Yesterday an invited group of digital media founders, editors and executives from such companies as Visual Revenue, Taboola, NewsCred, Seeking Alpha, Patch, Genesis Media, Newslook, The Daily and others met in midtown at ZAG/S&W for PluggedIn Ventures’ Digital Publishing Roundtable to discuss current challenges in creating, distributing and monetizing digital content.
Participants agreed that the past year has seen acceleration in the rise of tablets and the transition of magazines from print; e-books have risen while bookstores continue to fade. Online video viewership is growing but in decreasing lengths. And everything seems pointed toward mobile devices and their grasp on collective (yet fragmented) attention spans. As a result, publishers are increasingly realizing that they need to move beyond repurposing print content and static ads in digital channels and to look to video to make a real difference in monetizing their content. Some key takeaways:
Video is more cost productive: Video doesn’t make more money than print content but it gives offers more bang for the buck. It gives better revenues than a generic banner ad, but it doesn’t make more money. Banner ads are still generating more revenue. But there is more video inventory – so it can make more money on a cost-per-use basis. Advertisers look at CPM. It really comes down to relative CPMs in the simplest cases. They are looking at CPMs on the display side anywhere from 50¢ to $2.50, and video CPM’s can approach $15 or more. For example, pre-rolls are now about $20, while banner ads average about $3. So while content isn’t a big money-maker, video is worth doing.
Website paywalls won’t make things profitable: Paywalls, the arrangement whereby access is restricted to users who have paid to subscribe to a site, is just not viable today. To make people pay for content doesn’t make sense — most readers don’t think they should have to pay for it anyway. The combination of paywalls, lack of performance and the need to create a digital subscription base is actually suppressing traffic. Publishers need to find a way to make dynamic and lightweight versions of the paywall that will replace the economics of subscription. For instance, if users keep hitting refresh on NYTimes.com, they will not get more articles or content – instead they will get a “you must subscribe” button. But if these users are valuable, they should be allowed into publication’s site. In return for providing this time, attention and engagement, they should be given a pass for the rest of the month or the week or even just additional articles. In essence, paywalls won’t make things profitable; they are more of a hurdle to overcome.
Smaller Digital Publications need to focus on driving traffic: Digital publishers need to focus on targeted, value-added content for premier users. Publications like TheBlaze.com and TheDaily.com, for example, are focused on driving traffic – they are getting users by letting them see their content. This is their main way of monetizing — in order to grow they have to get significant traffic to their site. Publications need to focus on nurturing their content, nurturing their audience and aggregating the content that is relative for each reader.
Not everyone should get paid for content: The internet is a democratizing platform for publishing. It’s the biggest innovation ever– one person can reach millions of people. But that still doesn’t mean that everyone should get paid for that content. Many writers will write just because they like to express themselves, but for those who want to monetize their content they will need different technologies like new platforms and toolkit innovations. They need to find a way replace the money they are losing from subscriptions. Premium publishers, like The New York Times and The Wall Street Journal, are missing out on money by not having access to great video advertising. They just don’t have video inventories and so are in no position to put ads into them.
Targeted advertising experiences make more money: In order to make money, the audience needs to be optimized. While banner ads can be targeted, they are blunt instruments and appear in a static way for everyone. With video, ad experiences can be targeted to individuals. There may be a higher premium on inventory, but it allows publications to make more money. Videos need to be more targeted and put in conceptually where there is a logical fit. The fundamental premise behind advertising is that display will continue to exist; however, it’s not doing enough to solve the economic problems of traditional publisher. Video is a more effective vehicle for monetizing premium content.