While advertising and subscription revenues are core to publishers’ bottom line, developing alternative revenue streams is critical in today’s competitive environment. One diversification approach, ecommerce, has evolved well beyond affiliate links and branded content. A new report from Whatsnewinpublishing.com, The Publisher’s Guide to eCommerce, written by Damien Radcliffe, explores emerging ecommerce opportunities and lessons learned from publishers. The report details 10 ecommerce examples from publishers. Some used third parties to implement their ecommerce initiative, while others are developing inhouse teams.
The right recipe
As the report points out, eCommerce is not easy work for a
publisher. They need to be thoughtful in identifying the benefits of brand
extensions and messaging this to the consumer. Importantly, product relevance
and quality must exist to build customer loyalty for any brand extension.
Tasty, BuzzFeed’s food brand, provides a great example of a
healthy brand extension that organically fits its brand with snack-size recipes
and videos. It successfully broadens the brand’s reach beyond its core site and
social media channels. Tasty products include cookbooks and kitchenware, and
even a partnership with McCormick Spices.
The report suggests that publishers stick close to their
wheelhouse. For example, there might be a lucrative business living within their
articles and photographs archives. The Denver Post and the The Seattle Times lead
strong ecommerce channels selling special events and news coverage clippings for
memorabilia, wall art, and keepsakes. Third parties are often used for the
fulfillment, creation and distribution of these products, which reduces some of
the publishers’ risks.
Social commerce is another interesting avenue for publishers
to keep in mind. GlobalWebIndex research finds that nearly 3 in 10 online
consumers say that researching and finding products online is one of the main
reasons they use social. These platforms offer an opportunity for publishers to
reach new and wider audiences.
As such, media analysts thought that social platforms would
provide an optimal environment for a publisher ecommerce marketplace. Unfortunately,
it hasn’t panned out just yet. However, Snap appears to offer a strong potential
for experimenting in ecommerce. The research emphasizes that it is critical
that publishers working to offer purchase opportunities on social strive for a
Regardless of the approach, the report reminds publishers
not to underestimate the cost and complexity of running an ecommerce division.
It’s like building a startup business: Technology investments will be required
(acquisition and fulfillment software) as well as those for merchandise and warehousing.
Challenges and rewards
First-party insights are important for a successful
ecommerce initiative. This is particularly critical in establishing a
correlation between the content the user engages into the product searches and
products the user buys. Creating this type of first- party relationship between
content and product will allow publishers to offer predictive analytics.
There are a multitude of ecommerce ideas for publishers to
experiment, from affiliate relationships to developing and selling proprietary
products. Importantly, each ecommerce opportunity must be evaluated carefully to
meet the necessary criteria to compliment the publisher’s brand. And publishers
must recognize the level of investment required to undertake a successful
People used to be loyal to a single publisher. They paid for the content then and there (or were longstanding subscribers). And they didn’t even notice stories from other publications. It’s frustrating that online content consumption hasn’t work in the same way. But the same system that brought about the democratization of online content also broke publisher loyalty.
Suddenly, consumers had access to numerous content platforms. The barriers to entry lowered and smaller, niche publications could reach a global audience, adding multiple views to the same angles. This meant people got used to judging by the story rather than by the publication.
Paywalls should work as a logical solution to monetizing online content. And paywalls do function as a way to pay for content. However, they don’t account for the way the majority of online users actually consume content. They can be an inflexible solution in an environment that changes daily.
That’s why publishers need to consider paywalls as one element of a wider monetization strategy.
Paywalls turn away 98% of users
The formula for consuming content used to be: Seek out a source of content you trust or enjoy—such as a newspaper. Now online content producers have to find, and fight for, audiences. Through media aggregation and search platforms, news competes with other versions of the same story for reader attention. Now users don’t have to choose just one publication and stick with it. Information is everywhere. This has led to to consumers having a distributed, fragmented web of content sources.
For hard paywalls to work as a primary monetization system, publishers must possess (or build) a formidable audience based upon a strong, trusted brand. Many readers will only pay for content they know they can’t get anywhere else. Major media brands have the resources to offer this. But even then, the many readers are going to look elsewhere for content, particularly if they hit a paywall and feel they can find good enough information for free.
Speaking at a publisher conference, Marfeel CEO, Xavi Beumala described the problem of scaling a paywall model. “Even in the US market of 330 million, the total amount of business you have for a subscription model is always capped. You can’t scale it ad infinitum.”
The generations that are loyal to a single media source are dying out. Subscriptions may work for the New York Times. However, the New York Times is using the fuel of the reputation it took 100 years to build (not to mention a significant investment in its technology and delivery). Without new readers experiencing the quality of their output, some question whether this model continue to sustain the brand for another 100 years.
Other media groups, such as The Guardian, have bucked the trend with a voluntary subscription basis that doesn’t wall-in content. This model relies on readers wanting to support the business and see it continue to operate. Again, brand strength and reader trust and value are big factors here.
Netflix for news
Content aggregation platforms represent a further hurdle for publishers that want to paywall their content. Several big tech companies have announced plans to deliver news and entertainment from multiple sources in their own subscription platforms.
While publishers will be able to negotiate payment rates that allow their paywall-segregated content to appear in aggregated content platforms, these deals will always favor the major tech companies over the publisher. It’s not hard to imagine these companies also downgrading search results or newsfeed positions for any content that has a paywall—that they don’t operate. Facebook, Apple, and Google don’t want to direct users to content or a search query only to have that user bounce back from a hard paywall.
The arrival of these news platforms also offers further competition to the paywall model, one that has a real chance to further disrupt publisher loyalty. Consumers may hedge their bets, possibly choosing to pay more to see content from multiple sources than tethering themselves to a single subscription.
Easy to get into, hard to get out
Google’s latest Chrome update was an example of how the ecosystem is built around a handful of major technology providers, and small changes can cause major disruption. The update in question prevented publishers from detecting if users are browsing in incognito mode.
Intended or unintended, the consequence of closing this loophole meant that many publishers’ metered paywalls were no longer effective. When readers hit their article limit they can switch to incognito mode and instantly reset their meter of free articles.
Publishers suddenly found that their paywall solution was ineffective, in one single stroke from Google.
A lack of resources to build technology means that some publishers bet all of their chips on a single strategy. And, for some publishers, paywalls represent a functional option with a guaranteed level of revenue.
But paywalls can be a blunt and imprecise tool. They cut off the majority and work for a minority. With a paywall, you often close the doors to new readers and rely on a core of hyper-engaged users. These readers are effectively paying for the loss in traffic that the paywall creates. It also insulates content in a world where sharing and exposure are the oxygen of publications.
Using different sources of technology, publishers are now able to deliver a layered monetization strategy that meets the needs of different readers, different content, and different stages of the engagement journey. Technology that implements programmatic, direct, paywall, subscription, micropayments and more will empower readers to build tailored packages. Like GDPR, readers will be able to select their preferences based on their needs.
A small percentage of readers will want (and pay for) a dedicated, personalized, ad-free experience. For these readers, a hard paywall with a personalized experience is the perfect solution. A far larger subsection of the audience will accept advertising in return for content that is free at the point of purchase.
Broad multitudes within this grey-area will sometimes pay, sometimes won’t. They won’t accept recurring transactions or fees and will need the process to be frictionless. For the first time, mid-size publishers will be able to out-pace major media groups that are forced to develop bespoke solutions, banking on only the most profitable.
More technology and monetization platforms are being democratized and made available to mid-sized publishers. With a sliding scale of monetization options, they will finally have the ability to reflect readers’ stage in the process, capture new traffic, and give readers options that will build a longer-lasting connection with their brand.
I recently connected with Christa Carone, who joined Group Nine Media as president in 2017, at the Collision Conference in Toronto, Canada. Carone, who came to the media side of the industry after leadership roles on the marketing and agency side, oversees Group Nine’s sales and marketing teams as well as its data insights group. Group Nine is a digital media holding company comprised of four popular digitally-native media brands Thrillist, The Dodo, Seeker, and NowThis. Carone and I discussed revenue and distribution diversification, content strategy, and building a business based on brand equity.
Here are some highlights from our conversation:
Michelle Manafy: Tell me a little bit about your content
distribution strategy and why you are all-in on social.
Christa Carone: Well, I’d say we’re all-in on omni
channel—and that includes social. Right now, we’re distributing content on over
20 different platforms. That includes Amazon Prime, Pluto, Roku, and distribution
deals with networks literally around the world. So, our approach to being
completely agnostic on distribution is that we want to bring our content to all
of the different places where people are spending their time. And we want that
to be a pretty frictionless experience. Instead of spending a ton of money to
get you to come to my website, I want to bring our storytelling to the place
where you are already hanging out.
Michelle Manafy: Truly connecting with audiences at
scale almost sounds like almost an oxymoron to me. What do you think?
Christa Carone: You can debate that content is king
and distribution is queen and whether they have an equal seat at the table. But
that’s really kind of how I look at it. When both are working together extremely
well, you are able to build successful brands like The Dodo, NowThis, Thrillist,
and Seeker. It’s like really honing-in on higher value content. We’re building
lifetime value of the content, what’s going to keep an audience interested, and
remain totally agnostic on the distribution strategy.
Michelle Manafy: The trick, of course, is the
monetization. The other side of a distributed model is fragmentation. So, talk
to me a little bit about how managing all of those channels ties into an overarching
Christa Carone: The beauty of our strategy is
diversification. I often say that if Facebook sneezes, we don’t want to catch a
cold. Just like in any industry, you don’t want to be overly dependent on one
particular revenue stream. It’s business 101. Media is no different than any
other type of business. So, that’s why we’ve been so focused on building
audiences across a number of different channels. We’re building audience on TikTok
right now. The monetization strategy there is nascent. But it’s going to come. IGTV
is another great example. We produce great content for IGTV and put it on IGTV
pre-revenue. But I have no doubt at all that Facebook is going to open up
monetization opportunities there. And I want to have established an audience when
Michelle Manafy: You mentioned diversification and that
every company should be focused on diversified revenue. I take it that Group
Nine that’s been baked in from the start.
Christa Carone: Keep in mind that we’re two years old. So, we’ve had the benefit of learning from a lot of traditional companies. And I often say: We’re not pivoting to anything. Some of our brands were born into video so there wasn’t a pivot to video. And the business model was already established. Some of our brands were social first. NowThis, in particular, was born as a social-first distributed brand. We didn’t pivot our business model from taking audience from owned and operated to distributing through external platforms.
Thrillist is the oldest of our brands and it has such a
loyal audience. So, we are looking at diversification around where we can take
the Thrillist brand and make it more of a whole-lifestyle brand.
Overall, our focus is on lifetime value for the content. So,
if we’re bringing in revenue with licensing, great. Bringing in revenue from
the syndication model, great. If we’re bringing in revenue by production deals
with OTT content providers, like a Netflix, that’s perfect. And if we are continuing
to bring in a healthy amount of revenue from advertising, wonderful. And increasingly
we’re thinking about how we can tap into other revenue streams like commerce and
Michelle Manafy: Could you tell me a little bit about
your commerce strategy?
Christa Carone: Our approach to commerce is really looking at brands like The Dodo and Thrillist and saying there’s intellectual property here. There’s a maniacally loyal fanbase. Can we be licensing The Dodo into product? The Dodo clearly has enough brand equity to be producing large scale consumer and canine events. Thrillist has been a friend to people for a long time. It is your recommendation action for food and beverage and travel. So, our ability to take that brand equity and bring it into commerce is already built in. And stay tuned: We will definitely be doing some more on that later this year and we just hired a head of ecommerce.
Michelle Manafy: So, you mentioned that maniacal
audience, that loyal audience. What’s the Group Nine secret? Because, as
publishers, that audience relationship is what differentiates us from the
Christa Carone: It’s such a credit to our editorial
teams. They know how weave a great narrative and tell an amazing story. It
sounds simple but I’m always amazed … A great example is from NowThis. Many
people are familiar with the NowThis video about Beto O’Rourke that went viral.
The raw footage of that video was already posted on Twitter. It already lived
on the Internet someplace. The NowThis team found it and was able to put it
through their storytelling lens. They said how can we construct it in such a
way that viewers are compelled to watch the entire piece? There is an art to
it. There is a narrative that was built in through the use of text on the
screen, through the use of effective editing so that we as the viewer were
compelled to watch it from start to finish. That is the secret sauce that
really exists within our editorial teams and applies to how we produce content
across all of our brands.
I would say the other massive factor for us is that scale
matters. We have such amazing insights that we’re able to glean from the
consumption of our videos that informs how we produce content. Based on our scale,
our data team is looking at 115,000 views of our content every minute. Every minute. We’ve built a very sophisticated
data engine that is able to pull in insights for things like the right color
for the text on the screen, the right size of font, the number of words that
should be on your screen, the fact that videos about dogs have three times
longer watch time than videos around cats. So, the editorial team can say maybe
that dog video should be three and a half minutes but maybe that cat videos
should just be two or something along those lines. You’re able to really start
to use these signals to inform your storytelling.
Michelle Manafy: So,
what’s your growth plan?
Christa Carone: Our business is really becoming much
more analogous to a TV buy. What I mean by that is that we have access to sell
all of the pre-roll against all of Group Nine content across all of the major
platforms. So, you have a television commercial and you are in, say, an auto
company and the pet owner is really interesting to you. You can come to us and
have 100 percent share of voice across all Dodo content on Facebook, on
Twitter, YouTube, Snapchat. You can buy our pre-roll on our channels and
transact that directly through Group Nine instead of the platforms. Brands are
responsive to it because of the importance of brand safety. When you have the
brand safety conversation with a marketer, you need to be able to say here’s
the right audience and it is against premium, brand safe content. It’s
fascinating to me that we’re having more conversations with TV buyers who are
shifting that investment from linear to wherever they can get eyeballs.
Michelle Manafy: I’m finding the distinction between television and all digital video is increasingly blurred, particularly for buyers.
Christa Carone: Completely. I think we have to redefine
what TV means. So, TV is not a device anymore. When the linear players, the
cable players start talking about TV everywhere, we’re in that boat. It
includes YouTube, it can arguably be IGTV, it could be lean-back viewing on
Facebook… It can be TikTok. How define TV going forward is going to be interesting.
Michelle Manafy: Talk to me about how you’re
innovating and how the industry needs to innovate.
Christa Carone: Maybe for some media companies,
diversification is innovative. It’s different at Group Nine because we were
born that way. We’ve learned so much from how past companies have run that we
know what we need to do as a media company. I feel like innovation is really
coming through how companies are able to scale intellectual property.
Christa Carone: I mean that’s been such an advantage
coming into a company like Group Nine. What I’m able to tap into is the
perspective of a marketer and think of everything we’re doing from the
perspective of the client. Will an advertiser really buy into this? I come from
companies with significant brand equity so I’m a massive believer in
intellectual property and that’s what appeals to me about Group Nine. these
aren’t four media companies. These are four brands. So: How can we look at
building brand equity that isn’t just about one particular revenue stream? That
has been super helpful to me to bring more of an innovative marketing approach
to building brands.
However, we find that many publishers continue to focus
investment on web while either treating their existing apps as side projects or
not developing an app presence at all. Given the rapid shift in consumer media
consumption and shift in the publisher landscape, combined with digital
dominance by the “duopoly” (and soon triopoly), the time is now for publishers
to prioritize their mobile app presence.
The mobile app user experience (and native apps in
particular) is superior to mobile web for both content and advertising, which
is probably a core driver of consumer engagement in-app. Native apps are
typically faster, lighter, more interactive, and can often allow offline
content browsing. They’re also easier to access for consumers, especially if
apps are loaded on to the home screen of a smartphone.
These benefits extend to ad experiences in-app as well, where advertising growth continues to explode and expected to reach $77 billion in the US this year. Mobile app ads have evolved beyond just traditional display and rewarded videos, which are typically fueled by app-install spending.
The market has evolved to include video, outstream, and
native formats, many of which provide more innovative and interactive
experiences then web since these ads can tap into the native features of
smartphones (i.e., Bluetooth, GPS, gyroscope, camera, compass, etc.).
Measurement is also greatly improved with the IAB’s Open
Measurement SDK, which facilitates 3rd-party viewability and
verification measurement in-app, and this is poised to further accelerate
mobile app ad spending. In addition, mobile apps are relatively immune to ad
blocking which is pervasive in web environments.
Better personalized ads
Mobile app inventory for publishers could become an even more critical component of a wholistic digital ad strategy as industry concerns around data privacy escalate and tech giants clamp down on tracking and personalization in browser environments. Apple’s ITP (Intelligent Tracking Prevention) in Safari and Mozilla’s Firefox browsers have placed significant limitations on cookie usage and hence programmatic ads on mobile web. And Google is rumored to be evaluating similar restrictions in Chrome, which would then effect the majority share of mobile web browsers.
Mobile apps represent both a hedge against these limitations
and a superior environment for personalized advertising. In-app ad targeting
can leverage Device IDs, which are tied to specific users rather than browsers,
as well as more accurate location (GPS) and detailed demographic/behavioral
data (particularly if the app requires registration).
Ultimately, mobile apps provide a new path for publishers to diversify their revenue streams. Not only do apps provide more opportunities for advertising, but also a channel for subscriptions, in-app purchases, e-commerce, etc. In-app subscriptions actually fueled growth in consumer spending in non-gaming apps by 120% since 2016. App stores also provide an easy way for engaged audiences (which are generally more prevalent in-app than web) to subscribe and make payments for transactions.
It’s time for publishers to start investing in mobile apps,
which should no longer be an after-thought. While mobile app development and
maintenance is not an easy task for many publishers, it should be considered an
integral part of long-term digital strategy and a major growth driver. A
successful transition of web users to app users can result in significant increases
in loyalty and engagement, leading to new revenue opportunities while defending
publishers against threats in a rapidly changing digital landscape. Mobile apps
are no longer just a game (pun intended).
The report, based on responses from 200 editors, CEOs, and digital leaders from 29 countries, states that more than half (52%) of digital leaders expect subscriptions to be a main revenue focus this year. This compares to just over a quarter (27%) who cite display advertising as a main revenue source, and only 8% who state native advertising and 7% who report donations. Still, advertising is an important focus. A strong majority see display advertising (81%), subscriptions (78%) and native advertising (75%) as “important or very important” for company revenue.
Additional findings include:
Limited funding for quality news. Less than one-third (29%) of digital leaders expect funding from foundations and non-profits. Eighteen percent expect contributions from tech platforms and 11% think governments will provide more support. A full 29% of publishers do not expect any assistance in funding.
Google is very important; Facebook and YouTube less so. Google remains a key priority for most with most publishers (87%). They report it as “very or extremely important” compared to Facebook (43%), Apple (43%) or YouTube (42%) as they look to reach new audiences. Fewer publishers see Instagram (31%), Twitter (29%), WhatsApp (16%), Amazon (16%) or Snapchat (8%) as important to their news organizations.
Social media presents options for marketing and acquisitions. Publishers that are focusin on subscriptions use social media more as a marketing and acquisition channel. Still, social media usage and results differ by publisher. Magazine brands are more likely to use Instagram and Snapchat for marketing, while local news publishers use broad reach platforms for referrals.
Publishers use visual storytelling to attract a younger audience. Stories has become a highly popular storytelling format. It is used daily by 150 million people on Facebook, 190 million on Snapchat, and 300 million on Instagram. Publishers are utilizing visual storytelling because it works well on mobile and helps attract a younger audience.
Podcasts and voice assistant devices become part of publishers’ strategies. Three-quarters of publishers (75%) think that audio devices like Amazon Alexa and Google Assistant will become an important part of their content and commercial strategies. Seventy-eight percent also report that voice assisted devices will impact how audiences access content in the next few years. The New York Times now offers a short news briefing for Alexa devices and consumers can ask for the Times’ Flash News Briefing.
Publisher paywalls may lead to consumer frustration. The strategy to put whole-publisher sites behind a paywall may meet with consumer backlash. If this occurs, publishers will likely see an increase in the adoption of subscription blockers, an easy downloadable software or browser extension with a workaround for metered paywalls.
Increasing bundled offerings and payment aggregation. To prevent churn and increase engagement, publishers will announce bundled packages including more product and cross-media packages. For example, The Times of London offers a one-year Wall Street Journal subscription. Publishers, Telcom, and over-the-top services (OTT) are also packaging their services in subscription offerings.
It’s essential for publishers to continue strengthening their relationship with consumers. Rasmus Kleis Nielsen, director the Reuter’s Institutes, comments in the Nieman Lab Predictions for 2019, “The shift thus has to be about better and more distinct journalism in an incredibly competitive battle for attention, about a greater focus on what readers actually value, about organizations and technologies built around serving them efficiently, and perhaps most importantly about a commitment to the long haul — to making the changes necessary to winning paying readers one at a time, keeping them, accumulating them.” Nielsen believes that in order to ensure journalism is valued, publishers must identify the needs of the reader. Importantly, there are new strategies and technologies available to build consumer value, heighten product attraction and increase engage with paying consumers.
It’s no secret: In the coming year, readers will run up against more memberships, more pleas for donations, and more paywalls. In short, more opportunities for money to escape their wallets to bolster media outlets they have previously accessed free of charge.
Companies like Buzzfeed and Quartz have recently embraced direct-to-consumer business models, joining traditional subscription outlets in a rush away from digital advertising reliant models. Beset by multipronged threats like the internet giants Facebook and Google sucking up all traces of revenue growth, declining consumer trust, and an alarming trend of fraud cases, it’s not hard to see why digital media companies are looking for alternatives.
But this shift comes at a cost. While ad based revenue models optimized for reach, the new normal will be the tailoring of niche content to attract a reliable paying clientele. The Atlantic’s Derek Thompson recently predicted that the entire industry will return to the early days of journalism where a “party press” would stoke the partisan emotions of their readers.
“News media of the future could be as messy, diverse, and riotously disputatious as their audiences, because directly monetizing them is the new central challenge of the news business,” wrote Thompson.
That means that digital publishers will need to navigate the real risk of subscription fatigue. How much are consumers willing (and able) to pay for?
What it will take to survive in this new DTC world?
“As loose paywalls tighten and everyone seeks reader revenue, I imagine audiences will be forced to make choices, especially in what is looking like a dramatically slowing US economy,” said former GIzmodo Media Group CEO and Columbia University professor Raju Narisetti.
He expects that people will begin to add it all up and realize that — given other recurring payments like internet service, mobile, and subscription-based everything from meal services to shaving supplies — their content selection might need to be more discriminating.
Needless to say, publishers need to figure out how to compete for limited discretional dollars. One approach that many are trying is aggregate services like Flipboard, Texture, and Blendle.
An obvious option could be an even more widespread integration into an app like Texture, purchased by Apple last year. Texture offers a service similar to Netflix wherein a group of publishers bands together to offer a wide range of branded content for a single rate. While currently available to use, there are persistent rumors of a spring relaunch of the service included in a future Apple News update, foreseeably offering an increased amount of content above and beyond the current free selection. It’s hoped that the move would have the same omph Apple brought to its Apple Music platform. At least that’s the pitch.
Publishers remain skeptical, though. “Some executives fear Texture could end up doing more harm than good. Their concern is that Apple could steal their current subscribers, who would save money by reading articles on Texture instead,” reported Bloomberg.
One thing that could change that calculus is the confidence boost of a New York Times-shaped news outlet taking the plunge, according to Narisetti. While he admits it’s natural for the larger players to be cautious, there’s a vector for profit in the service.
“That’s because they are currently giving away up to 20 stories entirely for free on Apple News. So, in my mind, they are actually likely to incrementally gain by monetizing that via Texture, than lose any significant, core loyal direct subscribers to lower-priced subs,” he said.
Once that’s overcome, “the US news floodgates will open up on Texture, much like how NYT paywall given the confidence to the American general news industry,” he added.
But there are always more than one way to approach the problem.
Focusing on user experience, the creators of Scroll.com want to offer a direct to customer alternative which side-steps competing with a publishers revenue models by offering to remove the ads from a collection of publishers for a monthly fee. Sites load faster, users can opt out of advertising, and publishers get a new revenue stream.
“We avoid the problem of cannibalization and instead get to complement rather than compete with them. Most publishers see us as a middle of the funnel service, creating more engaged users who can then be converted into their own plans,” said Scroll founder Tony Haile.
But perhaps the industry needs to learn from the experience of the wider technology industry. Subscriptions are an increasingly popular way of packaging any digital-adjacent service (often dubbed Anything as a Service, or XaaS), whether it be a ride sharing plan, in-app purchases, or even the meals you make for dinner. But they’ve even suffered through the same issues as facing the digital publishing industry.
Value for Life
“As a media company looking at some of the struggles of consumer XaaS companies like Blue Apron last year, I would make sure to focus relentlessly on reducing my churn rate, and increasing the Customer Lifetime Value (CLV) of my paid subscriber base,” said Gabe Weisert managing editor at Zuora, a subscription management platform provider.
He explained that the way towards healthy CLV is to drive usage at every opportunity. Keeping people engaged keeps them paying customers. Strategies which achieve that include cross-selling and upselling. For example, the New York Times saw solid growth of new subscribers from their crossword and cooking app offerings.
“CLV should be the gold standard metric of every media company. That’s all Netflix cares about. It’s all Amazon cares about. That’s why [subscription services] keep giving us “free” stuff — they know exactly how much those investments materially affect the value of their subscriber base,” he said.
Many quality publishers are navigating the “valley of death” on their migration from an advertising-funded model to one more reliant on direct reader revenue. It’s not a journey that they’ll all survive. But publishers are being driven by the realization that solely ad-funded models won’t work in the age of platform intermediaries and tech giants, which control both content distribution and advertising revenue. However, for publications with a loyal, engaged audience, the journey is worth the risk.
Truth be told, it’s almost as unlikely that a solely subscription-based model will be able to support news publishers at the scale at which they currently exist. Just as the relative value of digital advertising is significantly less than print advertising, so too are most digital subscriptions worth much less per user than in print. The obvious solution, then, is to have a much more diversified revenue model, made up of a combination of advertising, ecommerce, events, and subscriptions.
The Diversification Dilemma
The dilemma for many publications – particularly digital pureplays – is that precious few people will pay to support them directly, kicking away one leg of that ideal diversified revenue model. Through a combination of low propensity to pay for digital news in most countries, generic content available elsewhere, and increased competition in the direct reader revenue space, there simply isn’t enough money going around for every publication to have that stable source of income.
Consequently, many publications are reappraising what their ad-funded, free-to-access properties are capable of when it comes to building additional revenue streams. Many have correctly realized that a free at point of access touchpoint with readers has advantages for launching new products (and reaching a wider consumer base) that aren’t replicable behind a paywall.
Going to Market
Time Out group, for instance, which has kept control to an extent of the events listings that for the most part migrated to new platforms, has used its website and widely available free magazine to promote the Time Out Market in Lisbon. That space, designed to capitalise on the huge audiences who visit the site, saw revenue growth of 50% in the six months to June 30 this year. Time Out also plans to launch five new markets in North America next year, including New York, Miami, Boston, and Chicago.
Similarly, in the UK the free newspaper the Evening Standard has been making a play to own the experiential space with events of its own, capitalizing on its own widespread availability as a free touchpoint in major cities to support its efforts. Despite a £10m loss this year – due in no small part to a mangled redesign spearheaded by its new editor– it’s an advantage the Standard is continuing to push by increasing its free circulation.
ShortList magazine is actively engaged in the same endeavor. However its Chairman Mike Soutar told an audience at this year’s Magfest in Edinburgh that the costs of delivery free media in print necessarily limit where those audience touchpoints are viable:
“I think free cannot work outside of urban conurbations, because you need audience and you need people to act. The proof of free media is engagement and the proof of engagement is when people do something, they buy a product, they do something with it.”
So if free print titles are diversifying into events and experiential marketing based on having touchpoints in viable areas in the real world, how are free digital titles diversifying? They don’t, after all, have the advantage of a guaranteed audience in a specific geography, nor a controlled circulation. which all but guarantees a decent amount of advertising revenue. They’re also more exposed to the ravages of the tech giants’ push for control of ad revenue. And, while they don’t have legacy print costs to content with, content creation is costly no matter the medium. Only this month The Outline, the Joshua Topolsky-founded news and culture site, laid off its last two remaining full-time staff writers, despite a valuation of over $21m earlier in the year, for instance.
For the most part, digital pureplay publications are instead launching new premium products in their vertical. Quartz, for instance, is launching its first paid-for product with its cryptocurrency newsletter Private Key. BuzzFeed, meanwhile, is taking advantage of its position to diversify further into ecommerce revenue: In his ‘9 Boxes’ memo its founder Jonah Peretti explicitly set out his vision for diversification of revenue by referencing its Tasty sub-brand, around which it has launched a raft of ecommerce propositions.
Regardless of whether a free publication is in print or digital (or occasionally both), the idea that advertising will not solely sustain it has become widely accepted. As a result publishers are diversifying revenue as fast as they possibly can, given the limitations of funding and time. Whether that’s diversification using a print title to buoy events and experiential, or by launching new ecommerce propositions around a vertical in digital, the question is no longer who is diversifying, but how quickly can they own the space into which they are expanding.
To many, it would seem that Jarrod Dicker had a dream job runningtheinnovationteam at The Washington Post. He led one of the most experimental journalism shops in the country with the backing of Amazon founder and CEO Jeff Bezos. While Dicker recognized his good fortune, he also saw room for something more – something you might not even find at one of the most progressive publications around. He saw a hole that needed to be filled and that maybe the blockchain would be the right fit.
That’s why last February, Dicker quit his job at the Post tobecometheCEOofPo.et, a publishing blockchain startup. It was a company offering a publishing model so fresh and compelling, Dicker simply couldn’t resist.
The attraction? A chance to create a way out of the revenue box the publishing industry is in.
Dicker had been working on building a new ad model at the Washington Post, but he recognized that approach would only get him so far. “What we were doing at Post was first step toward building new vision of the media industry,” he said. However, he knew it was going to be very hard for one publisher to change the revenue model for an entire industry.
Like many, he questioned whether it was possible to survive long-term with the current advertising model, particularly in a world of poor advertising experiences, where consumers increasingly opted to use ad blockers. Dicker thought that there had to be a better way – and that might just be the blockchain.
The blockchain may seem like a strange savior, but Dicker suggests we consider the full utility of an immutable, irrefutable record. If you could prove ownership and perhaps even truthfulness beyond a shadow of a doubt, maybe you could shift from the ad model to one where revenue comes directly from content consumers.
He says that Po.et is working today as a technology layer where creators can place ideas and, using programming hooks, build licensing and revenue models on the platform. “If someone created content, they can create proof of work and attribution and manage permissions all on the platform. Then they can share a public key and anyone can use it, or if it has value they can charge to unlock it,” he said.
The company started with a set of open source tools that publishers and individuals can tap into to build applications that take advantage of the platform. “If you are a publisher and your content goes through Po.et., you can define when and how to share your content based on rules and permissions. If the permissions rules are broken, there are indicators to warn you, and that brings smarter and more efficient ownership to this space,” he said. It also frees the content owner from using ads because the value is based on the content itself, rather than on an ad model.
The promise of this approach is a sophisticated licensing mechanism that takes something like CreativeCommons and allows content owners not just the ability to apply their license/sharing method of choice, but also a mechanism to enforce it. This enables Po.et to act as a marketplace where you can attach a license to your content that requires people to pay a fee to use it. Then the platform will handle the transaction for you based on the rules and permissions you have applied.
The whole idea is egalitarian in a sense. It puts the revenue power in the hands of the content owner or publishers. However, as we have seen in the last couple of years, that which is open and free is also subject to gross manipulation by people or nation states with an agenda. What’s to stop people from gaming the market?
Dicker sees the marketplace itself as the defense against such abuse. As such, he wants to avoid having some sort of formalized policing method. “Policing the platform is going against what’s happening with a decentralized [system] and blockchain. If people have to stake tokens, dollars and reputation, there is more value with this incentive,” he said. He believes this buy-in and the nature of the blockchain itself will help prevent any abuse of the platform. “That’s the beauty of the blockchain. Everything is on the ledger and everyone can see whatever is happening,” he said.
He still plans to find ways to keep the marketplace from getting polluted. “There will be ways to sift out content if marketplace isn’t sifting it out. But what we are working towards is something that can be leveraged by all and used by all, and that’s the core ethos of what we are trying to do.”
Poets on the blockchain
In fact, Po.et was so invested in the blockchain multi-owner vision they did a $10 millionInitialCoinOffering or ICO to sell tokens and raise money for their project. The idea behind the ICO was to get buy-in from a group of investors committed to the idea of building a decentralized marketplace for content owners and a more discoverable network not beholden to larger networks like Facebook or ad models.
Dicker says that people bought these tokens, not as an investment vehicle as you might think, but because they believe in the company. “Even though there is a token, it can’t be bought and sold. They hold that token because they believe in the mission,” he said. Dicker believes that kind of buy-in will help reinforce the underlying structure of the platform and make it more difficult for people to try and find ways to work around it.
“Everyone who has an idea should be able to control that idea. How do we make it simple to store that content and assign a set of permissions that define who can see it and who can’t.” Whether such at vision can thrive, even with the best of intentions remains to be seen. But Dicker sees a better way for the publishing industry on an open platform where the owner controls how the content gets shared and monetized – and where advertising no longer forms the primary basis of the revenue model.
Strategies for differentiating their premium news and entertainment companies in an environment of disruption, trust issues, and monetization challenges were the focus of the annual closed-door members-only Digital Content Next (DCN) Summit held Feb. 8-9 in Miami, Florida.
DCN CEO Jason Kint updated attendees on consumer privacy, net neutrality, and press freedom policy initiatives. He said that pressure on platforms will increase this year and that advertisers will seek greater transparency. Kint cited findings from DCN’s new Distributed Content Revenue Benchmark Report, which found that publishers only garner 5% of their revenue from social platforms. However, he also touched upon the growth in paid content, on-demand video, and promising signs of sustainable advertising models.
For the digital media industry, Trust has reached a crisis level, Kint said. He and other speakers throughout the event pointed to the 2018 Edelman Trust Barometer, which reveals a low consumer perception of the media, platforms, and advertisers—particularly around digital.
An absence of trust has been a driving factor toward regulatory scrutiny in the U.S. and abroad. It has also profoundly affected digital advertising, one of the mainstays of the industry. Kint applauded DCN members for embracing DCN’s new tool for rebuilding trust: TrustX. The cooperative private programmatic marketplace serves as a collaboration platform for marketers and publishers to create innovative advertising solutions that drive measurable value and improve the consumer experience with confidence and safety at scale.
Kint was far from alone in extolling the importance of trust in the digital content marketplace, however. Fatemeh Khatibloo, principal analyst at Forrester Research cited the building blocks for trust, which include integrity, competence, transparency, privacy, and data security.
David Sable, Global Chief Executive Officer, Y&R, noted that trusted brands employ honesty, environmental sustainability, and kindness. He also pointed out that millennials are keen to identify trusted news sources. Building trust starts early, according to Sean Cohen, president, International and Digital Media, A+E Networks, citing how brands such as the History Channel have become a trusted source for students.
While Edelman’s barometer noted a five-point jump in trust of journalists, a social media-weaponized world has given way to readers and viewers expressing anger, often anonymously and without consequences, as vividly reported by a panel of journalists— Arianna Davis of Refinery29, Jorge Ramos of Noticiero Univision, CNN’s Brian Stelter, and Katy Tur of MSNBC Live.
Brand Quality and Context
People won’t pay for brands that don’t focus on quality, noted Andrew Essex, former CEO of Tribeca Enterprises and Droga5 [pictured, top]. Quartz President and Publisher Jay Lauf also emphasized value-based selling over commodified volume selling.
Context is critical, he said, adding that marketers “are terrified” about ads appearing on an exploitive YouTube video or inadvertently funding fake news on Facebook. And Hearts & Science research on negative reach confirms advertising appearing next to content a consumer finds offensive does more harm than good according to the agency’s president Zak Treuhaft.
And, in a world dominated by memes and disembodied news delivered via social platforms, “Context is king,” according to Sean Cohan, President, International and Digital Media, A+E Networks. For example, he pointed to the History brand’s increased emphasis on providing a larger historical context for today’s news, such as the history of sports figures’ involvement in political protests.
Disruption and Opportunity
Disruption has led to a competitive marketplace imbalance as DCN member companies try to transform their business models, as Kint noted. At the same time, disruptive technologies, such as voice assistants, can create significant opportunities.
Loren Mayor, COO, NPR, spoke of the station’s mission to connect with people through storytelling journalism and is using on-demand audio and podcasting to enhance audience growth and engagement.
Smarter use of data and respectful personalization were subjects that came up in a number of conversations and presentations. More-informed data will help drive value, according to Lou Paskalis, SVP, Enterprise Media Planning, Investment and Measurement Executive, Bank of America Merrill Lynch.
Marcus East, EVP, Product & Technology/CTO, National Geographic, said that successful brands create personalized experiences and help consumers save time and money, create emotional connections, offer life-changing elements, and promote positive social impact.
That said, in today’s uncertain digital environment, the hallmarks of reputable journalism have reemerged as critical for consumer trust and attention. Michael Anastasi, VP News, USA Today Network, Tennessee pointed to importance of the Indianapolis Star’s investigative coverage of U.S. Olympic gymnastics doctor Dr. Larry Nassar, which stands out in a time of local news outlets’ survival uncertainties.
Anastasi said that USA Today leverages its local/national symbiosis on to inform some of its stories. He cited the brand’s coverage of the opioid crisis across all platforms—and with national, local, and individual ramifications. The comprehensive coverage was made possible through a sponsorship from BlueCross BlueShield of Tennessee.
In addressing financial sustainability in non-profit journalism, ProPublica President Richard Tofel noted significant growth in donation-based revenues since the 2016 U.S. presidential election. The non-profit model seems to be working for ProPublica as Tofel said that they launched with a staff of 25 nine and a half years ago and now number more than 100.
Diversification and Monetization
Unsurprisingly, revenue was a key topic at the Summit. And while advertising remains a critical focus, diversification was a dominant theme. In all aspects of monetization, good consumer experience and engagement were essential. As Ed Davis, EVP & CPO Advertising Products, Fox Networks Group put it: “Attention is currency.”
Maggie McLean Suniewick, President, NBCUniversal Digital Enterprises, showed off the many ways the company’s Olympic coverage is tapping into a wide range of platforms to engage target audiences wherever they might be. Bloomberg Media’s initiatives include global partnerships that help it transcend the competitive U.S. market according to Scott Havens, Global Head of Digital, Bloomberg Media. And The Washington Post has launched 15 products specifically designed to engage consumer interaction according to Jarrod Dicker, The Post’s VP of Innovation and Commercial.
The History Channel is leaning into new platforms and partners with The New York Times on stories and photo spreads. Sean Cohan, President, International and Digital Media, A+E Networks said that the company is seeing doubled social engagement, significant newsletter interest, and substantial boosts in YouTube video revenues.
Marty Moe, Vox Media President, said his company focuses on finding ways to grow quality, scale, and audience across its eight brands while retaining relevancy on each platform. However, diversification brings challenges such as tracking and measuring performance on multiple platforms, noted Christy Tanner, EVP & GM, CBS News Digital CBS interactive.
Dr. Jens Mueffelmann, CEO, Axel Springer Digital Ventures GmbH, President, Axel Springer USA, said his company’s success in global acquisitions is based on later-stage investment, development and partnership. While its successful classified ad profits have stunned critics, Mueffelmann urged companies to “stay paranoid” and continue to keep a close eye on emerging digital technologies and players.
On the heels of the news that The New York Times added 157,000 digital subscriptions in the 2017 fourth quarter, pushing its subscription revenues – which comprise 60% of overall revenues – to more than $1 billion, COO Meredith Kopit Levien encouraged everyone to get into the subscription business. It’s important to understand what drives subscribers, she said. For The New York Times, it’s the resources to create better original content, including 250 daily stories, a popular crossword puzzle and a cooking app, she said, noting “our strength is as a brand.”
While challenges in trust, brand quality, disruption and diversification continue to throw roadblocks up in the news and entertainment industry, Kint emphasized that for DCN members, there is strength in numbers, citing The New York Times’ subscription victory as a victory for all DCN members because of what it symbolizes for the industry.
At the core, DCN members are focusing on what they do best and continue to innovate and experiment in order to best serve audiences.
“All of our members have a direct and trusted relationship with your audience and with your advertisers,” Kint told the packed conference room. “They come to your brands because they know what they’re going to get when they give you their valued attention or valued advertising dollars.”
We were wasting time chasing display advertising dollars.
That’s the big lesson Spirited Media learned at the end of 2017, an awakening of sorts for us at the parent company of Billy Penn in Philly, The Incline in Pittsburgh and Denverite in Denver.
Now don’t get me wrong, we believe still that there are companies in and around our cities that are interested in partnering with us to reach our audiences — which are generally young, affluent and very civically engaged. And we’d had an encouraging start to the year by pursuing display ad sales. We needed that success to continue; that’s what we built our budgetary projections on.
And then that early ad success faded. It stands to reason why, of course: Going head to head with Facebook, Google and the largest newspaper websites was always going to be tough, And our staffs (no larger than six doing editorial work) can’t tell the same traffic story as sales folks repping newsrooms 15-20 times that size.
Instead, we looked at all the other ways we’ve been able to grow revenue, and prioritized those internally into three tiers. We stuck display advertising at the very bottom. In other words, we’re happy to get it, but we can’t burn staff time and effort to chase it. We’ve got bigger things in mind.
There are three things in Spirited Media’s most important revenue tier: the first is sponsorships and ticket sales for the events we’ve become so adept at organizing. The second is a membership program we’re rolling out in the coming weeks across all our sites. And the third is offering our custom platform for others to use. Let’s talk briefly about each of them.
Billy Penn launched in October 2014 – I was the site’s editor at the time – and we began hosting the first of our events a few months later. At the time, our staff numbered five people – myself, a community manager and two reporter/curators, and a brand new sales and events director. So, when we decided to start getting our audience together in person, putting together a lot of programming for those events wasn’t realistic. The same people building that event were the ones building our daily news report, after all. So the events (we tried many, but what worked best were happy hour gatherings) were very light on the programming. And when I say “light,” I mean we’d maybe grab a microphone for 20 minutes of a two-hour event.
These events proved incredibly popular with our audience and they had several things that recommended them over intrusive advertising on our site. One, the events lasted for a set amount of time; two, the events could only hold a certain number of people. In other words, we were able to create the scarcity that is nonexistent in a land of infinite Web pages. So events — the smart execution of them, ticket sales to attend them, and sponsors to underwrite them — are one of the pillars in our most crucial revenue tier. And, of course, events (and the potential early access to their tickets, or even their planning) will play in very heavily to the next item on our revenue punch list.
One of the things I consistently heard from Philadelphians as I walked the streets of the city was how much those who read Billy Penn loved it. Not just liked or respected, but connected with in a visceral way. So as we looked at how to build a business model that could withstand the seismic shift rocking the ad-supported media world, we of course considered whether we could turn that loyalty — hell, that love — into monetary support. But we can’t make this happen alone, so we’re working with the News Revenue Hub (Motto: “Fortifying the public’s access to quality journalism by helping news organizations build sustainability”), a spinoff of the stellar digital operation Voice of San Diego, a company that’s helped many newsrooms figure out how to turn their audiences into members. We’ll launch membership across our sites in the next few weeks, directly making a pitch to our readers that the work they’ve been consuming requires their direct support to continue. That’s because, plainly speaking, it does.
We’re proud to be a company that puts our users first. Editorially, that means we pay attention to what we think people want to know. And we’ve also committed to respecting their time and their experience online. That means unlike other news providers’ sites, we don’t pop advertisements up in front of the story you’re trying to read, or force an auto-play video into your quiet office, or load up the top, middle and/or end of your story with some photo you just won’t believe about a 70s TV show star. We try to respect people’s time and their attention.
How’s that working out for us? Well, our research shows that more than half our audience is under age 35, and 75% of our readers are under age 44. That’s a startling figure for a media company, and it’s due in no small part to the way we’ve built our sites, using a custom WordPress theme that gives us what we think are clear advantages in the market:
One, it’s very easy for journalists to write and post their work onto our sites (and, automatically, Facebook Instant Articles, and Google AMP pages). We’ve also baked newsletter functionality into the back-end as well. Because we have very small staffs, there’s no separation between a reporter, an editor and our audience.
Two, our sites make a small amount of content look and feel like a lot. The home pages of Billy Penn and The Incline (and soon Denverite) spotlight the most important stories we’ve published, and then present a list of the most important events and other news stories happening in and around our cities, whether or not we’ve written them, in what we call “The Stream.” It’s basically a Facebook feed of what you need to know at any given moment.
Three, we’ve baked membership tools right into the platform. These pages, and the action funnel on which they’re built — driving occasional readers to become repeat readers, into newsletter subscribers, and into paying members — take advantage of a sea change in how the news industry is realigning itself in the midst of the great advertising breakdown.
And we’re finding that this suite of tools is attractive to other small publishers that are also seeking revenue that’s immune to the whims of Facebook and Google. In fact, we’ve closed one deal with a publisher to provide them the same tools we’re using, and following up on other requests about it that have come over the transom. We’ve seen enough interest, in fact, to prioritize platform sales as part of our most crucial revenue streams in 2018.
Another thing we’ve heard through the course of our existence is that people were interested in starting a “Billy Penn” newsroom in their city, but owned and operated by them. Until now, we have not pursued those arrangements; however, in the course of our reevaluation, we’re willing to explore arrangements like this.
My boss Jim Brady, the former editor-in-chief of Digital First Media, former editor of washingtonpost.com, and a former news executive at AOL, has also consulted at many of the world’s biggest and best media brands — ESPN, USC and The Guardian, among them. Our VP of Product, Brian Boyer, was most recently the Senior Editor for Visuals at NPR; he came there after building the News Apps team at the Chicago Tribune. Me? I’ve been the Executive Online Editor at the Philadelphia Inquirer, and the top digital editor in two of Hollywood’s oldest news institutions, Variety and The Hollywood Reporter.
Among us, we’ve worked in newsrooms covering local, national and international news; in verticals (sports, entertainment, politics), launched departments and won awards for videos, innovation, public service and more. And we’re finding interest in accessing that expertise among other media companies, which out of necessity have cut their digital workforces down in the face of the ad cataclysm.
So we’re putting out our consulting shingle, and negotiating with those seeking everything from advice in reaching the audience we have now or the audiences we’ve reached in our past. Why isn’t this a Tier One revenue stream? Simply put: bandwidth. While we can hire developers should interest in our platform take over, we can’t easily clone ourselves to grow a consulting arm. But the money we make in this fledgling endeavor can help extend our company’s runway as we push toward profitability.
We’ve already received grants to support our work —we hosted a Knight Foundation fellow for one year in Philadelphia, and are the proud recipients of a $106,000 grant for work on a Playbook for Mobile News. We’re also finalists for a Report for America grant, which would support a Spirited Media reporter working in Pennsylvania’s state capital of Harrisburg. These kinds of efforts can help underwrite important journalism in our cities while easing the burden on our budgets. In addition, a two-year partnership with Politifact funded a reporter position to help us fact-check Pennsylvania, thanks to a grant from the Democracy Fund. So we’re no stranger to grant-funded journalism, and are actively seeking out new ways to bring it into our newsrooms.
Finally, we’re not going to say no to companies that only want to buy space on our sites. But, as we said, it’s just not a great use of our time to sit through endless agency meetings on the off chance that we score the rapidly declining dollars to spare, once Facebook and Google gobble their share. We’re delighted with the roster of repeat advertisers we’ve had across all our sites, of course, and hope to continue working with clients as diverse as the Philadelphia Eagles, Comcast and Beneficial Bank — but, as often as possible, we’re hoping to convert those advertisers into sponsors supporting the events that are increasingly part of the future of our businesses.
We’re confident that future is bright. After all, local news is a lot closer to our users than the national and international sources. We’re down the street, just around the corner from our readers. It’s sobering but heartening to come to the realization, as a company, that those readers are even more directly responsible for our future than we’d first considered. But then again, that makes sense. We’re always telling them how important they are. We’re now giving them the opportunity to prove it.
Getting ones’ news digitally is not just for millennials—it’s the norm these days. In fact, nine in 10 U.S adults get their news digitally either via desktop or mobile. We’ve also seen strong digital native brands, those originally founded on the web like Vox Media or Huffington Post, emerge as leaders in the news marketplace. The new Pew Research Center research looks at 36 digital native news outlets that averaged at least 10 million monthly unique visitors in Q4 2016. The analysis provides an excellent snapshot of the digital native news industry’s audience strategies to increase outreach and engagement.
Usage and engagement
Overall, digital native news outlets are performing well. Monthly unique visitors for the 36 sites for the digital native news outlets increased 12% in 4Q 2016. Users also spent a healthy 2.4 minutes per average visit.
The use of digital native news apps is an important part of audience strategies. Close to two-thirds (61%) of the highest traffic digital-native news outlets have apps available for either iOS or Android. Mobile compatibility is an important part of their overall strategy and user engagement. In fact, 42% of these new outlets have apps supporting both iOS and Android.
User outreach is key to building and sustaining engagement. Almost all digital native publishers (97%) offer newsletters. Three-quarters produce podcasts and 61% have comment sections on their articles to promote consumer feedback. Digital news outlets also rely on social media to engage their users: All of those covered have Facebook pages and Twitter accounts. Almost all have Instagram accounts (92%) and are on YouTube (97%). Less than 25% have a Snapchat channel or account.
Digital advertising continues to grow as a proportion of total advertising revenue, a trend that Pew points out is driven in large part by growth in advertising on mobile devices. Interestingly, based on a Pew Research Center survey conducted earlier this year, more than eight-in-ten (85%) U.S. adults now get news on a mobile device compared to 72% just a year ago.
The report cites eMarketer estimates that digital advertising grew to $72 billion in 2016. Mobile advertising revenues accounted for 65% or $47 billion of the digital ad sales revenue. Desktop advertising revenue on the other hand continue to decline, now at 35% of total ad revenue. And, as ever, the report emphasizes the dominance of Facebook and Google in both banner and mobile display ad revenue.
Building a strong native digital news brands includes a platform native approach aligning publisher, platform and consumer strategies. Digital native publishers should experiment to find their unique voice and consumer connection. Importantly, the strength of a native digital news brand is deeply rooted in an engaged reader relationship.
Leaving this year’s Digital Content Next Summit in New Orleans, I was struck by how much of the conversation revolved around media companies moving from an advertising-supported model to a subscription-based model. There was a lot of healthy debate around the optimal types of brands and level of scale required to succeed in this transformation. Everyone wants to know what the best offering is and what types of content are best suited to capture subscription revenue.
One variable not discussed as deeply was the value of passion. Ask yourself: How passionate are your fans about the topics you cover. How passionate are they about the media brands themselves? The answers tell you a lot about your odds for success.
At TEN, we believe our passionate fan base is a key success factor in transitioning from a legacy publisher business model to a direct-to-consumer business with multiple revenue streams, including subscriptions and events. Let’s start with how we quantified how passionate our fans really are.
We partnered with market research specialists GfK to try to put a monetary value on our fans’ passion and influence. GfK’s proprietary study told us that our fans are two to five times more valuable than the national average in terms of buying power and buying influence across auto, action/outdoor, and home tech—our core content pillars.
We have built trust with these fans and through years of covering their passion and being a market leader in that particular space. Brands such as Motor Trend, Hot Rod, and Surfer go back decades as the respective bibles of their categories. Our job has been to leverage that brand trust and deliver great experiences on new and evolving platforms. In many cases, the business model is free with ad support, paid, or a combination of both.
Ready for Action
And now we are seeing it come together. Strategy is meeting up with execution. Looking at social, our auto reach is more than 106MM with an average age of 27. They are the greatest collection of millennial automotive fans in the world—an unexpected position to be for a legacy publisher reinventing itself in the new media landscape. Passion produces engaged fans. And that engagement provides a bridge to monetizing these fans in a variety of ways.
When we talk about original content and digital video, the story is even stronger. Our Motor Trend YouTube channel is ranked number one in the U.S. by Tubular Labs in every category they track, from subscriber monthly views and cross-platform views to engagement rates. This translates into revenue through pre-roll and ad-supported sponsorships and integration into our programming.
In our events business, we’ve gotten 30,000-plus fans to attend Roadkill Nights, an extension of our original video series of the same name. This past summer, Roadkill fans got to drag race down the iconic Woodward Avenue in Detroit. The show’s host, David Freiberger, is now (much to his chagrin) a genuine social media influencer, mobbed by autograph-seeking fans at every event, some bearing Roadkill tattoos.
That kind of success is what created the optimism around our original content and our SVOD service, Motor Trend OnDemand, which we launched in 2016. Today, you can find our shows and SVOD service on Amazon Prime Video, Netflix, Roku, Apple TV, iOS, Android, and Chromecast. Hundreds of thousands of people engage with us there each month on top of the millions who watch us on YouTube and Facebook Live. Most important, they care enough about this content to pay for it.
The Passion Grows
This passion and viewership is further amplified through our existing media footprint. We use our social channel, sites, magazines, and events to drive viewership, subscription, and engagement—often in real life. Moving forward, we expect to add more affinity models, where we bundle the SVOD, print, events with exclusive experiences to surprise and delight our fan base.
All this leads us to encourage our media peers to monetize their consumers directly. This means focusing on the brands and properties with the highest engagement metrics, most passionate level of fandom, and the kind of content opportunities best suited for today’s consumption platforms of choice: on-demand digital video and social. If you do that, passion will beat scale every time.
Scott A. Bailey serves as President, Automotive, for TEN where his primary responsibilities include enhancing the relationship between the Automotive Group’s brands and its audience, leading the continued development of TEN’s digital businesses, and improving its customer offerings by expanding its media platforms. Scott is a two-time nominee and Emmy Award winner for his work in advanced media technology and brings decades of digital and publishing experience to TEN . He came to TEN from Synacor, Inc., where he served as Chief Operating Officer and was part of the management team that took the company public in 2012. Before Synacor, Scott served as Senior Vice President at Comcast Interactive Media, and prior to Comcast, he was the General Manager for Turner Sports Interactive, a division of Turner & Time Warner.