Publishing - Then and Now: Revenue

This is the last of our trilogy of blogs exploring the differences between traditional print and online publishing. This week we’re talking revenue.

The internet disrupts the status quo

Before the days of the internet it was straightforward for publishers to make money from print titles. Customers expected to pay for their favorite content, and were willing to do so. Adverts in print publications with good circulation and a clearly defined audience were premium inventory, with advertisers queuing around the corner to spend budgets. The combination of established audience and strong ad rates was a lucrative one.

Unfortunately, these profits have significantly declined since the advent of the internet, as consumers have been presented with access to an almost unlimited amount of information, none of which they have to pay for.

Revenue through sales

Paying for content was once the norm, particularly given consumers were buying a tangible, physical product like a newspaper or magazine. Online publications however often find it hard to charge money for access to content. There are a plethora of free online publications to compete with, and studies show it is often only possible to charge for content if you are already an established brand with a loyal following.

Publications in the UK and US with an established readership, such as The Times, The Sun and The Wall Street Journal, have put up ‘paywalls’ for which members have to pay to access the publication or in some cases, specific content. It’s a gamble between losing readers to free competitors and solidifying your readership, not a decision to be taken lightly.

Opportunity to increase efficiency

Paywalls are still being experimented with, and they’re a subject that will be covered in more depth in a future post. However, the majority of a publisher’s revenue has always come from advertising, not subscriptions, so what’s going on online?

Online advertising presents publishers with a vast range of formats; from standard banner adverts to far more sophisticated ads embedded within videos and images, and tailored to a publisher’s content. Technology also promised more intelligent advertising, delivering ads that are relevant to an audience subset, rather than the readership-wide, one-size-fits-all approach of print ads.

Is the opportunity being realized?

With the flexibility, personalization and dynamic nature of digital ads you’d expect online publishers are sitting pretty right now, especially considering the global audience that has been opened up to them, where once they were restricted by physical distribution.

As we referenced above though, that’s clearly not the case. Many are unable to generate sufficient revenue from the most established online advertising formats such as display. Users have learned to tune out adverts that don’t benefit them, so they don’t click and the value of publisher inventory has dropped accordingly.

Seeking alternatives

Because of this, publishers are now exploring new ways to drive revenue from their digital channels. ‘Native advertising’ is the latest industry buzzword and has been met with mixed reactions (whitepaper link), due to concerns about integrating ads within editorial content without effective guidelines on format and transparency.

Despite concerns around native, as an idea it is at least based around giving brands a platform to give users value, typically in the form of interesting, compelling content. Regardless of the label that’s attached to it, advertising that gives users value also gives them a reason to engage with it, gets better results for advertisers and increases the premiums publishers can change for inventory.

This is where we think online advertising is moving. Given the current state of affairs, it has to.

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