5 Ways publishers can diversify their revenue streamsBy Nicole Lauzon
While many publishers have begun the journey of transitioning to digital sales, advertising still remains their core revenue stream.
This is problematic, as the social media giants and Google continue to innovate and find more ways to gobble up ad earnings typically enjoyed by media players.
The good news is that, given their reputation and resources, publishers are well-placed to branch out and monetize new revenue streams, and decrease their reliance on any one method.
But what are those alternatives? And how can we execute them well? In this article, leading media analyst and Founder of Borrell Associates Gordon Borrell shares valuable insights on how your media business can capture its slice of the $94 billion opportunity in U.S. local digital advertising.
1. Long-term planning will be essential for organizations that want to survive
According to Borrell, most media companies are taking a 3–4 year approach to their revenue modeling and strategic planning. He suggests they need to be looking further ahead in the future to effect change, setting their sights on what to expect by 2032.
“Within 10 years, 90 percent of advertising revenue will be digital. Today, it’s 65 percent. Just before the pandemic, it was 55 percent, so the pandemic caused an acceleration of the trend for digital advertising,” Borrell says.
Newspapers, radio, and television broadcasters are best positioned to capture their share of the digital advertising market by taking a wider view of their role as an information provider. By looking beyond the confines of your publication, website, or app, you’ll be able to take advantage of new opportunities on multiple platforms, instead of just your own.
“Your salaries are being paid by it. It’s more about advertising than it is subscription fees. The advertising portion is the greatest opportunity for any type of company that wants to call itself a media/marketing company because advertisers need it. They need help,” says Borrell.
Borrell describes local businesses as “deer in the headlights” when it comes to their marketing, but says “the deer now have the guns.” The digital age has armed them with their own websites, social media accounts, and other platforms, without the ammunition and knowledge to market effectively.
“It really is important that you help those entrepreneurs, the backbone of your communities, market themselves. That’s part of your role,” Borrell continues.
2. Make the move to video
According to findings from recent Borrell Associates Inc. research, local media companies are clawing back market share from pure plays for the first time in 15 years. According to Borrell: in the early 2000s, before the birth of Google and Facebook, publishers and media providers were responsible for selling as much as 60–80 percent of the local digital advertising in their markets. Since then, it has been shrinking dramatically.
“Twelve percent of all the money that businesses spend in the local market on digital advertising stays in the market, because it’s being sold by a newspaper, a TV station, or a radio station, etc.,” he says.
“A year and a half ago, [that share] suddenly started increasing again. This year, we think it will be at about 14 percent. That’s a very significant finding and when we looked deeper, we discovered it was video,” he continues.
Borrell views the evolution of the internet in three waves:
- First wave | the 2000s - Search marketing rose in popularity as the world got onto the internet and began to discover everything that was out there.
- Second wave | the 2010s - Social marketing popularity spurred by the Facebook age saw the world shift from finding where everything was to finding everyone.
- Third wave | the 2020s - Video marketing leads the charge in the latest wave and, according to Borrell, poses the greatest opportunity for publishers and media companies.
Unlike search and social marketing that advertisers can easily purchase online, the complexity of video production and storytelling is not so accessible. The nuances of script writing, proper lighting, camera operation, audio engineering, and editing place media companies as the execution experts that local businesses need to get it done.
“[Video advertising] is complicated. It’s not as easy as search where you go online and enter a credit card. This is why we are seeing such an increase in video advertising. People love it, and they’re getting their local media companies to help them with it.”
According to Borrell, 67 percent of businesses say they purchase their video advertising from a local media company, hammering home the importance of positioning yourself as the expert who can fulfill the need.
What is over-the-top video (OTT) ?
Over-the-top video or OTT, as defined by the Interactive Advertising Bureau, is video content transported from a video provider to a connected device over the internet outside the closed networks of telecom and cable providers. Hulu, YouTube TV, Prime, and Disney+ are examples of OTT services.
It’s one of the greatest opportunities for media companies in Borrell’s view, but you shouldn’t position it that way with local businesses. Instead of getting into the nitty gritty of online video advertising, sell it to your clients instead as a TV or video commercial. It’s something that they’ll immediately recognize and want to find out more about, locking up the sale right then and there. He also suggests broadening the format. It’s not necessarily about producing 15- or 30-second spots anymore. Media companies can assist in the production of how-to style content, positioning their local business client as the expert in their field.
“Newspapers, in particular, seem to be really good at how-to and instructional or explanation videos, producing the videos for [advertisers], then helping them with the distribution. Then you can actually trim some of those videos down into commercial spots and put them up onto YouTube channels, which some of the best practice companies are doing,” explains Borrell.
3. Become the go-to marketing expert to support local businesses
Sales staff in media and publishing need to position themselves as the person to call with any marketing question or concern.
“Imagine your toughest advertisers,” Borrell says. “ [They’re] sitting there at [their] desk saying, ‘Gosh, you know, I’ve got questions about TikTok, I wonder if that is a viable means. I wonder about this OTT stuff. I don't even know what OTT means. I know, I'll call…’”
Borrell says they need to be picking up the phone and dialing your number; otherwise, it’s a big missed opportunity.
“If they see you as a marketing partner but you only come in the door selling newspaper advertising and the only stuff you can sell them in digital form is [website banner ads], that doesn’t answer a lot of their questions. Once they see you as marketing experts, then it opens the door to [many] other things you can help them with,” shares Borrell.
Not only will a strong digital strategy help keep those local businesses engaged with your organization, but it will hold their attention with your publication as a whole and encourage them to spend more even on traditional means if that’s where you're recommending they spend their money.
4. Never underestimate the amount of money in the market
Based on research data from one of Borrell’s larger clients, he recommends never underestimating market potential. His findings suggest, on average, when a media company thinks they’ve captured 50–60 percent of their client's advertising budget that’s not the case. In reality, they are only taking advantage of 10 percent in all cases, and less than 5 percent in many of those instances.
The biggest mistake that I think most media companies and advertising teams make is underestimating the amount of money that is either in the market or that the buyers have in their ad budget.
Borrell says, “We've got data now. We're in the data age for god's sakes—unless you've been under a rock. We're in the age where we don't have to guess anymore. We know how many businesses are in every market. We know what types of businesses they are. We know how big they are, how many employees they have, and how much they spend on advertising.”
According to Borrell, leveraging the data and coming to grips with how much money is actually out there on the table is one of the best practices of media organizations that perform really well in the space.
5. Seek alignment with ownership
Finally, ensuring your vision for a digital-forward future is shared with leadership at your company is perhaps one of the most important aspects that will mark the success or failure of your attempt.
“You have to understand who you're working for and what their goals are,” Borrell says.
He continues, “They own the company and they have a specific thing that they want from the
company. Do they want what you want? Do they see a big key strategic part of the future being digital? Do they see that's where everything is headed?”
Borrell suggests trying to scare them with the reality of where the industry is headed. By getting ownership involved in understanding the bigger picture they can make a more informed decision.
“Everyone has a fear of change. Unless they realize this is a positive thing, you’re not going to get very far with them,” he says.
Will you ensure long-term viability by targeting digital revenue opportunities?
The future for media is overwhelmingly digital, and publishers need to respond by offering solutions that can help local businesses reach their consumers online.
It's imperative that sales leaders help drive the organizational changes required and target digital revenue opportunities to ensure long-term viability and success for their communities.
Learn more about how Vendasta can help your organization build and scale digital revenue streams. Book a demo with our dedicated media expert here.