|
Getting your Trinity Audio player ready...
|
Buckle up, 2023 is going to be a hell of a ride.
As we kick off the New Year, many publishers are contending with the need to tackle a heady mix of long-term structural issues and more short-term considerations.
Combined, it means that the media industry is facing a number of significant challenges in 2023. This includes ongoing changes in advertising markets, pressure on consumer spending due to inflation and the cost of living crisis, as well as evolving media habits and preferences.
In responding to this, many publishers will be seeking to do more with less in 2023 – the byproduct of the lay-offs seen at many outlets in late 2022 – as well as contending with other issues such as rising print costs.
Here are five charts demonstrating some of the biggest challenges being faced by media and publishing companies today; as well as some thoughts on how to address them.
1. Advertising will continue to grow… just more slowly
Global advertising is expected to increase by 5.9% in 2023, according to the latest forecast from Group M. This is only slightly lower than the 6.4% estimated by the group in June 2022.
Within this, they predict “strong gains” in areas such as “connected TV, retail media and fast-growing markets like India.” Group M also notes that China and the US will make up 55.5% of all advertising revenue in 2022, highlighting the significance of these markets for global players.
The headlines around recent predictions from Group M, Zenith and others, have often focussed on the downgrading of their 2023 forecasts, a potential source of concern given the continued reliance on advertising as a revenue source for many publishers.
Yet, at the same time, Group M suggests taking a more longitudinal look at the data. When you do that, they suggest, you see a very different picture. Looking at advertising growth on a three-year compounded basis can help smooth out the impact of the pandemic and other fluctuations in advertising markets.
When viewed in this way, “despite the headlines of negativity, we estimate the three-year compound annual growth rate for total advertising from 2019-2022 is at 8.8%, nearly identical to the 8.7% rate from 2016-2019,” they note.
That’s not to say that there are not challenges ahead for publishers when it comes to attracting advertising revenue, but the picture in 2023 may not be as bleak as many feared.
2. Subscriptions will also continue to grow… again, just more slowly
Arguably, we see a similar picture when looking at subscriptions, another essential revenue plank for many publishers. In this space, growth rates are also slowing, but again they remain relatively healthy when viewed over a longer timeframe.
In the introduction to FIPP Q3 2022 Global Digital Subscription Snapshot, FIPP CEO, James Hewes, acknowledges this reality, noting how this growth is potentially cooling.
“Just as we are starting to feel the chill of Winter approaching in the Northern Hemisphere, so perhaps we are also starting to feel the chill of the approaching freeze in digital subscriptions, he writes.
However, this subscription climate needs to be put into a wider perspective. “Growth for most brands remains healthy, with period-on-period gains of 5% or more for many,” Hewes adds, although “this is significantly down on the position at the same time last year, when low double-digit growth might have been expected each quarter.”
It’s a conclusion reiterated by Michael Silberman, SVP Strategy at Piano, who has pointed to
subscription growth returning “from the stratosphere.”
“Subscriptions continue to be a real bright spot for publishers,” he said in a recent webinar. Although this has slowed, many publishers are continued to see growth in this area, with Silverman stating that “there was still a respectable pace of growth – 14% through November in terms of growth at the beginning of the year.”
Slower growth rates will mean a renewed emphasis for publishers in reducing churn and retaining existing subscribers. They will also need to offer fresh, innovative, packages and products to encourage new subscriptions.
This will be especially important as the cost of living crisis continues, with the result that many consumers will become more hesitant about taking on new subscriptions or begin to look more actively at cutting back on the ones they have.
Despite this, many publishers seem to be more optimistic about their prospects in this area than perhaps you might expect. Seeing how your fellow publishers put their subscription strategies into practice will remain an area to closely monitor – and learn from – in the year ahead.
3. (Re)Building trust will be vital
Addressing issues of trust remains fundamental to both reader revenue and advertising strategies. Advertisers wish to see their products associated alongside high-quality and reputable content that is aligned with their brand. Meanwhile audiences need to trust the contact that they are consuming, both in terms of its accuracy and in meeting their information needs.
Numerous studies have shown the size of the trust challenge that publishers face.
The 2022 Edelman Trust Barometer found that – across the 28 markets surveyed – nearly half of all respondents (46%) view the media as a divisive force.
“There is a turning away from traditional news sources because of the perception of bias and fake news (76%),” observes CEO Richard Edelman. Trust in media is often distinctly linked to political affiliation. In the USA, although not unique to it, this issue is especially acute. Edelman’s study – echoing other research – found a 31-point gap, when it comes to trust in media, between Democrats (55%) and Republicans (24%).
Similarly, the 2022 Digital News Report found that “only 26% of Americans trust news generally.” This represents a 3-point decrease from the previous year, and the lowest figure across the 46 markets sampled.
“Large numbers of people see the media as subject to undue political influence, and only a small minority believe most news organisations put what’s best for society ahead of their own commercial interest,” wrote Professor Rasmus Kleis Nielsen, Director of the Reuters Institute for the Study of Journalism (RISJ) who produced the report.
To remedy this, publishers need to accommodate a range of different considerations.
In the advertising arena, trust issues must be integral to preparation for a post-cookie world. This will be essential if publishers are to offer advertising products that appeal to a wide range of advertisers while also being relevant to audiences.
Looking at the content space, publishers need to look at the breadth and tone of their output.
As Nic Newman, has suggested, this means making news content more accessible and easier to understand, embracing a mix of formats and content styles including approaches such as solutions and constructive journalism, “signalling opinion more clearly,” as well as “not labeling everything breaking news when it isn’t.”
Alongside this, as Peter Houston reflects, “media headlines have grown significantly more negative over the past two decades.” Publishers need to mind their language, as well as create more opportunities to listen, ask questions, and more effectively communicate the journalistic process. Initiatives such as the Trusting News project offer valuable case studies and guidance on that publishers can apply and adapt, as part of a wide-ranging trust strategy.
4. Reaching Gen Z where they are
In the battle for the attention economy, publishers have long have to compete with a myriad of other ways in which audiences can spend their time.
That challenge is especially acute with younger audiences, and with Gen Z in particular.
This is a demographic that is attractive to advertisers and represents the next wave of potential subscribers. However, is an also an audience that often tends to consume media very differently, with platforms like YouTube and TikTok, as well as music streaming services, occupying a much larger percentage of their media diet than other age groups.
To reach this audience, it’s really important to understand the content types, styles and platforms they consume. To do this, publishers need to make a greater effort to speak to them directly.
Talking about science journalism, but offering principles applicable to any beat or vertical, Martina Efeyini, a Science News Civic Science fellow, recently wrote for Nieman Lab about the importance of talking to this demographic “to see what sparks their curiosity.”
This “involves co-design and collaborating with teens, organizations, and groups,” it also means “we compensate the teens who participate in focus groups for their time. By giving teens a voice to share their opinions, we learn what excites them and what they need.”
Pubslihers should take heed of this, as well as the need to hire more talent from this demographic, and use this cohort to create the content which speaks directly to their own age group.
As Jon Birchall, Director of Editorial Strategy at the LADbible Group advocated to Press Gazette: “For us to build a media that is essential, inclusive, and as such commercially viable, for 2023 and beyond, we must listen to youth audiences and empower young talent to fundamentally redefine what news is and the role it plays for the next generation.”
Publishers need to meet Gen Zers where they are, and communicate in a style and format that speaks to them. Creating tailored products, hiring and empowering Gen Z talent, and engaging with audiences off-platform on YouTube, TikTok and Instagram, are likely to be essential to any successful approach.
5. Audiences spend over 2 hours a day with publishers’ content
Lastly, for all the legitimate concerns voiced about news avoidance, subscription fatigue and lack of trust in the media, it’s worth remembering that audiences still spend a considerable amount of time consuming content.
Insights shared by Simon Kemp – CEO of Kepios, a marketing strategy consultancy, and chief analyst at DataReportal, an online library of reports exploring people’s evolving digital behaviours – shows just how much of our time is spent reading “press media.”
On average, internet users around the world 2 hours 9 mins a day on this type of content, slightly less than social media (2 hours 28 mins), but perhaps more time than you might expect.
This makes for a firm foundation for publishers to build on in the year ahead, engaging with audiences and using this engagement to build products, advertising and reader revenue strategies that tap into these consumption habits.
The media industry is facing a range of challenges in the year ahead, including shifts in advertising markets, pressure on consumer spending due to inflation and financial struggles, and continued changes in media consumption habits.
In order to address these challenges, many publishers will need to be flexible and find ways to achieve their goals with fewer resources. In addition, print publishers will also have to grapple with rising paper and printing costs, and all players face a year full of multiple uncertainties.
At the same time, the industry may be more resilient than you might think.
Despite these challenges, the media industry remains full of potential for those who are able to adapt and find new ways to connect with their audiences. Whether through subscriptions, advertising, or other forms of revenue, there are opportunities for publishers to thrive in the face of these challenges.
There are clearly going to bumps along the road, but by staying nimble and being open to new ideas, publishers can weather the storms of 2023 and emerge stronger than ever.
Buckle up, 2023 is going to be a hell of a ride.
