A glance at the news publishing industry & the challenges and opportunities that lie ahead.
The news publishing industry has been going through an existential crisis for the past decade. The shift to digital modes of consumption has posed profound challenges to publishers. The phenomenal rise in popularity & adoption rate of digital platforms such as Google & Facebook made them the de facto medium, not just for search & social, but also for news consumption. Advertising dollars started following this trend and ad budgets were diverted to these platforms. Only a handful of leading publishers (e.g., NYT, Washington Post) could manoeuvre in this environment to carve out success stories. Publishers who didn’t command such large user bases or a niche value proposition started struggling to survive. Local news publishers with limited financial resources were the worst hit. Article discovery on the platforms became crucial for many of these entities. Click through rates (CTRs) became the metric for success, while an entire industry around search engine optimization (SEO) & advertising technology (Adtech) spawned to help publishers stay afloat.
Two key events in 2018 set the course around how social media platforms & the adtech industry treat user data. The Cambridge Analytica episode exposed how user data could be mishandled to interfere with democratic processes at the highest levels. GDPR also came into force during this period. This put a lot of scrutiny on how user data is collected, processed and distributed by various actors in the Martech & Adtech industries. Soon enough, public opinion also galvanized around tighter data privacy norms. One of the fallouts of these developments was the gradual fading away of third-party cookies from the adtech ecosystem. This thrust back first-party data (from publisher websites/apps) as the key source of assessing user behaviour. Advertising focus started to shift away from hyper-targeting to contextual, providing some relief to publishers.
Another aspect of news coverage in social platforms was the issue of fake news. Platforms like Facebook are largely driven by user-generated content (UGC), and there are many opportunities therein to spread fake news and propaganda. While platforms have put in place fact-checking mechanisms to counter such abuses, the current solutions are still far from ideal. This means that readers tend to trust publisher websites over platforms for the important new information. We will see evidence of this behaviour later in this article.
The COVID-19 crisis has dealt a staggering blow to the global economy. Its timing couldn’t have been worse for the news publishing industry. Print production and circulation of news witnessed a dip, as lockdowns became a norm across the world. Revenue from sporting and other live entertainment sectors has more or less disappeared. It will not be a surprise if several publishers--especially the local ones--don’t survive this pandemic. However, there have been a few positive aspects for publishers amidst this crisis. Lockdowns have resulted in a positive impact by bringing back readers to the digital channels of news publishers. The surge in digital consumption of media has provided a much-needed shot in the arm to the news industry. This is also an opportunity to set themselves up for the long term. We will now glance through some of the key factors that are in play during the crisis, including those that merit scrutiny by publishers to inform their mid-term and long-term strategies.
COVID-19 has put the focus back on authentic information more than ever. Readers now rely on trusted news publishers as their primary source of information. As the pandemic unfolds, the demand for official statistics, announcements and policy updates have become primetime news items. Popularity of opinion editorials and analyses also have a direct correlation with the credentials and reputation of the author. News publishers are now preferred over other social platforms purely on their strength as reliable outlets for information dissemination. It is now up to the publishers to chalk out strategies on how to maintain some of this stickiness with the readers post the crisis.
The pandemic has driven demand for local news and updates on COVID-19. Given that local administrations are involved in key decisions and implementation aspects, the need to be aware of the local news and updates is top priority for most readers. The adversity unleased by the pandemic has also reignited a sense of community across many smaller towns. Numerous positive stories from the community have been well received and become one of the most read categories. Publishers will now have to look at newer sources of funding that were hitherto unexplored. Several of those initiatives could help in the revival of some of the local news publishers across towns and communities.
The COVID-19 pandemic has presented an ad revenue conundrum for publishers. While the number of readers has increased, there has been a steep decline in ad revenues. Advertisers are concerned that product ads will show up next to negative news articles related to COVID-19, thereby affecting their brand reputation. The problem is exacerbated by an overreliance on keywords as a filtration criterion for blocking articles. There needs to be more contextual content assessment to accurately block articles. Publishers have to work with advertisers to find a solution as the incentives are aligned for both sets of stakeholders in ensuring better brand safety and ad placements.
Publishers are taking a hard look at their subscription strategy. While one end of the spectrum is a paid subscription model, the other end is purely driven by programmatic ad revenues. Most leading publishers have opted for a predominantly paid subscription model, while others have taken a more cautious wait-and-watch approach. The COVID-19 pandemic has provided the right impetus to many publishers to switch on their paywalls. Of course, how this strategy will evolve in the mid to long term will depend on how publishers are able to create value and drive user loyalty.
Podcasts have steadily gained popularity over the last few years in helping publishers build user loyalty. Experiments by publishers had started almost a decade ago and several success stories along the way have only encouraged publishers to embark on even more ambitious projects. However, not every publisher will have the resources to create a multi-episode documentary podcast. This, however, should not deter publishers from trying out smaller experiments. Some examples could be a 10-minute daily COVID-19 roundup or a 30-minute weekly episode on some of the burning issues by journalists. Podcasts have the potential to create a connection between journalists and readers. They provide journalists an opportunity to showcase their expertise and engage contacts in a unique, captivating format. It will not be surprising if such podcasts (even offered free) could attract more subscribers to pay for the main publication.
While the jury is still out on the success of such alliances, publishers should consider this a long-term strategy to harvest first-party user data across alliance partner sites. With third-party cookies losing favour, such alliances could not only reduce the dependency on the duopoly but also create a legitimate source of audience targeting data. Should the alliances evolve into a walled garden paradigm, the potential then to turn these into data moats is highly possible. This would make for a compelling proposition for advertisers.
The Way Forward
The staying power of publishers today will depend on their access to credit lines and cash reserves. Their ability to succeed in the coming year will essentially take a combination of great editorial content, actionable insights on readers, and a frugal mind set around reining in operational expenses. Furthermore, any collaboration and monetization opportunity, such as associating with academia and making archives available on a demand basis, should also be explored. A technology partner could help publishers in this endeavour in several ways. Publishers should relook at their IT estate and exploit all opportunities to move to an as-a-service paradigm. While a cloud strategy (IaaS/PaaS/SaaS) could form the base business case, technology partners can also bring into play data platform solutions that can deliver actionable insights under lucrative pricing models. Such insights will fuel the martech and adtech machinery for publishers. Technology partners can also be roped in for their cost-effective yet value-added services in the area of operations (e.g. Ad Ops). And finally, publishers should have a clear vision and path for their digital properties. This is also a space where established technology players could bring in expertise to drive the re-imagination of digital news channels.
The journey ahead for news publishers will be challenging to say the least. They should make prudent and set on a path that could help them prevail in the future!