Flight To Content Quality Enables Publishers To Turn A New Page

The democratisation of media, which means that anyone can publish, has prompted a flight to quality, but is more digital ad revenue enough when print’s losses are so high? Could content subscriptions and events be the answer?

Flight To Content Quality Enables Publishers To Turn A New Page

by Sean Hargrave

Posted on 09-26-2017

This article is part of CMO.com’s September series on the state of media and entertainment. Click here for more.

According to Advertising Association/WARC’s most recent annual expenditure report, although national news brands saw a near 5% increase in digital ad revenues in 2016, total ad revenues were down 10%. It means roughly £10 million was gained in digital, but around £100 million was lost overall. For every pound being made in digital, 10 are lost in print. It is even worse in regionals and magazines, where both print and digital revenues are forecast to go down this year.

Yet, there is some cause for optimism. The democratisation of media means that anyone can publish anything. As a result, quality becomes of utmost importance. Publishers that are raising the bar have seen traffic and subscriptions rise. In addition, IAB figures suggest that ad blocking rates appear to have plateaued.

This upswing has most definitely been felt at The Guardian, where chief revenue officer Hamish Nicklin has revealed the title had shifted strategy to focus on building digital revenue through a £5 per month membership fee and accepting voluntary contributions. A little over a year on, and, he has claimed, the shift in focus is most definitely paying off.

“Over the past 18 months, we have seen a surge in digital traffic and record numbers of unique browsers and page views,” he said. “In July this year, we reported that our membership numbers had gone from 15,000 to over 230,000 in just over a year—in addition to around 200,000 traditional subscribers in digital and print. We have also received over 200,000 one-off donations from readers who appreciate the importance of our work and crucial role in holding those in power to account.”

Facebook Announcement

Clearly, then, there is a flight to quality content. The question now is whether this is enough to save newspaper and magazine brands or do they need to aggregate content, perhaps, through Apple News, to build scale? It is a question made all the more important by Facebook’s announcement that it will launch its own news aggregation service this autumn that will not charge publishers for any subscriptions earned through sharing content for free.

The Economist is clear that future revenue improvements rely on a twin strategy of pushing subscriptions, largely through social media campaigns, and aggregating content. Its CMO Michael Brunt explained the group had decided to “have a foot in both camps.” “We use Facebook to target our key audience, and it’s working very well for subscription growth,” he said. “We also aggregate our content through Apple News, so we’re looking at what Facebook is doing with great interest. There are some publishers that would consider this a loss of control, but we see it as a route to market.”

Ganging Up Together

Newspapers have long been arguing that the dominance of Google and Facebook in digital advertising means that the only way to compete is to join forces. According to a report by OC&C Strategy Consultants at the end of 2016, Google and Facebook will take 71% of all money spent on display advertising online in the U.K. by 2020.

A national newspaper scheme, Project Juno, is yet to launch, but for advertisers looking to reach either a national or local audience at scale, there is 1XL. The single source for advertising across a wide range of local newspapers and magazines, including Johnston Press, Newsquest, and Archant titles, it claims to reach 23.5 million online users every month and to have doubled Johnston’s revenue per thousand impressions over the past three years.

For Scott Gill, 1XL’s managing director, the fight today is taking on Google and Facebook’s dominance before tighter advertising rules are brought in by the General Data Protection Regulation (GDPR) next May. “We’re already showing how we can compete better through building scale for advertisers, which publishers can’t do as well on their own. The next stage is going to be focusing on quality,” he said. “GDPR is going to reward quality, responsible publishers who gain first-party data above third-party networks, so that’s good news. We’re also discussing establishing a kitemark for quality content providers. This would allow decent journalism to be labelled and attract a higher price compared to low-quality sites.”

Is It Enough?

Trinity Mirror is remaining bullish about publishing’s prospects, but it is backing this up with a strong events arm. In publishing, the national and regional newspaper group recently bought Local World to build scale in local news. It is also being linked with a bid to buy The Express and Star national newspapers.

While the company will not officially comment on the latter, group marketing director Zoe Harris believes the former shows Trinity Mirror’s belief in local news brands. However, she also pointed out the importance of events and stand-alone sites operating in niche “verticals.” “We have several well-known events, such as the Handicrafts Show and the Keswick Mountain Festival,” she said. “There are also our recruitment verticals, Fish4Jobs and SecsintheCity, which operate independently.”

Audiences Trump Platform

Hearst’s chief digital officer Paul Cassar agrees that events are hugely important at his company, which recently followed up announcements of editorial job losses with a drive to increase headcount at its events arm by 30%. “Digital publishing is all about opening new audiences for us, such as launching Cosmopolitan on Snapchat,” he said. “We build powerful brands, whatever the platform, so they can also be monetised through additional revenue streams, such as our shopper advice service, The Good Housekeeping Institute. We also have events to further monetise our audiences, such as the Elle Style Awards or the Esquire Townhouse conference.”

What is clear, then, is that there is an industrywide flight to quality. To make the most of this, publishers can improve digital advertising revenues, perhaps by joining forces. However, it is unlikely to be enough to make up for print losses. Hence, smart publishers are looking to both boost digital revenues at the same time as build audiences for additional services, such as ratings for consumer goods or lucrative events.

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