Just when I get used to the industry’s business model being all about reader revenue, it isn’t.

Well, it mostly is, but advertising was peaking it’s head out in a “don’t forget about me” move at last week’s INMA Media Innovation Week in Hamburg, Germany. 

INMA Researcher-in-Residence Grzegorz Piechota is our resident expert in digital subscriptions and its first cousin, reader revenue. Last week in Hamburg, he suggested the next big thing in reader revenue may be innovations in advertising revenue. 

INMA Researcher-In-Residence Grzegorz Piechota describes how the audience and advertiser revenue puzzle pieces fit together.
INMA Researcher-In-Residence Grzegorz Piechota describes how the audience and advertiser revenue puzzle pieces fit together.

The dots connect easily really. News media companies have spent the past several years trying to perfect the technology, skills, and strategies needed to save the industry with reader revenue. And all those learnings can be used for advertising because advertising makes money from readers, of course. 

This is not brain surgery. But I was interested to see an area that has been all but kicked off the stage making its way back to at least stage left. 

As Piechota sees it, maybe there’s not so much of a difference between audience objectives and advertising objectives: “We know that driving loyal usage is something that correlates with retention, but at the same time, this is what produces our inventory. This is what produces the data that we use to segment and target people. So, basically, focusing on the loyal segment is the best method always.”

Reach: check. User experience: check. Engagement: check. Revenue: check.

Piechota discussed The Washington Post as a case in point. Its recent announcement of its Zeus ad platform with self-service programmatic and targeting capabilities show its trying to compete with Big Tech on digital ad revenue.

Le Figaro is another example. The news media company has two home pages: One advertiser-first and one reader-first, minimising the presence of ads for logged-in subscribers.

Here are some other case studies from Hamburg I thought interesting: 

Mediahuis: The media brand has expanded into job search, e-shops, and real estate, generating a lot of data. What does that data do? Help Mediahus get to know its readers. MH Data Studio has defined four building blocks for digital campaigns — pixel on site, native content, audience targeting, a match database — that advertisers can combine in a way that best benefit them. Importantly, Mediahuis does not share data from its advertisers with others and is data-respectful of its readers: “We are customer-centric, Jessica Bulthé, the company’s data analyst digital advertising, said in Hamburg. “We value our reader above everything else.” 

Schibsted: In light of the fact that 74% of all ad revenue in the United States is predicted to be driven by native advertising by 2021, Schibsted did an in-depth study of native. Schibsted’s commercial editor then wrote four articles per brand for 16 brands. The articles were divided into groups — informative, emotional, product-focused, and category-focused — and were tracked. The highest performing? Product-focused articles. Native is a good fit for the audience-advertising balance: “What we also like about this format is that it’s something that both our readers and our publishers really appreciate,” Isabelle Redving, creative concept specialist at Schibsted, said. 

Isabelle Redving of Schibsted said native advertising is working well with the company's audiences.
Isabelle Redving of Schibsted said native advertising is working well with the company's audiences.

Ekstra Bladet: “Millennials … consume media advertising different than all other generations,” Mette Pabst, editor-in-chief at Ekstra Bladet, said. “They are digital natives and they have developed their own ways of communicating through social media. So to engage Millennials, you need to have a brand. You need to make a connection. And you need to communicate effectively with them.” Ekstra Bladet’s female-focused brand For Shero engages its young audience by partnering with advertisers like Always. Pabst recommends these four key points for connecting audiences to advertisers:

  • Have a perfect match between media, advertisers, and audience.
  • Have the same values; a campaign should be in sync with values of media brand and values of advertiser.
  • Trust in the media.
  • Be transparent, especially for Millennials.

Axel Springer: Stefan Betzold, the company’s digital news media managing director, told our Hamburg audience that the company is not a digital publisher anymore. Instead, it’s a “media and tech company.” Part of that new identity is not shifting away from ad revenue. E-commerce specifically is one of Axel Springer’s “four key investment initiatives” for the near future. 

t-online.de: This digital-only media company in Berlin was on our two-day study tour on the final day of last week’s conference. Daniel Fersch, head of news there, told our study tour participants that, of course, content is important. The company has focused a lot of time in its Buddy Slackbot, which helps editors understand an article’s bounce rate. Content is free, which eases any friction for advertisers. “We definitely are a journalist brand, but our platform is an advertising platform for advertisers,” Fersch said. 

Two other speakers really caught my attention on this topic: 

Frédéric Filloux is CEO of Deepnews.ai, a company that uses AI to measure the quality of a news article. Why? To match the price of an advertisement with the quality of the news next to it. As someone who has been in the journalism business since I started studying it in college in the mid-‘80s, this blew my mind. Why have we never thought of this?

Philipp Westermeyer, podcast entrepreneur and founder of Germany’s Online Marketing Rockstars (OMR.com), laid some revenue truth down about podcasts: The podcast industry generated an estimated US$479.1 million in revenue in 2018 (up 53% from 2017) and is expected to produce more than US$1 billion by 2021, according to a recent report from the Interactive Advertising Bureau and PwC. This should affect the way news media companies look at advertising, Westermeyer said.

“Publishers still work toward a CPM model. I would totally drop that. I would go to a fixed price as much as possible. If you have a certain reach and you have a certain trust and you have a certain awareness and brand perception in a community, that’s what you charge for.

“The thing you have to understand about podcasting now is it’s almost like music bands. Remember how music bands used to be 20 years ago? Everyone had a band. There are so many podcasts out there now that it is really hard to find an audience.”

And so we come full circle. For so many years, news media companies focused the majority of their energy and resources in the revenue advertising promised. Digital advertising upturned that dramatically. So, eventually, the industry turned to readers. That’s where we are right now. But it, too, is a transition.

“Perhaps it’s irrational to think that by focusing on reader revenue we should abandon the ads,” Piechota said last week.

And perhaps it’s incredibly rational that news media companies are taking all the lessons from their advertising revenue past and all the lessons from their reader revenue present and slowly forming a combined model for the future.