By David H. Lipson, Jr
Chairman and CEO of Metro Corp, a publishing company whose signature titles include Philadelphia and Boston magazines.
I was listening to terrestrial radio in my car the other day, listening to Terry Gross interview a scientist who had written a book about the incredible scientific breakthroughs of immunology. He said that with science, research is messy, and you don’t really know where you’re going but eventually it pans out. It’s the faith that in nature, answers exist and that keeps the scientist powering through, searching for clues. And it’s only after you’ve made the great discovery, that the narrative of how the discovery was made can be pieced together.
Practitioners in the media business are like scientists. Our search for sustainable business models is messy. We like to say we know where we’re going but often it feels counter intuitive. We seek clues, and once a trend is found (and announced by the media, of course) we move quickly, trying to gain traction. Sometimes it works and sometimes, not so much. But I think when we finally settle in on a plan that actually succeeds, we will look back and develop our own story of how we adapted to the disruption.
Like the scientists, we too have faith. The faith is in the power of our brands and our connection to our local community.
Here’s the latest on the key trends I am paying attention to:
- Charging consumers for your content. With so much uncertainty about the future of advertising, media companies are focusing their efforts on garnering more revenue from their readers. The success story that serves as a great symbol of hope is the New York Times that now earns 60% of their revenue from subscriptions.
Verizon, owners of the mega digital content company Oath, recently announced that it will pivot from a focus on ad revenue to subscription revenue. Their properties include HuffPost, Yahoo Sports and Yahoo Finance. Despite the ubiquity of sports coverage, the genre does show promise as a subscription supported business. The upstart sports blog “The Athletic” counts on subscribers as its sole source of revenue and has raised $70 million since its launch in 2016 and is now valued at $200 million.
The first step in this process is committing to a content plan that is very focused. What does my brand stand for? What type of consumers does it resonate with? What type of content brings readers back frequently? Editors have to be very disciplined and pay attention to the analytics as they make editorial investments.
As a media brand develops “stickiness” with its audience, it can begin to charge them more money for subscriptions or for higher priced membership products. The side benefit to building a more loyal readership is better data on your customers opening many opportunities to better serve advertisers.
- Media brands behaving like advertising agencies. In an effort to remain relevant with advertisers, media companies must offer compelling solutions to win business. This requires new selling skills, more creative capabilities and robust account management. These solutions are often a mix of a variety of consumer touch points – traditional advertisements, sponsorships, exposure at events, native content, video, etc. – and are very impactful.
The good news is that this feels like a trend that has legs. The sense is that advertisers are devoting a portion of their budget to more data driven ad buys and a portion to these elaborate partnerships with media companies.
Most major media brands have developed distinct teams to develop these complex solutions. The Financial Times recently assembled a team from their existing content studio, event staff and a recently acquired thought-leadership agency to offer complete marketing services to their advertisers. They are anticipating this will result in a 30% increase in revenue in ’19.
- Events remain incredibly important. From a revenue standpoint, events have become a must-have platform for media companies. They offer the opportunity for media companies to monetize their relationship with their audience through ticket sales and offer advertisers the opportunity to get their products in the hands of consumers. Finally, it’s the one area that Google and Facebook have not disrupted, at least for now.
Look for this trend to grow as the demand for events from consumer brands is accelerating and media companies search for new revenue streams. Earlier this year, the now struggling Vice media purchased a Brooklyn-based event company that produces 300 events a year and owns a large event space. When making the announcement, Vice pointed to the growing demand from advertisers who are looking for “unique and immersive expressions for brands interested in reaching young audiences.” This summer, Bustle Digital Group bought event company Flavorpill. BDG CEO said this about the move, “This acquisition was made with an eye towards our 2019 growth — in both user engagement and revenue … We expect to see a substantial increase in paid attendees for our experiential programs to come through Flavorpill.”
These trends look promising, but you can expect more change and more experimentation for media companies in the years ahead. In the meantime, look for media companies to tighten their focus on serving the needs of their readers and solving the problems of their advertisers.