Having discussed monetizing the mobile channel the series of blogs on conversations from the Digiday Publishers Summit continues with another challenge that publishing execs are grappling with:
Over-relying on Advertising as the Sole Revenue Model
What’s the most common revenue model in digital publishing? It’s advertising, of course.
Why is that problematic?
It’s not just that, as discussed in a previous blog, display ad CPMs on mobile are very low (compared to desktop). But it appears that display ad CPMs in general are under downward pressure, supported by this quote from The Economist’s Tom Standage:
“The Economist has taken the view that advertising is nice, and we’ll certainly take money where we can get it, but we’re pretty much expecting it to go away.”
Why?
When something is commoditized, its perceived value goes down. So, given how much the Internet is flush with content, it is no surprise that CPMs are falling because the perceived value of content is lower.
So, what do publishers say they must do?
At The Economist, Tom says it is selling subscriptions to busy readers who don’t have time to scour the whole Internet to learn what they need to know. Instead, The Economist’s value is that the reader learns what they need to know in a compact format, whether that is in the print edition or mobile app.
It is also banking on thought leadership, i.e. organizing conferences and papers that can be sponsored. At Lyris, we would call this a niche publishing approach – getting the right, compact information to the right targeted audiences. Our CEO John Philpin talks about this in an article for Adotas, writing,
“Any business that wants to pursue ‘true differentiation’ needs to establish a product that, in the mind of the consumer, is markedly and undeniably different.”
At The New York Time Digital, it is called “Services.” At the Digiday Summit, Paul Smurl, general manager of core digital products for The Times also emphasized his conviction that publishers must reinvent their revenue channels and go beyond advertising to secure their future. He shared his excitement about the new “Services” that save their audiences time and effort, for example:
- A new cooking site that offers a one-click option to purchase all of the recipe’s ingredients and have them shipped to you.
- Or a travel channel that publishes curated, high-value travel vacations and makes it easy to book them.
Bottom-line, there is so much content on the Internet already that publishers must reinvent themselves to go beyond advertising.
Here’s our team’s take.
Very similar to the examples from The Times and The Economist, Lyris and the clients we serve in the publishing industry are big believers that value is produced by bringing the right content to the right recipient at the right time through the right channel.
It’s about taking a page out of the playbooks of Facebook and Google, who are masters in content distribution and creating relevant experiences.
And, it doesn’t take an army of programmers to do this. Thanks to machine learning intelligence and with the help of the Lyris Audience Messaging platform, publishers large and small are able to let automation work for them.
The key is that we’re living in the age of data and analytics-driven intelligence. An interesting glimmer of just how key data is to the future was shared by the speaker from ABC at the Digiday Summit. Namely, Disney is working on consolidating its audience data into a common DMP platform so that it could perhaps be shared between Disney brands one day in the future in order to drive more targeted display advertising. The better the data, the more fine-grained a sponsor or advertiser can target an audience.
Likewise, there are publishers that talk about banding their data together in a data co-op to achieve similar scale across multiple publishing empires. While all this is still focused on advertising, the more powerful data can help these publishers defend themselves against the looming future where the Facebook and Google IDs could become the only relevant display ad targeting IDs that matter, as the speaker from ABC hinted.
Lyris’ Strategic DOs and DON’Ts:
- DO look for ways to reinvent your publishing model and how you provide value to your audience.
- DO drive your niche publishing and distribution strategy based on the richest audience data you can gather.
- DON’T neglect audience messaging automation to the ‘Channel of One’ as part of your strategy – it would only be at your own peril.
- DO appoint a Chief Audience Data Officer to work tightly with the monetization team to design value-based programs for your audience.
