to the core revenue business. On-property, this means high-quality, brand-safe ads that don’t cause latency. Landing pages can’t send customers to competitor sites and only authorized vendors can be allowed through the pipes, lest data leakage become a concern.

Going off-property is not just extending the audience, but also the retailer brand. During an AdMonsters Ops session in June, Christine Foster, Vice President, Media Operations at Kroger mentioned that a great deal of their offsite ads are actually co-branded. So, retailers with big advertiser budgets in tow may be reticent about appearing adjacent low-quality ads, scam ads, or ads with questionable content, which could range from gambling to marijuana to even crypto. 

When retailers buy off property, they need high-quality inventory in well-lit spaces. To ensure brand safety—both their own and advertisers’—retailers are pursuing guaranteed direct deals with premium publishers as well as private marketplace arrangements. Certainly, major publisher brands with massive traffic are already benefiting. But there’s definitely room out there for niche publishers with ties to specialized retailers.

Lifting all boats

The excitement around retail media stems from the fact it’s beneficial for just about every party in the digital media ecosystem: Advertisers reach key audiences with confidence; ad tech companies like Criteo and CitrusAds develop new business; publishers gain revenue; and of course retailers are able to further monetize their customer data. 

Publishers of all sizes need to investigate retail media opportunities. However, they also need to understand that their ability to rake in revenue here greatly depends on the quality of their environments.

Featured Post | Revenue

Audience trust drives Wirecutter’s affiliate strategy

Leilani Han
Executive Director of Commerce, Wirecutter

Affiliate marketing is a dynamic endeavor, with myriad factors driving strategic decisions on how to sustain a healthy revenue stream while maintaining consumer trust.

In this Q & A, Leilani Han, Wirecutter’s executive director of commerce, shares her insights on strategies driving Wirecutter’s success.

DCN: There appears to be a renewed or intensified interest in affiliate marketing as a revenue diversification strategy. How do you see it?

Han: There’s always been a keen interest in affiliate marketing, but the space has certainly evolved with who was investing in the channel over the last 10 years. In our space, we’ve seen many media companies realize this was a smart strategy for engaging with your audience more deeply while providing a service to them that could evolve into a revenue stream.

This coincided with an evolution in the consumers’ relationship with their shopping journey. Affiliate has the unique capabilities of encompassing all channels so that it fits in perfectly with social media, the internet, and being able to provide greater value to people’s lives.

Wirecutter has been at the forefront of this trend, as we helped to prove to others this model could scale successfully. Today, millions of readers turn to Wirecutter’s advice for inspiration and making smarter shopping decisions.

DCN: What is your company’s approach to affiliate marketing, content/commerce mix, video, social?

Han: Our recommendations – and affiliate marketing – have always been at the core of our business since its 2011 launch. While we’re technically classified as commerce content, we don’t separate our work into content or commerce. We are simply focused on providing the best service journalism to our readers.

Compared to competitors, we are not in the business of worshiping products. We are in the business of helping users find out what is worth paying for and what is the best product for the price. We employ a journalistic, methodical process to uncover the right information.

We make a recommendation – not just a review. We communicate in a way that is relatable and direct – not academic. Wirecutter cuts the time and stress of shopping by providing direct and actionable buying advice.

We knew if we took care of the reader experience and prioritized their trust in us above all else, the monetization follows. That’s an indication we’re hitting the mark on being helpful to them. That’s a balance we have to strike to serve our readers and our ability to monetize. Our team does a great job of finding that balance.

As digital innovation has evolved over the years, so have the channels through which we can reach our audiences. We view video and social media as another way to introduce new readers to our advice while reaching them in the moment in the spaces where they’re organically spending their time.

DCN: What are the driving factors underscoring where to put the efforts?

Han: Our core mission is to serve our readers with helpful advice and earn their trust. Our recommendations are at the center of our efforts. We try to be thoughtful about how we engage with our audiences and whether we’re successful in meeting their needs.

We aim to be as impartial as possible from any business interests. Our approach is being transparent through every point of the user experience. 

The affiliate model aligns well with our reader service mission because we do not earn commissions if we are not successful in earning trust and making the right recommendations. A successful affiliate business is a clear indicator we are doing right by the reader. The data helps inform us whether we’re meeting the mark on what readers need advice on and what to buy.

Learn more about the Wirecutter’s policy.

DCN: How do you mitigate the inherent challenges?

Han: One of the biggest challenges at the beginning is figuring out what resonates with your readers, how you can gain traction with them to return and click through to purchase, and then scaling that in a way that honors your service for your readers. While affiliate marketing can be a very meaningful revenue stream, it is not as turnkey as some other channels. It requires time, effort, and a lot of testing to eventually find the sweet spot of your editorial voice and how to monetize effectively.

Another challenge is in how to strike the right balance between sources that are key drivers of your business and ensuring you’re diversified enough to withstand changes that are outside of your control.

One example of this for Wirecutter is organic search and the ever-changing algorithms that can impact how much traffic is coming to your site.

Last fall, we launched a subscription product because we know that our journalism is worth paying for and we are focused on deepening our relationship with our readers. This allows us to reach these readers directly and lessen our reliance on other traffic sources to bring readers back to Wirecutter. So far, we are seeing positive results that confirm our belief that Wirecutter’s service journalism is a meaningful resource in people’s lives.

Despite our priority to grow our subscriber base, we are continuing to focus on our affiliate business as well. Our affiliate business model remains unchanged. If you click a link on our site and buy something we recommend, we may receive a commission.

As always, our writers and editors are never made aware of any business relationships we have with retailers. We’ll continue to make picks independent of all business and financial interests. Those things will never change: helping readers make the right buying decisions will always come first.

The change happening with browser updates and privacy regulations is also top of mind for many publishers and what the deprecation of cookies means for the industry. Many of the major affiliate networks have been addressing this by updating their tracking technology to help mitigate any losses from these changes, while Wirecutter has proprietary technology that has also helped us to mitigate any loss.

Perspectives | Revenue | Supporter Spotlight

Most paid subscriptions are for streaming services. Learn how they win customers

In a recent survey about the impacts of the pandemic and the overall sentiment of U.S. subscribers, Recurly found that 87% of respondents have a subscription to at least one streaming video service and 46% have a subscription to at least one streaming audio service. The increasing ubiquity of streaming subscription services leaves little to question about their popularity among consumers, particularly the Gen Z and Millennial generations. In order to rank among the highest-rated streaming subscription services like Netflix, Amazon Prime Video, and Disney+, it’s important for subscription businesses to understand consumer behaviors and motivations that promote retention and preserve subscriber loyalty. 

In this article, you’ll learn how streaming subscription services and changing consumer habits have existed harmoniously and how they continue to thrive in an economy captivated by recurring revenue businesses.

Streaming service industry trends

At the core of any successful subscription offering is the subscriber experience, and an ideal subscriber experience starts with studying subscriber wants and needs for informed decision-making. One of the most important survey results concludes that consumers subscribe to goods and services because of brand preference, access to discounts as subscribers, help to manage a budget, and more. However, the prevailing motivation is content, and not just any content – exclusive content, as well as value and convenience. 

Our survey results reveal that 40% of consumers rank exclusive access to content or services as the main reason for signing up for a subscription service. Unlike a box of the month, streaming subscription services may give subscribers special access to coveted content such as a highly anticipated series or film. When consumers evaluate a purchase, they consider the value they will receive in exchange for a recurring payment. In this case, the value of a streaming subscription service is presented in the form of content, and the more exclusive the content is, the higher the value is to the subscriber.

How consumer sentiment affects demand

As a consequence of the pandemic, 91% of U.S. consumers are concerned about inflation and its impact on the cost of goods and services. Coupled with the recent news of Netflix losing 200,000 subscribers, many streaming subscription services are struggling to get a grasp on subscriber churn. However, despite climbing costs and unpredictable consumer behaviors, 68% of consumers still signed up for another streaming video service and 31% signed up for another streaming audio service in the last year. Furthermore, the same subscribers expect to use streaming video (78%) and streaming audio (36%) subscriptions the most this year.

Pertinent value remains a strong factor in subscribers’ purchasing decisions. For streaming services, this is an opportunity on which to capitalize. From promotions and free trials to the freedom to pause as a subscriber, streaming subscription services can strategically adapt to developing consumer behavior trends via stronger value manifestations. Rising costs may be inevitable, but how these changes are packaged and delivered plays a vital role in influencing consumer perceptions of your business. 

The smartest streaming subscription services don’t let value decline as the pandemic shifts the economy. Instead, they create value in novel ways. Recommended content and complementary goods and services in new forms are just a couple of ways to retain subscribers and remind them of the value they receive from your streaming subscription service.

A change in consumer expectations

Nowadays, with just a few simple clicks to manage an account, streaming subscription services have proven that convenience is more impactful to the subscriber journey than many initially thought. While traditional subscription convenience is typically defined as routine home deliveries, in the streaming space, convenience can also refer to the ease of setting up, changing, or canceling a subscription. 

A majority of survey respondents (62%) value this accessibility when considering a new subscription. Streaming subscription services, which are largely self-managed by the subscriber, make account changes as easy as possible – an intelligent response to changing behaviors and motivations. As a result, the subscriber experience faces little disruption. These considerations should extend into thoughtful dunning strategies and even the renewal or cancellation experiences for a seamless ordeal throughout the journey. While the decision to continue with a subscription is ultimately in the hands of the customer, the touchpoints throughout any subscriber journey contribute to the overall perception of a service.

The success of streaming subscription services

Streaming subscription services are one of the few businesses that can repeatedly present exclusive content as its main value driver. From a consumer’s perspective, this is one of the most enticing reasons to subscribe to a service, alongside relevant value and flexibility. Undoubtedly, streaming media subscriptions have a competitive advantage over their counterparts, and that edge only remains intact when the subscriber is placed at the center of a thoughtfully planned customer journey.

About the author

Theresa Mcendree is the Chief Marketing Officer at Recurly, a subscription management and billing platform that maximizes subscriber lifetime value with expertise, technology, and insights for global brands.

Featured Post | Revenue

What The Economist’s move into education can teach other publishers

Education may not be an obvious segue for a news publisher. But when you look more closely, it can actually be an incredibly powerful way to leverage the expertise of journalists to create something valuable for your audience (and bottom line). The Economist launched its Executive Education pillar in February 2021 as a growth initiative that would allow it to leverage its journalists’ deep knowledge and understanding of global issues. 

The education sector itself is vast, and there are many routes publishers could take, from accredited courses to partnerships with schools and universities. The Economist decided to focus on its existing audience, and tailor its courses at highly qualified senior executives. “We’re already catering to the needs of mid-career executives who are upskilling, and that’s our target audience for our courses,” explained Fionnuala Duggan, Executive Director of Education at The Economist Group Media.

“We chose a format for a course and topics that would resonate well with them and at the level they were looking for. The whole operation is pitched to their needs in terms of their ongoing executive development, corporate professional development and career development.”  

Now, they are expanding their offering with a new course on fintech and the future of finance. Billed as giving attendees a “future-focused view of the major issues”, the aim is to demystify personal fintech, blockchain, and cryptocurrencies. Notably, the program will draw in implications for both the business and personal lives rather than being solely work-related.

Quality not quantity

Each course runs for an average of six weeks, and requires between 6-8 hours a week from participants. They are delivered online, which was a pre-pandemic decision to widen participation to a global audience. Courses contain a mix of writing, infographics, video, audio and links. Each is led by a head tutor alongside a team of tutors who guide students through each week. 

The Economist decided to take a guided approach with scheduled start and end dates rather than run on-demand courses because it offered a higher quality experience. Having tutors that can answer questions, stimulate discussion and provide feedback helps participants get more out of the courses, which underpins the value of the four-figure price tag. 

Duggan also noted that having a schedule means they can bring participants together. “There are around 72 countries represented in most courses,” she said. “If you’re discussing something like international relations with people from the U.S., Australia and central Asia, you get all these different perspectives. There’s an enormous amount of learning from each other.”

Although the courses may run to schedule, they are far from being one-hit wonders. The first course Economist Education ran was on International Relations, which is now on its sixth presentation. “Each of these courses takes quite a long time to develop — four or five months,” Duggan said. “That’s why we have a smaller number of courses that are high quality.”

Blending journalism and pedagogy

One key part of the publisher’s approach has been separating the focus of this pillar from the rest of the business. Although there is a great deal of collaboration between the departments, their approach is different. “We’re not in the media business,” Duggan said. “We’re in the business of education. But we’ve benefited enormously from all the things that The Economist and The Economist Group has.”

This has also meant the team are able to acknowledge what strengths they don’t have within the business. Duggan was cognizant of the fact that The Economist had never run courses before, and that this needed additional expertise in order to meet audience expectations. They chose to partner with GetSmarter, an EdTech firm who deliver online education from world-leading universities like Harvard and Cambridge. 

“We really wanted these courses to be from The Economist, so that they would be able to carry over people’s expectations journalistically, and also bring the coverage into the courses,” Duggan explained. “At the same time, the journalists aren’t teachers. So we’ve found a really cool way of blending what they’re able to bring with the pedagogical expertise that our partner has.”

“This means we have this very constructive, collaborative relationship with the journalists and all of the knowledge and knowhow and context they bring. Our editorial processes are also involved clearly in the editing of the course. And then we bring in the pedagogical experts who can shape the course, and we have the best of both sides.”

Duggan’s advice for other publishers is to focus on getting the proposition right, and partner up if necessary. “For a media brand to go into education, it’s very important to execute very well,” said Duggan. “But it’s also important to understand what your brand brings.” The Economist brand’s vast reach helps with attracting an audience to the course. But that’s not all: The courses put the publisher’s journalistic expertise front and center of both the courses themselves, and the marketing strategy.

“Bringing the newsroom into our courses is absolutely central to our offering,” Duggan emphasized. “When you’re talking about topics that are extensively covered already in our publications, we need to make sure that the courses have the same take on subjects, the same access to the sources the journalists might use, and of course, the journalists themselves, because they are the best people to comment on these topics.”

Top marks and takeaways

The courses so far have been a success. Each one sees completion rates of around 94%. “When very busy executives are giving six to eight hours a week into a course, that’s quite a lot of time,” she said, noting that the lack of attrition highlights the strength of the content. 

The publisher declined to give any specific revenue figures, but did note that each course is attended by between 100-300 people on average. Given the price is £1,475 per person for their current selection, it is safe to assume each course is generating a healthy six-figure sum.

Now Economist Education has established itself and had time to iron out the kinks, they have a wide range of topics they can develop courses on next. Duggan confirmed that their next course will be on sustainability, coming in October. They are also exploring the B2B enterprise market. “From where we are now, there’s plenty of opportunity to continue growing quite quickly,” she noted. “There’s an awful lot of scope in the education sector.”

Although The Economist’s approach is specific to its own needs, there are still plenty of takeaways for other publishers looking to extend into educational courses. First and foremost, it is important to consider what your brand would bring to an education course. There may be lots of opportunities depending on the type of coverage. But educational courses like this are best suited to super-serving existing audiences rather than bringing in additional subscribers.

It is also crucial to acknowledge where skills may be missing at a publication. A well-crafted course will almost certainly need input from educators. Consider partnering with educational institutions or companies who specialize in pedagogy in order to bring the most value to a course. 

Ultimately, however, as publishers’ seek ways to build value for audiences and diversify revenue, there are lessons to be learned from The Economist’s successful addition of an Education pillar. Given a media brand’s strength and deep institutional expertise, there may well be value for audiences that want to engage more intently and enhance their own knowledge further.

Perspectives | Revenue | Supporter Spotlight

Where conversations fit into your paywall strategy

A mid-sized digital media outlet dropping its paywall is not usually the stuff of national news. But when Quartz, the digital business outlet, scrapped its paywall earlier this month, the move was promptly written up in the New York Times. What gives?

The degree of attention paid to Quartz’s decision has something to do with the media environment of the moment. As we’ve written about more than once, digital subscriptions are on the rise across the industry, boosting profits for everyone from the New York Times to local papers in Buffalo and St. Louis.

Still, while subscriptions are generally trending upwards, nothing in the media industry stays static. In fact, just a few weeks later, Quartz announced it had been acquired by G/O Media, whose suite of sites is unpaywalled. It’s possible Quartz was just getting in line with its soon-to-be owner. It’s also possible that it is suggestive of a trend. Either way, it might be worth it to take a step back, assess your current paywall policy, and explore other methods of expanding your revenue strategy.

The power of community

In recent years, the rise in paywalls has grown in tandem with another trend: a renewed interest in community on the part of publishers.

The focus makes sense. Even the biggest publishers—outlets that receive tens of millions of visits per day—see only a fraction of the traffic of the big social platforms. On the internet, it seems, there’s no bigger draw than conversation. Give people a place to be heard, to connect with like-minded individuals, and they will repay you with regular visits: this is one of the main lessons of Web 2.0. It’s no surprise that publishers would want to siphon some of that energy for themselves.

For publishers looking to beef up their owned communities, a fully-paywalled site can be a complex proposition. 

On the one hand, people who actually pay for a subscription are some of the likeliest to comment anyway. A thriving community can absolutely be built exclusively with paid subscribers. Substack’s a great example of this. Many Substackers only let you comment if you subscribe, and nonetheless host sprawling, engaged comments sections. There is also the fact that only letting paid-up members comment almost guarantees a more civil discourse, as it’s unlikely that a troll would actually pay money to annoy people.

On the other hand, comments are an incredible tool for growth—and paywalling all your articles can negate that function.

There is no question that it’s your content that matters most when cultivating readers. But as mentioned: online, community that creates stickiness. Community keeps readers reliably coming back, day after day. Un-paywalled articles allow first-time or occasional visitors to shake up the conversation, keeping things fresh and luring in still more readers (and participants). This can still be possible with a paywall—some percentage of readers, after all, will opt for a free trial and find the conversation that way—but the process might be slower, the growth less explosive.

To paywall or not to paywall?

Obviously, few sites deploy a paywall for every article (though some do—such as The Washington Post). Most, instead, paywall some content and open other content to anyone who wants to read it. Countless strategic concerns go into the decision of what to paywall. What we’d argue—given the importance of community for growth—is that one of those concerns should be: How likely is this article to generate conversation?

This consideration doesn’t have to be incompatible with a normal paywall strategy. In a normal paywall strategy, the articles that are paywalled are those most likely to drive clicks—juicy scoops or exposes, say, or epic longform features. But the articles most likely to generate clicks are not necessarily the ones that will generate the most conversation. They can be, absolutely. However, the truth is that evergreen, lower-stakes content is just as if not more likely to generate vibrant discussion. 

Think, say, a list of the best albums of 1999. Or a quick primer on the best way to cook a steak. Or a write-up of last night’s big prestige-TV finale. Content like that can generate discussion at a surprisingly high volume. It draws in new readers and, in the slightly longer run, subscribers.

All of that said—and despite the Quartz move—there is no real indication that paywalls are on the way out. The beauty of this moment in media is that publishers don’t have to choose. They can grow their audience with paywalls while they can grow their audience with community (and with social media, live events, ecommerce, etc. The options right now are endless, as discussed in our recent guide). 

What an engaged community can offer, more immediately than many other revenue concepts, is engagement. Higher engagement means more pageviews and––when leveraged to sell subscriptions or place ads––stronger, more diversified revenue for publishers.

Perspectives | Revenue | Supporter Spotlight

Diversify strategies to survive “peak subscription”

Once seemingly unstoppable, subscription-based digital media services like Netflix now look vulnerable. Netflix reported seeing a drop in subscribers for the first time in 10 years, prompting a recent selloff that shaved more than $50 billion off the company’s market cap. Other streaming services, from Disney to Roku, also reported similar drops. Many worry that we’re witnessing a phenomenon known as “peak subscription,” where consumers facing an increasingly uncertain global economy are growing weary of committing to a laundry list of ongoing subscriptions.

Some publishers have felt the repercussions of peak subscriptions and competition from free alternatives. Quartz reported that some readers subscribe just to read one specific article and then quickly unsubscribe afterward; behavior that hindered real growth. Although metered paywalls have proven effective at driving subscriptions for many publishers, some believe it is a “blunt-force instrument” that won’t work for everyone.

Even as the total number of subscriptions is still high across publishers and creators, there are concerns that the supply of content sources outstrips demand, particularly when we consider more commoditized content. Despite the fact that the global subscription economy is projected to grow by $51 billion dollars in 2022, competition is fierce – even for the likes of Netflix. 

As subscription fatigue becomes a growing concern, and competition among subscription-based content of all kinds continues to intensify, media companies seek ways to go beyond pure subscriptions and increase their revenue. The good news is that various solutions already exist.

Redefining the journey to becoming a subscriber 

One of the key solutions to combat subscription fatigue is to let audiences become paying readers and members at their own pace. Instead of asking people to lock themselves into a subscription model off the bat, some companies monetize the subscriber journey in smaller steps.

To move away from relying solely on the one-size-fits-all subscription model, streaming services like Disney+ have opted to offer a lower-cost version of their service that includes ads. The potential rewards of this move are clear: Disney’s own Hulu streaming service has turned commercials into a $1 billion revenue stream. Comcast’s Peacock and AT&T’s HBO Max now both come with ad-supported and ad-free versions. Even Netflix, which stood clearly opposed to integrating ads in the past, will now launch an ad-supported version sometime in the future.

Publishers such as Vox and The Guardian have also moved to a membership model, believing that readers will want to voluntarily support their publication even without the added pressure of a paywall. 

Quartz also offers a subscriber-only newsletter that gives paying members exclusive access to additional content and various other benefits. However, it has made content on its main site free to access. Vice News has opted for an even more reader-friendly approach by adding a “tip jar” to its website, in case readers want to voluntarily make a contribution to the publisher.

The demand for incremental revenue streams to reach readers averse to committing to a subscription is why à-la-carte payment solutions emerged for publishers and content creators. These solutions allow users to buy paywalled text, audio, or video content with one-off payments or make voluntary contributions for open content.

Publications understand that having multiple monetization solutions builds engagement from different audience segments. This also feeds the subscription funnel with loyal users. Instead of asking casual visitors to commit to a subscription with discount offers, they are given the chance to engage in incremental steps. 

The new era of reader revenue

The shift from relying solely on subscriptions signifies a clear acknowledgment of the need to give consumers flexibility and freedom. For audiences, this is a sure boost to their overall experience.

Digital publishers and content creators will benefit as well. Overall, a growing number of people are willing to pay for content. According to the 2021 Digital News Report from Reuters, 17% of people surveyed stated they were ready to pay for media content — a definite increase from the previous year.

Offering multiple reader-revenue solutions like exclusive memberships, micro-bundles, ad-supported bundles, à-la-carte payments, and even a tip jar makes it easier for publishers and content creators to monetize different audiences segments and capture rich first-party data. Alienating large swaths of audiences with an all-you-can-eat subscription offer will no longer suffice in a world where users are spoiled with choices.

It is also imperative to understand users’ willingness to pay for different types of content. For example, the exact same content bundle might be worth $10 per month to half of your audience and worth $5 per month to the other half. The one-size approach is to offer a $7.50 bundle to everyone. However, the maximum revenue approach entails creating two separate bundles for each of the audience segments. Unbundling content to understand user willingness to pay for each type of content can actually pave the way for publishers to resurrect the appropriately priced recurring payments. 

If you’re a subscription-based digital publisher, the message is clear: the time to look for incremental ways to monetize and engage with a wider audience — including the elusive “never subscribers” — is now. Learning from the examples set by the companies above will save you from wasting time forcing one, rigid monetization strategy on an audience that doesn’t want it.  

About the author

Dushyant is a Co-Founder & Chief Commercial Officer at Fewcents, a plug-and-play solution that helps digital publishers and creators monetize content with cross-border micropayments in the form of pay-per-content or tips. He spent 13 years at Google where he led strategic partnerships, working closely with some of the biggest digital publishers in Asia. Prior to Google, Dushyant has worked at SAP Ariba, American Express, and two tech startups. He holds an MBA from the ISB, Hyderabad and is an active angel investor & advisor for startups in Southeast Asia.

Diversity, Equity & Inclusion | Industry-Research | Revenue

Data and revenue diversification dominate publisher strategies 

Publishers continue to remain highly focused on revenue diversification and the value of first party data according to new research from the Association of Online Publishers (AOP), a UK industry body that represents digital publishing companies. The AOP undertook its Digital Publishing: Meeting the Future survey to provide “a snapshot of how digital publishing companies across the UK are continuing to respond to the challenge to change.” The research offers a look at publishers’ business priorities and the future-readiness of the media industry.   

The AOP carried out its survey between January 5 and February 9 of 2022. Of the 111 responses, 83% were from publishers and 17% from organizations providing solutions to the publishing sector. 

Diversifying revenue streams  

Across all types of publishers (B2B, B2C, or a combination), respondents said that their highest priority is developing new revenue streams through product innovation. Ensuring data privacy compliance and transparency ranked second. 

The AOP’s publisher respondents ranked opportunities for revenue growth over the next three years. More than half (55%) feel that subscriptions are the big revenue opportunity right now, with lead generation-based revenues ranking second (33%). The report concludes that these findings mean that publishers are highly focused on building direct relationships with audiences and leveraging their first party data. 

Audio and ecommerce tied for third (31%) in terms of revenue priorities, which points to continued revenue-model innovation. The research finds that both B2B and B2C publishers agreed that subscriptions have the most potential for growth. However, publishers that target both B2B and consumer audiences saw ecommerce as the most promising revenue generator. 

Data dominates  

While publisher concerns about ensuring privacy and providing transparency rank high, they clearly know the value of their first party data and seek to maximize its use. According to the report, publishers are focused on building the right ecosystem of commercial, data, and tech partnerships.  

In the shadow of cookie deprecation, some publishers are considering collaborating on data initiatives. AOP found that, while 12% of publisher respondents are unsure of their next moves and 12% do not expect to collaborate, many publishers are either already collaborating (20%), are discussing collaborating (16%),  or are open to the possibility of collaboration (40%).  

The majority (75%) of publishers said that they are working to ensure that audience data informs everything they do and that they are investing in tools to help achieve this. Despite the emphasis on data, however, only 17% of publishers said that all their teams are aligned internally around their audience data. Half of the solutions provider respondents suggest that, while publishers understand being joined up internally around audience data is important, many don’t yet have a strategy in place to achieve their goals. 

Workforce and workplace concerns 

Interestingly, recruiting and retaining talent, and ensuring a diverse and inclusive workplace, are rated higher (tying for third place with “developing new first party data strategies”) than the tech-based challenges you might expect the digital publishing sector to be focused on.   

Most respondents (75%) report that “supporting and retaining current employees” is their top priority when it comes to recruitment and workforce development. This was followed by adapting the publisher’s offering to appeal to new talent entering the industry.  

Putting in place recruitment processes that eliminate bias and support the development of a more diverse workforce is ranked third here. However, when asked how they would describe their organization’s diversity, equity & inclusion (DE&I) strategy, respondents suggest confidence in their progress on this challenge. Just over half (51%) believe they have made good progress with areas for continued improvement, and 24% believe they have an effective DE&I strategy. Only 5% of respondents don’t believe they have a clear strategy on DE&I. 

As Covid-19 restrictions are being eased in the UK and elsewhere, publishers are evaluating their working environments and plans to return to offices. This survey found that 37% of respondents say their ideal working pattern would be to work from the office two days a week and 24% would be happy to come in for the occasional key meeting, but primarily work from home.  

Nearly a third (30%) of respondents expect their employers to be fully flexible and happy for them to choose to work as they wish. However, 66% believe they will be asked to work at least a few days in the office each week. 

Clearly, the past couple of years have seen trends like ecommerce intensify and placed increased pressure on publishers to innovate. That innovation has, unsurprisingly, focused on product and revenue. However, it has also required publishers to reexamine workplace culture, recruiting, and retention strategies. The AOP’s survey finds that digital publishing companies that understand the bigger picture challenges and have identified many opportunities. However, it appears that they may still be working through the best tactics and strategies to provide the requisite competitive advantage moving forward.  

Featured Post | Revenue

How a one dollar offer drives The Boston Globe’s subscription success story

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.”

Perspectives | Revenue | Supporter Spotlight

What’s ahead for ecommerce? 3 trends for publishers to watch

If we’ve learned anything over the past few years, it’s that almost anything is possible. For better or worse, the future is highly unpredictable, which can make long-term planning difficult. One of the best ways to prepare for the future — whatever it may bring — is by keeping up with industry trends.

That said, one looks to be a sure bet: ecommerce. Undoubtedly, this is a revenue trend that will only grow in importance for publishers. According to GroupM, “By 2024 retail-focused ecommerce will amount to $7T in annual sales activity or 25% of all retail sales.” And the effects of the Covid-19 pandemic have only continued to accelerate the adoption of online shopping and the move away from traditional brick-and-mortar retail.

For publishers, creating an ecommerce strategy that is optimized for impact is more important than ever.

If you’re looking for expert perspective on the trends that are shaping ecommerce and their implications for publishers, take the time to read Ecommerce in Publishing: Trends and Strategies. Published by What’s New in Publishing, the report offers deep insights into the ecommerce space to help publishers deliver an exceptional shopping experience and maximize revenue.

3 trends to watch

Ecommerce is evolving rapidly, as new technologies emerge, and consumer expectations continue to rise. We’re already seeing the impact of these three trends, but they are likely to become increasingly more prominent.

1. Friction-free experiences

Publishers and retailers alike are focused on creating smooth, seamless ecommerce experiences. That means empowering consumers to complete a purchase quickly and easily, in as few steps as possible.

For example, an inefficient ecommerce experience might send readers from your content to a merchant page where they must search for the featured product, visit the product page, add the item to their shopping cart, and finally check out. Shoppable technology can streamline the process, allowing consumers to go directly to the desired product page — or even add merchandise to their cart from a link in your content.

Reducing friction is beneficial for both publishers and merchants, as it lessens consumer frustration and increases conversions. And consumers increasingly expect this type of functionality, so they can shop whenever, wherever, and however they prefer.

2. New payment methods

The practice of buy-now-pay-later (BNPL) is growing in popularity among major retailers, who are eager to provide consumers with easy payment options. This trend is beginning to catch on among publishers as well — especially with those who already leverage ecommerce as a core part of their business.

BNPL is essentially a type of short-term financing that allows consumers to make a purchase now and pay for it in the future — often in multiple, interest-free installments. As consumers get accustomed to this type of payment option in the retail world, it’s likely that publishers will need to follow suit to avoid missing out on valuable ecommerce revenue.

On the outskirts of the payment method trend, a few publishers are experimenting with purchases using cryptocurrency or even text-to-buy — although these are far from common.

3. Social commerce

A frictionless experience is integral to social commerce, which allows consumers to make purchases through apps and social channels. This segment of the ecommerce market is growing rapidly, from $89.4 billion in late 2020 to a projected $604.5 billion within seven years.

With numbers like these, it’s no surprise that publishers are exploring new ways to monetize user engagement on social media. Ecommerce opportunities are the next logical step for influencer-focused channels like Pinterest and Instagram, so users can immediately purchase the products they see.

Channels like Instagram, Pinterest, Facebook, and Snapchat are rapidly expanding their shopping tools and functionality, which can help publishers tap into this trend. After all, research shows that finding inspiration and products to buy is cited as one of the main reasons today’s consumers use social media.

The continued growth of ecommerce has become a potential revenue stream that is too big for many

publishers to ignore. By partnering with platforms, retailers and other service providers publishers can create rich ecommerce experiences, offering the type of online shopping experiences that consumers now demand. Those that don’t risk being left behind, leaving much of ecommerce’s potential unrealized.

About the author

Rebecca Cole is the Director of Content and Communications for Sovrn, a publishing technology platform that provides advertising tools, technologies, and services for content creators to build their businesses, remain independent and thrive on the Open Web. Rebecca has more than two decades of experience driving increased attention through purpose-driven content. She has held communications positions in tech, energy, and consumer brands and was a journalist and editor. Rebecca has an undergraduate degree from The University of Iowa and a master’s degree in journalism from The University of Colorado Boulder.

Featured Post | Innovation | Revenue

How NYMag, NYT and Atlantic are leveling-up their game strategy

Last month’s Wordle acquisition by The New York Times hit headlines inside and outside the media world. It serves as a useful reminder of the value of simplicity in creating a successful game. However, it also reinforced the NYT’s ambition to be the destination for people spending time online.

The subscription behemoth isn’t the only publisher looking to level up in games. As the pressure to gain and retain subscribers grows, publishers are using puzzles not just to build habit, but to open a two-way relationship with readers – and their friends. 

A move to daily games

Jonathan Knight, The New York Times’ General Manager of Games, sees a correlation between daily engagement with the games and long term retention. “We see it as a great diversion from the news, when the news can often be quite rough,” he said. “We have a lot of people who are coming to read the news, and then the games are the ‘dessert’ at the end of the meal.”

Sensing an opportunity with a new wave of daily puzzle enthusiasts, New York Magazine announced a new crossword in January – with a twist. The 10×10 puzzle, housed under the Vulture brand, is entirely focused on entertainment and pop-culture. 

“We explored a few different avenues. But eventually we realized that what made the most sense was to start with something we already had,”said Vulture Editor Neil Janowitz. The 10×10 format is a relatively digestible puzzle that can typically be solved in under six minutes. But it also sits comfortably alongside the flagship New York crossword.

As the biggest site in the magazine’s network, Vulture made the most sense to house the new puzzle. “There’s a clarity and simplicity to making it a pop culture puzzle that everybody can immediately understand,” Janowitz added.  “You can put 10 crosswords side by side, and you can clearly pick out the one that Vulture published, because it feels like us.”

The Atlantic launched its mini daily crossword puzzle in October 2018, ahead of the publisher’s wider digital subscription drive. This one gets a little bigger and more challenging as the week goes on. “In addition to all the journalism we provide, we were drawn to the idea of giving people a moment of whimsy,” explained Executive Editor Adrienne LaFrance.

A gateway to subscriptions

The New York Times has taken a layered approach to its puzzles in order to entice players. Their ‘The Mini’ crossword is free to play for everyone. But if a user wants to be a part of the leaderboard and compete with friends, that’s a subscriber benefit. “That’s a great example of how we’ve managed to build a huge audience with daily engagement on a game that has a couple of layers to it,” Knight explained. Similarly the Spelling Bee word game has higher ranks of the game that are only accessible to subscribers.

The hope is that newly-acquired Wordle will introduce even more people to the NYT’s stable of games. “We want more people spending more time with the New York Times, and [the Wordle acquisition] plays a key role in that,” Knight commented.

Knight is committed to keeping the popular word game free on the site. They have no plans worked out for any other layers to it yet. But looking at where the subscriber walls fall on other NYT games, it is not inconceivable  that leaderboards or additional levels could be added to Wordle as a subscriber-only perk.

The Atlantic’s crossword is also free to play. LaFrance sees this approach as habit-building. “If people are developing a regular relationship through the puzzle, meaning they’re coming back every day, these puzzles become a ritual,” she said. “It’s useful because people are going from the puzzle to reading. So it means developing a deeper relationship, not just with the puzzle, but with The Atlantic as a whole.”

Both the Vulture 10×10 and New York Magazine’s other puzzles sit outside the paywall. Readers can play as many as they want, and will only hit the metered paywall when they try to read an article. It’s an experiment for now, with the purpose of pulling new readers in by building habits.

Beyond puzzles: merch and newsletters

Puzzles may be an excellent way to keep people coming back to publisher sites on a regular basis. But the gap between a habitual puzzler and a reader still remains. For some publishers like the NYT, this isn’t a problem. Their separate games subscription means that they still monetize that audience, even if some of them never interact with the news product. 

“We think of the news as the sun in our solar system,” explained Knight. “But increasingly—with cooking, with games, with Wirecutter, with audio—there are these planets that rotate around that sun, and that is an essential part of our strategy.”

However, for other publishers who haven’t put a price on the puzzles, attention is turning to ways to bring regular gamers more fully into the fold.

The Atlantic is trying a different approach to bridge the gap between player and reader. Two months ago, the publisher launched The Good Word. Crossword Editor Caleb Madison does a weekly deep dive into a favorite word or phrase from that week’s crossword; what it means, where it comes from, and what led him to “enshrine this bit of language in the grid”.

“We love the idea of creating a closer and more direct connection between Caleb and the people who are fans of the puzzle,” LaFrance said. As well as being able to collect details, the newsletter serves as a useful tool to expose puzzlers to The Atlantic’s journalism. The bottom of each edition is carefully utilized to promote popular stories and events.  

For these reasons, The Good Word is one of the newsletters The Atlantic is keeping free. “It’s a useful entry point into The Atlantic,” LaFrance explained. “There may be people who play the puzzle and aren’t deeply familiar with The Atlantic and start reading. In fact, we’ve seen that the puzzle is a real portal to the rest of our journalism.”

The NYT spotted a further monetization opportunity from its puzzles: merchandise. Fans can buy ‘Mini’ crossword baby onesies or Spelling Bee tote bags. The Spelling Bee merchandise, which was released late last year, immediately sold out, according to Knight. 

Humanizing the games

For all three publishers, centering the puzzle’s creators is a key part of their strategies. The Atlantic’s Madison fronts both the crossword and the associated newsletter. Both New York Magazine and the New York Times have bylines on their various crosswords.

“I think the idea that there’s a human behind the game is really important,” said Knight. “You really sense you’re trying to solve a puzzle that some other human has put out there for you to solve versus just playing against the machine.” 

New York Magazine has seen puzzle creators become “puzzle influencers” in the audiences they build. “There are a ton of constructors out there who have personalities. If you are a devoted puzzler, you have your favorite constructors,” Director of Editorial Operations Mariam Aldhahi explained. New York Crossword author Matt Gaffney has an established audience, and Stella Zawistowski and Malaika Handa who work on the Vulture 10×10 are now building a following.

“For us, it was about finding constructors that we think brought the right voice and tone to our puzzles,” said Aldhahi. “There is an audience around specific [puzzle creators], and people will go where their favorite constructors are.” 

The power of sharing

During the pandemic, The Atlantic introduced a social “Play Together” feature to its crossword. This allowed puzzlers to invite friends to help solve the crossword together each day. But it is more than just a nice bonding opportunity for friends in lockdown. Being exposed to The Atlantic’s work by collaborating on a puzzle is the ultimate in referral by stealth.

LaFrance noted that social play was something the team were keen on introducing, even without the pandemic. “In print, you have the puzzle on the kitchen counter and someone else wanders in and works at it for a bit… so I think people are familiar with this experience of collaboratively doing puzzles,” she said. 

Collaboration is a feature the Vulture 10×10 has also built into its gameplay. The team were inspired by the social nature of Wordle, and how many people share their results online. “I have a group chat with friends and we text each other our Wordles in the morning,” said Janowitz. “Clearly there is some amount of interest in comparing, and the bet being maybe collaborating and doing these things together.”

Time to level up

The race to reader revenue shows no signs of slowing. It is evident from each of these publishers that attention is now turning to more sophisticated ways of engagement and habit-building. 

But simple games are no longer enough. Offering games is not a strategy in itself. To fully maximize the gaming investment, publishers need to find ways to bring regular puzzlers into a deeper relationship, whether that be through newsletters, social features, or additional layers to the games themselves.

Advertising | Perspectives | Revenue | Supporter Spotlight

4 Ways publishers can invest in accountability to build revenue in 2022 

Spending on programmatic advertising is set to hit $133.04 billion in 2023, representing over 90% of display advertising, according to eMarketer. This rise in programmatic advertising presents publishers with a new challenge. While spending increases, so do the estimates around the cost of ad fraud. Publishers must exert more control over inventory than ever before if they aim to maintain customer trust while being a part of the programmatic marketplace. The good news is, providing a trustworthy, fraud-free environment for advertisers can be what sets you apart from the competition.  

Certainly, achieving transparency with advertising partners remains a persistent industry challenge. However, there are also few ways that publishers can maximize their opportunity for monetization while building audience trust and meeting the needs of advertisers. Let’s look at a few and what they may involve. 

Pay attention to bad actors and ensure fraud-free experiences  

It seems like an obvious criterion, but advertisers and agencies need to ensure real people see their ads. Delivering quality impressions and identifying any invalid traffic is table stakes for publishers who want to build trust with advertisers. 

In the past, attempts to prevent invalid traffic (IVT) have been tedious at best, and, at worst, horribly ineffective. To be genuinely effective at blocking IVT, publishers need intelligent solutions to identify patterns associated with malicious bot activity. Your solutions should do this without slowing download times or exposing consumers’ personally identifying information (PII). This is how you truly stay ahead of the game.  

Commit to responsible media  

We can all agree that getting brand safety right is essential—that value transcends across the ecosystem. The right technology needs to be in place to safeguard brand reputation while also being nuanced enough to allow access to quality inventory. Having the right tools in place will instill advertisers with confidence that working with you is an efficient and responsible investment decision.  

However, brand safety is about so much more than avoiding inappropriate or non-brand-aligned content.  Establishing a marketing strategy that brings brand values into the equation has increased importance, especially when it comes to reaching younger audiences. Curating packages in line with advertiser values (such as diversity, social initiatives, and environmental impact) will make you a more attractive partner overall. Publishers that support and maintain responsible media practices demonstrate integrity and care for audiences by doing what they can to avoid potentially damaging exposures. 

Work with reliable tools you have now 

Faced with an economy overwhelmed by COVID-19 and web traffic spread across a variety of devices and channels, more than 70% of advertisers feel they need to simplify management of programmatic budgets to have more inventory control. To meet the challenges of rapid declines in revenue during pandemic-caused turmoil, publishers cannot wait idly for the next technological innovation. In fact, conditions like these create opportunities to plan how to lower expenses and optimize value.  

For example, take a look at the tools you currently have at your disposal and determine if you are truly getting the maximum value. Connect with your partners, revisit best practices, and uncover new features that you may have missed or metrics you may not have paid much attention to before. Measuring attention meaningfully goes beyond simple verification metrics—such as valid, safe, and viewable—to more nuanced metrics that can provide deeper and more tailored performance metrics that can set you apart from your competition. 

Moving targets: establish dynamic pricing to deal with flux 

When the average cost of an ad impression falls precipitously due to high supply and low demand, as they did in early 2020, ad revenues creep lower as well. In January and February of 2020, the price of an impression fell by almost 28% compared to 2019. To cope with these changes, effective publishers employ dynamic pricing methods that incorporate bid analysis.  

By leveraging learnings to set minimum pricing rules per device, content category, type of bidding, advertiser, and other parameters, publishers can address growing demand and fierce competition. Even under the most challenging circumstances, ad revenue can rise if publishers continuously analyze the bids they receive for ad space and create opportunities to set minimum prices—between fill-rate and revenue—that reflect customer demand. 

New measures of success 

As an industry we are increasingly looking toward new measures of success and a commitment to the responsible media strategies that inform them. Human, viewable, and brand-safe data still sets the baseline for core measurement, but true brand effectiveness requires further evolution. 

Innovation | Perspectives | Revenue

Yes, live shopping is a revenue play. But for media execs, there’s more

Video shopping is being hyped as the next big thing in video and shopping. But it is kind of hard to believe that livestream commerce, which has its roots in the home shopping experience we know from cable TV, will be truly transformational. Now reconsider it as a new paradigm that combines information, entertainment, and retail. And, even if you count live callers to shopping shows, livestream shopping provides a whole new level of customer connection and conversion. So maybe activity and investments are booming for good reason. 

This year will be remembered as the biggest year yet for video commerce revenue. Research firm eMarketer reckons the global market for livestream shopping will rake in a massive $500 billion this year. 

Break this down by region, and China accounts for the lion’s share of earnings ($480 billion). But more astounding than China’s percentage of global revenues is the speed at which livestream commerce completely has transformed the country’s retail industry. Global management consulting firm McKinsey reports it took less than five years for livestream commerce to develop into an innovative sales channel and one that regularly attracts more than one-third of Chinese Internet users.

Western companies ramp up to revenues

The U.S. market may be nascent in comparison, but the pay-off for early adopters is impressive. Data from management consulting firm Activate’s Technology Media Outlook 2022 pegs revenues at $11 billion this year, up from $6 billion in 2020. 

Big names need little convincing. From online retailers Amazon and Alibaba to big tech and social giants Facebook, Pinterest and TikTok and Twitter, companies are “jumping into livestream shopping hard.” 

The pandemic provided a big push. At one level, strict lockdown measures have accelerated the trend of shopping online and in-app. At the other end of the spectrum, isolating at home has increased the desire of consumers, who crave connection and diversion, to interact with a new breed of creators and influencers lining up to make shopping informative and fun.

Media companies engage audiences primed to purchase

Right now, the most popular combination to power livestream shopping is social networking platforms and retailers. However, media companies offer ideal partnerships. They alone can position offers where they matter most: the point of inspiration where customers are consuming content and open to suggestions. 

“It’s really about creating an experience where content meets commerce,” Bryan Moore, co-founder and CEO of talkshoplive, a live streaming, social sales network, told me in an email interview.

He believes that the ideal intersection occurs by “connecting the retail and media landscapes.” His company has worked with Conde Nast and Hearst, retailers like Walmart, and creators from Oprah Winfrey to Dude Perfect on live commerce. Which maximizes distribution and, he says, “converts the most sales by cutting out all friction.”

This month BuzzFeed was the latest media company to announce a partnership with talkshoplive. The live stream with creators Carolina Reynoso and Vivian Nweze celebrates BFF-entine’s Day, highlighting product recommendations, gifts and much more. It follows a string of more than 50 livestreams on destinations, including Amazon Live, the retailer’s shoppable livestream offering. 

Another fast-mover in livestream commerce is NBCUniversal. The media company launched its commerce capabilities on its One platform in 2020. Since then, the company reports it has created over 250 different pieces of shoppable content and counts over 200 active retailers on its platform. 

From experimentation to execution

The number of media companies doubling down on livestream commerce continues to grow. But so does the competition. 

New data from Sensor Tower, a company providing market intelligence and analytics for the mobile app economy, shows that one-third of the top 15 apps (measured in downloads) in the U.S. have “either already experimented with livestream shopping events or have announced plans to test livestream shopping in the near future.” 

To up their game, media companies will need to be brave and broaden their approach beyond just driving affiliate conversions. The real power of livestream commerce is not about pushing products or driving sales. 

The deeper goal should be to build affinity for an interactive shopping experience – not just drive a purchase. Done right, whether the consumer purchases or not, the experience continually and consistently delivers something far more valuable: memorable and meaningful engagement. 

How to do live shopping right

On the face of it, livestream commerce is a perfect match with campaigns to sell beauty, fashion, decor and other items where brands and merchants pay the highest commissions. But this opportunity goes far beyond lifestyle. There are opportunities in many other verticals, including B2B software and services. Whether you opt to target consumers, or cater to business professionals, your first task is to enable the conversations and interactions that power commerce.

Cultivate creators to add authenticity

Encourage niche creators who can enhance the experience (and the reach of your retail partners) and open the aperture of how you view opportunities in the Long Tail. Reams of research show the engagement rates for nano-influencers are up to ten times those for mega influencers and major celebrities. 

Expand capabilities to create customer value

Position your company to present shoppable products to your audience in a way that maximizes convenience and minimizes friction. Choose platforms and partners that will allow consumers to enjoy the programming and the purchase experience. If possible, don’t just align with a livestream partner. Build the talent and tech in-house to run your own livestream platform. It can be a significant investment, but it also positions you to go after brands and opportunities that value access to your audience and are willing to pay a premium for it. 

Draw from data and consumer behavior

Livestream commerce requires deep commitment and insights. Be prepared to set up a team to manage these activities and “own” the customer. More importantly, equip them to build personas of potential customers and segments to understand the audience. This will also help you understand which interactive perks (games, giveaways, quizzes) are likely to keep these consumers engaged and entertained. 

Experience, engagement, and (yes) earnings

Content is king. But it takes more than compelling and trustworthy reviews and recommendations to enhance the livestream shopping experience. While incremental – or even significant – revenue is a compelling reason to move into live shopping, it offers other meaningful rewards. 

Today’s consumer enjoys an end-to-end experience that media companies are uniquely poised to offer. From the moment of interest, to inspiration and even investment, the media ecosystem can truly engage consumers in a way few others can. Live shopping experiences offer a new way to leverage content-based customer experiences to increase engagement and, yes, feed the bottom line. 

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