Publishers must develop new strategies for first-party data world

By Paula Felps

INMA

Nashville, Tennessee, USA

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As third-party cookies disappear, a robust first-party data strategy is essential for publishers. However, even though publishers recognize the need for such a strategy, most are not yet prepared for the first-party data future, said Peter Doucette, chief revenue officer at The Philadelphia Inquirer, in a recent Webinar.

Mark Challinor and Peter Doucette discussed the state of the industry and upcoming challenges during a recent Webinar.
Mark Challinor and Peter Doucette discussed the state of the industry and upcoming challenges during a recent Webinar.

In looking at the coming challenges and changes, Doucette walked through the current state of the industry and looked at the changing revenue mix. Comparing 2018 to 2021, he showed how dramatically two areas have changed: digital subscriptions and print advertising.

“Print advertising declines is the biggest change,” he said. “But circulations are roughly the same and digital advertising is about the same.”

However, digital subscriptions jumped from just 3% of the revenue mix to 12%, and that’s something publishers need to pay attention to. Digital subscriptions are the major revenue growth driver for publishers, and now it’s important to plan for a digital-only future.

The revenue mix has changed dramatically for digital subscriptions and print advertising.
The revenue mix has changed dramatically for digital subscriptions and print advertising.

Building a Digital Revenue Strategy

In the future, Doucette said, about 70% of revenue is likely to come from digital subscriptions, with about 20% coming from advertising and 10% coming from other sources. Publishers now are tasked with crafting a strategy that aligns with this future vision. As part of that strategy, they must:

  • Solve for a consumer-led digital-only future.
  • Create a business model in which advertising is not the primary revenue driver.
  • Pivot from a scaled, audience-led digital advertising strategy to one based on known relationships and data.
  • Include other revenue streams such as events, branded content, etc.

The shift to a consumer-led model is a seismic one, and to make it successful, the decisions made must be with that new approach in mind. Doucette pointed to the Inquirer’s own experiences as an example.

“Our digital business is powered by third-party data,” he said. “Where we’re starting to experiment is powered by first-party data.”

That means a change in the relationship between CPM and audience: “In the third-party advertising model, we want the audience to be as large and vast as possible.” But a first-party advertising approach changes the dynamics: “It’s about going for a slightly smaller audience that has a higher value. It’s really about knowing who the people are that are reading your journalism.”

He added that enables publishers to “…build a higher CPM business where you can … get more value and drive more revenue.”

Market Challenges

Of course, that won’t happen quickly or without challenges — and there are plenty of those to go around. Among the third-party challenges are:

  • Safari restricting cookies to seven-day expiration and blocking third-party/cross-site tracking.
  • Google Chrome’s decision to eliminate third-party cookies in 2023.
  • Apple IDFA’s requirement for users to opt-in on tracking, which limits access to Advertiser ID.
  • Pending legislation with GDPR, CCPA, and more.

“There’s a lot to figure out based on what’s happening in the marketplace,” Doucette said. “It limits our ability to do what we want to do in terms of tracking users.”

That includes limiting the ability to create longer-term segments for targeting, declining CPMs, and limited value to the third-party data.

Who’s Ready for the Change?

Doucette cited a recent INMA survey that showed more than half of all publishers are still “very reliant” on third-party data.

“Only 3% say they are not at all dependent on it, and the market data shows publishers are still in the third-party data space,” he said. In fact, only 13% said they were “very well prepared” for the shift from third-party to first-party data.


“All of this echoes the point that we need, as publishers, to get data-ready.”

An INMA survey found most publishers are still reliant on third-party cookies.
An INMA survey found most publishers are still reliant on third-party cookies.

He noted that European publications are, overall, farther ahead in this preparation because of GDPR, while U.S. publishers are shown to be lagging in terms of data privacy. In looking at where publishers stand in preparation, Doucette looked at three elements that are used to determine whether publishers are prepared for a data future:

  1. Increase overall in overall reader engagement. This includes content planning, recirculation, and reader experience.
  2. Increase in direct-paying relationships with readers. This includes subscription pricing and promotion, designing for a reader lifetime value, and revenue diversification.
  3. Driving revenue from advertisers. This is centered around audience-based advertising, and ad pricing strategy, and inventory yield management.

The Philadelphia Inquirer found itself to be above the industry average on this journey, and overall, findings from Deloitte Consulting show that most publishers are still in the early development stages of most of the criteria.

 

Most publishers are not ready for the data-driven future.
Most publishers are not ready for the data-driven future.

“This underscores that publishers are not data-ready to drive revenue from advertisers,” Doucette said. “They are still largely third-party data-dependent.”

That means they aren’t building direct relationships required to package and monetise their audiences.

“There’s still a lot of work to do,” he said. “We’ve got these large audiences… we need to figure out how to create the data around it. So that’s an organisational challenge. But, fundamentally, we need to do the tactical work of building out the data to take advantage of it.”

Developing a First-Party Data Strategy

As third-party data goes away, it is imperative that publishers turn anonymous users into known users. To do that, the Inquirer employs these three tactics:

  1. Registration for newsletters to collect first-party data from users.
  2. Progressive profiling to get more information from its known user base and start building up the profile of user.
  3. Use of a Customer Data Platform to help manage this data in real-time. “You need the technology in place to power this strategy and a CDP is critical. it’s not enough to get the data; you have to make it actionable.”

He encouraged publishers to think about what data elements are most valuable for them, then prioritise those elements based on what they’re looking for. The end goal, he said, is to build up a strategy that is ready for where the industry is moving.

A look at the changes ahead as first-party data becomes the new standard.
A look at the changes ahead as first-party data becomes the new standard.

“If we’re able to move, to break through these challenges, where we end up is … [with] potentially a smaller audience, a smaller data set, a better data set that powers both our subscription business and our advertising business to drive greater total ad revenue,” Doucette said. “That’s the theory, and that’s the game plan.”

About Paula Felps

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