Increased focus on reader relationships has created opportunities to deliver unique audience experiences and recommend products that audiences will love.
Readers have been the biggest revenue focus in 2018. Digital subscriptions have dominated the headlines from the rolling success of the New York Times to fresh paywall introductions from Wired to the New Statesman.
But paid content alone won’t protect against threats to fragile advertising revenue. Former chief business officer at Condé Nast, Jim Norton, told Digiday in March. “You can’t say, ‘If we’re down 10% on advertising, we can make it up through subscriptions.’”
So in the quest for audience cash, publishers are looking beyond charging for content to a range of products and services that will allow them to swap added value for income. Events and experiences top the list, but ecommerce is very much in the mix.
What happened in 2018
The developing uncertainty in digital advertising, added to the long-term decline of print income, has cranked up the pressure on publishers to find alternative income streams. In a year of stark realisations, 2018 was maybe the year publishers realised there is no silver bullet when it comes to securing revenues.
A long-term favourite in the non-traditional revenue stakes, events have continued to be popular among newspaper and magazine publishers. In 2017, the FT ran over 200 events in 44 countries, placing FT Live at the centre of the broadsheet’s drive for 1 million subscribers.
Time Out has used events around the world to drive ecommerce revenues from ticket sales and sponsorships. In 2017 it was involved in 800 events with 150,000 attendees, and in 2018 offered readers experiences as diverse as drag queens in the London Eye, or a Mac & Cheese Smackdown in New York.
Events are not a quick fix, margins can be low and scaling can be a problem. “Value is a feature of scarcity,” Richard Gillis of sports and entertainment agency Cake told Digiday. But that scarcity can be turned to publisher’s advantage in developing niche opportunities.
DC Thomson’s The Scots Magazine, enjoying increased interest in all things Scottish in the US following on from the 2014 Independence referendum. In Scotland, Scots Magazine Live involves Highland photography workshops and hikes with magazine staff. In the US, the title is selling through Barnes & Noble and online, is promoting a range of Outlander themed content and merchandise to take advantage of interest in the TV show.
Ecommerce is an increasingly popular non-traditional revenue play — from affiliate deals to licensed merchandise, publishers are selling stuff.
One of the UK’s biggest and best-known ecommerce plays in British media comes from Dennis Publishing. The company’s Buyacar website, launched in 2016, is on track to generate £60 million in 2018, almost 45% of total revenues6. Ambitions for the site see it growing from selling 450 cars a month to 1,000. “We want to massively scale the business… Next year, I believe we’ll make £100 million,” said Dennis Digital MD, Peter Wootton.
Dennis has a direct transactional relationship with car buyers, avoiding the risk that affiliate partners, like platforms, could move the goalposts. But affiliate revenue is still big business for publishers.
BuzzFeed is working with online retail platform Shopify to increase the visibility of its merchants in return for a commission of up to 25% of every referred sale. Publishers from Meredith with its Homes & Garden’s portfolio, Hearst in Sport and Fitness and Future in tech and gadgets follow a similar business model, drawing audiences in with review content that is then monetised through affiliate marketing programmes.
The need for more direct marketing support is fueling the continued rise of content studios. With advertising being an increasingly tough sell in 2018, publishers are holding valuable marketing budgets through audience-focused content creation. The big beast in the space is the New York Times’ T Brand Studio, now expanding across Europe after launching in London in 2015.
Launching its content studio directory in June, the IAB highlighted the strengths publishers bring to content branded content creation:
- They know their audiences best
- They have strong creative skills
- They are adept at distributing content
But yet again, content studios are not an easy fix. Some have closed because although they carried the requisite editorial cachet, they didn’t have the infrastructure, especially around client service, to succeed in the long term. Others are finding themselves drawn into agency work, producing and servicing content for use on competitor sites.
Where are we now?
Publishers seem to be leaving behind the ‘throw everything at the wall and see what sticks’ phase of their response to the revenue disruption. Recent efforts are about building on developing reader relationships and the insights they bring.
A recent Reuters Institute survey reports an increasing focus on a limited number of alternative plays. While most of the publishers responding to the survey confirmed they were ‘pursuing multiple revenue streams’, they see an average of six different options very or quite important.
With no single revenue stream delivering sustainability, the ‘mix of six’ will become crucial for publishers securing their survival. Building the right portfolio from the massive range of potential revenue opportunities will require keeping a close eye on the core business. Rather than chasing unicorns, publishers should take care of the business that they know best, layering in value to both readers and advertisers.
What can we expect in the future?
Find out what we can expect the future of alternative revenues to look like in 2019 by reading the full chapter on key strategies publishers have used to diversify in our report, Media Moments 2018. Download it here.