This is an excerpt from our free-to-download report, eCommerce in Publishing: Trends & Strategies
In this first chapter, we explore the growing prominence of eCommerce in publishers’ revenue strategies and the role that COVID-19 has played in accelerating this trend.
An increasingly important revenue stream
“Publishers say that, on average, four different revenue streams will be important or very important this year,” Nic Newman wrote in his annual “Journalism, Media and Technology Trends Predictions” report for 2021. Little has changed since, Newman’s newly released study for the year ahead suggesting that publishers are looking to stay the course and maintain this type of revenue mix, focused on “three or four different revenues.”
Although media leaders surveyed by the Reuters Institute for the Study of Journalism (RISJ), who published the study, ranked eCommerce fifth – in terms of their most important revenue stream for the year ahead – Newman also noted that 2021 promised “to be a year of economic reshaping, with publishers leaning into subscription and eCommerce – two future-facing business models that have been supercharged by the pandemic.”
eCommerce, the 2021 and 2022 reports suggest, is a revenue trend that is in the ascendancy, and an area that is only going to grow in importance for publishers.
Other studies have drawn similar conclusions.
In the U.S., data published by eMarketer – based on a survey by the data management platform Lotame – found that more than a third of the publishers they surveyed said that eCommerce would be their biggest source of revenue in Q1 2021, with nearly two-thirds (62%) indicating that it would be in their top three revenues sources for the quarter.
The reason for this optimism, they observed, was due to the fact that “as consumers increasingly use media content to discover and research products and brands online, publishers are forging an increasingly meaningful place in the customer journey.”
“Publishers are instituting eCommerce strategies that now position them as retailer and brand partners capable of driving conversions,” they added. “And marketers are recognizing publisher partnerships as valuable ways to shorten the funnel.”
The impact of the COVID crisis
One key rationale for these developments has been the accelerated adoption of eCommerce as a result of the COVID-19 pandemic.
With lockdowns and quarantine forcing many consumers to buy – or buy more – online, one early report stated that adoption of eCommerce had suddenly spiked to reach a level not anticipated in the U.S. for another five years.
Globally, data from the United Nations trade and development experts UNCTAD, reported that B2C eCommerce had grown from 16% of all retail sales in 2019 to 19% in 2020.
Within this, “the digital retail economy [that] experienced [the] most growth is the Republic of Korea, where internet sales increased from around one in five transactions in 2019, to more than one in four last year,” they commented.
Looking ahead, “the shift to eCommerce will slow down as coronavirus restrictions lift and economies open up again, but won’t go into reverse,” Zenith predicted in summer 2021.
Their Advertising Expenditure Forecasts report noted not only “the structural shift in the economy from bricks-and-mortar sales to eCommerce, driving more consumers than ever to research and complete purchases online,” but also its impact on advertising budgets.
“Zenith expects eCommerce to continue to pull in incremental revenues to the ad market,” they said, “driving 13% growth in social media and 12% growth in search in 2022.”
What this means for publishers
Although no one can predict what will happen as COVID-19 evolves to become endemic, the eCommerce bump that we have witnessed over the last 18 months looks set to continue.
“Connected tech” has become an increasingly essential ingredient of many people’s lives, and as Simon Kemp, CEO of Kepios and chief analyst at DataReportal, hypothesised during the early stages of the crisis, “with many people now using these platforms multiple times each day, it’s likely that significant numbers of people have already overcome key barriers to trial and adoption.”
Subsequently, given the prospects for eCommerce’s continued growth, this has become a potential revenue stream that is too big for many publishers to ignore.
As a result, we have seen traditional publishers like Forbes move into online shopping – offering branded products and apparel – following the launch of its Forbes Store; Future Publishing – which drove nearly $1 billion in eCommerce sales in 2020 – expanding its business by adding price comparison tech via the acquisitions of the GoCo Group and Marie Claire US to its portfolio; and the New York Times deciding to put its product review website Wirecutter behind the paywall, and accessible to NYT subscribers or to those willing to take out a dedicated subscription.
These moves have been accompanied by bullish pronouncements from a number of agencies about the prospects for long-term prospects for eCommerce.
WPP-owned Group M outlined in their first-ever eCommerce forecast, anticipated that global retail eCommerce was worth $3.9 trillion in 2020, akin to 17% of equivalent global retail sales (a figure that excludes online food and delivery services).
“By 2024 retail-focused eCommerce will amount to $7 trillion in annual sales activity or 25% of retail sales at that time,” they predicted, and “if growth continues at a low double-digit pace in subsequent years, then, by 2027, eCommerce sales would amount to $10 trillion globally.”
Meanwhile, alongside consumer spending, Zenith’s data suggested that not only would eCommerce help to drive increases in advertising spending, it would also bring “new money to the ad market.”
As they explained in a press release, these revenues would be “coming from small businesses that have had to pivot rapidly to eCommerce to survive lockdowns, and from budgets that brands would previously have allocated to retailers to secure physical shelf-space, which they are now spending on display and search ads on retailer websites.”
Collectively, these shifts in purchasing behaviours and advertising spending are combining to create new eCommerce opportunities for publishers. We will explore these possibilities – and examples of them in action – in the next couple of chapters.
Originally published in What’s New in Publishing earlier this year. While some of the data points may have evolved, the analysis and conclusion remain highly relevant.