How do publishers survive after ad-blocking?
Published 06/09/2015 | 02:30
Apple's new mobile operating system, which is due to arrive imminently, has jump-started a debate on the future of online advertising and how digital publications fund themselves. Not only does the new iOS feature a native news app that promises to be prettier than any other platform, it also features the ability to block ads on its browser. As a result, publishers' mobile websites suddenly seem a lot less commercially viable, while placing ads alongside their content on Apple's own platform seems more promising.
According to the latest research from PageFair and Adobe, 198 million users ran ad blockers in June 2015 globally. That's a year-on-year increase of 40pc. But Apple's new iOS may take ad blocking into the mainstream. So the ever-increasing mobile-marketing business, estimated to be worth $70bn (€63bn) a year, is directly under threat. But so too is the wider advertising ecosystem, if ad blocking takes off.
In the short term, this sort of behavioural shift is being pitched as good news for users. They'll benefit from faster load times and less cluttered web pages. But these benefits come at a price. Online publications, which are reliant on advertising for the majority of their revenues, will find it harder to survive. If they shut up shop, there'll be less media diversity and less choice for readers.
So what's a publisher to do?
One option is to erect paywalls. It seemed like a good idea a few years ago, but some publishers are having a change of heart. The Toronto Star pulled down its paywall earlier this year. And two years after putting one up, the Sun has relaxed its own paywall; this is after it claimed to have attracted 225,000 subscribers in November last year. Even with hundreds of thousands of subscribers, paywalls may not pay the bills - or they may only serve to throttle a publisher's online reach.
But what about a bigger scale? The New York Times now boasts one million digital subscribers five years after it erected its own paywall. But it also offers content for free and those one million paying customers are only about 2pc of its overall online readership. So, yep, like everything else online, if you have enough users, you are in luck.
Some publications have spurned the paywall option altogether and spun off different businesses. The Santa Rosa Press Democrat launched a digital agency to provide a full range of online marketing services to merchants. Tyler Brûlé's jet-set lifestyle magazine Monocle now has retail outlets in Hong Kong, London, New York and more. And numerous publishers have expanded into live events to diversify their revenues.
And there's another option: less invasive ads and less ad tech. This approach is growing in popularity and is pioneered by trendy online publishers like Refinery29 and Vox.
These sites are often unwilling to let third parties access their audience data or sell ads on their sites. And many of them equate ad tech with placing the need to turn a buck ahead of website functionality. Many of them favour working with brands to create native advertising that doesn't clutter up their site and is in line with readers' expectations.
But perhaps a more long-term future for publishers doesn't involve diversifying their revenues, but diversifying how they publish their content. The current glut of distribution channels makes it likely that publishers will become active on many channels, each one monetised in a slightly different manner.
They'll have their own website, perhaps a mobile adaptive version of that site, an app for smartphone users, they will push content to social channels, who will all create a native home for content consumption, like Facebook's instant articles or Snapchat Discover.
There'll be Google Play Newststand and a host of other services that run off RSS feeds. And this is where Apple's new News product comes in. It's just another platform in the new publishers' pick and mix.
Some of the more forward-facing digital media brands have already adopted this sort of platform-agnostic approach. Here's what BuzzFeed's Jonah Peretti said last year in an interview with The Verge: "It's not like we have an ideological or religious view on where content should live. Should it be a native app, or on the web, or mobile web? It really should be dictated by what's best for the consumer and what's best long-term for building a media company that can thrive with how people are consuming media today, instead of how they consumed media 10 years ago."
This mindset is miles away from some old-school publishers, who are still wedded to the idea that eyeballs can only be monetised on their own online properties.
Apple's introduction of mobile ad blockers may be a wake-up call for those who are yet to realise that technology has yet again moved the goalposts and publishers' sites will become less significant. It's a realisation that many will find hard to make.
Sunday Indo Business