Media Briefing: The pros and cons of three commerce pricing models
This Media Briefing covers the latest in media trends for Digiday+ members and is distributed over email every Thursday at 10 a.m. ET. More from the series →
In this week’s Media Briefing, media editor Kayleigh Barber breaks down the different pricing models that commerce publishers use.
- Comparison shopping
- 3 questions with The 19th’s Julia B. Chan
- How TikTok took over VidCon in 2022
- An attack on abortion coverage, layoffs at Substack, recession-proof publishers and more
The key hits:
- Publishers are testing new pricing models in their commerce businesses, which enables them to be paid at different points during the consumer buying journey.
- Flat-fee pricing is being used by some publishers as a step below branded content, but some execs worry it will impact their commerce content’s editorial integrity to include paid product placements.
- Cost-per-click pricing tends to pay publishers less, but it gives them the chance to get paid while testing trends and new products with their audience.
Over the past few months, some publishers with commerce businesses have begun testing new pricing models with the hopes of increasing e-commerce revenue beyond the incremental commissions earned from affiliate links featured on their sites.
For those publishers, commerce is starting to be seen as an avenue for advertisers to reach their target customers who are closer to the point of making a purchase. To win that bottom-of-the-funnel business, commerce teams have begun offering cost-per-click and flat-fee rates for brands.
“I just got back from Cannes and what I heard from most CMOs is not so much about budget reduction, but a shift between upper funnel and lower funnel spend,” said Josh Stinchcomb, CRO of Dow Jones, which recently launched its new The Wall Street Journal-adjacent commerce brand Buy Side earlier this month.
Cost-per-acquisition (CPA) has been the traditional pricing structure for publishers with affiliate businesses, given how much of a “set it and forget it” business model it is. And while it is still the lion’s share of how affiliate revenue is earned for many publishers, the passive nature of it also limits negotiations and leaves media companies at the mercy of brands who operate through affiliate networks like Skimlinks.
Not all publishers are sold on these new pricing models, however. Some fear that they could impact editorial integrity or simply aren’t worth the hassle. But of the publishers I spoke with, entertaining direct deals with retailers and merchants has become a no-brainer strategy to improve commission rates and overall commerce revenue.
“The intention is not to have any kind of branded content or pay-to-play content. That’s not part of our strategy at all. But I do think there are going to be more opportunities over time to do more direct affiliate deals with brands,” said Stinchcomb.
Here are three different pricing models being used in publishers’ commerce businesses and pros and cons as to why publishers are or are not incorporating them into their strategies. — Kayleigh Barber
What it is:
Flat-fee partnerships are direct deals closed with a retailer or merchant in exchange for guaranteed placement of the brand’s products or services within the publisher’s content. The retailer pays the publisher a fixed amount of money upfront, whether or not the publisher ends up driving sales. Typically, the publisher does not make any specific guarantees, such as minimum number of impressions or even which products will be featured. The deals can become more nuanced beyond this, given the flexibility and customization that direct deals allow for, but for the publishers that practice this model, like Vice Media Group, certain boundaries are put in place, such as not allowing the brand to see the content before publication, to make sure that editorial integrity is maintained.
- Similar to an advertising deal, the publisher earns thousands of dollars through a flat fee partnership at one time, versus waiting for commissions to trickle in through affiliate links.
- Like a branded content deal, flat fee deals can encompass a variety of ways in which the brand’s products are included within content, including podcasts, newsletters and live shopping. This provides a degree of testing and learning to see which platforms and content products are the most impactful for that brand in converting audiences, without risking the chance of the publisher not earning any money from including the product.
- Guidelines can be set in the contract to limit how much oversight a brand gets with the content, unlike branded content partnerships where an advertiser often receives final say before publication.
- If a brand or a product proves to be really popular with the publisher’s audience, there runs the risk that the publisher will not earn as much money from the sales it drove as it would if it used a traditional CPA model.
- Some publishers feel that paid placements or inclusions of products in articles threaten editorial integrity.
- Flat-fee modeling can compete with the advertising side of the house, and if not careful, brands will pay a fraction of the price for what could be considered comparable campaigns internally.
Vice Media Group is one media company that is not only testing flat fee pricing, but hoping to see it grow as an option that brands choose, according to chief digital officer Cory Haik, who added that the volume of deals executed in this category have increased by 1,000% from Q1 2021 to Q1 2022. Haik would not disclose the total number of flat fee deals.
At the company, flat-fee partnerships cap out at $50,000, according to Samantha Baker, vp of commerce and partnerships, who spoke about this model during Digiday Media’s Commerce Week event that took place last month. She said during the event that any brands looking to exceed that price point gets sent over to the advertising team to work with them on a branded content deal instead.
Flat-fee deals are typically reserved for brands that consider VMG to be a top driver of sales, Baker said, such as Our Place or Nordstrom, who are likely to ask for a flat-fee deal.
A deal of this nature can include anything from a dedicated newsletter inclusion to a minimum number of mentions in commerce story round-ups to a set number of dedicated articles on products from that brand in a given month – or a mix of those. Those deals, however, never guarantee which products will be selected, or if the reviews will be positive, and the brand doesn’t get to see the content ahead of time, Baker added.
What it is:
Cost-per-click (CPC) pricing gives publishers a referral fee when a reader clicks through to a brand’s website or product page. Unlike an affiliate link that uses a cost-per-acquisition model, the publisher does not earn a percentage of any sales made through that link, but are awarded a comparably smaller rate for getting a consumer into the brand’s ecosystem.
- This opens a door to working with retailers and merchants who have smaller marketing budgets and couldn’t otherwise afford the commission rates of a CPA model or the price of operating within an affiliate network.
- CPC pricing can be used in both direct deals with brands and as a pricing option through affiliate networks.
- This is also a way for publishers to write about new brands or products and potentially make money while learning whether or not those things resonate with their audiences. For example, if a publisher is writing about vitamins for the first time, it will earn a small referral fee from the vitamin retailer when a reader clicks the link to learn more about the vitamin, versus only making money after the customer purchases the product. If the vitamins are not appealing enough to the publication’s readers to get them to buy, the publication will still earn some money from clicks to learn more about the product.
- The price point of what a publisher can earn is much lower than a CPA model. On average, a publisher can earn between $3,000 to $5,000 per month from a CPC deal.
- Some publishers do not think the revenue earned from this model is worth the effort of setting up the deal in the first place, particularly if this pricing model is done through a direct deal.
- Not being able to see conversion rates can make it hard for publishers and brands to know how successful they were in driving sales of the product or how well the publication’s audience liked or disliked the product/brand.
- Brands who cannot afford to operate in an affiliate network might not have the stamina or bandwidth to handle traffic or sales that come in through publications with large audiences, according to Wirecutter’s executive director of commerce Leilani Han.
Advice from a consultant:
If a brand chooses to go this route, they should ensure that they’re making the most of having the new reader in their ecosystem, according to Ben Zettler, a digital marketing and e-commerce consultant.
To do this, when a user comes in through the specific link, set a pop-up offer that entices them to sign up for a newsletter in exchange for a discount, like 10% off your first purchase. “Then you can see really quickly, like within the first week [or] first couple of days, if people are converting,” said Zettler.
What it is:
Cost-per-acquisition (CPA) pricing is the most traditional pricing model for publishers’ affiliate businesses because they often are coordinated through large affiliate networks, though they can also be used in direct deals with brands. A publisher earns a commission from the direct sales it drives through the coverage of a product or service. Commission rates can vary drastically based on product category, price point and brand budget.
- Publishers tend to earn more revenue from commission rates versus from CPC referral fees.
- Figuring out what products audiences like and are willing to pay for is really easy because the publishers can see exactly what their readers are buying thanks to the conversion measurement.
- Some links allow publishers to earn a percentage of the customer’s total cart sales, beyond the specific product it covers, potentially increasing the amount of commission revenue earned
- Revenue is not guaranteed.
- There are many opportunities to lose attribution from the publisher to the point of purchase. If a reader doesn’t complete a purchase, or waits until later to buy the product by going to the site directly, the publisher loses out on the commission rate.
What we’ve heard
“I don’t really go on the Reels. I feel like my mom does that.”— Cadence, a 16-year-old who was among the Gen Z attendees that Digiday interviewed during VidCon
3 questions with The 19th’s Julia B. Chan
The same day the Supreme Court announced it would overturn Roe v. Wade, Julia B. Chan, editor in chief of The 19th, tweeted that the non-profit news publication — which covers the intersection of gender, politics and policy — was “made for this moment.”
The name for The 19th comes from the 19th Amendment, which granted women the right to vote. The site’s logo contains an asterisk as a reminder that the amendment applied only to white women.
“All of the news that has been coming out in The 19th’s lifespan in the last three years has shown exactly why a newsroom that centers women and LGBTQ+ communities and women of color is so, so necessary,” Chan said.
Digiday spoke to Chan to find out how The 19th prepared for the Supreme Court ruling and its plans for future coverage, the record traffic the site received last week and her thoughts on social media policies discouraging journalists to take a stance on the ruling. — Sara Guaglione
This conversation has been edited and condensed.
How has The 19th prepared for the news of the SCOTUS ruling, and how do you plan to move coverage forward?
We’ve had about a dozen pieces published since Friday. [Breaking news reporter Jennifer Gerson and economic reporter Chabeli Carrazana] spent all day making calls on Friday to cover clinics, in order to report out and get these pieces out into the world that were essentially snapshots of the moment Roe fell. We wanted to make sure we had a very human-centered approach threaded throughout our coverage. We were able to publish our breaking news piece three minutes after the news broke from SCOTUS, because we were ready. We’ve been planning for this for – if not this entire past year, for the last three years, quite honestly. We were ready at every [SCOTUS] decision day to basically mobilize as soon as the news came down. Our abortion tracker – which is essentially a state by state tracker – was published before Dobbs [v. Jackson Women’s Health Organization, the case through which the Supreme Court overturned Roe v. Wade]. We knew it was something we could use as a tool for our audiences to keep them up to date on breaking news and how that news impacts each state.
About a year in, The 19th expanded its mission from wanting to center and serve women to really recognizing we do not want to just talk to and serve women, but we want to be engaging and serving any marginalized gender. That is how our coverage has expanded around LGBTQ+ communities – a segment of communities that has not been served historically by legacy media. With that in mind, we are looking at what the impact on LGBTQ+ communities in light of Dobbs will be. This is a major topic for us as a news organization.
Did you see an uptick in traffic after the ruling?
It was one of the highest readership weeks of our history. We saw three times the average engagement across social media platforms. It was double our average weekly newsletter subscriber growth. We also saw new commitments to our donations from our members, which is a huge sign of support. They saw what was happening and they felt galvanized to take action. And one of those actions was to either donate or to re-up their donation to the 19th.
I’m sure you’ve seen the chatter about the memos newsrooms received, reminding them of their organizations’ social media policies and to not take a public stance on the SCOTUS ruling. Do you agree with those policies?
It’s a welcome conversation. We saw a lot of these guidelines come from legacy organizations. I think some of these guidelines are couched in the myth of objectivity – that journalists need to appear or be perceived as objective to report. But we know that’s not the case because journalists are humans. And that needs to be what informs and inspires our guidelines and our policies. When I think about objectivity, it’s not perceived objectivity of an individual, which we can’t control. I can’t control what you think about me, right? But it’s about the objectivity in our processes. How are we creating the journalism?
I think these guidelines are not black and white, and I do think some of the initial ideas that they are sourced from deserve to be interrogated, and I’m in the business of interrogating that. At The 19th, we really do encourage our journalists and our entire staff to bring their lived experiences to the work and to the workplace. As an organization, we believe bringing your full lived experience to the journalism is a benefit to the journalism, not a detriment. It’s what makes our journalism special. It makes our journalism stand out and is differentiated from other outlets.
Numbers to know
$3.99: Monthly price for Snapchat’s new subscription tier that’s imaginatively titled Snapchat+.
1 million: Number of email subscribers that Axios Local has accumulated in total.
-12%: Percentage decline in print sales for the top 25 U.S. newspapers from March 2021 to March 2022.
>360: Number of newspapers that have shut down since late 2019.
How TikTok took over VidCon in 2022
After a two year hiatus, VidCon returned to Anaheim, California, in late June, and the 2022 edition was a mix of Comic-Con for creators and their fans, a reunion for the digital video industry and a debutante ball for the creators — and one creator platform in particular — that stole the spotlight during the pandemic.
But there was one big difference. What was once an event dominated by YouTube has now been taken over by TikTok.
During VidCon, Digiday spoke with various creators from TikTok, YouTube and Instagram as well as industry executives about what this year’s version of the annual event indicated about the state of the digital video industry and creator economy. Watch the video above.
What we’ve covered
Vice Media Group brings back program for small, Black-owned businesses:
- Called Black+, the program’s second iteration will feature five business, down from 12 last year.
- VMG said the smaller selection is meant to allow the media company to provide more quality support to each business.
Read more about VMG’s Black+ program here.
Bustle’s Charlotte Owen is on a mission to turn around Elite Daily:
- In April, Owen was tapped as the editor-in-chief of the Gen Z-focused publication in addition to her roles overseeing Bustle and Bustle U.K.
- On the latest episode of the Digiday Podcast, Owen talked about applying the Bustle approach to Elite Daily.
Listen to the latest Digiday Podcast episode here.
Publishers evaluate cost-per-click pricing models in their commerce businesses:
- Vice Media Group and Leaf Group’s Hunker are experimenting with the CPC model in addition to the traditional cost-per-acquisition model.
- A CPC deal typically earns publishers between $3,000 and $5,000 per deal per month.
Read more about publishers’ CPC commerce pricing models here.
Media ERGs foster community among hybrid workforces:
- Publishers’ employee resource groups can serve as the glue holding employees and teams together while working remotely.
- ERGs can play an especially important role for new and junior employees.
Read more about media ERGs here.
Publishers grapple with younger audiences avoiding the news:
- 42% of people under 35 years old sometimes or often actively avoid the news.
- Younger audiences’ news aversion was a cause of consternation among a panel of executives and editors from The New York Times, Vox Media, Reuters and Google News Lab.
Read more about publishers’ younger audience concerns here.
What we’re reading
Attack on abortion coverage:
The National Right to Life Committee is trying to get states to pass laws that could be used to prevent journalists from providing coverage that include information about getting an abortion, such as New York Magazine’s recent abortion guide (or potentially even this newsletter that links to that guide), according to Scalawag.
Layoffs at Substack:
The newsletter platform provider has laid off 14% of its employees and has slowed its hiring pace in order to manage the company’s costs after canceling its fundraising plan, according to The New York Times.
Did the pandemic make publishers recession-proof?:
Media executives feel like the moves their companies made to weather the pandemic have prepared them to withstand the looming potential of another economic recession, according to CNBC.
BuzzFeed’s bumbled SPAC sell-off:
Intelligencer has published a deep-dive on how BuzzFeed allegedly bumbled its current and former employees’ abilities to sell their shares in the company when the publisher went public late last year.
Creators combat misinformation:
Platforms including YouTube are often cited as founts of misinformation, but some YouTube creators as well as Twitch streamers have been using the digital video platforms to host debates and dispel conspiracy theories, according to CNET.
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