Tuesday, March 29, 2016

Honest bucks

As publishers find new means of diversifying revenue streams, there could be room for a consolidation model that serves both publishers and consumers. 

My ad agency self and consumer self sometimes clash, oddly enough frequently about advertising. At work I subject myself to all the ads that Facebook, The Straits Times, Rappler, etc. want to throw at me, but at home I'm all about ad blocking. A few sites have now told me that I have to enable cookies to use their properties which really bugs me (consumer self), and only if I really want to see the content do I turn my ad blocker off. But my agency self, and begrudgingly even a little bit of my consumer self, understands the business side of things and how the publishers need to keep the lights on to keep producing the content I love to read.

Recently I clicked an Entertainment Weekly link. When I got to the site, which I visit frequently, a pop-up informed me that I had reached my free article limit for the month. I considered paying because I visit regularly, and the pricing seemed reasonable. What ultimately stopped me was the larger implication of potentially having to move into a paid model for more and more of the sites I frequently visit.

Because, first of all, isn’t the internet supposed to be free? (Consumer self.) But if publishers all have their way, am I going to have to enter into subscriptions with several of them, which might seem affordable on their own, but will add up overall? Not only is that going to potentially end up quite expensive, but it will be tough to keep track of.

Existing Monetization Models

There are a couple of monetization methods that exist at present. (The list below skips a few ad streams such as affiliate marketing, native advertising, etc.; wanted to keep the list topline. This is also covering larger content publishers and not bloggers.)

(1) Direct Subscriptions:
Consumers pay the publisher a fee to access content. Payment for access + experience.
/ Ads: None
/ Payment required: Yes
/ Content access: Unlimited
/ e.g. Netflix

(2) Freemium, no ads upon payment 
Consumers can access an initial batch of content, but must pay a fee to upgrade usage.
/ Ads: Eliminated when users move to the paid model
/ Payment required: None initially, but option to pay for extra features or no ads
/ Content access: Unlimited access upon payment
/ e.g. Spotify

(3) Freemium, ads remain even with payment
Consumers can access an initial batch of content, but must pay a fee to upgrade usage
/ Ads: Present all throughout
/ Payment required: None initially, but option to pay for extra features and/or no ads
/ Content access: Unlimited access upon payment
/ e.g. Hulu, New York Times 

On Freemium models with ads: Once a user is paying for access, will they still want to see ads? This seems like a double-charge, once for access and again for agreeing to ad exposure. When you compare it to traditional newspapers or magazines, you are also in effect charged twice, but on digital it somehow doesn’t seem to make as much sense. I signed up for Hulu then agreed to pay for the premium tier only to be served with ads throughout the shows. That was a real deal breaker and eventually led me to cancel my subscription.

 (4) Ad Supported
Content is free, Ads abound
/ Ads: Present all throughout
/ Payment required: None initially, but option to pay for extra features or no ads
/ Content access: Unlimited access upon payment
/ e.g. Buzzfeed, Pop Sugar, almost everyone else. 

The new cable?

Consortium models, like cable networks, may be the next step for publishers. There could be the equivalent of TV cable companies that charge just one fee for a whole range of channels. Digital publishers could enter into these consolidated arrangements, in order to make it easier for consumers to pay. This might even create new opportunities to offer new trial channels or sites that could be charged for later on. Publishers would still be able to choose to eliminate or keep advertisements on their sites, as they do currently.

I don't know how many publishers would sacrifice their independent revenue generation, but it might be easier for users to comprehend and manage because at the end of the day the consumer should win out.

Can we all just get along?

I can understand both sides of the argument. Consumers don't want to pay, don't want to be intruded on or tracked. Publishers need to keep the lights on. Advertisers are happy to pay for eyeballs. In our former media ecosystsem everyone knew the rules of engagement - ads were a part of any content experience.

Two parting thoughts.

First - Go native? Monocle is a publisher I support. They oversee the entire reader experience, even the ads. To be included in their publication advertisers must allow Monocle to shape their promotional material. It's the very best native advertising. Consumers may complain that native ads aren't obvious enough about, but when materials are obviously intrusive and flashy, they also lead viewers to bring out the ad blockers. Native content is of course costly on the advertiser front - can they really afford to craft a unique set of advertising material for each publisher? But maybe that's the digital evolution that is supposed to happen. Save the buys for consumers who are in-market and for any awareness efforts, craft along with publishers. (Cue: Post on new media planning.)

Second - Is it realistic to think that the media evolution is that we transpose our exact existing model into the new digital? This is what we're trying to do, after all. Ads existed above-the-line so they must exist in slightly enhanced versions online. Ads are capsules of promotional material; yes, we're now doing content as well, but ads themselves must still exist to fuel the entire content and marketing ecosystem.

Perhaps the new disruption is a world where ads no longer exist and an entirely newer, more subtle and useful form or marketing will prevail. Wishful thinking.


1 comment

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