What are the current mainstream monetization strategies used by top publishers online accross the UK? (in terms of investment & strategy trends; see previous question)
The current mainstream monetization strategies of top online publishers in the United Kingdom (UK) involve the use of video, header bidding, mobile advertising, off-platform syndication, direct sales, supply-side platforms, advertising networks, exchange based as well as agency trading desk ad sales. UK digital publishers also use private marketplaces (PMPs), native advertising, mobile application purchases/subscriptions, mobile application sponsorships, product diversification, paywalls and surveys to monetize their online presence.
Online Traffic and Revenue
Deloitte LLP, UK analyzed how web traffic affects the revenues of "traditional newspaper publishers" in France, Spain, Germany and the UK who have an online presence with millions of monthly readers. Their study established that newspapers are increasingly turning to online revenues to mitigate revenue declines from decreasing print circulation. According to the UK Audit Bureau of Circulations, the "daily circulation" of leading UK newspapers dropped 43% to 6.9 million in 2014 from 12.1 million in 2001. This decline accelerated in the period from 2010-14, which accounted for nearly 40% of the drop.
In contrast, "alternative news sources" have been expanding their reach due to their increasing affordability. The Internet in particular has contributed to the "24-hour news cycle" reaching a "global audience" much faster. In 2014, the UK Guardian newspaper's print version only had 180,000 daily subscribers in the UK, compared to the web edition which "attracted 90 million unique visitors per month." In excess of 23 million of these visitors were from the United States and 4 million were from Australia. Similarly, the UK Daily Mail tabloid's online version Mail Online, reached "146 million unique readers" in October 2013, which is more than twice the size of Mail One's domestic readership.
The bulk of online revenues that newspapers get comes from advertising so attracting online readers is crucial. These readers fall under 2 categories — "direct traffic" and "referral traffic." The first group access the newspaper sites directly, while the second access newspaper content via referral sources such as "news aggregators, search engines, social networks and blogs." According to data from comScore only 34% of online readers access news sites directly while the remaining 66% access news sites through referrals.
Using circulation, web traffic and advertising spending statistics, Deloitte LLP, UK estimates that "increasing web traffic by 10%" improves "overall revenues by 0.6%." An increase of 10% in referral traffic alone contributes an additional 0.42% to overall revenues. In 2014, online traffic generated an estimated €1,128 million across France, Germany, Spain and the UK with referral traffic's share sitting at €746 million. UK publishers total revenue for 2014 was around €4.9 billion, with total web traffic contributing €314 million and referral traffic contributing €208 million to total web traffic. Web traffic therefore accounts for 6.4% of publishers' overall revenues and referral traffic 4.2%. Deloitte's findings were reflective of the general newspaper publishing sector in which publishers "generate 10% of their revenues" online. Finally, Deloitte's puts the estimated "value of single a visit" between €0.04 to €0.08.
Monetization strategies of UK publishers online
A study conducted by AOL publishers that investigated online monetization strategies of publishers in the United States and the United Kingdom, established that both US and UK publishers rated video advertising as the "number one revenue driver" for 2017 because of the improving quality of video ads. The bulk of UK newspaper Trinity Mirror's ad budgets are now video focused. According to the paper's programmatic director Amir Malik, publishers are striving to have "every article accompanied by video." Unlike in the US however, UK publishers are struggling to find high quality video ad inventory.
Publishers use header bidding to avail ad inventory to multiple exchanges at the same time to enable these exchanges to bid on the same inventory thereby increasing revenue for the publishers. According to AOL, close to 50% of UK publishers had invested in "header bidding technology" in 2016, and 90% of the remaining publishers were planning to invest in it within year.
Mobile advertising is on the rise among UK publishers with 79% of publishers augmenting their mobile inventory in 2015. The key revenue opportunities for UK publishers in mobile result from "faster ad loads" at 48%, "engaging ad units" at 42%, "mobile web-based content" at 42%, and "personalized creative" at 41%. The main mobile monetization challenge cited however was "ad blockers" at 55%. According to UK publishers, mobile contributed 10.2% to total ad revenues in 2015 and was projected to surpass TV in 2016.
AOL states that 75% of UK publishers prioritize off-platform syndication which entails relying on third parties such as Facebook and Google for referral traffic. An estimated 86% of UK publishers rely on third party referrals for 25% of their traffic. According to Suzy Hay, Global Director of Content Partnership at the Guardian UK, referrals from Facebook have resulted in a 42% year-on-year rise in traffic to news sites. Referrals however present new editorial content and reader loyalty challenges.
AOL's report further ranked "direct sales" at 25%, "supply-side platforms" at 24%, "ad networks" at 22%, "exchange based sales" at 20%, and "agency trading desks" at 10% as the top monetization "approaches for impressions sold" for 2017. Supply-side platforms automate advertising sales and are used by online publishers to "sell display, video and mobile ads."
Online private marketplaces (PMPs) are invitation-only platforms offered to select advertisers by "high caliber publishers." More than half or 55% of UK publishers use just one PMP, while 36% of them work with multiple PMPs. The main challenges to PMPs however include "technology deficiencies," and "management execution costs."
UK premium publishers such as Hearst UK, the Economist, News UK, the Telegraph and IPC Media use native advertising. A benchmark study by Polar, a native advertising platform, found that "sponsorship pricing for native ad units" was popular among 60% of UK publishers. In addition, 40% of UK publishers combine sponsorship with other models. Polar further established that UK publishers "serve" more native mobile ads (27%) than the rest of the world (<20%). According to the UK Association for Online Publishing native ads, supported by traditional advertising, augmented brand perceptions by 38%.
MOBILE APP SALES/SUBSCRIPTIONS
UK publishers have also tried monetizing their mobile apps through selling or subscription models. Daily Mail UK initially availed its Mail Online app for free for 60 days then charged subscriptions after that period. Daily Mail then experimented with "advertising-funded apps" for its "third-party app publishing strategy." Telegraph Media Group launched their Audi-sponsored iPad app for free. The Financial Times UK uses a hybrid subscription and advertising model.
Other UK publishers have diversified their operations. Dennis Publishing, a publisher of magazines and websites, diversified their automotive website portfolio to include an e-commerce car dealership, BuyaCar, which it acquired in 2014. BuyCar is now responsible for 16% of Dennis Publishing's total revenue. Hearst Magazines UK, publishers of Elle, Good Housekeeping and Country Living, launched Hearst Live, a "centralized events business" which enabled its audience to "experience its brands in live environments" such as festivals. In so doing, the company created new ticket sale and event sponsorship revenue streams which doubled Hearst's revenue.
PAYWALLS AND SURVEYS
The Times, a UK daily, has over 400,000 subscribers to its paywalled site. 229,000 of these readers subscribe to both a digital and print package, while 172,000 have chosen the digital-only packages. Paywall models are classified as hard, soft (metered) or fremium. Hard paywalls completely restrict access to content without a subscription. With soft paywalls, visitors can access "a limited number of articles" for a short period. Freemium paywalls avail limited free content with the option to pay for more content. Finally, publishers like Trinity Mirror, offer premium content in exchange for "completed online surveys commissioned by advertisers."
UK publishers encompass video, header bidding, mobile advertising, off-platform syndication, direct sales, supply-side platforms, advertising networks, exchange based as well as agency trading desk ad sales in their digital monetization. Private marketplaces (PMPs), native advertising, mobile application purchases/subscriptions, mobile application sponsorships, product diversification, paywalls and surveys, also form part of their monetization arsenal. UK print publishers are increasingly turning to online advertising to counter declining print circulations and web traffic now accounts for between 6.4% and 10% of overall revenues of publishers. Two-thirds of news readers access news sites from third party referral sites like Facebook and Google.