August 18, 2017 Last Updated 11:11 am

How publishers are optimizing profits in the era of social sharing

Guest column: Keith Sibson, Vice President, Product & Marketing at PostUp, discusses strategies publishers can use to combat declining revenue and platform dominance

Today’s consumers scroll through their Facebook feeds and flip through Google News for their news fix. Thanks to smartphones and tablets, people consume more content than ever, but this isn’t necessarily good news for publishers.

By uprooting the way people interact with news, social networks and news aggregation sites have flipped the publishing business on its head. Platforms like Facebook and Google provide instant access to a potential audience of billions, while programmatic advertising provided turnkey monetization. Because publishing’s barriers to entry dropped to near zero, the number of publishers exploded. So while global content consumption is going up, the total amount of ad inventory (slots) sold alongside that content is growing even faster.

As a result, the value of each ad to publishers has dropped significantly. A site that once succeeded with digital ad sales may not turn a profit with display revenue alone. This is especially true for sites with high-quality content, which may struggle with a pure advertising model because of their costs of content production. These sites may need to rethink their business model.

But it’s not all doom and gloom. In fact, despite declining revenue and platform dominance, some publishers are thriving by rebuilding their business models to weather the new wave of digital consumption. These publishers have diversified their digital revenue streams with user-optimized paywalls and email newsletters. Along with traditional display ads, these can help publishers turn a profit.

Building Audience Relationships with Email

In this new environment, publishers must focus on the value of establishing relationships with the audience. With platforms a significant source of publisher traffic, more than half of a site’s visitors drop in once and leave quickly, never to return. These visitors are of little value to the publisher.

While platforms may provide easy clicks, they form a barrier between the publisher and their audience, preventing them from building reader relationships. Readers have a much harder time recalling which site they visited when they come from social media, and some of these readers don’t realize they’ve left the platform at all. The key to success is identifying and establishing a link to these readers. This can be done by capturing their email addresses. Then, publishers have the long-term opportunity to market to and upsell readers on their list.

Getting the email address connects publishers directly with individual readers. Each newsletter they receive is an invitation to engage with your content, an invitation that won’t get lost under social media or search algorithms. These newsletters have higher value display inventory since advertisers can target specific audiences. In addition, the newsletters drive people to click on the publisher’s site and in turn view more ads. Emails are also an excellent way to promote paid subscriptions, since people who have shared their email address have raised their hand to identify themselves as interested in your content. Because of this, email is a critical part of any paywall strategy.

Monetizing Users Directly with the Paywall

Paywalls allow publishers to diversify their business model by monetizing their users directly. While many early experiments with paywalls couldn’t generate enough revenue to offset the loss of ad revenue, declining programmatic revenue has made paywalls more important than ever. Modern paywalls are dynamic: they can be personalized to the user and optimized to generate maximum revenue.

Publishers can test at which point to enforce a paywall depending on user data. For instance, an unknown site visitor from Facebook is less likely to subscribe. Publishers still want to earn display advertising revenues from these visitors, so the optimal strategy might be to set a “high” meter, where the visitor can consumer multiple articles (and their ads) before being stopped by a wall. Based on the known data for this customer, the offer could be a varying introductory price.

Meanwhile, a reader from search might get a paywall much sooner. If they know your brand or were searching for a specific topic, the customer has expressed a much stronger intent than the Facebook visitor. This person might get the paywall after fewer free articles, and the price might be higher.

Publishers can test the price and meter across audience segments, and with machine learning, the vision of a truly 1:1 personalized business model can become reality. NewBay Media-owned sites Multichannel News and Broadcasting & Cable are optimizing their subscription revenue model with personalized paywalls that maximize the revenue outcome for each individual audience member. Using data, these sites strike the right balance between subscription and advertising revenue models.

In the era of social sharing, publishers must adapt their business model. This means looking to a diverse array of revenue streams to monetize content in the most effective and profitable way possible.

Keith Sibson is Vice President, Product & Marketing at PostUp. Before joining PostUp, Sibson served as VP of Revenue at SpareFoot.com, the consumer marketplace for the $22 billion self-storage industry. Sibson holds a Ph.D. and BSc in Computer Science from Glasgow and St. Andrews Universities, respectively.

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