May 12, 2017
The most popular talk from this year’s Digital Innovators’ Summit in Berlin was given by Greg Piechota [watch it here] and it focused on new publishing models, that is, worry less about content and reach and more about how to monetize content across platforms.
The Toothbrush Test
Is this a service that users will access multiple times a day, every day? Allegedly this is the first question Google execs ask when assessing an investment. The same question is useful for publishers – what content will keep readers returning – other than news? In fact, the news is no longer a staple for publishers as most adults access news through social media channels which are far larger and more powerful than most publishers.
Piechota comments: “Because platforms have aggregated such large audiences, they win at the attention economy [the battle for user attention]. They then capture most advertising in the market, with – in the US – Google and Facebook’s share last year up to 70%… So publishers are now fighting for 30%. And who is getting the money? 60% of the money goes to AdTech companies… Publishers get one-third of the revenue.”
Piechota noted that the digital ad revenue generated through platforms was not substantial enough to cover publishers’ costs, such as paying the journalists to create the content in the first place, so publishers need to generate more income from platforms.
To do this they needed to understand how things had changed. Firstly, instead of neat threads, stories had become frayed: “So you get headlines of articles in aggregators, you get visual elements on social platforms. Comments and reactions [to stories] go to external platforms. Recommended stories are often not recommended to us by publishers anymore, but by social media – which means the biggest stories can become visible on more platforms,” he said.
Secondly, publishers are no longer the gatekeepers to market, anyone can publish and attract attention.
Finally, the consumer’s decision-making process doesn’t necessarily follow the publisher’s plan, so advertising, for example, isn’t achieving what it should. Piechota was quick to point out that in some cases, neither is the content: “People don’t love watching ads. People don’t want to spend a lot of time on choosing the brand and looking for stories. If somebody can save them the effort, if somebody can save them money, save them time, people go for it,” he said.
Using the New York Times as an example, Piechota suggested that charging other parties for content was a possible solution. Through direct subscribers, native advertisers, affiliate marketers such as retail clients and donations he estimated that the New York Times could make as much as US$307m a year.
He also cited this fragmentation strategy as having worked for other sectors such as Ryan Air. “Once they started to charge for everything… for your seat, for checking in a bag, for paying by credit card, and then you can buy insurance, book a hotel, rent a car, whatever… last year Ryanair made more than €1bn profit,” he said, and that counteracted the money the company was losing from the huge costs associated with air travel.
So should publishers consider fragmenting the content and charging for each part? Yes, says Piechota, and no. “We should think about content portfolios, different content with different business models… [and] optimize for different functions. We’ll have some content that will attract new users… we’ll have some content maybe to retain customers. And then we’ll have some content used for [upselling]. In this way, you will increase the average revenue per user from the audience you have.”
And one last thing (Columbo style), Piechota was at pains to stress that publishers should rethink the relationship they have with the platforms themselves. “You think about [platforms] as your suppliers rather than your business partners. You are not begging them for money; you are basically ‘hiring’ them to do a job for you.” So start working with them to make your content pay.
If you want to find out more about maximizing your advertising and publishing revenues, then get in touch with Amnet to plan your online campaign.