How to make for revenue to follow the audience
Feb 4, 2013
SEO richest words: revenue
Follow the Audience: Adapting Revenue Models for Changing Media Landscape
How can we fix a business model that's failing? This question is the holy grail for information companies, especially news ones, which have seen their advertising revenue-based model decline over the last two decades. Various strategies are being tested to reverse the drop in revenues - paywalls, premium subscriptions, crowdfunding - but it's possible that a declining model can't be saved, and the solution lies elsewhere. If the audience has moved, their attention has also shifted, and proving this is the task of commercial departments in collaboration with advertising agencies. The discussion on how to recover lost revenues isn't new, but with the surge in mobile device audiences, it has become more relevant. Why? Because while mobile sees its audience grow to gigantic levels (between 2012 and 2017 the forecast is for a growth of 1300%), revenues from it are still minuscule (a French publication, Les Echos, has half the audience coming from smartphones and tablets, generating a meager 5% of total earnings). If the losses of print were far from digital gains, they are even further from mobile revenues.
Content creators and distributors have no choice but to follow their audiences wherever they go (as observed by Fréderic Filloux in this post). To try to continue maintaining the revenues that advertisers paid in print, we don't only need new metrics, although they are absolutely necessary. It is essential that the publications prove their efficiency to the market and in this task, three fronts will be necessary: that of developers within the newsrooms, that of the reformulation of the content production flow, also within the newsrooms, and that of convincing advertising agencies about the efficiency of the new platforms.
An interesting possibility is suggested by ComScore, the largest global digital audience meter. In an article published, the company suggests that one of the difficulties in increasing revenues is the absence of scarcity in the supply of advertising spaces. As publications can place more and more ads on the same page, the supply curve is infinite and brings the price of spaces to a very low value (read more about the ComScore article here).
A change in the metric - for example, auditing how many ads were actually seen by a user and not just loaded at the bottom of the page or accessed by search engine bots - would create a finite universe of advertising spaces, something that would raise the value of each of them and, according to the ComScore study, would lead to higher revenue than the previous one, which only counts “exposures” of the ad. Until then, even significant audience growth will not be reflected in revenue growth.
Developers have another crucial role in the operation. Without the publications stepping down from their pedestal and proving the efficiency of their platforms, no one will be willing to pay money for a brand, no matter how old and traditional it may be. The next few years should see a lot of investment in the search for content delivery solutions with programming languages like HTML5, alternatives to Java (like Ceylon), Go, and more attention to items like interactive design of multiplatform websites.
Within the newsrooms, changes are already happening, albeit forcibly. Twitter, Facebook, and other social networks have become part of the daily life of journalists, and the whole thing could have been much smoother if ten years ago, companies had started to pay attention to something more than their own navels. To retain the attention of the audience, the newsrooms need to redistribute their tasks by preparing different information deliveries for each medium, addressing different moments and focuses for different platforms that are used by users with varied profiles and in different states of mind, so to speak. A mistake that is over 10 years old and still being made clarifies the nature of the problem: the printed newspaper brings the 'hard news' from the night before, already known in prose and verse by the reader who has access to some electronic device. The redistribution of information flows is as fundamental as everything else.
Of course, recovering the revenues lost in the transition of media does not mean that the newspapers and magazines of decades past will return to earn what they earned. The horizon has fragmented, and the system's money now tends to go to many more competitors than before. The publications themselves need to redesign themselves as companies, slimming down the structures where they need to be slimmed down (i.e., in the non-operational part). As Charles Darwin said, it is not the strongest or the fastest who survives but the most capable of adapting to changes.