Last year, during the depths of the pandemic, publishers found themselves in a strange situation. Audiences were higher than ever, with consumers spending more time online and seeking out news sources to stay informed about the pandemic. But brands, worried about their financial statuses, and in some cases unable to even sell their products due to shop closures, massively cut back their advertising.
Publishers’ revenues were hit hard. Over the course of last summer, we saw almost daily stories about publishers furloughing or laying off staff as they tried to balance their books.
But now, with advertisers’ confidence restored, we’re seeing a boom in publishers’ digital revenues.
“The industry had a huge trough in the middle point of last year,” said David Higgerson, chief audience officer at Reach, “but enjoyed a very strong Q4, and that’s continuing in Q1.”
And this boom isn’t just a recovery from the pandemic – it marks genuine strong growth compared with pre-pandemic quarters.
The most recent Digital Publishers’ Revenue Index (DPRI) from the Association of Online Publishers (AOP) and Deloitte found that in Q4 2020, digital publishing revenues in the UK were up 13.1 percent year-on-year, driven by growth in subscription revenues (up 44 percent) and display advertising up 16.8 percent. And this is in comparison to Q4 2019, the last financial quarter completely unaffected by the pandemic.
This growth is all the more impressive when you consider the state of the digital publishing industry before the pandemic. In the last pre-pandemic DPRI released by the AOP and Deloitte, which compared Q2 2019 to Q2 2018, digital revenues were down 3.7 percent.
Advertiser spending following new tactics
The major driver behind the growth in ad revenues is, somewhat obviously, that lockdowns are easing, and consumers are getting ready to splurge. Advertisers are investing now, ready for a surge in consumer spending.
Future Plc, a UK publishing group, conducted a study of its readers to try to predict their spending patterns once lockdown lifts.
“We found that the average UK household has saved £4,800 during the pandemic, while also clearing off some debt as well,” said Dave Randall, head of commercial technology at Future. “And in that same survey we asked how people are planning to spend that money. The overarching theme of most responses was that they’ll send it on celebrations, coming out of lockdown and having fun.”
Randall added that brands are now shifting from tactical spending to brand spending, to prepare for this change in consumer behaviour.
But brands aren’t spending in exactly the same ways as they were pre-pandemic. Laura Milsted, global advertising director at the Financial Times, said that advertisers are spending more with quality publishers generally, as brands look for quality ad placements. “While we are certainly part of a global trend currently being felt across the ad industry right now in this surge in digital ads growth, we are also benefiting from advertisers’ growing appreciation for quality and willingness to pay for it,” she said.
And those VideoWeek spoke with said there’s been an overall desire from advertisers to work more closely with publisher partners, buying bespoke advertising and marketing packages tailored to their specific needs.
“We’ve had plans we put in place which have helped us specifically in Q1,” said Reach’s Higgerson. “Part of that has involved working very closely with SMEs as they’ve been coming out of hibernation for the best part of a year, it’s been very important for us to use our regional network of newspapers to help them reach their local audiences. And for the bigger advertisers we’ve been working to target their ads much more closely to more specific audiences.”
The FT’s Milsted said that targeting has been a particularly important part of the FT’s ad offering recently, as has its branded content advertising proposition, which has seen double digit year-on-year growth.
And Future’s Dave Randall said that Future’s creative solutions, which are bespoke packages of content and ads, have been particularly strong. “It’s been a record year when it comes to creative solutions because of the strength of our journalistic content, and our access to specialists and experts in those areas,” he said.
Identity push starting to pay dividends
The other major theme over the past year, identity and the decline of third-party cookies, is also starting to work in some publishers’ favour.
Some publishers, including the FT, have focused more heavily on driving subscription revenues as an alternative to advertising. And as the AOP’s data shows, subscription revenues have been very strong over the past year.
But the FT’s Milsted said that by bringing more users into a logged-in environment, the FT’s subscription strategy is also bolstering ad revenues.
“Our digital subscriptions business has also been very strong, continuously driving double revenue growth and doubling in size over the past five years,” she said. “This also supports growth in other areas of the business, as subscriber inventory is so much more valuable and secure given the demise of third-party cookies.”
Reach’s Higgerson said his company is similarly starting to see dividends from their preparations for the death of cookies.
Reach has very quickly managed to get more of its users logged in. “At the start of last year we had a few hundred thousand registered users, now we have 6.3 million,” said Higgerson. “And all that registration data helps us to build up a better picture of the customer. That means we can make sure we’re serving them the right stories which will appeal to them, but also enables us to come up with the right commercial opportunities to sit alongside those stories.
“So ultimately now our customers are getting more content which should appeal to them, and more advertising around that content which should appeal to them too,” Higgerson added.
