Over eighty percent of digital publishers are making non-advertising growth a priority next year, according to the latest Digital Publishers Revenue Index produced by the Association of Online Publishing (AOP) and Deloitte.
This is despite the fact that digital advertising revenues have continued to see solid growth, according to the report’s figures. Total display advertising revenues were up six percent year-on-year, while online video revenues grew 21 percent compared to Q3 last year.
While digital ad revenues are still strong, publishers are exploring other revenue streams as ad growth is starting to slow down, and confidence is falling. The report found overall confidence from both company and industry perspectives are down significantly, by 27 percent and 44 percent respectively year-on-year.
The AOP’s managing director Richard Reeves highlighted a few sources of this uncertainty.”In the last quarter we have seen a slight slowdown in revenue growth,” he said. “The implementation of GDPR earlier this year and anxieties around Brexit have no doubt generated feelings of uncertainty, resulting in a drop in confidence throughout the industry. This is something that will need to be carefully monitored in 2019, as the digital publishing industry looks to increase revenues further and build a sustainable future for all.”
This drop in confidence follows a year in which a number of high-profile digital first publishers have fallen into difficulties as financial results have disappointed. The fact that digital natives like BuzzFeed, Vox and Oath have missed revenue targets and laid off staff has cast something of a shadow over the industry.
But Reeves says the fact that publishers are working hard to rectify these troubles, alongside the continued overall strength of digital advertising, is cause for hope. “The continued increase in digital publishing revenues is extremely encouraging, as display advertising and subscription revenue lead the way to drive growth for the industry,” he said. “And with many publishers actively focussed on growing non-advertising revenue streams, the industry has many interesting areas of innovation.”
We’ve already seen some of the first-fruits of these efforts, with BuzzFeed News announcing a paid membership programme earlier this year. The AOP said 83 percent of its board members will make non-advertising revenues a high priority next year, diversifying their revenue streams by expansion or the introduction of new products and services.
“Social media, instant messaging and apps provide people with a platform to consume content easily and elegantly on their smartphone, and more than a third of smartphone owners read the news on their smartphone daily,” said Deloitte’s lead partner for media and entertainment Dan Ison. “Plans for new products and services will only continue to fuel this consumption and, coupled with a focus on non-advertising revenues, we hope to see online publishers’ confidence recover.”