Going against the common narrative amoung publishers across the world, Grzegorz Piechota, INMA’s researcher-in-residence, said the next big thing in reader revenue may be innovation in advertising revenue.

Kicking off day two of INMA’s Media Innovation Week in Hamburg on Tuesday, Piechota told the audience that businesses are realising they want to market to real people and not proxies.

“They realise that perhaps cookies will not buy cars,” he said.

INMA Researcher-In-Residence Grzegorz Piechota describes the stages of transitioning to a reader revenue business model..
INMA Researcher-In-Residence Grzegorz Piechota describes the stages of transitioning to a reader revenue business model..

News media companies have imported the technology and skills needed to drive reader revenue, and those same aspects could be applied to innovation in advertising. Piechota outlined a common series of stages companies are experiencing in their journey to reader revenue.

The first stage is a marketing project to monetise the minimally viable product. In the next stage, companies try to make the product better fit customers’ needs and adjust the marketing accordingly. Then comes business model changes and a focus on scale.

What’s next? Piechota said he is not an oracle. But companies seem to be experimenting with services and turning internal tools into products.

“Why do we do this?” Piechota asked. “Because if we just invested in new technology, we actually need to find return on this investment and just charging for content is not enough.”

Looking at the outline of this journey, Piechota said many are wondering if they can speed up the process with more resources. Using a graph of The Washington Post’s revenue as an example, he pointed at the lack of growth on the first and second anniversaries of instituting its paywall. Significant growth is not visible until after the third anniversary.

“It just seems there is a learning curve,” Piechota said. “So even if you don’t have the problems that we all have, there is still a learning curve. It just takes time. It takes time to adjust our product, to adjust our marketing, it just takes time.”

After its sixth anniversary, The Washington Post seems poised to go after ad revenue. Last week’s announcement of its Zeus ad platform with self-service programmatic and targeting capabilities makes the company a contender for ad revenue usually grabbed by tech giants.

Piechota then gave examples of where other publishers are in their reader and ad revenue journeys: 

  • The Chicago Tribune is managing strategically different channels of ads.
  • Aftenposten has developed a touchpoints API to spread messages across its apps.
  • Die Zeit is using frequency data to predict registrations.
  • Using advanced targeting, The Columbus-Dispatch is helping connect ad partners to its audience with valuable first-party data. When the local hockey team wanted to sell more tickets, the media company created look-alikes based on the profiles of football fans it identified in its user base. The result? A 20% lift in ticket sales for the season.

Many publishers feel divided between serving their advertisers and their audiences, Piechota said, but that is not necessarily true. He questions if there is really a difference between the objectives of advertisers and the objectives of users.

“And we know that driving loyal usage is something that correlates with retention, but at the same time, this is what produces our inventory,” Piechota said. “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.”

Advertisements play a significant role in the user experiences publishers are creating for both loyal and casual audiences. Le Figaro has two home pages, Piechota said. One is advertiser-first and one is reader-first, minimising the presence of ads for logged-in subscribers.

But, Piechota points out, 90% of readers hit the ad-heavy homepage. While publishers should not necessarily cater to the majority, they should not be turning them away with poor experiences. There must be a balance: “Maybe we can also balance the user experience according to predicted user value.”

For most media companies, perhaps the objective for 2020 is to find a balance between serving advertisers and audience, as both play a crucial role in the business model. A reader-centric focus does not discount the potential for ad revenue, Piechota added.

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