What are the current mainstream monetization strategies used by top publishers online across the USA?
Due to the rise in ad blockers, more publishers are turning to native advertising, including sponsored articles and partnerships, to monetize their content. News publishers report that advertising revenue from native ads is expected to grow to 25% by 2018, which is up from 11% in 2015. Below, please find a deep dive of publisher monetization methods, with a specific emphasis on sponsored content/partnerships, as requested.
Please note, unless otherwise noted below, I have defined "publisher" as a website or content creator making print, audio, or video content for consumption, such as a news website or video channel on YouTube. At the very end, I have also included some data on monetization for mobile app publishers, in case this is also relevant for your research.
In addition, please note that I used U.S. data where available, but in some cases, only global data was available (noted below).
Top Areas of Growth
The State of the Media 2017 revealed that publishers' goals for 2017 were to grow in three monetization areas: sponsored content, data and video. This survey revealed that 43% of publishers listed sponsored content at one of their top 3 monetization methods for 2017.
Digital display advertising was the second most popular monetization strategy for publishers. When is comes to display ads, programmatic ads (or ads that can be targeted to a specific audience) are winning among advertisers, with 67% of ad money being spent on this kind of ad, and the trend only gaining traction. However, in 2017, and estimated 86.6 million people in the U.S. used an ad blocker to avoid display ads, which is why many publishers are turning to native ads, such as sponsored content.
At Digiday Publishing Summit, a survey of publishers attending indicated that around 50% had their editors working on sponsored content.
Many studies, surveys, and reports consider sponsored content as a form of "native advertising," which also includes native social content and display ads that look like native content. Revenue from native advertising is on the rise across the board.
In 2015, advertisers spent the following on native ads:
- Social: $7.5 Billion
- Native-Style Display: $1.9 Billion
- Sponsored Content: $1.3 Billion
Total: $10.7 Billion
In 2018, advertisers are estimated to spend the following on native ads:
- Social: $11.9 Billion (increase of 59%)
- Native-Style Display: $5.7 Billion (increase of 200%)
- Sponsored Content: $3.4 Billion (increase of 162%)
Total: $21 Billion (total increase of 96%)
Note: I used this percentage calculator to determine the percentage increase for each type of advertiser, or you can do it by hand with the formula % Decrease = Decrease ÷ Original Number × 100.
Other studies estimate spending as high as $59.35 (globally) in 2018 on native advertising.
This trend is mirrored on mobile, where it is estimated that 63% of the ads displayed will be in the "native advertising" category by 2020.
Publishers estimate that a total of 30% of their overall ad revenue will come from native advertising in 2018, which is up from 19% in 2015.
In addition, publishers estimate that about 20% of their revenue comes from affiliate ads. Depending on the monetization strategies, affiliate ads can be native or typical banner/display ads.
Another monetization strategy that cannot be ignored is Patreon, which is a crowd-funding way to make money with content, especially among individual publishers (rather than publishing brands such as The Wall Street Journal). About 2% of Patreon users make a full-time living using Patreon.
Sponsored content will continue to grow in importance as the popularity of video grows. 76% of publishers plan to increase the number of videos they produce, and most are considering some kind of native advertising as a way to monetize.
However, new ad-blocking software is threatening video advertising as it hasn't in the past, with the ability to block pre-roll video ads. Sponsored video content is a way to bypass these ad blockers.
Video ad earnings are also being threatened by wildly changing policies on YouTube and the retreat of advertisers from this platform. Finding sponsors individually allows publishers to avoid relying on the volatile YouTube ad monetization system.
Currently, video publishers are monetizing primarily through YouTube, Facebook, and their own websites. 68% of publishers use pre-roll ads when publishing on their own website, while only 34% use pre-roll ads when publishing on YouTube.
Around 66% plan to experiment the mid-roll feature on Facebook over the coming year.
49% are using sponsored video to monetize their content, and over half of publishers are considering producing sponsored videos or otherwise partnering with sponsors to create content. In total, we saw an increase of 57% when comparing YouTube video publishers who created sponsored content in Q1 2016 versus Q1 2017, with views increasing by 242%. On Facebook, the increased was even more drastic, with 4864% more uploads and 7390% more views of sponsored content.
On YouTube, the most growth for sponsored content was seen in the niches of gaming, music/dance, and entertainment, while on Facebook, the most growth for sponsored content was seen in the niches of entertainment, sports, and food/drink.
Only about 16% of video publishers are considering increasing the number of ads used to monetize their videos.
Digital Print Monetization
29% of publishers have started to incorporate "shoppable content" into their website, while an additional 40% say that they are testing the implementation of this kind of content for the future.
Digital news publications are especially keen to implement native ads, if they aren't already, and for good reason. Revenue from native ads is expected to grow by 25% in 2018, which is up from 11% in 2015 and would make the native ad industry worth $21 billion. Many news publishers (48%) are already using native ads to monetize, while another 39% are interested in adding it to their monetization strategy in the future. 66% to 68% of news media publishers see print content as the biggest opportunity for native ads.
Renewal Rates for Native Ads
Strong renewal rates are key for publishers using native ads to monetize their content. Publishers typically see a 33% renewal rate for native ads that run for less than 6 months, but top publishers are seeing much better renewal rates (72%) due to longer contracts.
The longer contracts, analysts note, allow sponsors to make changes based on collected data, which in turn allows for better results. Better results encourage sponsors to renew, despite prices as high as $75,000 per month.
Top Revenue Sources for App Publishers
To round out our researcher, I wanted to give you some data specific to mobile app publishers, in case this type of publisher is more important to you than content publishers.
A 2017 survey by AdColony found that ads are a top monetization method for major mobile app publishers, accounting for 56% of all revenue. "Ads" include both video and display (i.e.) banner ads, as well as native advertising, which includes sponsored content.
Here's a complete breakdown of monetization methods, based on the percentage of revenue they brought in for major app publishers:
1. In-app purchases - 39%
2. Video Ads - 31%
3. Display Ads - 20%
4. Native Ads - 5%
5. Paid Installs - 2%
Subscriptions, mCommerce, and affiliate purchases are accounted for some revenue for mobile app publishers, at 1% or less each.
Please note that this study was global, but I wanted to include it since no U.S.-only data was available.
Our research has shown that, unsurprisingly, native ads are on the rise, while growth for display ads has slowed. Other forms of monetization, such as affiliate ads and Patreon are also being used by savvy content creators who have learned the downside of putting all your eggs in a single basket. While I was not able to find a specific breakdown of how publishers make money in combination, I do hope the above information gives you a great overview of the monetization trends for publishers in the U.S.