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Advertising | Industry-Research | Perspectives

Marketers keep spending on problematic platforms

Despite a steady stream of negative news about social media platforms, eMarketer predicts that marketers will continue to invest ad dollars there. eMarketer’s US Social Trends for 2019 foresees continued fallout from 2018’s social media scandals and revelations, particularly for Facebook. It appears that marketers will continue to advertise on the problematic platform, despite declines in usage and engagement along with increased regulatory scrutiny.

For Facebook-owned Instagram, the report points to the likelihood of “growing pains” and investigations into data practices and privacy, in part stemming from the actions of its parent company. Overall, eMarketer says that 2019 will be a year to watch in terms of changing user behavior and engagement across social media platforms.

For Facebook and Instagram, eMarketer predicts that:

  • They will bring in a combined $67.25 billion in worldwide ad revenue, up 23.5% from 2018.
  • They will see US expenditures increase 20.6%, to $27.57 billion this year.
  • Time spent on Facebook among US users will remain flat this year, at 40 minutes per day.
  • Time spent on Instagram will inch up only slightly, to 27 minutes from 26 minutes in 2018.

However, the report points out that, much as marketers have had trouble shifting ad dollars away from linear TV despite declining audiences, they won’t be inclined to quit Facebook either, even in light of its mounting problems. In fact, Next year, eMarketers predicts that marketers will put $32.18 billion into social ads, with the vast majority—$27.57 billion—spent on Facebook. That will bring social ad spending to 47% of TV ad spending ($69.17 billion) this year.

For Snapchat, eMarketer predicts that usage will slow. However, the company will have better luck garnering revenues from its existing users. eMarketer estimates that Snapchat’s US average ad revenue per user (AARPU) will top $10 this year ($10.18 to be exact), up 30.4% over 2018 (when AARPU grew just 10.9%).

Other eMarketer 2019 productions include:

  • An explosion of the stories format (followed by a backlash)
  • The spread of vertical video
  • The newsfeed will maintain its dominance as social media’s primary UI
  • Social shopping will gain traction

Given the turbulence in the social media landscape, we’ll all need to keep an eye on Facebook’s place and popularity in the marketing landscape as well as the ripple effect that increased scrutiny on platforms data usage will have on all players. It will also be interesting to see if the stories format remains relevant in the long haul, as well as continued shifts in the perception of, and tactics around, influencer marketing.

Perspectives

Should publishers ditch native ad content promotion for good?

The internet is filled with tricks and tactics to reach your target audience.

There’s the e-newsletter blast, the banner campaign, the native ad widgets. There’s Facebook and Instagram and Twitter. These methods are constantly changing and requiring publishers to adapt to new rules and regulations, but one thing remains constant: if you want to reach your audience, you’re going to have to pay. Given that paid promotion is a part of most content programs these days, it’s vital that publishers are getting the best bang for their buck – or else their margins will suffer.

In recent years, platforms have cracked down on organic traffic, forcing publishers to adjust their spend accordingly in order to drive traffic to their sites. It’s also changed how we sell products like content. You can no longer put an article or video on your page and sit back as the views roll in. Instead, campaigns need a dedicated (and usually significant) amplification budget to deliver the results the client expects.

Considering this, it’s important to ensure that you’re getting the most bang for your promotion buck. Otherwise, you’ll end up breaking even — or worse — on something that should be a significant revenue stream for your business.

Two of the most common tactics are Facebook and native ad network promotion. Each has its pros and cons (scale, price, engagement), which we’ve explored in the last five years at Pressboard. But after more than 3,000 stories, we’ve stopped using native entirely and have shifted our whole client content promotion budget to Facebook. Here’s why.

The Native Ad Problem

Native ad networks have been praised for their ability to deliver a nondisruptive ad experience to viewers. In fact, research from the Native Advertising Institute suggests that readers prefer them over pre-roll video ads and banner advertisements, probably because they blend into the page more seamlessly.

And while they do succeed in sending traffic to a site, native ad networks face one major challenge: quality.

In order to outcompete other native networks and provide advertisers with adequate scale and inventory, many native networks have had to expand their reach beyond premium sites. As a result, quality of traffic has naturally given way in favor of quantity. The readers on these sites are often less qualified, which means they’re less likely to click on and engage with your stories.

At this kind of scale, native ad tactics also inevitably encounter brand safety issues. We’ve all seen those cringe-worthy headlines popping up in “Stories You Might Like” panels; it’s even worse if your sponsored content is sitting next to one of them.

Why Should Publishers Care?

Not all native ad networks are created equal. There are networks with built-in quality control measures, like minimum time spent, that ensure the audience they reach is, well, actually human. They can also lead to massive revenue if done thoughtfully.

But at the end of the day, there are better ways to deliver the results your clients want to see.

Content is different than banner ads or other kinds of advertising. While a banner needs 0.5 seconds to communicate its message, content needs audiences to engage with it to be effective. That connection is incredibly powerful: branded content leads to 59% greater recall than other digital ads. Beyond this, advertisers need to show that their investment in content is making an impact, and their clients are increasingly concerned about engagement rather than clicks. Therefore, it’s vital that the people who click on your ad intend to read and scroll through your content.

In a recent study, we compared how two traffic sources — Facebook newsfeed and native ad networks — compare when it comes to engagement and click-through rate.

The data came from over 1 million unique reads promoted through Facebook or native ad networks and tracked using Pressboard’s platform. We analyzed engagement metrics including time spent, scroll depth, and click-through rate on links in the article to determine which tactic was most successful. The results?

The Facebook Solution

After reviewing the results, Facebook is the clear winner when it comes to both engagement and conversion. Readers spend an entire minute engaging with content when they reach it from a Facebook ad. That’s almost two times higher than traffic coming from a native ad network. They also convert at double the rate of what we’d expect from a reader who reached the content after clicking on a native ad.

Even when we considered cost, Facebook outperformed native ad networks. Sure, native drove cheaper clicks and impressions, but that advantage changed when we looked at verified reads. Fewer clicks on native ads reached the content we were trying to promote, whereas the Facebook audience was more likely to reach our content. As a result, each actual read that came through Facebook cost $0.34, while reads earned through native ad networks cost $0.59.

Anyone that invests in content promotion knows the importance of every dollar. And while clients aren’t concerned about the publisher’s bottom line, they are invested in the performance of their content. Finding a platform that delivers strong conversions and engagement and at relatively affordable cost is a win-win. Until something inevitably changes in the AdTech space, we think we’ve found it.

Perspectives

DCN’s must reads: week of May 9, 2019

Here are some of the best media stories our team has read so far this week:

Featured Post | Perspectives

Are the NewFronts still worth it for publishers?

Certain terms like “new wave,” “new school,” and “online video” start to lose their meaning over time. The same seems to be true of the “NewFronts,” now in their eighth year in New York. The showcase for traditional and digital native publishers selling their video offerings to marketers has been split up into twice-per-year affairs (with a fall showcase in L.A.). Just 16 publishers presented in New York this year, down from 36 in 2017.

The idea of the TV Upfronts and NewFronts are to dazzle advertisers and get them to commit a chunk of their advertising to the publisher, though there is less scarcity online. Have the NewFronts made progress over the years? Most definitely. Has that progress meant there is no need for them anymore? Not quite.

What’s most interesting at this year’s shindig is that traditional players are pushing new acquisitions and initiatives, while the digital natives are trying to sound more traditional with ongoing series. This points to a convergence of purposes and the fact that online video, OTT, streaming video et al have commingled to the point of absurdity. This leaves marketers grasping at just what they’re buying and how they can track and optimize it all. And yet there’s still a place for publishers at the NewFronts as a showcase for offerings and to generate much needed buzz.

Platform domination

The biggest challenge for publishers, as always, is trying to stand out from dominant players like Hulu, YouTube, and even Twitter. And the dominant players just get more dominant. YouTube casts an immense shadow as the largest ad-supported video platform online. But, as Digiday’s Sahil Patel points out, YouTube users are spending 200 million hours per day watching YouTube on a TV, up from 100 million hours last October.

And Hulu hit $1.5 billion in ad revenues last year by offering a mix of legacy TV programming and original shows. During its NewFronts presentation, Hulu execs pointed out that they have 26 million paid subscribers, and a much younger audience than cable, at 31 years old vs. 53 years old. Plus, 80% of Hulu viewing takes place on a TV set, up 75% from last year. (And Hulu even sponsored Digiday’s coverage of the NewFronts.)

This puts many publishers in a bind because they have to sell their uniqueness to advertisers while also cutting deals with the platforms to expand reach.

“Mass reach is still a thing,” Mediahub’s Michael Piner told Digiday. “And there are certain partners that are being prioritized because they can achieve the mass reach of TV.”

What do publishers get?

So what do publishers get for their money and trouble at the NewFronts now? Well, the decrease in presenters means they do get more attention from attendees. And at least one publisher, Studio71, was touting its upfront ad sales.  The company has presented at the NewFronts from 2016 through this year’s edition. Studio71’s CEO Reza Izad told Digiday that 85% of their revenues each year came from upfront commitments. They boast 100 million unique viewers per month on YouTube and vet each piece of content on the network.

Still, many publishers such as Group Nine and Refinery29 decided to forgo the NewFronts for a private tour to increase intimacy – and likely save costs. The increased competition for digital video ads is partly to blame, and people are also paying more for services such as Netflix and HBO that don’t serve ads at all.

But it’s still hard to ignore the growth of digital video, especially if you sell video advertising in entertainment. The IAB’s Video Ad Spend Report surveyed marketers and found they would be spending $18 million on average this year on digital video ads, up 25% from last year, with the Media/Entertainment vertical up a whopping 75%. (And yes, that means studios are buying more ads on other media.)

Switching places

Meanwhile, notable presentations from Meredith and Conde Nast discussed new shows for their OTT services, and Meredith is also distributing them through its local TV stations. And as OTT moves into broadcast, cable network Viacom was showcasing content on its newly acquired PlutoTV OTT service. 

“Viacom is embracing digital inventory, and at the same time we see Condé and Meredith pushing themselves into the OTT universe,” Wavemaker’s Noah Mallin told AdAge. “They are starting to resemble each other more and more.”

As AdAge’s Jeanine Poggi’s so astutely points out, this is the year when the NewFronts actually looked a lot like the regular TV Upfronts, with the themes of brand safety, original programming, and scale. “This year more publishers spoke about renewing existing shows, creating long-form content akin to TV and positioning themselves as the new ‘primetime,'” Poggi wrote.

So where does that leave publishers and the IAB? Perhaps the time has come to ditch the NewFronts and merge them into the regular TV Upfronts. More importantly, publishers need to calculate carefully the benefits of a flashy program on stage at the NewFronts, and whether that still beats a private tour or other marketing outreach. Ultimately, it will take a new round of upstart video-centric publishers who want to make a splash to inject new energy into the NewFronts.

Advertising | Perspectives | Revenue

To maximize OTT performance, should we think lean back or lean forward?

Given that OTT is the new TV, how should audience interaction be considered? TV is conventionally viewed on a large screen ten or so feet away and described as a “lean back” viewing experience. However, the new capabilities that come with OTT are associated with “leaning forward” – similar to browsing the Internet. In the digital age, people navigate content by swipes on mobile touch screens or clicks on portable laptops and desktops. In other words: They lean forward.

From a media perspective, it has proved optimal to follow traditional TV practices in order to maximize viewer time with OTT video content. This starts with playing video the moment the app opens just like tuning into a TV channel. These days, the practice is becoming standard particularly across OTT apps for broadcasters with linear establishments. (AKA, leaning back.)

By the numbers

The metrics behind the lean-back practice are particularly compelling when comparing average view time for media companies that have transitioned from on-demand menu starts to starting with video streams. Average viewer times have increased between 80-120%— more than doubling from less than a half hour to over an hour per session.

Moreover, Pluto TV, the leading free streaming service with more than 15 million monthly users, takes it a step further with 24 hours of programming on OTT channels. Pluto recently announced a view time of two hours per session, which already represents half the average daily view time of TV in the U.S. of nearly four hours. And consider Hulu (with 28 million customers), which recently announced binge watching on the service as a new ad targeting metric. So, length of viewing time is now a metric of significance in OTT viewership and even advertising.

Ad engagement

From an advertising perspective, lean-forward ad engagement can be far more impactful. This means capturing consumer attention with interaction of any kind, whether a game of sort for brand recall or data capture for direct response. In digital, user interaction is the driving force behind premium and higher value ad opportunities. 

However, when we consider OTT as the new TV — where leaning back is the status quo on a connected TV versus the underwhelming amount of time spent watching OTT on mobile phones — a new balance must be struck with the level of interactivity and added value that is possible. Compare this to the lean-back paradigm of TV in OTT, where the remote is purely a means of turning the stream on or off or tuning the volume up or down.

With lean-back, media companies and marketers will need to capture the most meaningful signals from viewers through their viewing behaviors and activity along their content journey. They will also need to break the mold with interactivity in simple and beneficial ways to the viewer, such as skip or continue to watch a certain commercial like done with simplicity in digital.

For OTT, we’ll need to take a hybrid view to maximize consumer understanding and ad performance. As a medium, OTT must be evaluated in the context of “lean back” in terms of programming presentation, and a “lean forward” opportunity in the presentation of commercials through viewership behavior.

Perspectives

Publishers face new risks in the wake of the CCPA

While the California Consumer Privacy Act (CCPA) is poised to present peace-of-mind for many, it could be crippling for any publisher that relies on their GDPR compliance framework. In light of recent updates to CCPA, it’s clear that publishers must get on board or face some seriously damaging consequences in the form of not only revenue loss but also severe financial penalties.

The CCPA ripple effect

When CCPA first passed in June 2018,  just one month after GDPR’s enforcement, people were quick to refer to it as “GDPR light.” This was an indication that the landmark law will have significant ramifications on how companies that meet the thresholds and do business with Californians will have to change how they operate. At its core, CCPA signals a shift in business models, in particular where data is a revenue stream. What “GDPR light” downplays, however, is how significant that shift truly is.

The very fact that such regulations were passed in the world’s 5th largest economy was a bold statement in itself. With California at the helm, it’s only a matter of time before the rest of the nation follows suit. Other states are not just going to sit back and have privacy issues impact their citizens after California has made the first move.

More legislation in the works

Already, several other states have already jumped on board with similar laws, some with pages pulled straight from CCPA.  For example:

  • North Dakota: A proposed bill would require companies to provide to consumers (upon request) with information about the types of personal data that companies collect and possess.
  • New York: Two bills are on the docket: one addressing biometric privacy and another that would govern businesses’ collection and disclosure of personal information. Utah: A bill would require law enforcement to get a warrant from a judge to access electronic information.
  • Washington: Legislation would allow consumers to ask companies for a copy of their personal data and to delete or correct inaccurate data. It would also regulate facial recognition technology.
  • Texas: Two bills have been proposed that take more than a page, entire chapters in fact, from CCPA: TCPA and TPPA.

The results are clear: CCPA is about to shake the very foundation of how companies conduct business nationwide. Because of this, several federal regulations have also been proposed. And while it’s unlikely any of them will pass before CCPA is enforced on January 1, 2020, it’s vital to note that these things are currently being worked on behind the scenes. More importantly, since CCPA passed sooner than anyone expected, publishers should begin taking immediate action to align with the upcoming regulations. The groundswell of consumer privacy ballot initiatives is only growing stronger as consumers become more outraged with their lack of privacy rights in the digital landscape.

Proposed amendments

Every publisher, whether operating in California or not, needs to be fully vetted on the new law because it affects anyone who conducts business with California residents. It provides those residents with new rights to their information such as knowing what personal information is being collected, shared, and sold, and with whom.

Furthermore, it also allows them to access and delete, or decline the sale of their information while still receiving equal service and price from businesses. Meanwhile, publishers must inform their digital readers of what information is being collected and why. Publishers must also work to ensure that each vendor in their supply chain is operating within their contracted policies. Additionally, toll-free numbers, email, or websites must be provided to consumers so that they can easily request their information.

The latest on CCPA

Recent changes to CCPA include several notable items, but there are two amendments in particular that could affect businesses for years to come—SB-561 and AB-25. The first dramatically increases the legal risks of businesses that collect and keep information by allowing consumers to file suit for any alleged violation of their CCPA rights without any evidence of harm—even before the Attorney General publishes guidance. What’s more, if the amendment passes, businesses will no longer have the right to consult with the AG on such matters.

The second amendment deals with how the law defines “consumer information.” If passed, this amendment would exclude information collected by a business from a job applicant, employee, contractor, or agent. That’s a good thing, because without this change, consumer information will include business contact information and employee information, resulting in unintended consequences. Former employees will be able to request items from  previous employer records, such as emails and other corporate documents that mention their name, including those that contain confidential corporate information and performance evaluations. They can also request emails to and from former contacts, enabling them to reach out to company clients and prospects.

Preparing for CCPA

At the end of the day, there’s no definitive answer on how CCPA evolves by the time it is enforced on January 1, 2020. Still, with less than a year to go, businesses need to take a risk management approach. They need to find out what information is collected  and from whom, what information is  shared and with whom, and how to secure that data. Operations, security, IT, and compliance teams will need to keep abreast of the regulations and their consequences for the organization. And in order to operationalize security and privacy, these teams will need to work together.

Those taking a wait-and-see approach should look no further than the average cost of GDPR compliance. It’s been noted that, after factoring in legal and other fees, the cost sits anywhere between $1M‐$10M. That number could quickly grow if a violation occurs, and the likelihood is high, given the increased right to personal information. To put it bluntly, waiting to see what happens next is not an option. Businesses of all sizes must act now to protect their bottom line or face the impending consequences. 

About the Author

Steve Stup is responsible for developing and overseeing the revenue strategy at The Media Trust. He has experience developing high growth sales teams through the course of his career spanning around 30 years at The Washington Post, Lexis Nexis, and other recognized brands. During his tenure at The Washington Post, Steve built the company’s digital business and spearheaded successful sales and revenue operations teams. He is an alum of Virginia Tech and The George Washington University.

Featured Post | Perspectives | Revenue

The cannabis business is booming. So how about the cannabis ad business?

Do a search for cannabis-related articles and thousands will come up in the results. And with good reason: Recent years have seen the legalization of it in 10 states now, with 33 states allowing marijuana for medical use. This has given way to countless articles written about the burgeoning legal industry and startups offering cannabis and CBD products.

Billions of investment and consumer dollars are flowing into the legalized cannabis space. Last year, legal cannabis was a $10.4 billion industry in the U.S., employing a quarter of a million people, according to New Frontier Data, a cannabis market research firm. According to a report from the Associated Press citing New Frontier Data, “Investors poured $10 billion into cannabis in North America in 2018, twice what was invested in the last three years combined… and the combined North American market is expected to reach more than $16 billion in 2019.”

But for all the explosive growth of this new and legal market, the advertising part of the equation has not kept pace. The largest digital platforms don’t allow cannabis ads. Cannabis articles may appear on many publishers’ sites, but few allow advertising of these products. The fact is that cannabis is still a Schedule I drug in federal law, and the Controlled Substances Act of 1970 prohibits advertising and selling of such products. State laws vary widely, causing many with ad space to sell to err on the side of safety.

It’s no surprise, then, that many of the publishers reached for this article just don’t allow cannabis advertising, particularly in national publications. One major publisher with a number of popular titles said that it doesn’t accept cannabis advertising. Though it does accept ads for topical cannabidiol (CBD) oil products to the extent allowed by law.

Publishers leery of cannabis ads

Meredith Corp. said that it doesn’t accept any marijuana or cannabis-related products (including Marijuana-based THC, Cannabinol [CBN] or CBD products) or any other product that’s illegal under U.S. law. One exception the company now allows is Epidiolex, which contains CBD and has been approved by the FDA to treat childhood epilepsy and can be legally advertised for such use under federal law.

Meredith said it also now accepts industrial hemp-related products, including Hemp-based CBD or CBN products, with THC content of 0.3 percent or lower. Hemp products of this sort were previously illegal under the Controlled Substances Act. However, they were made legal under the 2018 Federal Farm Bill, enacted in December 2018.

There’s more leeway on the local publication front. Local newspapers and publications in states where cannabis is legal for recreational use may have an easier time accepting ads, depending in state law. The Seattle Times, for example, accepts cannabis advertising.

“Cannabis advertisements are reviewed by our staff to ensure they meet our general advertising creative and copy policies. There are Washington State rules for this category of advertising, and we comply with those requirements,” said Gary Smith, VP of advertising at the Seattle Times. “While there are complexities around accepting this type of advertising, it has been a growing part of our overall client mix. And we’ve had very few customer complaints associated with the inclusion of this ad content in our products.”

Is the duopoly doing it?

Publishers need not worry that they’re losing out on cannabis ad dollars to Google and Facebook. Both have shied away from allowing cannabis ads. Google’s policies state that ads promoting products that alter mental state for recreational use, including “legal highs,” are prohibited.

Facebook similarly prohibits such ads, though the company reportedly formed a group to “examine its approach to cannabis,” which suggests that it could be moving towards a more permissive stance. In the meantime, state legal cannabis businesses are allowed to create verified business pages on Facebook, and appear in search results (they were previously blocked from search),” according to Bloomberg Law.

Varying state laws are a hurdle for brands that want to market cannabis products in multiple states where it’s legal. And given that that Google and Facebook don’t allow cannabis ads, and that many publishers shy away from them, Cannabis brands often rely on outdoor advertising and sometimes even events.

The brand perspective

Jason Deland, co-founder and chairman of cannabis brand Dosist and founding partner at ad agency Anomaly (which handles advertising for Dosist), said that their media strategy has largely prioritized outdoor advertising for creating awareness. Zoned areas that allow for outdoor cannabis advertising in California have helped Dosist build its brand, as has its retail location on Abbot-Kinney Blvd. in Los Angeles’ Venice Beach.

Dosist has also had event partnerships with Barry’s Bootcamp, with messaging focused on sleep and the health benefits of cannabis. The company also has advertised with Cannabis-friendly publications like High Times. As for social media, Deland says that Dosist creates organic content on its own pages.

Other brands have tried to circumvent the social media ban on cannabis ads by using influencers to promote their products or promoting prices on their own social accounts. However, that can have its own set of headaches and influencers can sometimes have murky return on investment.

For now, it seems like unless there is a change to the categorization of cannabis at the federal level, most companies with ad space to sell won’t allow cannabis advertising anytime soon. There are the rare exceptions of course, as noted above with Epidiolex, and more of those may come in the future as pharmaceutical companies look to get more cannabis-related drugs approved. Others are hopeful that with the recent allowance of industrial hemp products to be advertised – thanks to last year’s Farm Bill – that the federal government will ease up eventually on cannabis, but only time will tell.

About the Author

Maureen Morrison is a writer and consultant, working with agencies, startups, publishers and brands on editorial and communications strategies. She previously was a reporter and editor, and spent 12 years at Ad Age covering agencies, digital media, and marketers.

Perspectives

DCN’s must reads: week of May 2, 2019

Here are some of the best media stories our team has read so far this week:

https://www.vanityfair.com/news/2019/05/the-markup-craig-newmark-journalism

Advertising | Industry-Research

Better machine decision-making, rethinking digital ads, and smart cities will improve the health of the internet

Mozilla’s newly released 2019 Internet Health Report offers insights from more than 200 experts examining what’s key to a healthier internet. The report is an open source compilation of research that tracks the internet and general technological progress. The findings center on three key areas: the need for better machine decision-making, rethinking digital ads, and the rise of smart cities.

Better machine learning

Machine learning and artificial intelligence (AI) are the next generation of computing. They enable more powerful automation, prediction, and personalization. As AI intelligence works its way into our daily lives, we need to question the ethical decisions and potential risks associated with it.

Industry experts are concerned that the large tech companies that control social media and e-commerce, are also shaping the AI agenda. Given Facebook’s, Amazon’s and Google’s ability to gather large quantities of training data, they are developing powerful AI technologies. An ethical assessment of their algorithms is important to ensure the consumer’s fundamental rights are protected.

Rethinking digital ads

Digital ads monetize online content and services and are the key driver of the advertising economy. Many researchers contributing to this report are alarmed by Google and Facebook’s combined control of approximately 84% of the global digital ad market outside of China. Their access to user data as a source of global market power in business negotiations is a major concern. Targeted ads used by these companies exploit their users. A scandal uncovered a few months ago included ads on Facebook demographically targeted to exclude people of a certain race from housing ads. Another example, also on Facebook, allowed advertisers to use available data on the service to create an affinity group to target ads to “Jew Haters.” 

Some brands and marketers are stepping away from YouTube and Facebook but many still purchase their inventory for targeting campaigns. As a result of these scandals and others, users want to take control of their data. New software initiatives are being explored to offer a decentralized solution, giving consumers control over who has access to their personal data.

Rise of smart cities

Smart cities exist when the internet and connected devices are applied to solving problems from energy efficiency, transportation to government services. Similar to rethinking digital ads, collecting neighborhood data must be thought about carefully. Smart cities face challenges with regards to establishing policies and processes to guide the usage of local data with regards to privacy and transparency.

Steps to a healthier internet future

Many of today’s biggest internet companies still access users’ clicks, likes, friends, emails and downloads to fuel their business models. However, some companies are thinking about alternative business models and new technologies to give users control of their data. One such initiative is Purpose Foundation. It promotes “steward-ownership,” a legal structure to prioritize a mission over profit revenue model. It involves users in the ownership of the company to ensure consumers benefit in the economic growth. Importantly, involving consumers in internet innovation and safeguarding personal data are key steps to a healthier internet.

Innovation | Perspectives

Channels, conversions, and churn: Why better mobile UX is key for publishers

Publishers attempting to unlock new sources of reader revenue are understandably honing in on device usage, particularly when there are an estimated 5.1 billion unique mobile users around the world that could be paid subscribers.

Chartbeat data between May 2018 and April 15 of this year shows that mobile continues to dominate device-based engagement across the world, with between 55% and 60% of readers engaged through this channel, followed by desktop and tablet. This trend is also reflected across North America, where approximately 57% of readers prefer mobile devices to consume content.

However, simply possessing the analytics to know whether readers prefer your mobile, tablet, or desktop experience is only step one. The next and crucial step is understanding the sources of retention and churn.

Therefore, we wanted to take a closer look at the relationship between devices and subscriber behavior, specifically where subscribers most often convert or churn. From there, publishers can uncover the solutions that will improve subscriber retention rates.

Analyzing subscriber conversions by device

We began by analyzing subscriber status changes (i.e., conversions or churns) that took place across publishers in January. In order to be included in the dataset, a user* would have had to visit a site on their device at least once in the last quarter of 2018 and at least once in January.

Quick note: Why do we refer to the data population as “users”? Since we don’t track individuals across devices, it’s possible for a single person to appear multiple times in the data if they’re accessing a publisher’s site on multiple devices.

Subscriber patterns

Our findings show that while tablets have the most subscribers (as a proportion of total audience size on each device), they are also the most likely to convert, as indicated in the chart below. This is followed by desktop and mobile, suggesting on first impression that publishers should be focusing their web conversion UX efforts on tablet and desktop.

You can also see that the churn/conversion ratio is highest on mobile (which also has the greatest number of users), followed by desktop and tablet. This suggests that the mobile web subscription and/or login experiences on websites is simply not up to par with their desktop counterparts. This could potentially take the form of slow loading speeds or difficulty navigating through form fills, for instance.

What can publishers do to improve subscriber experiences?

Chartbeat’s analysis demonstrates that publishers will want to shore up their mobile UX and subscription flows, thereby improving the likelihood of subscriber conversions and retention while reducing churn. This is particularly important on mobile devices, given that those sites are now the predominant way new users experience a publisher’s website, but through which so few are being converted.

We also think it’s worth noting here that this slice of data does not include app users, which tends to be where mobile loyalists congregate. That said, we see a good opportunity for experimentation—publishers can analyze the impact of tailoring experiences towards acquisition, engagement, and conversion on the mobile web versus re-engagement and retention on the mobile app.

All publishers need to take a deep dive into new and churned subscribers over various time periods, their reading patterns by device, and whether their user journey flow would encourage, or turn off, a potential subscriber from converting. Our approach is to help publishers integrate subscriber analytics in an effort to provide a clear idea of the connections between audience engagement, loyalty, and more paying subscribers. Clearly, publishers need to develop a deeper understanding of their subscribers’ device-based usage.

Revenue

Back in black: The rise of revenue diversification

The publishing industry is going through a transformation due to continued shifts in reader habits. As readers spend more time within social platforms, publishers are exploring new opportunities both on and off their sites to reengage users and grow their bottom line. Revenue diversification has become a priority in the media business.

With a large number of readers congregating on social platforms, advertisers and publishers followed them there. All types of content that ranges from personal posts to advertisements to videos have made their way into people’s feeds. But akin to display ads in the early stages of internet advertising, the feed has driven a need to break through the clutter. In today’s media environment “normal” coverage doesn’t always make it through – surprising events do, particularly when main metric that news outlets are judged are through ratings and page views. 

The changing social relationship

Social platforms are characterized constant changes to algorithms, the latest of which prioritizes posts of friends and family members over publishers. At the same time, Facebook regularly tries to entice publishers to try new products and features.  

Earlier this year, the social media giant also informed its production partners for news shows on Facebook Watch that it won’t renew two-thirds of its existing news shows. At this point, publishers aren’t likely to put too much faith into these so-called partnerships. As a result, they have to seek out new revenue approaches that rely less on social platforms.

Even web natives like Buzzfeed have recently struggled with layoffs, reinforcing the view that diversified revenue streams outside of platforms are imperative for survival. These venture-backed sites have seen issues surrounding the need to prove profitability faster than they can grow organically, causing a focus on sheer traffic and get-rich-quick strategies.

A healthier approach

Then there are niche players, like wellness publication Well+Good, which have done the exact opposite. They focus on growth by creating content and real-life experiences for their core audiences in order to connect with their readership in new ways and create additional streams of revenue.  As they understand the lifetime value of their readers and cater to their wants and needs, they’ve created a loyal following that transcends from online to real life.

By noticing a trend for “one-stop wellness” among its readers, Well + Good created experiential events through teaming with other wellness brands and expanded their offering. Readers can now experience the brand through wellness retreats, in-person monthly talks, and the potential for health & wellness pop-up shops.

Flowing with the revenue streams

However, it is important to recognize that new revenue opportunities need to be a natural extension of the brand. At the 2019 American Magazine Media Conference in New York City, Troy Young, president of Hearst Magazines, mentioned how media brands need to be more “thoughtful, research-oriented and data-driven.” At the same conference, CEO of Bonnier Corporation stated “…it’s dangerous for us in media to think we should stay in our swim lane. We are not going to get out of media, but we’re attached to it,” when commenting on how he would “future-proof” Bonnier by proposing one-third of his revenue comes outside of publishing.

Revenue streams outside of ads are not a one-size-fits-all. And figuring out how they fit within existing infrastructure can be difficult. But publishers that get it right have new ideas that focus audience attention and command bigger media budgets from brands. “There is going to be a new crop of players like us that accelerate because they understand how to connect content, commerce, and conversation,” Erika Nardini, CEO of Barstool Sports said. “Companies that do that are going to be in a good spot.”

Experience and growth

Leading local news organizations like Gannett are diversifying their revenue through subscriptions, though they are still focused on ad yield and engagement. To help with this, publishers are starting to personalize the onsite reader experiences with unique and proprietary formats to prove engagement with audiences for a higher price from advertisers. This is revealing to be a viable strategy for revenue over struggling standardized banner units. As people continue to shift toward mobile where there’s less real estate for ads, it has led to the rise of publishers embracing native, according to Digiday.

A recent eMarketer report forecasts that the spend for native display ads from US advertisers will be $43.90 billion in 2019, a $24.6 year-over-year growth. They also anticipate native display ad spend to grow over 20% to $52.75 billion in 2020. Principal Analyst for eMarketer, Nicole Perrin said “Native formats have made significant inroads in channels like mobile apps, but there are still a lot of traditional display units being traded programmatically, especially on desktop and the mobile web.”

It’s interesting to note that when it comes to the share of native from social, eMarketer sees a slight decline from 76.6% in 2018 to 73.5% in 2020. Yet this may be a silver lining for publishers. As Facebook finds itself embroiled with data concerns with its ad-targeting tools and constant change of its ad policies, it may become less appealing to brand marketers. It may also give publishers pause in how they include social as a part of their online strategy.

If today’s publishers want to explore new opportunities to diversify their revenue streams while making meaningful connections, a native feed experience is a viable strategy. It can help improve reader engagement by personalizing content experience and shift share from the social media giants and bring publications back into the spotlight. 

Perspectives

DCN’s must reads: week of April 25, 2019

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