This article first appeared in Whats New In Publishing on 20th December 2021
The more things change, the more they stay the same. The French aphorism may be nearly 200 years old, but it still has resonance today – not least if you’re a digital publisher. Innovation is everywhere in the publishing industry, particularly when it comes to how they’re monetising their businesses, but in the face of all this change a core fundamental remains immutable. What this is, I’ll come to shortly, but first, let’s take a quick look at what’s driving innovation in this space.
Change is on the cards
There are a variety of reasons why publishers are looking to try out new monetisation strategies, not least the need to compete in a highly fragmented market where the likes of Google, Amazon and Facebook hog a lot of the attention. However, on top of these long-term innovation drivers, publishers have also had to overcome two immediate challenges.
The first was the need for a response to COVID-19. During the early days of the pandemic, ad spend plummeted and many of the events and shows publishers rely on for profit were cancelled. Publishers had to innovate to stay in business, and many of the short-term fixes in response to the pandemic are now becoming part of their core propositions.
The second driver is the impending loss or restriction of third-party tracking cookies on major browsers and advertising IDs on mobile operating systems, which threatens to fatally undermine ad sales as a major source of revenue for publishers. The UK’s Competition and Markets Authority suggests that ending third-party cookies on Google’s properties alone could lead to a loss of hundreds of millions in revenue for publishers if no viable alternative is put in place (more on this shortly).
The face of innovation
Short and long-term threats to traditional business models are therefore driving major change in publishing monetisation strategies. These new strategies include:
- Direct sales. Some publishers are moonlighting in the ecommerce space, encouraging consumers to order goods and services directly from their site. The Guardian, for example, has set up an online bookstore, and often directs readers from its book reviews to the site.
- Product development. Other publishers are building new digital products linked to their core business. For instance, Quartz, a business research publisher has developed an app that uses bots to connect readers to news stories.
- Native advertising. The use of sponsored content that looks almost indistinguishable from regular content is rising in popularity rapidly. It has been forecast that native advertising spend will increase by 372% from 2020 to 2025.
There are, of course, other innovations including metered paywalls, affiliate links, podcasting and much else besides. In some cases, publishers are leaving the large ad networks to once again conduct their own sales outreach with brands, in others they’re going a step further to provide full creative services.
However, despite all the innovation taking place today one thing remains the same as ever for publishers – for any of these strategies to work they need to understand their audiences. Without a granular understanding of audience preferences and behaviours it will be impossible to, for example, sell them the right products, design appropriate digital experiences or attract sponsors to provide native advertising.
The more things change, the more they stay the same.
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This imperative for publishers to know their audiences brings us back to the fact that the industry can’t simply let cookies go without a viable alternative in place. New monetisation strategies don’t solve the loss of cookies, they for the most part simply create new cases where an alternative to third-party tracking cookies is required. Innovative business models solve the proximate challenge facing publishers, not the fundamental one.
The good news is that it is highly likely that an alternative to third-party cookies will be put in place soon. One particularly promising approach is to verify publishers’ first-party users with the information held on telco’s networks to enable constant recognition of the same user over time and across devices. By sending a pseudonymised token representing a consented first party user to a telco, the latter can then verify pseudonymous identities across the open web and on any channel. No personally identifiable data is transacted, and so the approach respects the privacy of consumers and is fully compliant with relevant privacy regulations.
In this way, publishers can achieve a verified, 360-degree view of their users to better serve them. Importantly, that not only means they can deliver their new monetisation strategies effectively, but it also means that they can offer addressable audiences at scale to advertisers, so that their core programmatic advertising revenues are protected.
COVID-19 and the “cookie winter” threatened to be existentially damaging for publishers. In the event they have sparked innovation, and with the right approach to audience verification they could well lead to a significant boost to publisher revenues in the long-term.