How Publishers Can Achieve an Ideal Revenue Mix
Single or even double income-stream publishing is increasingly a thing of the past. The search for sustainable revenues has taken many media organizations way beyond advertising or newsstand sales into a seemingly infinite array of money-making schemes.
Some alternative revenue plays – Buzzfeed’s Tasty kitchen tools from Walmart anyone? – are unlikely to get traction outside their own, very specific, audience. But others are becoming staples of the modern publishing portfolio and should be considered by every publisher looking to establish a healthy revenue mix.
The problem for publishers is it’s becoming increasingly difficult to say what a healthy revenue mix looks like.
The majority of publishers responding to the 2018 Digital Leaders Survey by the Reuters Institute for Journalism were pursuing multiple revenue streams; having an average of six different options was noted very or quite important.
The search for alternative revenues doesn’t have to mean the old favorites are out – digital display was marked as very important by almost 40% of the digital leaders RISJ surveyed. Even the super-evolved New York Times still gets almost $120 million of its $415 million revenues from advertising.
But it’s complicated. Are we talking direct? On third-party exchanges? On platforms? Should you be doing video ads? Does audio count? What about native or sponsored content? Email newsletters? Social media across multiple platforms? And does all this need to be mobile?
Working your way through that mess wouldn’t be so bad if you knew you were going to earn a decent return. But where digital advertising used to be a guaranteed grower, it really isn’t any more, mainly thanks to the terrible trio of Google Facebook, and Amazon.
The new uncertainty in digital advertising, added to the long-term decline of print income, has cranked up the pressure to find alternative income streams.
Most recently, publishers have been looking hard at converting their free reader base to paid, from basic digital subscriptions, to enhanced membership packages and data dashboards. But look back before the paid-content pivot and events, ecommerce, marketing services and commercial-content creation were all pegged as game-changing revenue alternatives.
Searching for a Savior
That fact that variations of the ‘Is this [insert cool new thing] the savior of publishing?’ appear frequently suggests that:
- Not enough headline writers have heard of Betteridge’s Law (the answer is always no)
- No one has actually found the savior of anything yet
From blockchain to billionaire buyers, we live in hope. And maybe one day, someone will invent a silver bullet that dispatches all the publishing industry’s woes, but until that magical moment, it’s every man, woman, and publishing director for themselves.
How to Fix the Ideal Mix
No one revenue stream is going to counter advertising income declines. The “mix of six” is going to become crucial for publishers that don’t want to get consolidated out of existence. But building the right earnings portfolio from the enormous range of potential revenue streams out there requires the discipline to keep at least one eye on your core business.
Too many publishers have gone chasing off after unicorns when they should have been focused on taking care of the business that they know best. If you’re wondering about your own revenue mix, ask yourself a few questions and avoid your own version of Conde Nast’s style.com catastrophe.
What Will Your Audience Pay For?
Reader revenues are the current focus of the search for alternative incomes. I’m happy about that. I think any publisher that can charge for their content has a head start on sustainability. But people need to be clear, paid-content is not a quick fix.
You need to walk your audience past the idea that content is free by promising, and delivering, real value. You need to put the right tech in place and maintain a level of audience reach that will support continued advertising sales, because you’ll need that income too.
Most of all, you’ll need faith in your own operation. Publishing Executive contributor Andy Kowl says, “The biggest hurdle to selling content is mustering the belief that you can.”
Can You Connect Your Advertisers with Your Audience?
The rallying cry of the reader-revenue revolution is better reader relationships but developing deeper relationships between your audience and your advertisers is no less important. Space selling is over. Consultation is the name of the game.
From audience segmentation and targeting to development of custom campaigns, publishers need to move beyond selling the dream and help marketers achieve their objectives. That means taking the time to understand and craft solutions that connect advertiser and audience.
In a recent podcast panel discussion that asked ‘Is advertising more hassle that it’s worth’, London-based advertising sales trainer Raoul Monks said, “There’s this kind of shift from salespeople getting into the client’s head… now it’s getting the client into the audience’s head and helping the client make it easier for their audience to choose them.”
Do Your Add-Ons Actually Ad Value?
Maybe your audience will buy branded kitchenware; the addition of a logo has worked for publishers from Playboy to The New Yorker. But licensing isn’t going to deliver significant cash to anyone but the biggest brands.
More likely, brand extensions will need to enhance aspects of your existing business. The Skimm targets a “smarter living” calendar app to its busy readers; The Information sets itself up as a Slack group to give subscribers a heads up; The UK’s Dennis Publishing sells cars and car insurance to readers of its car titles.
Pete Spande, chief revenue officer of Insider Inc., focuses on audience acquisition, data, distribution, and storytelling. He says, “We’re looking for new businesses that can monetize our core strengths.”
Will You Really Get a Return?
The days of dismissing projects that’ won’t contribute an additional 20% to 30% to the bottom line are probably over. As one of the UK’s leading supermarket says, “Every Little Helps.” But that doesn’t mean that publishers should be bouncing on to every bandwagon.
Events are a no-brainer for many publishers, but also a massive opportunity to spend more money than you make. Venue costs, marketing spend, and organizational time are significant in events and it’s too easy for your ambition to swallow any advantage. You can justify the time and money as ‘deepening your reader relationships” but unless those readers are spending, or sponsors spending to reach them, why are you doing it?
For publishers looking to diversify their businesses away from over reliance on advertising, the ideal revenue mix will depend on audience and advertiser preferences, skills, and resources available and a realistic look at what the competition is up to. But thinking about that “mix of six” idea, identifying brand extensions that complement your core has to be the starting point.
Mr. D. Eadward Tree wrote on Publishing Executive recently about the happy cohabitation of print and digital. In a strong defense of the peace that has broken out between rival print and digital publishing factions he warned that, “One-trick ponies face an uphill ride.”
That’s every bit as true across the revenue spectrum as it is across the platforms, but at the risk of stretching D. Eadward’s metaphor a little too far… too many ponies sharing limited resources won’t get you to the top of the hill either.
Peter Houston runs Flipping Pages Media, an independent consultancy and training firm, helping publishers build multi-platform success. He has run Guardian Masterclasses, spoken at Google’s ThinkPublishing and was formerly Editor-at-large for The Media Briefing. He now co-hosts the Media Voices Podcast, delivering a weekly take on the media news and guest interviews with senior players at a leading media organizations, from Facebook to Nieman Lab, The Economist to CNN.