Opinions expressed by Entrepreneur contributors are their own.
You’re reading Entrepreneur United States, an international franchise of Entrepreneur Media.
Despite some setbacks at the beginning of 2020, trust towards news publishers has been growing. And quite predictably, this resulted in new direct and programmatic ad partnerships for many outlets, primarily monetizing their inventory with display and video ads. As a result, people paying for ad-free news sites is growing too.
As we enter Q4 2021, however, things are changing, and it’s time to get a grip and regroup.
While shadow banning is no longer an issue, at least for large and reputable outlets, the growing readers’ news fatigue is slowing down the increase of subscriptions and even leading to their decline in some cases.
In addition, given the continuous fight against ad fraudsters, particularly in the programmatic ad segment, and many AdBlock users, the necessity to unlock new monetization opportunities becomes even more urgent in the news segment.
Related: The Creator Economy Boom
Paid subscriptions are no longer a remedy, are they?
Aside from news fatigue, the question remains: Is it possible to run a successful news outlet while keeping all content behind the paywall?
Like it or not, from what we have been tracking in 2021, this strategy isn’t working for news publishers. Yes, there’re a few valid exceptions, but these only prove the point.
The trick is, even if a reader is willing to pay for access to quality news, they’d rarely subscribe to multiple outlets. Instead, people are more likely to resort to reprints. This means if a publisher doesn’t belong to the top three news resources in their niche or a particular region, they will inevitably face a gradual decline in paid subscriptions.
Offering a free trial to subscribed users rarely results in their upgrading to premium. While it may help keep the email newsletter subscription rate high, few people read or even open such emails. And this leaves almost no room for monetization of these subscribers.
Again, there are some valid exceptions — where the publisher’s creative team manages to keep the newsletter open rate high enough to sell the relevant ad space to brands and agencies — but their share is too small to perceive this as a universally effective monetization strategy.
How to make ad-supported freemium strategies work
If subscribers aren’t willing to pay for the news content they’re consuming, there’s only one alternative — advertisers should do it instead.
In the readers’ acquisition context, the ad-supported freemium strategy may imply a variety of options, but the two most common use cases are:
- Free access to article previews and full access to news content upon free signup (with selected publications only available for Premium subscribers)
- Free access to a limited number of publications per month and full access to content for subscribers (usually paid)
As for the demand partners’ acquisition, while advertising in news outlets fosters customers’ trust in a brand (per IAB), there are several essential aspects publishers need to ensure to keep their inventory valuable. These are a brand-safe and brand-suitable content environment for display and video ads and the precision of targeting capabilities.
In the programmatic ad segment, of course, third-party verification of ad campaign data will take the limelight, but the two factors mentioned above remain crucial, too.
In this respect, while a publisher’s ownership of their digital properties can be verified via trust.txt and their inventory via (app)ads.txt, the targeting precision mostly depends on the readers’ first-party data.
The latter factor has forced many news publishers to develop full-fledged first-party data platforms, enabling their demand partners to target their most valuable audience at the right time, in the right context.
Indeed, the access to and use of first-party data in the new, privacy-centered realities isn’t that easy — granular, informative readers’ consent to its collection and use for advertising purposes is already a must in many jurisdictions — but the investment may be worth the while.
Expansion to e-commerce niches: benefits vs. pitfalls
Aside from paid subscriptions and advertising partnerships, one of the potentially effective monetization strategies for news publishers is to expand their businesses to e-commerce. This usually implies the launch of separate divisions, offering third-party vendors’ limited deals, product discounts, holiday packages and more to customers.
On the bright side, the launch of such an e-shopping division within the publisher’s platform helps acquire customers from new, non-target niches while adding an incremental revenue stream from third-party vendor partners, too.
At the same time, the development and promotion of such an e-commerce platform require significant financial and operational effort. This is what can make the venture too risky for small and medium-sized publishers in the news niche.