As Covid-19 changes consumer behaviour, publishers have to go where the money is.
With Covid-19 turning some revenue streams like ad sales and events into a trickle, publishers have been forced to reassess what the best ways are to fund their operations in the future. From ecommerce and paywalls to podcasts, there are several promising avenues to explore on the road to recovery.
“As always, the most important thing publishers can do post-Covid is make sure they understand and serve the needs of their audiences,” advises Peter Houston, founder of Flipping Pages Media and one of the writers of the Media Moments 2020 report, recently released by Media Voices Podcast. “Whether that’s niche podcasts or ecommerce, newsletters or virtual events, publishers have to respond to how the pandemic has reshaped audience behaviours.
“And that’s not all about digital innovation. No one would have predicted the size of the spike in print subscriptions during lockdown, but now that it’s happened, magazine publishers need to work really hard to keep and deepen the relationship with readers that turned to them during one some of the hardest times in recent memory. The prize will be a proper cross-platform engagement with audiences.
“Publishers need to find their perfect revenue mix, five or six income streams complementary to their core competencies.”
Take it as read
One of the biggest lessons to come out of the pandemic is the importance of reader revenue. As consumers were hit with waves of data and scientific information, they clung to trusted news sources like a life raft – happily reaching into their pocket to pay for quality content.
“Publishers offer trust and brand safety, which – dare I say it – has slightly gone out of fashion in recent years,” James Wildman, CEO of Hearst UK pointed out during the virtual FIPP World Media Congress in September. “But the pendulum seems to be swinging back in our direction; integrity matters again.”
His words were backed up by Marc Walder, CEO of Swiss media group Ringier. “Covid has taught us that the hunger and need around reliable relevant information has never been bigger,” he said. “If the internet is a very loud place with a lot of content for people to consume – like rain pouring down on you – those media brands who clarify, explain, who are relevant and credible, they will win the race in the end. It’s about helping people find their way in a life that’s become complicated.”
The proof is in the figures. Those who covered the crisis effectively saw a huge bump in subscription numbers. The New York Times, for instance, reported a 14 per cent growth in the third quarter of 2020 taking them close to six million digital subscribers overall. Meanwhile, The Atlantic, who, like many leading publishers brought their pandemic stories in front of their paywall, reached 500,000 digital subscriptions in a short space of time.
“Reader revenue has been the shining light in the darkness,” says Houston. “From print subscription spikes to digital subscription growth, readers have really put their money behind trusted media brands. First party data, developed from direct reader relationships, will also shape future opportunities for publishers.”
The big question for publishers going into 2021 will be how many of the subscribers who jumped on board because of Covid will stick around when the virus is no longer dominating the news cycle. Whatever the churn rate, getting readers to pay for copy is here to stay.
According to Juan Señor of Innovation Media Consulting – co-author of FIPP’s annual Innovation in Media World Report – the biggest innovation to come out of 2020 will be media companies selling journalism to make up for lost ad revenue.
“We’ve been selling the wrong thing,” he pointed out at the Congress. “It’s going to be increasingly difficult for you to make a living out of just an ad-dependent magazine media experience on digital. The fastest way to sustainability is to find a way to charge for your journalism. If your journalism is not worth selling, you shouldn’t be in this business. People have rediscovered the value of consuming quality journalism during the crisis and we have to capitalise on this moment in history.”
In pod we trust
The jury still seems to out whether podcasts could be a strong revenue stream for publishers in the future. James Wildman has described them as “commercially, a long walk for a small drink,” while John Wilpers of Innovation Media Consulting (and co-author of FIPP’s Innovation in Media World Report) has pointed out that: “There’s still plenty of scope for podcasts that address niche topics that are of passionate interest to small communities. People are taking the time to listen.”
One person firmly in the positive podcast camp is media analyst Esther Kezia Thorpe, one of the joint overall winners of the FIPP & UPM Rising Stars Award this year, who has played a crucial role in transforming Media Voices Podcast – a weekly look at news from across the publishing world – into a successful media business.
“I think the biggest issue with monetising podcasts is expectations,” she cautions. “Media has grossly inflated expectations for advertisers on everything from page views to ad impressions, so when you’re in conversations with advertisers about listener numbers, they often look like a miniscule quantity compared to site traffic, as an example.
“But the value of podcast listeners is far higher – 100 people spending 30 minutes each with a podcast is far more valuable than 1,000 people reading an article for one minute on your site.
“If we can educate both publishers and advertisers on the value of these smaller audiences, and not focus on the big numbers – like, I can’t monetise my podcast until I have 1,000 listeners a week – monetisation will speed up a lot.”
Thorpe believes podcast will play a bigger role than video ever played in the future. “Podcasts are far cheaper to produce, more reliable to monetise, and much easier to consume on the go than video,” she says. “You only have to look at the amount of money companies like Spotify, Amazon and Apple are pouring into podcasting to see that it’s on the brink of being something great.
“But as with all new products, it’s important to have a mix if you’re a publisher looking to get into this space. What is it adding to your brand and audience? How does it fit into your wider strategy? Podcasting because everyone else is doing it isn’t a good enough reason.”
Clicking with consumers
Even before the pandemic struck, consumers were increasingly shopping from the comfort on their couches. Covid has not only accelerated that trend but introduced a new generation – those most at risk of the virus – to the convenience of ecommerce. As the pandemic recedes, many of those online shoppers will remain, giving publishers a whole new audience to aim for.
“The fastest growing customer group right now is 65 plus seniors, which has learnt to get things sent to their house and most likely will continue to buy outside their food delivery,” says Jonas Sjostedt, Founder and CTO, of Tipser, an ecommerce platform for publishers.
“Once you turn to ecommerce the convenience and reduced friction will make you stick with it. We have seen a steady increase in sales because our publishing partners are spending a lot more time on ecommerce as a revenue source.”
Sjostedt believes publishers are in a great position to cash in on the ecommerce boom. “Publishers have an edge against commerce sites because they have organic traffic returning to their sites and many are returning several times a week,” he points out.
“Publishers have a strong media brand that people trust and editors who curate the world and make it relevant to the readers. Publishers can leverage that brand and capitalise on consumers directly where inspiration strikes.”
Sjostedt describes the numbers being generated by ecommerce as “staggering”.
“We see a three to five times increase in profit compared to affiliate programmes for the same products,” he says. “Tipser has over 30 per cent average commission for the first half of 2020 while the average commissioned paid out from affiliate programmes is around 12 per cent. The conversion rate is also really fine – one and a half per cent end-to-end. As a comparison to that, the end-to-end conversion on affiliates should land on something like 0.2 per cent.”
Sjostedt stresses that there’s not just one way to draw up an ecommerce strategy. Publishers need to find the approach that works best for them – whether that’s inbedding buying options inside articles; having a market space curated by fashion editors who have built up trust with consumers, or integrating commerce into mobile platforms.
Houston agrees that ecommerce looks like being a big win. “Publishers that had already laid the groundwork have benefited from years worth of ecommerce development squeezed into a few months of 2020,” he says.
A glowing example of what’s possible in the world of ecommerce is BuzzFeed. Having recommended products to its audience, earning a cut of the revenue when readers click the links in its articles and buy from other sites, the publisher this year introduced a website called BuzzFeed Shopping to buy goods without going anywhere else.
The new BuzzFeed Shopping site carries out transactions through ecommerce platform, Shop Bonsai Inc. The company told The Wall Street Journal it had deals to roll out on-site shopping experiences with eight more publishers in 2020.
“Publishers like BuzzFeed that have really embraced affiliate over the last few years and built a solid business, and they’ve actually trained their audience to shop from them and expect to be sold product – those publishers are really ripe for this kind of product,” Saad Siddiqui, chief executive of Bonsai, told the newspaper.
Creativity out of adversity
It’s not just well-established companies that have been able to fill in the gaps for publishers as they negotiate an environment transformed by Covid. 2020 has also seen the birth of a series of startups shaped by the pandemic.
One of the most successful is Singapore-based Few¢ents, which has developed an innovative solution that aims to help publishers extend their reader revenues by collecting micropayments from readers.
“Few¢ents is what we call internally a Covid baby – the problem that we identified was because of Covid and we built the solution during the pandemic,” explained Abhishek Dadoo, co-founder and CEO of Few¢ents, during the FIPP World Media Congress.
Dadoo spotted a gap in the market when realising consumers needed to take baby steps towards becoming loyal readers of a particular publication – a system to “unlock one article at a time, so they start getting used to that publisher, and then eventually – if they think ‘well this is well worth it,’ – they end up subscribing”.
“A bridge to subscriptions is what we have built at Few¢ents,” he added. “And this bridge allows a consumer to unlock one article at a time for a few cents, as the name suggests, and that builds loyalty for the publisher.”
Dadoo and Few¢ents are just getting warmed up and have big plans for the future.
“We are starting off with largely news or text based publishers, but very aggressively moving into video,” he explained. “For example nba.com has a huge audience from The Philippines, who are not eligible to subscribe to nba.com. But they could buy specific highlights of a particular game.
“So the formats are multiple: ebooks, audio books, emagazines, texts podcasts, anything that falls under the digital goods umbrella.”