With newspaper circulations dwindling and advertising rates in record decline, it’s of little surprise that content providers are seeking to alter their revenue generation models – some with quite drastic measures.
The FT and the Times recently announced massive profit falls, and the Observer and Independent are facing closure. Channel4 and ITV are both actively seeking ways of generating additional revenue following catastrophic falls in television ad spend. With forecasts of a further 5.8% fall in global advertising this year, there’s little sign of improvement.
It is clear that the industry needs to innovate in order to survive, and there are three primary methods companies are considering: 1) charging customers to access content; 2) generating revenue through online advertising and strategic product placement; 3) diversifying into other sectors.
This is currently one of the most talked about – and controversial – means of generating alternative revenues. Newspapers are looking at charging for access to articles online and television companies are investigating collecting fees to access online archives.
The FT has been successfully charging for online content for quite some time and News Corp has announced that it is to start charging for online content next year. The problem with this model is it relies on loyalty to websites and, when users can access content for free from aggregator sites such as Google News, there’s little incentive to pay for content. One method companies are investigating is a micropayments model: already used by the Wall Street Journal, the iTunes-like payment methods attracts customers unwilling to commit to subscriptions, but are not averse to paying small amounts for single articles.
Traditionally, online advertising has been the industry’s poor relation. However, new methods of online promotion are forcing advertisers to sit up: online adverts can be personalised to their audience, making for highly effective campaigns. A recent Burberry campaign on the Telegraph’s website, for example, had a 14% click-through rate compared to online’s typical 0.2%. IPTV’s growth will help facilitate this type of advertising.
Television companies are also realising the earnings potential of their websites. ITV.com recently announced a 1,250% y-o-y increase on video views on ITV.com making it an extremely attractive platform for advertisers. Channel4 saw click-throughs on advertising rise fivefold when it stopped charging for archive views.
Some companies are looking beyond advertising and branching out into new products and services. The FT, for example, launched the premium publication China Confidential to attract subscribers keen to access information on the fast growing market.
Euromoney promoted its database/information services and sales grew by 46%. DMGT put added emphasis on its less-advertising dependent B2B units this year which resulted in the unit accounting for 80% of profits.
Whichever path companies take, it’s clear they need to completely redefine their businesses to ensure future growth. As demonstrated above, the battle against the advertising downturn can be won and it’ll those who are able to innovate the most that will emerge the strongest.
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