Evolving Audit Bureaus
By Steve Chapman, Senior Director Global Content Partnerships
Over a century ago, the Audit Bureau of Circulation (ABC) was founded in the US to instill trust and transparency between publishers and advertisers in the print media market. And while ABC’s goals were honorable, the results did not live up to the audit bureau’s intentions, or stakeholders’ expectations. Circulation ended up driving publishers to print more copies than would ever get read in their efforts to raise advertising rates to cover their high costs.
Back in that heyday of print, the publisher-advertiser power funnel tipped in favor of publishers who could increase their circulation numbers through bulk distribution to newsstands, hotel rooms, Newspapers in Education (NIE) programs, airport gate, etc. And despite the audits performed by ABC to try and validate those bulk orders, advertisers started to lose trust in the numbers, creating a growing chasm between themselves and those who controlled the inventory.
That frenemy relationship continued for many decades until the digital revolution hit the industry like a sledgehammer. In an internet minute things started to take a dramatic turn. As advertisers’ blinders were removed and the promise of true transparency became a reality, a complete inversion of the publisher-advertiser power funnel started to take shape.
Today, the buyers are calling the shots and they’ve made it very clear that unverified circulation numbers, dubious digital subscription data, unique page views and advertising rates, governed by archaic print models retrofitted for a digital universe, are not going to cut it anymore.
Meanwhile, publishers are paying the price for greedy advertisers’ assaults on readers with invasive, poor quality ads that gobble up mobile data and significantly impact their digital reading experience.
What should have been a transition to a more transparent and trusting relationship between publishers, readers and advertisers turned into an ad blocking nightmare, not just in the US, but worldwide.
There’s more than one way to pay publishers
And this is just the beginning. In the next five years, ad blockers are expected to cost publishers US$27 billion in lost revenues.
Ad blocking didn’t happen because readers don’t want ads. The “Vogue Effect” in magazines proves that quality advertising does attract and retain the attention of readers. What people don’t want is advertising that abuses their personal data and their life on the web.
But there is hope. If publishers, advertisers and platform providers work together and put the customer in the center of their businesses they can create a new future that is sustainable and profitable for all. There’s an old saying, “There is more than one way to skin a cat”, and the same is true in funding publishing. Advertising revenue is just one form of funding; subsidies are another and then there are…
Paying with data
• Snapchat doesn’t pay publishers a dime for their content; they pay them through the data that publishers collect through tags that show what a person is reading, how long they’re spending with the content, the approximate age range and demographic of the user etc. – high value data they can then market to advertisers to help them better target advertising on behalf of their brands.
Paying with audience
• For distributors with massive and growing audiences through channel partners (e.g. hotels, airlines, Telco’s, libraries, etc.) publishers can get exposure with people they could not normally reach on their own. The audience becomes the currency in this model.
Paying license fees
• Most distribution partners use some form of revenue share with publishers based on readership, but more and more we’re seeing publishers looking for distributors to pay a flat fee for unlimited distribution rights.
Paying through gifted access
• In this new model advertisers sponsor access to a specific issue of a magazine or full platform access for a predetermined number of readers. Through this model, publishers are paid a share of the advertiser’s sponsorship fee and also enjoy the added benefit of increased circulation and audience reach as a result.
Publishers paying to play
• This is the Snapchat model again where publishers pay to have their content distributed through the platform through guaranteed ad revenue minimums from publishers.
These are just a few of the ways publishers are compensated for their content beyond advertising. Now you may wonder why they are being discussed in an article about audited circulation. Well, payment models and audited circulation go hand in hand; and if they don’t, they should.
To maximize reach and revenues new forms of monetization are continually being introduced into the industry and audit bureaus need to be able to adapt its rules to include and align them with new ways of measuring engagement.
Where do we go from here?
Publishers, distributors and advertisers need to work very closely with the audit bureaus to help them to evolve so the relationship between publishers, distributors, advertisers and readers becomes a winning proposition for all.
The first step is including engagement as an additional metric to paid consumption – a fluctuating value that grows and shrinks based on the time spent, articles read or pages browsed for each reader.
Issues such as duplication need to be better addressed. With the multitude of devices in the hands of readers, the chances of counting consumption for a single user more than once is a very real problem. More sophisticated de-duping algorithms are available in the consumer space as users are registered and tracked fairly easily.
In the past, if a publisher sold 10 copies of a printed magazine or newspaper to a hotel and 100 people read it, they’d only be paid for 10. Today, if 100 unique people read issues online, publishers get paid at least 100 times. So even though the ability for distributors to prove that it’s not the same digital reader is problematic, the engagement level is likely higher because of the type of environments they’re in.
But not all audit bureaus take into account these high engagement environments. For example, Australia just approved the digital counting of issues in hotels and airlines. The move came about as a result of a trial performed with a major Australian magazine publisher, the AMAA (Australia) and PressReader, that demonstrated these business’ values, not just to publishers, but advertisers as well.
It’s not easy ensuring that proper accounting is done for print, digital edition, web and app consumption, especially with all the different bundles publishers are now selling. And compensating publishers the correct amount, within the required time frames by country, is also a challenge for global distributors. But it is mandatory that the industry start to excel at this soon so that the power struggle transforms into a symbiotic partnership between all stakeholders in the publishing supply chain.