How the advertising market is changing forever and why publishers should care

There’s a revolution going on in global advertising, and its effects will be felt even in formerly protected media niches.  Here are the headlines and also what I think publishers should do about it.

In just a couple of years, online advertising will contribute 27% of total global spend, surpassing print at 20% and getting closer to TV at 39%.  Mobile is fuelling this shift, with consumers in Asia, LatAm and Africa bypassing fixed internet, and accessing the web largely through smartphones.  By 2016 mobile web access will surpass fixed broadband worldwide.

Mobile changing people’s behaviour

These ubiquitous mobile devices are changing people’s behaviour at a phenomenal rate, encouraging more browsing early and late in the day while travelling or simply multi-tasking while watching TV.  As well as a daily source of news and social connections, mobile is now an important device for watching video content, whether that is short-form internet clips, or long-form catch-up or streamed TV.  As 4G rolls out and more people buy larger sized phones or “phablets,” spending your commute watching video on your phone seems more appealing.  In China, consumers routinely watch entire programmes with several people clustered around one smartphone.

Video and mobile fastest growing ad sectors

Advertisers, still enamoured of the impact of TV advertising, are racing to invest in video ads around digital video.  A recent report from Freewheel, published by emarketer, shows that in the UK, 17% of digital video ad views are on smartphones and 15% on tablets.  60% are on desktop or laptop, with only 7% via OTT (set-top boxes).

No surprise then, that video and mobile are the fastest growing digital advertising sectors, squeezing more traditional display.  By 2018, PWC forecasts that mobile and video together will account for 23% of total digital adspend.

Programmatic buying gaining ground

Whilst there is plenty of media hype about programmatic buying, it is gaining ground rapidly in the US, and appeals to large-scale advertisers and global agencies who previously had to book digital advertising manually, publisher by publisher.  Advertisers have concerns about ad misplacement and viewability, but they like the ability to optimise campaigns in-flight as response comes in.

Content marketing expanding

Advertisers are also becoming increasingly canny about “owned” and “earned” media, which are fuelled by their own content marketing, reducing the role for old-fashioned “paid” advertising.

The publisher’s plight

So traditional publishers are finding themselves in a shrinking sector (print media) of an ad market where all the excitement is around digital video, mobile, sponsorship and content marketing.  And as successive generations grow up accustomed to instant gratification on mobile devices and impatient of the cumbersome and dated qualities of print, this trend will only accelerate.

Developing digital content alongside print is a start for publishers, but over the last few years the revenues generated by digital subscriptions and advertising have barely replaced the lost print-driven revenues.  And upstart digital pure-plays are making real inroads into traditional newspaper market shares.  Huffington Post and Buzzfeed are able to fund their free content through smart use of native advertising.

Programmatic advertising inevitably reduces the rates that publishers can receive for their inventory – as media buyers expect a discount for the large volumes involved, and there are many hungry mouths in the advertising chain requiring commissions.

How publishers can hold onto advertising revenue

So what are the options for the more specialist publisher?  Developing some form of paid content subscriptions is essential to reduce dependence on advertising, but it may not be the whole solution.  Adding on live events, holidays, merchandise sales, training and professional development can grow revenue per reader or subscriber, but few publishers are able to thrive without advertising.

The new skills that publishers need to develop to hold onto their advertising revenue include:

  • developing a credible mobile content proposition – which could be mobile web rather than a dedicated app – with advertising opportunities
  • collecting in depth data on their audience to help advertisers target finely
  • growing expertise in editorial video and selling video ads
  • offering bespoke content creation services to advertisers
  • creating customised multi-platform campaigns for major advertisers that closely track their desired outcomes

It’s never easy to convince an established ad team to completely change their approach, but these advertising trends of mobile, video, programmatic and content marketing are moving too fast for any publisher to ignore.

About the author:  Carolyn Morgan has launched, grown, acquired and sold media businesses across print, digital and events.  She has programmed several highly regarded conferences on digital publishing and advises publishers on their digital strategy.

If you’d like a chat about how you can reinvent your publishing or media business for the digital age, please get in touch.

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