August 05, 2019 ON24
Media and publishing organizations, particularly those in the news sector, have struggled with diminishing returns from advertising for several years. By some estimates, US newspaper advertising revenues have declined by more than 66% from 2005 to 2017, so the future of the industry hinges on digital growth.
Time and again, we’ve seen that having a single revenue model, particularly one built around ad-funded content, is difficult to sustain in the long term as a sharp increase in customer churn or a major economic downturn can change the rules of the game in the blink of an eye.
Even among well-established business titles – many having built their success on a promise of reaching buyers through controlled circulation – ad revenues struggle when auction-based media buying provides an easier, more measurable and cost-effective way of reaching tightly defined target audiences. On the flip side, readers who perhaps would have turned to such sources in search of information can now simply use a search engine to locate the content that meets exactly their needs.
The Subscription-Ad Conundrum
Even so, while audiences understand that ads are often part and parcel of the media experience and are willing to watch some ads in exchange for free access to content, the majority believe that ads are intrusive and complain about the sheer number of ads. Unsurprisingly, they are willing to pay a subscription fee to have an ad-free media experience: 44% of respondents cited ‘no ads’ as a top reason for subscribing to a new paid service.
However, industry analysts increasingly argue that these models are not sustainable and using consumers’ resentment towards ads as a guiding principle is one of the media industry’s greatest fallacies. Ad-funded content still has a major role to play, and those premium publishers than both serve ads while growing subscriber numbers have proven that a blended model actually works. These organizations are successfully building a sizeable ad-funded segment outside of subscriptions by extending their customer-first approach to advertising.
For decades, media and publishing organizations have focused on delivering high-quality content but severely neglected the ad experience. As a result, readers and viewers have become frustrated with the advertising component of their media experience (one in four US internet users block ads and 27% of global news users block ads on any device) and this led to an apparent demise of ad-supported models.
The Future of Ads in Media and Publishing
But recent success stories show that it is possible to drive long-term growth with advertising by creating engaging ad experiences. Using a combination of strong creative, non-intrusive formats and optimized frequency capping, and finding the right balance between relevant and creepy, leading organizations ensure that ads contribute to the media experience instead of interrupting it.
“Advertising and news content have always run side by side in printed newspapers. Now, with most readers seeing The Times on digital platforms and with print advertising in a long-term, irreversible decline, the company is seeking new revenue sources… The close collaboration between news and advertising, though, comes with a need for particular care. And sponsorships – which closely tie a particular advertiser to a particular piece of journalism – come with their own special set of concerns.”
As such, maintaining the integrity of content while allowing sponsors and advertisers to connect with audiences, offers a fruitful way of boosting revenues. But the delivery of these messages needs to be done in a way that both respects the viewer and gives them a compelling reason to tune in.
Discover how webinars can help media and publishing professionals improve their digital experiences with the ON24 Webinar Benchmarks Report for Media and Publishing.