I’ve been writing about how important it is for publishers to establish a robust revenue mix for what feels like a very long time. Then again, everything that happened pre-2020 feels like a very long time ago.
But, if this crazy year has reinforced anything I know about publishing it’s that revenue diversification is key to the long-term survival of most, if not all, media owners.
Faced with the perfect storm of falling print earnings (ad and copy sales), a challenged digital advertising market and COVID-19 lockdowns that have choked off newsstand and events income, publishers with their eggs in just one revenue basket have been hit hard.
Just this week, ad-dependent Family Traveller magazine threw in the towel, despite being profitable and growing prior to the pandemic. With travel pretty much outlawed globally, big spenders like tourist boards, hotels and cruise lines simply weren’t running advertising. “We are predominantly an advertising led business,” founder and director Andrew Dent told the UK’s Press Gazette. “The entire industry has been paralysed for six to seven months which has meant that our revenue has fallen to effectively zero.”
As Dent says, “No media business can absorb that”.
Family Traveller is an extreme example of the magazines and newspapers closed by COVID. Many more, already in a precarious financial position, were simply tipped over the edge by these straitened times.
But not every publisher has lost out to the Coronavirus; despite the obvious challenges 2020 has thrown up, some have done relatively well. And the one thing the winners appear to have in common is a balance sheet that carries more than one revenue line.
Five or six revenue streams
I first properly thought about the logic of a properly balanced revenue mix back in 2012 when David Carey, then the man in charge at Hearst Media, told The Economist, “You need five or six revenue streams to make the business really successful.”
I must have used Carey’s quote more than any other over the years, but I’m pretty sure this is the first time I’ve encountered a hard registration wall and a subscriptions hard-sell when I’ve linked to the original article. That’s because The Economist has put subscription revenues, both print and digital, aggressively at the centre of its financial strategy, accounting for more than 60% of the £326 million turnover reported in The Economist Group’s 2020 annual report.
In these times of social and political turmoil, the hard news focus underpinning many of reader-revenue success stories – The Guardian, The New York Times, The Telegraph – can be ascribed to a thirst for trusted information. But lifestyle publishers have also capitalised on reader revenue growth to keep the lights on in 2020.
Dennis Publishing, Condé Nast, Bauer Media all saw big subscription boosts over lockdown. Subscriptions to Bauer’s Total TV Guide were reported to have grown tenfold year on year; with everyone staying home to watch TV rather than going out shopping over lockdown, a subs strategy rather than an ad strategy win.
Even in the travel sector, where Family Traveller was by no means the only COVID casualty, membership revenues have become central to future survival. Although facing in a different direction – B2B not B2C – travel industry news provider Skift has shifted to become a subscription-first business. Announcing the move in July, founder Rafat Ali said he is building a revenue stream ‘more resilient to industry down cycles’.
Advertising still has a place
None of this means that advertising is done, just that it’s no longer the only game in town. One of the biggest benefits of the New York Times’ growing digital subscription revenues has been the breathing space afforded the advertising team to fix some of the shortcomings in the publication’s ad set up.
Ad sales were down by over 40% through the earliest months of the Coronavirus crisis, and the New YorK Times sales team, helpless to fix the short-term situation, used the downturn to plan for a post-COVID future that won’t include cookie-based ad tracking.
“There is something that happens when you can’t do a lot about your quarterly results and it requires that you focus on a year or two from now,” said the NYT’s SVP of ad innovation Allison Murphy. Absolutely, especially if you can rest on the financial cushion provided by 6.5 million paying subscribers.
Beyond advertising, publishers have looked to the virtual world to keep the all-too-real wolf from the door; virtual events and ecommerce have delivered when their real world equivalents couldn’t.
Just as live events were once de rigueur in the diversifier’s portfolio, virtual events have become ubiquitous. B2B information and exhibitions company Informa has lost $1 billion of budgeted events revenue because of Covid-19 cancellations. That’s a huge blow for any business finances, but the company will offset some of the loss by using its events expertise to produce 500 virtual events this year.
Although virtual revenues are typically lower than real-world revenues, platform improvements, increased reach and lessons learned around marketing offer Informa solid revenue opportunities for the future. And helpfully highlighting Informa’s mixed-revenue strategy, CEO Stephen Carter points out the company’s specialist subscriptions, data and content business is resilient.
Publishers with well developed ecommerce capabilities have been able to place online shopping sales and commissions at the heart of their survival efforts. Back in May the Financial Times reported that Future Publishing’s ‘bet on ecommerce’ was set to help the specialist interest publisher ‘weather the worst of the coronavirus crisis’.
Where few publishers were able to capitalise on lockdown traffic spikes, Future leverages the record number of people visiting its websites to sell more goods through the ecommerce links embedded in review articles.
Although Future closed six titles early into lockdown, by the end of the summer, it had launched three digital-only hobby titles, paid back government subsidies designed to ease the Coronavirus impact and was on track to meet 2020 financial forecasts.
Find your revenue mix
Hopefully the extraordinary challenges publishers have had to face this year will prove to be truly extraordinary and 2021 will see our industry return to some kind of normality, even if that is a new normal.
But publishers can learn a very straightforward lesson from 2020 – in a fragmented media landscape, where audiences and advertisers have more options than time or budget, narrow business models based on one or two revenue streams are just too risky.
If you haven’t already, you need to figure out what your revenue mix looks like. This piece I wrote for Publishing Executive at the end of 2018 might help. But the bottom line in fixing your bottom line is to figure out exactly what your audience and your advertisers value in what you deliver and find additional, monetizable ways to add value to your core offering.
From podcasts to print supplements, marketing services to Zoom meetups, without brand extensions that bring in revenue from readers or let you charge advertisers for new ways to reach your audiences, no vaccine in the world can protect your business against the future that publishing faces.
Peter is a consultant and trainer helping publishing professionals make better decisions about the future of their businesses. He writes regularly about the media, with bylines in The New Statesman, The Drum, Publishing Executive and What’s New In Publishing, and has written in-depth reports examining the current state of the media markets and individual publishing strategies. Peter has presented on media strategy at conferences and corporate events in Asia, Africa, North America and Europe and is a co-host of the Media Voices podcast where he regularly interviews senior publishing executives.