Discovering innovative ways to increase revenue while maintaining the highest standards of journalism means identifying the driving forces behind consumer behaviour and adapting such incentives to news media strengths.
In the eighth of nine modules, attendees at Tuesday’s “Business Model Innovation and Creating New Value” session of the INMA’s Virtual World Congress heard how taking chances on these models is paying off at News Corp Australia and Schibsted.
News Corp invests in publisher-partner model
Australians gamble more per capita than any other nation, which is why News Corp Australia got in on the game, Michael Wilkins, managing director sport, gaming and wagering, said.
In the United States, affiliates currently drive 15%-20% of player acquisitions. An affiliate is a platform that is an advertising driver to a bookmaker. Publishers traditionally have done this through print and print form guides, but News Corp is now using its publisher platforms to do this.
Thanks to the explosion of U.S. sports betting, with 12 states offering online gambling, there are several affiliates already in the market such as DraftKings and Catena Media. These offer a high cost per acquisition of up to US$200 and a trailing commission of up to 40%, Wilkins said.
Australia sees US$145 billion in annual gambling spend, with racing and sports betting accounting for US$2.7 billion of that total. What does that mean for publishers and for News Corp, which has a history of publishing print pages of racing forms? As other businesses have moved online, so did News Corp.
News Corp acquired two platforms, Punters and Racenet, which serve slightly different audiences. In 2019, they turned over US$700 million in betting and 65,000 leads, with each lead averaging US$220 dollars in acquisition revenue. That’s a very good business in a traditional publishing model, Wilkins said.
These platforms attract broad audiences, from 18- to 60-year-olds, plus an increasing female audience. Punters was built as a start-up before being acquired, and News Corp made sure it kept its start-up mentality. News Corp has built a similar platform for The Sun, which is seeing promising success.
News Corp thinks the publisher-partner model can work internationally and is creating partnerships in the United States and Europe. Ensuring compliance with legalised gaming laws is important, and News Corp is very careful about adhering to legislation.
“The publisher-partner model for affiliate wagering has worked really well for us, and we think it can work well elsewhere,” Wilkins said.
Schibsted disrupts e-commerce logistics
Schibsted is aiming to turn distribution from a pure cost to an asset. As a result, the company is now delivering everything from breakfast to the home delivery of e-commerce. Schibsted recently launched a service that allows customers to send a parcel from their own mailbox to any house in Norway using the newspaper distribution network.
Schibsted started this journey about five years ago, but what it has accomplished in just the last 10 weeks could only have been done because it started that long ago.
Schibsted is comprised not only of several national and regional newspapers, but also marketplaces and investment companies.
“We are kind of in the growth part of Schibsted,” Schibsted CEO Cathrine Laksfoss said. “Because we are located in this company with both marketplaces and the news, we can succeed better than any other logistics company in our market. In 2013, we took all of the logistics activities out from every newspaper and merged them together into one business, and that’s when it started.”
The question for Schibsted became: Why was the company focusing on falling print circulation when distribution in e-commerce was growing?
In Norway, about 90% of households receive a newspaper delivered every morning, which is unique compared to many other countries. “That’s a great base to be in if you’re focusing on e-commerce,” Laksfoss said.
In 2015, Schibsted joined forces with the media network in Norway and created a new brand, called Helthjem, which means “all the way home.” This network covered 90% of households in Norway.
This also solved another problem with e-commerce delivery in Norway. While 70% of online shoppers want delivery straight to their homes, only 25% get it. Usually a customer has to go somewhere else to receive delivery of their e-commerce order. Customers also expect delivery to be fast, within two to three days, driven by Amazon.
The network decided to start delivery in markets where there was good growth and a high margin. This led to the launching of four different businesses each year since 2015. Consumers have responded very favourably to the offerings.
“When we started back in 2015, we didn’t know if our deliverers would be able to deliver parcels. It’s quite different than delivering a newspaper,” Laksfoss said. “In 2015, we had 53,000 parcels going through our networks. This year, we will have more than 10 million.”
Since the COVID-19 pandemic and lockdown happened, Schibsted has doubled its home delivery parcel volume.
“Home delivery is really sticky,” Laksfoss said. “We see that the growth is continuing into May, and we do expect that growth is going to continue and it’s taken us to a different level than we were before.”
The Congress finishes on Thursday with the last of nine modules, “News Media Outlook 2021: What To Expect Next.” Register here for individual sessions or the entire Congress (the latter includes access to this and previous sessions).
Banner image courtesy of Gerd Altmann from Pixabay.