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Advertising | Perspectives | Supporter Spotlight

How to increase revenue by cutting ties to indirect demand sources

I promise this isn’t another article about the end of cookies. Instead, I want to discuss how publishers can maximize the opportunity to increase revenue as this industry shifts in the wake of their eventual demise. 

To do this, publishers must align demand strategy with their strategic and revenue objectives.

More than 60% of publishers expect digital revenue to grow in a post-third party cookie era. Few have articulated exactly what this will look like, what strategies will be put in place, and how publisher operations can and will play a role in establishing a stronger foothold in the industry. The path to success ultimately involves optimizing demand leveraging new perspectives and data such as focus on revenue compared to fill rate, and quality ad executions with higher margins compared to adding placements to a site.

Uncertainty in how to capitalize

There is still some uncertainty around how organizations can capture new revenue as the industry evolves. In a recent study by DoubleVerify, 45% of publishers stated they are turning to private marketplaces, 40% believe first-party data will be the best solution, and 34% are leaning on contextual. The study shows an even distribution between the options. Really, each could play an important role in the new age of advertising.

Balance data and demand strategy

Given that many publishers are building out robust first-party data ecosystems and taking a renewed refreshed emphasis on private marketplaces, it appears that they are transitioning away from indirect revenue sources to more premium and direct relationships with advertisers. Research finds that 60% of publishers forecast growth in preferred deals and private marketplaces, and 88% of publishers believe selling direct will become more important. 

While direct demand is only a small percentage of demand, it is starting to account for a large portion of revenue. On average, direct-sold inventory accounts for 39% of publisher revenue, with (digital) programmatic accounting for 28% of overall publisher revenue. Advertisers are expressing interest in more direct relationships with publishers. This means more ad dollars spent on advertising with publishers versus on “tech fees.” (Remember that each time an ad call passes through a new system in the tech stack, the budget is siphoned away from publishers to pay for various fees.)

Developing a direct or premium-first demand strategy will require differentiation. Each publisher can rely on their first-party audiences. However, they can strengthen their stance by partnering with their publisher operations and content teams to deliver unique value in content production and optimization. 

These teams have the expertise and insights to support data-driven optimization. That said, it will be essential to go beyond dynamic creative optimization and incorporate format and page placement. Look at the data and create tailored packages combining placement and formats to meet campaign KPI objectives. This unique combination of data, placement, content, context and site value will drive differentiation between publishers. 

Three strategies operations can support

Beyond supporting the development of these packages, operations can support these initiatives in three categories: Demand optimization, ad quality analysis, repurposing and backfilling unsold demand with alternative revenue strategies.

Beyond fill rate

Operations teams need to have the ability and autonomy to control demand to optimize not only performance but revenue and margins. Publisher platforms should provide transparency into demand revenue by source and the power to waterfall demand sources to support revenue and corporate objectives. A direct and premium-first approach to demand will generate higher CPMs and more favorable margins, offsetting the loss by removing or deprioritizing indirect demand. 

By coupling this with a premium-first site experience, meaning highly integrated ad executions, publishers can start to improve the site experience while improving revenue.

Ad quality analysis

With high-impact ad executions and content-led advertising, direct demand could drive more premium revenue, meaning publishers can remove ad placements that rely heavily on indirect sources or 3rd party targeting. The shift to prioritizing quality placements over quantity gives publisher operations the ability to focus on page placement and its impact on meeting client campaign goals. 

Drive alternative revenue

As publishers continue to build out their first-party data programs, including free and paid newsletters, they have an opportunity to use the valuable real estate reserved for advertising. They can also repurpose the removed ad placements to drive engagement and program adoption. Developing and running “house ads” enables site owners to use their ad placements to strategically support these initiatives and improve the site experience for viewers. The pennies lost in low-quality ad placements and indirect demand are an opportunity to support other corporate objectives.

The takeaway

Ultimately, open marketplaces should be a last resort in the waterfall. Direct demand, private marketplaces, premium demand, and house advertising should be prioritized over these open exchanges. This strategy gives publishers the direct relationship advertisers seek while equipping publishers with the best opportunity to grow revenue and still provide options to scale and backfill inventory easily. 

Advertising | Industry-Research

Publisher demographics are more effective than data-brokered targeting

Many marketers believe that personalized advertising in digital media is very effective at offering efficiencies and generating clicks and conversions. While advertisers generally agree that targeting is a useful tool, there is little business-to-business (B2B) research that evaluates the efficacy of advertising tactics like this. However, Nico Neumann, Catherine E. Tucker, Kumar Subramanyam, and John Marshall explore What Type of Digital Advertising is Most Effective for B2B Prospecting? in a new study.

Reaching B2B decision-makers

This research questions the best targeting method to reach B2B decision-makers using digital advertising. The authors focus on the tech sector as their desired audience: the most extensive B2B advertising vertical with an over a 30% share of the U.S. B2B digital ad spend market. The goal for the campaign is to increase branding among Information Technology Decision Makers (ITDM). Therefore, reach is a key metric for this campaign. 

Methodology and analysis

Seeking out expertise, the authors asked five different global data vendors to produce ITDM prospect lists. Two vendors provide a simple list of ITDM prospects, including user’s name, location, role, email, and cellphone information. Using their proprietary black-box methods, the other three data vendors provided a ready-made list of ITDM prospects. All five ITDM segments easily integrated into buying or data management platforms.

The core focus of the study is to examine the factors of data quality and their influence on results. The authors compared the five prospect lists to random prospecting on a digital publisher network of Time Magazine, Dotdash Meredith, Design Home, and other quality publishers to serve as a baseline for reaching the target audience. In addition, the researchers surveyed those exposed to the campaign to find out about their ITDM responsibilities, demographics, work-related characteristics, digital footprint, and content interests. This benchmarking exercise assessed the reach performance of the different ITDM targeting practices compared to the network of publishers without purchasing additional ITDM data segments.

The survey analysis examined all segments and found that over 84% of respondents have no IT product or purchase responsibilities despite the list of targeted ITDM users. Interestingly, the first two prospect lists were more effective than using black-box audience segments for identifying ITDMs via digital ads. However, even the prospect lists are not statistically better at reaching the defined target market than the digital publisher network.

The prospect-information validation using the collected surveys suggests a significant level of inaccuracy, consistent across the first two vendor lists.

Invalid data can occur if:

  • A potential error in the link to the data profile itself.
  • Data is classified incorrectly.
  • Information is outdated.  
  • Inaccuracies with machine learning or other attributions problems.

Importantly, audience information generated by publishers is less likely to be subject to these errors.

Effective tools

After evaluating the cost-effectiveness of market costs and reach, the study found that contextual and content-interest targeting is almost 9 to 10 times more efficient than specific ITDM pre-packaged prospect lists. The custom B2B lists for ITDM are no more helpful in finding the desired audience than random prospecting from a digital publisher network. Further, publishers’ demographic first-party data targeting is most efficient.

This study provides independent evidence that publishers and first-party data efforts offer more effective and cost-efficient target audience reach than the use of data brokers and third-party cookies.

Advertising | Perspectives | Supporter Spotlight

Winners from the CTV boom to be decided by early measurement adoption

All forms of digital video advertising are growing rapidly. According to the IAB, the digital video channel has grown over 50% since last year. This is largely being driven by the surge of users who are now enjoying a variety of streaming and digital video offerings online, with CTV being the most recent beneficiary. And with Nextflix planning to get in on the game with an AVOD offering, this space is only going to get hotter.

Brands hoping to reach these audiences are spending more than ever. But continued growth relies on transparency and measurement becoming a core pillar of how these channels operate. Publishers looking to capture higher CPMs and brands seeking increased exposure through CTV and video must advance measurement efforts to improve optimization opportunities and performance.

Online video measurement shows the path CTV must take

Some progress has been made on the measurement front. Through VAST, and later VPAID and Open Measurement development, new measurement standards and tools have become available that improve performance and revenue. While there is still more work to be done, it’s clear that measurement has helped this channel mature to drive results for buyers and sellers.

The measurement challenges for CTV are not new. As we’ve seen with online video over the past decade, measurability improvements have led to ad performance gains over time, benefiting buyers and sellers alike. If history were to repeat itself, publishers benefit most when they expand their tech stack and data tools to benefit from improved measurement as it becomes available.

CTV limitations highlight opportunity for publisher adoption

While millions of users flock to CTV, the industry is building out the required infrastructure to ensure additional advertising inflows. One of these has been particularly difficult to implement: viewability.

VPAID, which enables viewability measurement in online video, is still not fully adopted by the industry. Less than 40% of desktop and mobile impressions support VPAID and it is not supported at all on CTV, mostly due to its own limitations that the industry wants to move away from. New standards for viewability such as Open Measurement are not yet supportive of CTV as a channel. We’re working on this, through tools like Fully On-Screen measurement, which is designed to help buyers more roughly understand whether their ads are actually being seen. However, is more work to be done before brands feel comfortable moving large portions of their budgets to CTV.

Case Study:
How audibility and viewability work together to improve ad recall and brand awareness

As just one example to illustrate how measurement advances can benefit the industry, let’s look into the case of audibility measurement for video advertising. A Google study based on YouTube indicated that an audible and viewable ad saw a 1.6x improvement in brand awareness over an ad that is only viewable, and a 3.8x improvement over an ad that is only audible.

Given these results and what we’re hearing from clients, we’ve learned how audibility measurement can improve publisher revenue when it’s properly taken into account and optimized against. By expanding access to these metrics in alongside CTV metrics such as fully on-screen insights, buyers and sellers can expand the shared language of data that accomplishes performance and revenue goals.

In these nascent stages of measurement innovation on new channels, publishers have an opportunity to provide value to brands looking to feel more secure in their ad spend. Whether it’s through fully on-screen measurement, audibility or other metrics, publishers can begin optimizing performance today.

In DoubleVerify’s work with advertisers and publishers, we are developing more video-level transparency for toolkits on both sides of the industry. Since standardization is set to follow new measurement technology, buyers will look to these tools as a way of measuring KPIs. Instead of waiting for this to take place, proactive teams can use these tools to improve ad quality and performance before the competition.

Perspectives

DCN’s must reads: week of May 19, 2022

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

DCN’s must reads: week of May 12, 2022

Featured Post | Innovation

How social audio supports The Washington Post’s “adoption, addiction, and affection” strategy

In the 18 months since social audio spaces were introduced the media landscape, digital content companies have experimented to uncover their purpose and how they can best serve audiences. For The Washington Post, the answer was revealed amid the discussion of a massive leak of offshore data, which exposed the secrets, deals, and assets of the world’s rich and powerful.

The Pandora Papers investigation was not The Post’s first use of social audio. They’d experimented with Clubhouse in mid-May 2021 and held their first Twitter Spaces event June 10, 2021.

It was, however, one of their most ambitious experiments as it involved other global news organizations simultaneously joining the Twitter Spaces event. The Pandora Papers investigation spanned five continents and involved 600 journalists in 117 countries.

“The Pandora Papers was the largest reporting consortium in journalism history. We’re talking about [journalists examining] 11.9 million documents and financial records,” said Michelle Jaconi, head of news talent strategy and development at The Washington Post.

That’s a wealth of information – but a challenge to present given its scope and depth. “The amount of nuance that you can go into in a platform in audio where you don’t have the set limitations of an article is wonderful.”

“Twitter Spaces has been an incredible playground for creativity and exploring ways where we could stretch that platform,” Jaconi said. “That one was one of the biggest and most ambitious spaces we’ve done, because we did it across different newsrooms. It was an incredibly fascinating test and stretch, and incredibly well received.”

Space(s) for transparency and engagement

Social audio allows The Post to share the teamwork and collaboration that takes place in their newsroom, Jaconi explained. The work that goes into a large scale, investigative report is largely invisible to readers. However, the audio format allows the journalists to communicate the process and passion that goes into a project like this one. As Jaconi points out, “The voices humanize the work, effort, the passion and the care that goes into every piece of journalism at The Post.”

One thing the team at The Post has learned through its use of social audio is that the audience is incredibly curious and wants to learn more about the journalistic process.

“We learned, wow, there is an audience for this, and [social audio] is incredibly good for things that are so complex that you need extra time and nuance and care to explain,” Jaconi said. “And, especially with Pandora Papers, we were testing the platform and how much we could stretch the production capabilities of an audio event that was truly global. We had some issues. But I think Twitter’s even gotten better since then at the product and the production aspect of doing massive events.”

Attracting and engaging audiences

Like all publications, Jaconi says The Washington Post not only wants to increase the size of its audience, but also engage younger, next generation, diverse and global audiences. For the use of Twitter Spaces grew the following of @washingtonpost on Twitter, as well as the following of their reporters.

“I think one of the things that social audio is incredible for is that social platforms convene audiences of curious people – or sometimes just bored people who become curious when they see a trending hashtag,” Jaconi said. “Every time we do one of these spaces, our reporters get new followers. That shows that we’re building audience.”

Social audio spaces create an intimate connection between The Post and their audience, on a device that many use to interact with their family and friends. “That is a wonderful way for us to not tell our expertise, but instead to show it. We do it in a way that provides intimate connection between our reporters and their audience,” Jaconi said.

For reporters who often work in text-based mediums, one of the things that makes social audio fun is that they get to know their audiences more personally and engage directly. 

“While you’re talking, you can actually see avatars and photos of people joining in that conversation right there with you. And that is something that I love for reporters to know,” Jaconi said. “Who doesn’t like telling a story and looking at the avatar of someone and saying, ‘oh, thank you for listening. That’s so interesting that you’re popping into this conversation and listening to me.’ That has been really rewarding for everyone who’s participating.”

And, as it continues to improve the functionality of Spaces, Twitter is now surfacing live audio to users when they first log in and providing beacons to audiences indiscriminately. This adds value for digital content companies because previously, Twitter had only surfaced Spaces to an organization’s existing audience.

“Social audio is one of the most exciting playgrounds right now to gather new audiences because the product keeps getting better,” Jaconi said.

Adoption, addiction, affection

In helping Post reporters reach new audiences, Jaconi looks for a funnel of adoption, addiction, and affection. With The Post’s recent reporting on the war in Ukraine, Jaconi said they are seeing an uptick in followers, but also affection. Social audio plays into this by increasing the personal engagement between audience and reporters.

In particular, The Post has sees a trend of audience members sending deeply moving messages. “People have been following reporters for the first time and posting comments like: ‘I am praying for your safety. I hope you’re okay. Please be all right.’ That is affection and concern for our journalists,” Jaconi said, noting that she’s never seen this kind of thing take place at this scale before.

“To have that be the overwhelming chat response to an audio space from our reporters covering the war, boy, is that a different experience for our journalists and reporters,” Jaconi said. “It means that we we’ve done a really good job and reaching people who are interested in information and are interested in building that relationship with us and our reporters.”

Lessons learned

Jaconi explained that there are a few best practices in the social audio space that digital content companies ought to think about.

First, update your Twitter app. Jaconi explained that Twitter often updates Twitter Spaces and improves and fine tunes its functionality. (We covered some of those in our last social audio piece.)

Second, remember that audience members can join Twitter Spaces mid-stream. It’s possible those audience members have never met you before. Hosts should make a habit of re-introducing themselves during the course of an event. This should include addressing new people joining the Space and telling them what they’re speaking about, their name, background, expertise, and the topic of discussion.

“It doesn’t have to be boiler plate. It can be done in a casual way. But also, because there’s audiences that are listening while they’re multitasking, I really urge people to introduce themselves again,” Jaconi said.

Thirdly, Jaconi suggested that digital content companies who engage in social audio spaces ought to “feed their audience.” This means give your social audio space a thread of everything you covered in that space. If you’re using social audio to discuss investigations, mention the methodology of your investigation, the complexity of doing the investigation, biographies of speakers or guests and the like, in a thread. This assures that the listening experience isn’t just a one-off that happened in the Twitterverse, and instead is and can be connected to other content, events, or used in the future.

“It is so rare, and so exceptionally powerful, to be in the same place as your audience at the same time, with everybody convened,” Jaconi said. “You’re convening the curious at something that you’re an expert in. So feed them when they’re there, because it might be a while before you convene them again.”

Perspectives | Revenue | Supporter Spotlight

Where conversations fit into your paywall strategy

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

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

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

The power of community

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

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

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

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

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

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

To paywall or not to paywall?

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

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

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

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

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

Advertising | Perspectives | Supporter Spotlight

On the Anniversary of ATT, two players to watch are Snap and Facebook

Since Apple’s App Tracking Transparency (ATT) framework came into effect, the company has started confronting users with daunting warnings about favorite apps tracking you across apps and websites owned by other companies, and inviting consumers to opt out of this tracking. The impact on measurement has been material. Tim Cook would call such opt-out language “merely descriptive” — and would neglect to recall that Apple invented IDFA for sound and pragmatic reasons (including privacy). However, it could be argued that the language is scary and intended to persuade people to opt-out. It is important to note that app publishers are not permitted to include their own justification at the point of decision. Only Apple’s framing is available.

Since the changes were made in April of 2021, estimates of opt-out rates have been all over the map. Our initial models (chart below) used 80% (meaning 80 people opt out of tracking and 20 people permit it). Since that time, we’ve seen estimates ranging from 95% to 60% opt-out rates. But credible players in mobile infrastructure who see data on thousands of apps across all hardware types have noted that the opt-out rates have been declining since the initial surge, and an estimate of 60 to 65% is probably more accurate today. But Apple not the only company to keep an eye on when it comes to tracking and measurement.

Two key players to watch in terms of evolution of measurement are Facebook and Snap. Both companies are mobile-forward, and both have built material businesses around delivering measurable advertising for customers on phones. Facebook has acknowledged that the changes in iOS would have “on the order of” $10 billion impact on sales in 2022. Analyzing the 2022 revenue impact from Apple’s privacy changes, Lotame estimates that the IDFA change will have a total impact on the companies of almost $16 billion (+9%). Again, with the lion’s share of that impact (81%) coming from Facebook.

Both companies have spoken extensively about the impact of the iOS changes on tools and capabilities, and both are adapting rapidly. For SNAP, the company has said it is adapting by a combination of pushing customers to use Apple’s SKAD Network (“SKAN”) and by developing and enhancing native tools such as the Snap Pixel and their Advanced Conversions (“AC”) tools. Snap also acknowledged that many of its customers would have to move their focus “up the funnel”.

The issues are that the native tools may have limitations and may require Snap to interoperate more with other ad tech players. As for Apple’s SKAN tool, it provides only aggregated data, and it delivers with a 24-hour delay. These are very material limitations for conversion-oriented marketers. Snap has said it will take time to work through all of this.

Facebook, equally frustrated, even used the term “rebuilding”: we’re rebuilding a lot of our ads infrastructure so we can continue to grow and deliver high-quality personalized ads. Facebook called its new tools “Aggregated Event Measurement.” But at the same time Facebook also threw Apple under the bus for providing data that is both delayed and aggregated. The suggestion is that Facebook — which does not play well with the rest of Ad Tech — will have difficulty providing measurement better than Apple’s dumbed-down SKAN utilities.

One major initiative at Facebook did become highly salient: its focus on ecommerce infrastructure for its marketer customers. This was described by Sheryl Sandberg as one of seven key initiatives, and it was mentioned numerous times in the 4th quarter earnings call. The idea is for Facebook to continue to deliver and enhance end-to-end tools for its ecommerce seller. From the first marketing impression, to the ecommerce store and experience, to financial fulfillment, customer retention, and remarketing, Facebook wants everything to happen on Facebook.

The issue is that any time any part of the chain moves outside of Facebook’s app, Facebook can’t deliver the measurement and attribution its customers require. This became painfully clear with the iOS changes. Facebook’s mission to fix it will lead it to the erection of higher walls around its version of the internet, and more firmly bunkering its marketer customers inside.

When you consider how other players may be future-proofing mobile marketing strategies, initiatives will be similar to those of Snap and Facebook: using the SKAD network while holding their noses, building home-grown measurement tools that often won’t work as well, and relying on the ad tech industry to provide adapted tools, such as the Lotame Panorama ID which can link identity across devices and platforms without the IDFA. App developers will also be looking to those partners that provide tools and infrastructure, such as AppLovin or MoPub to deliver new tools and techniques.

And all this enthusiastic turbidity and debate leaves all of us wondering: “What will Google do?”  Keep in mind that Google doesn’t have the fire to lock down mobile phone ad IDs that Apple does. Apple uses the cover of “privacy” to make these changes. But others feel that Apple is restricting the ability of others to monetize traffic on its devices without its direct involvement (and economic participation).

Google, on the other hand, for the infrastructure it delivers, has benefited by providing tools and capabilities that are open and used by everyone. In June of 2021, shortly after Apple made its changes, Google announced it did not plan to bother users with a push demand for opt-in on each app (both Apple and Google always have allowed global device opt-out). After that, Google was quiet until it capitulated a few weeks ago. As of mid-March, Google is saying that it will “replace” GAIDs (Google’s version of the IDFA) on phones with its web-based “privacy-sandbox” tools, and then phase out GAIDs in about two years.

What does that mean for cross-application tracking today? Well, even if we lay aside second-best workarounds that are progressively emerging, there is still a lot to do with mobile ad IDs. In the U.S., iPhones have about 58% market share, but some reports are seeing 40% of users opt-in. Android phones have about 42% market share and will have GAIDs available for at least two more years — an ocean of time.  Considering this collectively and scoped to the U.S., that still leaves marketers with access to a mobile advertising ID on about two-thirds of inventory. Have fun while it lasts!

Perspectives | Revenue | Supporter Spotlight

Diversify strategies to survive “peak subscription”

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

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

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

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

Redefining the journey to becoming a subscriber 

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

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

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

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

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

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

The new era of reader revenue

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

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

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

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

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

About the author

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

Diversity, Equity & Inclusion | Featured Post | Perspectives

Five big leadership challenges facing the media industry

Anita Zielina founded the Executive Program in News Innovation and Leadership at CUNY in 2019. Since that time, she has shaped the leadership skills of executives from local media, start-ups and major outlets such as The New York Times, Reuters, Bloomberg, and ProPublica.

Now, on the eve of her departure as Director of Strategic Initiatives at the Craig Newmark Graduate School of Journalism in New York, she shares her perspective on some of the biggest leadership challenges the media industry faces – one of which is leadership training itself.

“I just built the program that I wish I had a bit earlier in my career,” explains Zielina. Like so many in our industry, she says “I started out as a journalist and I never had the management training, the product training,” she says. “I never learned how to speak the language of the business and strategy side of things.”

An Executive MBA at INSEAD, addressed some of those needs, but “there was not one other person from media in my class,” Zielina observes. In a cohort of 120 people, all of her peers were from consumer brands, oil and gas consultancies, banks, and the like. Nonetheless, she says, “I loved the experience.” But she could see that there was a need for such a program tailored to the media industry.

Zielina has set out to fill this need at CUNY. She built a program offering elements of a traditional MBA – with classes on strategy and organizational change – alongside a “comprehensive leadership growth development program,” and a focus on media best practices.

Anita Zielina

In a wide-ranging interview, Zielina – who is returning to Austria to launch her own consultancy focused on digital and leadership transformation – shared her views on the key challenges facing the news and media industries.

Here are five of the core elements that emerged from our conversation, with a focus on supporting future leaders  – and the challenges facing them – in the media industry:

1. Training the next generation of leaders

Zielina has extensive leadership experience in media including stints as Chief Product Officer & Editor-in-Chief Digital at the Swiss-based NZZ, Digital Editor and Deputy Editor-In-Chief at Stern the German current affairs magazine, and as an Editor at the Austrian newspaper Der Standard. Looking back at previous roles she says, “I think I did a decent job. But I had to teach myself a lot of the skills you need as a leader.”

Those skills include an ability to navigate the intersections of business product, audience, editorial, technology and innovation. They are not necessarily acquired in the newsroom, she suggests, and the media context is often missing from traditional business programs.

“Our industry has a tradition of people rising to leadership roles,” she says. “They were great journalists. Then suddenly they become managers, and they do not get the support that they need.”

The need for this type of support is clear when looking at the graduates from CUNY’s executive programs. “Half of the people in that cohort that just graduated have taken on a larger role throughout the year or immediately after the program,” Zielina told us, “either in their own organization or in a different organization.” The training CUNY provided has been crucial to enabling them to effectively step into these leadership roles.

2. Strategic vision and execution

“There are some similarities in organizations whether they are large or small,” Zielina says when asked to share the biggest challenges for participants in the CUNY’s Executive Program in News Innovation and Leadership. “Number one is strategy.”

Shortcomings in communication, as well as the need for strategy to continually evolve and be updated, are key factors. Even when strategy exists, she says “it’s not clearly communicated. In other cases, the strategy “is old, it’s faulty, it needs to be adapted to new challenges.”

To address this, Zielina encourages leaders to think about whether their organization is prepared for transformation. They must focus on which audiences they want or need to reach, and how to ensure that appropriate resources are prioritized. Integral to this is a “talent pipeline” as well as clarity about the type of work culture you want to instill.

“The difference between an organization that successfully manages transformation, and an organization that doesn’t, is not necessarily that one has a strategy paper or slide deck while the other does not.”

At the heart of this are leader who can turn strategy “into products, into audience work, into services, into organizational structures, and the daily execution routine.”

3. Detoxifying the workplace

Implementation is about more than just the products you build, and the platforms you use, Zielina reminds us. People, ethics, and culture must not be overlooked.  

The workplace is an area in which she believes change is long overdue. If not, then talented people will leave. For good. In fact, Zielina says, many are already gone.  

She notes a generational shift whereby Millennials and Gen Z “are not willing to put up with the not-so-great culture and ethics anymore.” “They are opting out,” she says. Unfortunately, “these people are never going to come back if we lose them now.”

According to Zielina, the size of this issue is one that too few industry leaders grasp, although she believes the trend is “becoming more obvious.”

“Younger colleagues in this industry, are waking up to the fact that they don’t have to stay in places that are toxic. They don’t have to stay in places that don’t let them have impact.”

“I think it’s the big the big issue that we’ll have to tackle the next few years,” she says.

4. Making DEI commitments a reality

“A lot of tensions obviously revolve around women, people of color, [and people] from different socio-economic backgrounds, finally saying, ‘I want a seat at the table. And if I don’t get a seat at the table, I’m going to leave.’ So really prioritizing DEI is so crucial.”

Zielina feels that “there was a certain reckoning after the murder of George Floyd and we see movement there.” However, many organizations are failing to deliver on their DEI promises.

Too often, she says, we hear companies say “yes, we are prioritizing, but it was so hard to find a woman and it was so hard to find that person of color. So we took another white man, but next time, we’re definitely gonna do it.”

“If we don’t tackle the big underlying cultural issues of this industry, if we don’t make this industry more attractive, if we don’t make this industry more equitable, if we don’t make this industry a healthier, better and more supportive space, we are going to lose all those people,” she adds.

5. Updating outdated modes of human capital

Making the industry more attractive, Zielina suggests, includes learning from the creator economy and the great resignation.

“More folks are realizing maybe I don’t want [to work for] an employer, maybe I want to do my own thing. But I don’t want it to be a kind of hockey stick startup with venture capital, I just wanted to work for me. I want to tell my stories. I want to serve my audience, who I care about.”

“We are going to see more of that,” she says, which means rethinking collaboration and working with creative/journalistic talent. She also believes we will see increased emphasis on impact, flexibility, and hybrid work – issues that matter to growing numbers of the workforce.

“There is a huge disconnect between the corporate world, and specifically corporate HR and applicants and employees,” she cautions. “And this disconnect is getting bigger.”

“You can start that tomorrow,” she says, urging organizations to ask “whether our incentive systems, our HR processes, our way of work is still adequate for this day and age.”

Future plans

After she leaves CUNY, Zielina plans to continue to focus on ensuring organizations have the structures, skills and talents they need, “in the space of digital leadership and product.”

Zielina sees signs that a famously myopic industry is starting to look beyond national markets for solutions. “It makes me optimistic that it seems that we are getting a bit more global and a bit more international as an industry,” she says.

“Those best practices are really starting to be shared across borders, and that that I think is an a fantastic development. We need more of that,” Zielina adds, “and I hope to play a part in that in at least bridging that gap between the U.S. and Western Europe.”

Perspectives

DCN’s must reads: week of May 12, 2022

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

DCN’s must reads: week of May 5, 2022

Perspectives

Why you need to unlock the hidden value of anonymous users

If your media company is directly monetizing its audience in any way or form, odds are, your registered users and subscribers are your biggest money-makers. Even so, the largest portion of your audience is probably made up of unknown readers who aren’t contributing much to your overall reader-revenue growth.

According to recent research we conducted at Viafoura, a shocking 99.6% of publisher unsubscribed audiences, on average, are anonymous visitors. While most of these visitors are passive readers who are less committed to a company’s content than known audience members, you can still get tremendous value from them.

In reality, your anonymous audience is far from worthless. It’s an untapped goldmine of information and revenue just waiting to be activated. But before you can extract the full value of your unknown visitors, you need to know exactly why and how they can become loyal and lucrative audience members.

Prioritizing anonymous to known audience conversions

Naturally, known audience members give your organization far more data and monetization opportunities than anonymous visitors. Viafoura’s research finds that engaged registered users offer publishers five times more return visits than non-registered users.

Rather than waiting for registered users to appear magically, successful publishers have recognized that the key to better monetizing audiences is to actively nurture their anonymous audiences and encourage them to log in. After all, each of your registered and subscribed audience members first started off as unknown visitors. 

Keep in mind that almost every anonymous user can become effectively monetized once they are registered. As Greg Piechota, Researcher-in-Residence at the International News Media Association (INMA), explains, “[we] see reader and ad revenue strategies converging as publishers refocus on registering and logging users.” 

Ultimately, converting your anonymous visitors to known users online is an essential step on the road to building audience loyalty and growing your company’s revenue streams. 

Registration as a means of improving content performance

Logged in users are not just more readily monetizable, they provide a raft of information that allows you to improve their experience and increase engagement. 

You can begin piecing together your users’ profiles as soon as they create profiles on your website or app. The more they interact with your content and fellow users, the more you’ll understand who they are, their needs, and the types of content topics and writers they favor.

This valuable data can be harnessed to segment your users into different groups with similar interests. Then, they can then be targeted with relevant content — including advertisements. 

Of course, content that aligns more with your users’ interests is more likely to draw their attention and keep them engaged on your website or app for longer. “Once you understand your target audience’s needs, you can develop personalized content that addresses their biggest concerns and pain points,” Gartner reports. “But timing is everything.”

To make the biggest impact on your audience and win over their loyalty, your media company must serve its users the content they want when they crave it, even as their needs and interests change. While you can’t get this information from unknown visitors, you can extract it through the data and comments of your known users.

Turning anonymous users into engaged subscribers 

Giving anonymous users the chance to log in to your website is not only key to getting their data, but it can also make your anonymous users become dedicated to your brand. The reality is that once you get anonymous visitors to register, you’re halfway to getting them to subscribe. 

In fact, Viafoura data reveals that registered users are significantly more engaged than their unregistered counterparts. They spend an average of 15 times more time on-site after registering. And all that extra time your registered users spend on your company’s website means they have more opportunities to connect with your company’s content and other users.

“News brands that see more known users see more subscribers, and brands that see longer session duration see lower rates of churn,” according to Piechota. He says that research proves that you earn one subscriber for every 10 registrations.

The Telegraph recently shared that its audience growth goal is framed around this research. The company is aiming for 10 million registered users and one million subscribers as of 2023.

This reinforces the fact that you can unlock significant value — including engagement and (eventually) subscription revenue — from a large portion of your anonymous audience simply by getting them to register.

So, if the majority of your company’s audience is anonymous, what’s stopping you from encouraging that massive group of people to become registered, known and returning users? From there, you can use their available data and growing loyalty to your advantage, further enhancing your organization’s engagement, content, subscription and ad revenue strategies.

Advertising | Industry-Research

Streaming drives this year’s upfronts

The buzz this upfront season is all about streaming. As Tim Peterson at Digiday put it, “Historically streaming has taken a backseat to traditional TV in the annual upfront market. This year, however, streaming will be sitting shotgun as it gets closer to seizing the wheel.” Many upfront presentations this year emphasized the value of ad-supported services like Peacock, Hulu, and HBO Max. In particular, networks focused on the value proposition for advertisers to buy inventory on their ad-supported streaming offerings – to keep those dollars in their family of brands.

The strategy this upfront season contrasts with to Wall Street analysts’ concerns over the long-term viability of the streaming marketplace. In the wake of Netflix’s quarterly performance, Quibi’s short life, and CNN+’s untimely demise, analysts have been skeptical about the marketplace’s growth potential. BofA Global Research analyst Jessica Reif Ehrlich reports, “We believe investors are now questioning the long-term market potential in streaming.” However, networks are not only confident that their streamers will continue to attract audiences, they are betting on their connected TV extensions to attract this year’s upfront dollars.

Networks believe that consumer viewing habits, particularly for those who ante up for subscriptions, will prove a viable market for advertising dollars. Streaming service penetration is strong among U.S. households. Deloitte research reports that approximately 80% of U.S. households in the United States paid for a streaming service in 2021, with about 35% churn across the member base. Monitoring engagement is essential to understanding churn. Subscriber growth and retention work hand in hand in monetizing the streaming ecosystem.

Streaming is nearly one-third of TV viewing

Time spent is an essential metric of engagement and retention. The Gauge, Nielsen’s total TV and streaming snapshot for March 2022, shows that streaming audiences spent nearly 30% of their total TV time watching over-the-top video content. Streaming gained a full share point over February as broadcast networks transitioned away from NFL football and the Olympics. The Gauge offers a monthly macroanalysis of how consumers access content across television delivery platforms.

There was a slight decrease of 0.7% in total streaming viewing when comparing total television viewing last month. Viewing share across all streaming providers, Netflix, YouTube, Hulu, Prime Video, Disney+, and Other Streaming was either flat or gained slightly in March.

The slight dip in streaming usage is significantly less than the drop in total TV usage, down 4.2%. March’s drop-in TV usage is consistent with historical declines this time of year due to the increase in warmer weather and more time spent outside.

Advertisers chase audiences on CTV

Broadcast programming also lost more than a full share point, and sports viewing was down 53%. NASCAR and the NCAA basketball tournaments are big March events. However, “sports event programming” share of viewing dropped from 25% to 12% in March.

An important question for marketers and agencies is where to place their advertising bets; in other words: how much of their ad budgets should they be transitioning to connected-TV audiences? While linear TV still possesses strong advertising muscle, linear ratings are a dwindling sales proposition. Undoubtedly, audiences can increasingly be found streaming content and that’s where advertisers are looking for them.

Networks and content producers are looking to direct to consumer distribution and connect-TV is center stage. There’s still much to work out, especially around audience fragmentation and measurement. Importantly, connected-TV advertising offers quality and relevance and the ability to implement cross-channel media planning. No doubt that this year’s upfronts require a careful analysis of audiences’ video content consumption in order to make savvy decisions about where ad dollars will be best spent.

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