Monetizing digital content is hardly a new challenge. Several studies have proven today's readers enjoy fresh news, but don't want to have to pay for it. So what's the most effective way for a publisher to stay profitable?
Revenue stream diversification is key. While 2016 is forecast to be the first year that digital surpasses TV in advertising spend, there's a lot of competition for those dollars. Relying on advertising alone can be risky.
Many professional sports franchises do an impressive job at tapping into multiple revenue streams. Teams don't just sell tickets; they also license logos for clothing and souvenirs, and earn broadcasting fees. And while you might not have the same opportunities as a football or basketball organization, there are several clever ways for online publishers to make money beyond traditional banner ads.
Online publishers have been debating the effectiveness of charging readers to consume content for at least a couple of decades. In the '90s, AOL had a "walled garden," or a paywall that required users to sign in before accessing new articles and posts. Some analysts are concerned that the revenue from subscriptions comes at the expense of lost traffic and banner ad dollars.
However, in the past several years, The New York Times and The New Yorker have experimented with metered paywalls that allow readers to consume a handful of articles before asking them to pay. For both of these publishers, it appears the paywall has helped increase revenue -- yet they have learned some important lessons along the way.
Digital revenue now accounts for more than 11% of The New York Times' bottom line. But, the Gray Lady didn't get there without a lot of furor from its readers. As another source of revenue, the newspaper also attempted to charge users for a new app and made it free when downloads were much lower than expected.
The New Yorker offered readers free access to its article archive for five months as a way to increase interest in the relaunched New Yorker site, which also asked visitors to pay for fresh articles. Although editors feared readership would drop off once the archive closed, it actually went up. Subscriptions also notably increased in response to the meter. And interestingly, smaller newspapers such as the Minneapolis Star Tribune have put up a paywall and seen their traffic decline and their revenue increase.
Native advertising, or sponsored posts, have skyrocketed in the last few years. BuzzFeed has been very successful with sponsored posts -- charging publishers to post relevant content that dovetails with a brand message. Headlines such as "9 Things That Have Changed In The Last 20 Years" may seem like a pure nostalgia play, but they also connect an emotion to the sponsoring brand -- in this case, Motorola.
The political site Talking Points Memo (TPM) turned native advertising into a $1 million business in the first year. TPM was able to quickly command high ad rates by having an engaged audience and targeting campaigns at a relevant readership. In one text-driven promotional piece, it was able to serve a message for the Pharmaceutical Research and Manufacturers of America specifically to a Washington, D.C., readership that would be more knowledgeable of the topic being discussed. Sites that speak to niche audiences can be very profitable as long as they know how to communicate a brand's message to the right ears.
Using affiliate links is hardly a new practice. Sites like Apartment Therapy are able to create articles users want to read about home decor and design, and include affiliate links without the approach coming off as too heavy-handed. For example, a possible article about new kitchen products would still have editorial perspective, yet it would link only to products the authors wants to promote. It's a great example of service journalism partnering effectively with e-commerce. That model can be replicated by numerous other publications, particularly in the lifestyle category.
Slate has started experimenting with a paid membership that allows users early access to some posts and exclusive access to specific articles. The success of this program remains to be seen, but it's worth keeping an eye on as a potential model to follow. SKIFT also offers extra content by selling research papers for a fee.
This monetization model can take many forms, including selling video classes and insider emails. One of the nice things about this approach is that small experiments can be done to see if your audience is willing to pay for extra content such as e-books or live-streamed seminars.
At a time when advertisers have an ever-growing array of places online to put their dollars, publishers need to be creative and experiment with various revenue sources in order to survive and thrive. The ideas mentioned above are just the beginning. With new platforms and technology emerging daily, the key to success in monetization will be a sound data strategy powered by accessible analytics to help publishers achieve their goals -- whatever they may be.
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