Publishers having to work for their profits

In a game hard-hit by digital, it’s all about playing to your strengths

WITH print advertising collapsing faster than expected and digital advertising being Hoovered up by a few intermediaries, it’s becoming increasingly important for publishers to find ways to profit from their products.

We thought we’d set out the four most pressing questions.

How long can publishers count on display advertising as a key revenue source?

It’s no secret that many publishers dropped the ball when it came to digital advertising. It was far too late into the public’s adoption of the internet when publishers realised the value of those digital audiences and the vast reach they afforded potential ad partners.

Arguably, the failure of Western publishers to capitalise on that opportunity has poisoned the well for publishers in the emerging markets, who must contend with a market in which digital real estate is often worthless.

The Guardian and the Daily Mail, two British newspapers whose world views couldn’t be more different, rely to a large degree on digital advertising revenue. Their results this year have made it plain how completely the digital advertising ecosystem is dominated by Facebook and Google.

Those two tech companies, which became intermediaries in the ad market in very different ways, account for at least 64 percent of all ad spend online. Some give a figure that is significantly higher.

Although publishers were historically the only means through which advertisers could reach huge audiences, that role has been thoroughly usurped, and print ad revenue is dwindling. But as those two ad giants extend olive branches…

To what extent should publishers hop into bed with third parties?

Publishers aren’t dancing to their own tunes any more. If they want to appear on Facebook’s news feed, they’d best do what Mark Zuckerberg tells them.

The Facebook founder says “more video”, publishers say “how high… will the marks on this wall be when this watermelon explodes?”

It’s a sad state of affairs from publishers’ perspectives – when the worst that could happen would be news agents in a given area refusing to stock them – to have to bend the knee to these third parties.

But there are assertions that a strategy of plurality in distribution can lessen the dangers of overdependence. If publishers exist across a range of platforms, then no single third party can dictate their every move.

It’s worth noting, however, that not all third parties are created equal. Facebook is far and away the platform with the most power and biggest opportunities for publishers looking to monetise an audience.

So long as Facebook is the only game in town, worries about its power over publishers will remain.

Is video an oasis in the desert for publishers – or just a mirage?

An ever-increasing quantity of video is being consumed on mobile devices. American IT giant Cisco predicts fully 75 percent of the world’s mobile traffic will be video by 2020. Some predictions make this figure look conservative.

Even when confusion about what exactly constitutes a view is taken out of the equation, all the figures for video consumption indicate audiences are consuming a great deal more.

As a result, we’ve seen advertising money flood into the market and publishers responding in kind by vastly increasing their output of video content.

In the UK, for instance, The Sun includes some video in 70 percent of its articles, and an ecosystem of aggregators and verifiers has sprung up as a result.

But video is fairly costly to produce to a level of quality befitting news brands, and advertisers’ requests for video far outstrip newsrooms’ ability to produce it.

So is video the next great hope for publishers or, as some have predicted, is the video advertising bubble about to burst?

Is geographical expansion an answer to publisher revenue woes?

In June, Damian Radcliffe, emeritus editor of The Media Briefing, took a gander at the annual Mary Meeker report – specifically the section on where the next growth spurt in digital audiences is likely to appear. He found that while reaching many more, in the West it was difficult.

“Against this backdrop, India offers a welcome contrast. With 277 million users, there are more people online in the subcontinent than the US. Only China has more internet users.

“With a growing middle class and a large population who read – and speak – English, this confluence offers a potential sweet spot for English language publishers. As a result, India is a market that highly valued Wester n media brands should be considering.”

But how can publishers ensure they stay true to their brand as they expand?

Last week, The Media Briefing interviewed Ollie Lloyd to determine how his Great British Chefs website is expanding without losing sight of its core proposition.

He said: “Global expansion will come from our saying ‘Right, we’re going into Spain, we’re going to launch Great Spanish Chefs, an English-language site about Spanish food, whom will that appeal to?’ A group of UK consumers who are into Spanish food, so we can build deeper, even more relevant content and become an even more go-to place for our UK foodie audience.”

It’s all about playing to your strengths.

This is an edited version of a post in The Media Briefing (www. themediabriefing.com) before its 2016 Monetising Media conference