Part Two, ideas 13-29: Advertising and Ad-Free opportunities
This is the second in our series outlining ways publishers are looking to raise revenue. Last month, in part one (ideas 1-12), we highlighted examples of some of the different paywalls, subscription / content payment models that media companies are using.
This article (ideas 13-29) explores advertising models, events and newsletters.
As we mentioned last month, just because you can do something, doesn’t necessarily mean that you should. But, here at What’s New in Publishing, we hope these case studies spark new ideas, or reaffirm existing strategies and approaches, as we move into 2019.
The value of global ad market is worth nearly 550 billion U.S. dollars a year (2016 figures), with the largest markets being the United States ($197 bn), China ($79 bn), Japan ($42 bn), U.K. ($24 bn) and Germany ($23 bn).
Looking ahead, PwC predicted earlier this year: “Total spending will rise at a compound annual growth rate (CAGR) of 4.4% over the next five years.” “But,” they cautioned, “with sharp differences among industry segments and sectors within them and across territories.”
The fastest growth will be in digital, with traditional media and markets seeing the slowest – on in some cases, like newspapers and magazines – negative revenue growth. These conclusions reinforce the need to double-down on digital business opportunities, including potential expansion into emerging areas such as e-sports, podcasting and virtual reality.
Here some some examples – from the well known, to less well known – advertising products:
13 – “Spots” on traditional media (TV and Radio) as well as display, classifieds, online banners and boxes for print and online products.
There are a number of ways in which these traditional types of ads are purchased by advertisers. This includes local sales, programmatic, bids for search and social networks, as well a combined ad sell encompassing both print and digital products for a publisher.
Many publishers offer a deep discount on ads which run across physical and electronic products.
A key reason for this is the need to grow digital revenues, without impacting the printed page. Despite dwindling print readership, print is often responsible for a disproportionate amount of many publishers revenues.
A Pew analysis of publicly traded newspaper companies noted earlier this year that “Digital advertising accounted for 31% of newspaper advertising revenue in 2017… The portion stood at 29% in 2016 and 17% in 2011.”
14 – Network ad purchases across media companies.
Given the need for many advertisers to achieve scale, the ability to purchase ads across a media group e.g. USA Today Network or Gannett, is obviously welcome.
15 – Network ad purchases across consortia.
For standalone, or smaller publishers, there’s a risk of missing out of these types of larger ad buys. As a result, the types of opportunities offered by groups like the Local Media Consortium (LMC), can be advantageous to publishers and advertisers alike.
According to their website: “LMC membership encompasses more than 75 local media companies in top markets across the United States and Puerto Rico, and includes more than 1,700 publications. The LMC audience footprint currently spans 172 million unique monthly visitors and its member companies serve more than four billion page views to readers.”
In the past we’ve seen similar models used on a citywide basis in Sacramento, Boston, Chicago and elsewhere, although these approaches have often struggled with long-term sustainability.
You don’t have to look very far online to find boxes highlighting content – both editorial and advertising – by “discovery” platforms like Revcontent.
As Digiday reported earlier this year, this relationship has historically been financially attractive for many publishers, with some benefitting from financial guarantees in the region of seven-figures each year.
In 2016, the New York Times commented how “financial details for the companies are not public, though notable deals shed some light on the industry’s size.” “Taboola signed a three-year deal with Gannett last year,” they wrote, which “could bring inasmuch as $55 million for the publisher.”
“Time Inc., which owns People, Fortune and other magazines, said in 2014 that its three-year partnership with Outbrain would generate more than $100 million in revenue. Outbrain says it accounts for up to 30 percent of revenue for some publishers.”
However, moves to revenue-sharing models (based on cost per click), brand safety (including consumer views on this types of advertising/recommendations) as well as how search engines view these types of ads, are leading to a potential rethink and refresh of this approach.
17 – Content Sponsorship of particular beats
North Carolina’s third-largest paper as measured by print circulation, and part of BH Media – Warren Buffet’s Berkshire Hathaway – group; the deal was reported to be worth “$15,000 on a one-year contract. That’s about $214 per article.”
Stressing their editorial independence (written into an agreement between the two organizations) Jeff Gauger, the News & Record’s executive editor and publisher observed:
“The News & Record long has wanted to provide more arts coverage, but in these leaner times, we needed a way to pay for that coverage…the News & Record has committed to publishing at least 70 stories about local arts topics during the next year. That’s 70 more stories than we would have published without this agreement.”
Content supported by this arrangement would be signposted: “This News & Record arts coverage is supported by contributions to ArtsGreensboro’s Arts & Theatre Media Fund.”
The Guardian is just one outlet which has also deployed this model, working with the Bill & Melinda Gates Foundation to support a series focussed “on the surging youth population and what this means for the fight against world poverty,” as well as a new website (in 2010) tackling Global Development issues.
18 – Underwriting
The News & Record’s account of their partnership with ArtsGreenboro, often uses the term “underwriting” to describe the relationship.
In the United States, this type of language is perhaps most commonly associated with sponsor messages / acknowledgements for particular shows found on public media, especially public radio.
As Mara Liasson, an NPR Correspondent on National Politics, wrote back in 2006:
“NPR has worked hard and done lots of audience research to design its “sponsorship” so listeners will not perceive these spots as commercials. That would presumably damage NPR’s image as non-commercial (which I just learned is called “brand equity!”) and lead to a drop in listener support.”
It’s a potentially semantic and ethical minefield, and one where organisations are very careful to have clear guidelines about the nature of this support. (See for example the news website VT Digger, WCBE 90.5FM (Ohio) and NPR’s Underwriting Guidelines.)
19 – Native Advertising, Branded Content and Sponsored Posts
Another potential semantic minefield, let’s ignore the definitions for now, and focus on some examples of this type of content.
At a local level, outlets such as The Lo-Down – which covers the Lower East Side in New York – have featured “paid posts” or “sponsored posts” for a while.
Some of the pieces e.g. Apartment of the Week, (in this case, Sponsored by Halstead Propertty) are clearly a way of categorising advertising content differently. Other material, such as (Sponsored) Pre-K Students Hold Community Bake Sale to Benefit Children in Need are arguably the type of content local newsrooms outlets have historically covered as part of their journalistic output. Meanwhile, a recent promotional post from LES Partners, The Lower East Side Partnership, promoting Small Business Saturday® probably straddles the two.
On a larger scale, Wired has partnered with a wide range of different types of brands, and the New York Times famously published an excellent piece on female incarceration in the United States, in part due to support from Netflix ahead of the latest series of the women’s prison comedy-drama “Orange is the New Black.”
20 – Publication of Legal / Public Notices
Many newspapers in the U.S. and the UK have benefitted over the years from legal obligations by government institutions to publish public notices.
The rationale for this activity was to ensure Government transparency and to provide opportunities for public engagement and accountability. However, with newspaper print circulations declining, there’s been active discussions about removing this obligation.
Argurably, the model no longer makes sense, given that most newspapers are no longer the mass media that they once were. Audiences can find out about potential developments through other means – online news websites, Facebook Groups and so on. Many newspaper published notices are also republished online.
Nonetheless, the hit for newspapers, should this revenue stream disappear, could be discernible.
Other common types of advertising products include:
21 – AdSense ads from Google
22 – Pre-roll and Mid-roll video ads
23 – Podcast advertising (recorded adverts, presenter read etc.)
24 – Special sections: e.g. entire print sections dedicated to advertorial, such as Christmas Guides, or Guides to special events.
25 – Advertising inserts in magazines, as well as local and national newspapers
Alongside these advertising products, we are also seeing the emergence of business models designed to reduced – or in some cases eradicate – the advertising experience.
26 – Use of subscriptions to enable ad-free content
Perhaps the most obvious proponent of this strategy is Netflix. Aside from their range of content, that this material is ad-free is no doubt a key part of the services’ appeal.
In the last quarter alone, the company added 6.96 million users, making a total of 130.1 million paid memberships. This year, they will spend $12bn-13bn on content, including 82 feature films, 700 new or exclusively licensed television shows.
Overall, Netflix’s “revenues grew a robust 34% year-over-year (y-o-y) to $4 billion, driven by growth in subscribers across both the U.S. and international streaming markets,” Forbes noted last month. International subscribers are the fastest growing user base (+40% year-on-year).
27 – Tiered subscription plans e.g. Hulu
The U.S. based streaming service Hulu celebrated its 10th anniversary this year. Since launching in 2008, the service has grown to 20 million subscribers.
Their current subscriptions plans range from $7.99 (for limited ads), through to $11.99 (no ads) or $39.99 for Hulu with Live TV (which includes any live ads, but also allows for viewing the service on two screens).
The addition, in 2017, of live news, entertainment and sports to their service (with providers including 21st Century Fox, The Walt Disney Company, NBCUniversal, CBS Corporation, The CW, Turner Networks, A+E Networks and Scripps Networks) may be revised, Hulu CEO Randy Freer told The Information last month, perhaps as part of a plan to introduce a range of other payment tiers in the near future.
28 – Membership schemes offering ad-free content as a member benefit
A number of different publishers are exploring the potential afforded by different types of membership models. Benefits for members can include access to member only content, as well as early-bird tickets for events.
Slate Plus members get all of these benefits as well as ad-free versions of Slate podcasts, an ad-free version of Slate’s iOS app and fewer ads. “Members don’t see advertising that interrupts reading, like in-article video ads,” their website says.
These efforts support the wider strategic goal of growing engaged time with Slate content.
29 – Paid for Ad Blockers endorsed by publishers
Yes, you read that right. As recode wrote last year: “Former Chartbeat CEO Tony Haile wants to save the media industry by blocking ads. His new startup, Scroll, will charge consumers once for an ad-free experience across many news sites on all platforms.”
Scroll aims “to create what amounts to a subscription ad-blocking service, endorsed by the world’s biggest publishers,” they continued, a list which includes News Corp, Axel Springer and The New York Times.
A world where the business model of content relies on distracting people from that content doesn’t make a whole lot of sense,” Haile told the Global Editors Network earlier this year. “There could be a better way.”
Explore our recent dive, by WNIP’s Monojoy Bhattacharjee, into their product here.
Next month, in the third and final part of this series, we’ll look at making money from content, eCommerce, events, spin-off services and new business models.
Download WNIP’s new Media Moments 2018 report, which dives deeper into this year’s developments in publishing, and looks at what opportunities 2019 could usher in. The report is free and can be downloaded here.