McKinsey to news publishers: digital revenue model has 4 tenets


A sustainable digital revenue model for newsmedia companies should be based on sponsorship at scale, proprietary lead generation, consumer-paid access, and digital video, said Michael Lamb, a principal at McKinsey & Company.

Lamenting the deteriorating business models built on banners as billboards, the “tyranny of the click-through,” and free access to content, Lamb encouraged publishers to work with “the Web we’ve got.”

Despite rising advertising and audience numbers, Lamb suggested publishers “ignore the cheering” since premium display is under pressure. The good news is that news publishers can still command a premium versus Facebook, Yahoo, and others.

Lamb walked the INMA World Congress audience through case studies related to a sponsorship sales model, non-fungible inventory, and accountability for impact. This includes thematic/event “tentpoles,” more intrusive advertising units, data targeting, and more.

Another tenet of the emerging digital revenue model is lead generation: using content and audience to drive sales for others:

  • Catalog the taste and preference of the audience.

  • Elicit and capture consumer signals of intent.

  • Create commerce-friendly touchpoints.

  • Create deep partnerships with e-commerce players.

Working with leading global news publishers on paid content strategy, Lamb was adamant: consumers will pay for digital content – “especially if they’ve been trained by Apple.” He cited data, especially, for gaming and music sales for the iPhone and iPad.

McKinsey’s experience with the New York Times on their pay model, for example, found that they could generate 450,000 paid digital subscribers while maintaining its Web audience and creating new value for the print newspaper.

Finally, Lamb said that digital video advertising is skyrocketing, and news publishers must prioritise this if they are to capture a part of growing revenue. “This will be easy pickings for the lucky few,” he said, going through models such as auto-streaming videos, companion clips, and videos with related content. The flip side is about “threading the needle” of content costs and the scale needed for this to be a profitable business.

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