Publishers are still pinning growth hopes on advertising

The New York Times announced Thursday that it reached 4 million paying subscribers in the third quarter of 2018, and generated significantly more revenue from digital subscribers than online ads. But as a growing swath of publishers attempt to diversify their businesses in a similar fashion, the majority are still looking in a familiar place for revenue growth: advertising.

Over the past few years publishers have stepped up their investments in subscription programs, commerce initiatives, licensing deals and more, in search of direct consumer revenue and a way to lessen their reliance on — and competition with — online ad behemoths Google, Facebook and increasingly Amazon.

But as promising as those opportunities may be, they aren’t yet driving significant revenue for many publishers. They might be growing quickly — up hundreds of percent year-over-year or month-over-month — but they’re often growing from tiny bases. Building new competencies and capabilities doesn’t happen overnight and without significant investment in resources, which means ramping those revenue streams up quickly is challenging.

That’s why — despite all the talk of commerce and subscriptions and other new revenue sources on conference stages and in the press — behind closed doors, publishing executives are still all about the ads. Their focus remains on how to drive a little more volume, or why header bidding, ads.txt or GDPR might help them eke out a little more revenue per impression.

And then, of course, there’s video.

“Advertising is still what we know best, and it’s where we see the biggest opportunity for growth,” one online publishing executive told me this week.

Female-focussed publisher Bustle says that its non-advertising businesses are growing quickly as it pushes into new areas such as events, but still expects the bulk of its revenue growth in 2019 to come from advertising growth on its existing properties.

Digiday Research published last week suggests those are common sentiments. In a survey of 91 publishing execs, most said they expect to see more revenue growth in 2019 from display ads and video ads than from subscriptions, commerce initiatives, and even branded content.

“It’s nice to experiment with new ideas and to think about what our business could look like in a few years, but for now our focus is advertising,” another publishing exec said.

It depends who you ask, of course. Those with a background in ad sales are, perhaps, more likely to place greater emphasis on ads. Publishers themselves are dealing with similar challenges internally. As they look beyond advertising, they’re having to figure out how to incentivize their commercial staff effectively, and who is responsible for what in terms of revenue generation. Should a chief revenue officer at a previously ad-supported site be responsible for subscription revenue also, for example?

But ultimately, despite fast-growing new revenue streams and initiatives, there remains a sense among many publishers that these remain bets for the future. Those looking for significant revenue jumps in 2019 are still betting largely on the ads.

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