Many digital publishers rely on display advertising as their main route to driving revenue growth. But publishing trends are showing it’s more important than ever to diversify revenue streams.
The Digital Publishers Revenue Index (DPRI) report for Q2 2019 shows digital publishing revenue fell by 3.7% compared to the same period in 2018. The drop was mostly down to a 15% dip in display advertising.
Those stats reinforce why digital publishers need to broaden their income sources. But why is display advertising revenue falling, how big is the problem, and what can publishers do to drive digital revenue to their brands?
Why digital display ad revenues have declined
Many online publishers are facing falling ad revenues. So what's causing that decline?
Data protection legislation
Data is vital to digital advertisers. The ease of collecting and tracking this data means provable Return on Investment (ROI). And that makes advertising easier to sell.
Recent data privacy laws, such as the GDPR and CCPA, have made it hard for you to know your audience, or at least know their desires. Customers must consent to their personal data being used, which makes it harder for publishers to track and target specific users. Last year’s warning from the Information Commissioner’s Office (ICO) raised concerns about the ad tech sector's use of personal data is likely to lead to further industry reforms.
Global economic slowdown
2019 was a year of economic uncertainty. Business confidence was dented by trade tensions between the US and China, no-deal Brexit anxieties and a sluggish demand for durable goods. Economic growth slowed to its weakest pace since the global financial crisis over a decade ago. As a result, many companies chose a more risk averse approach to spending their marketing budget, favouring options with more measurable data.
The COVID-19 coronavirus
The COVID-19 pandemic is just horrible. Of course it is horrible. Apart from the real world horror, it's prompting a severe impact on advertising revenues. A report by Cowen and Co. estimates that Facebook and Google could lose more than $44 billion in ad revenue.
Some of the biggest ad industry spenders, such as travel and automotive, have seen their operations affected. There's been an inevitable, but temporary, cut in advertising spend while they adapt to the changing market conditions.
Countries in lockdown are seeing more people at home, spending time online. Consumer spending has changed. They have less opportunity to buy in person and are moving their spend online. We’ll see in time if this permanently changes spending habits. In the publishing world, we need to be ready to respond. Maybe they'll never crave those ink stained fingers again!
Meanwhile...ad blocking continues
Internet users and web browsers enabled ad blocking features to combat the rise in more intrusive advertising. It's valuable feedback on our audience's tolerance of various ad formats. And the result costs the publishing industry millions each year in lost revenue.
How to drive digital revenue from other sources
With falling display ad revenues and increasing restriction on target based advertising in today’s digital landscape, it makes sense for publishers to evolve what they do to drive revenue to their brands.
Digital publishers need not despair. There are plenty of practical alternative ways that publishers can take to increase revenue.
Readers are increasingly open to paying for high quality, trustworthy content. And an advert-free reading experience is equally desirable - we're looking at you, ad blocker users.
Growing numbers of publishers are adopting a variety of subscription strategies, which broadly fall into several categories.
- Hard paywalls - only subscribers can access content;
- Metered paywalls - website visitors can access a set amount of articles for free, before getting asked to subscribe;
- Freemium paywalls - visitors can read selected content, with advertising, without charge. Readers then pay for ‘premium’ content.
- Dynamic paywalls - a personalised approach where the paywall shows based on a user’s behaviour and audience segment.
Have you ever noticed that some online publishers review or promote the products and services of specific brands? Many of those publishers do so because they get paid to promote other brands. Authoritative online publishers can consider sponsorship deals with big-name brands to increase their digital revenue.
According to an article from The Verge, podcasts are expected to generate around $1 billion in annual revenue by 2021.
Publishers create audio (or video) podcasts on a subject relevant to their focus, and market them through their own channels. They earn revenue through sponsorship deals or advertising on a CPM or CPA basis, with the added advantage of promoting their own publication.
As a publisher you're already content rich. With a few tweaks your newsletter can become another income stream. You already have a database of content thirsty readers with a interest in your publication's topic. And there are companies that want to reach those very people. A well designed newsletter with an advert from a relevant advertiser offers great click through potential. And remember to track open rates and times to optimise it even further.
Diversify your digital revenue
If we ever needed a reminder that we need multiple sources of revenue, it's the world in 2020.
Find out how we can help your brand transform its digital revenue strategies