Many media executives complain that their audience is not willing to pay for digital content. Publishers often cite a 10% rule of thumb, meaning only one out of ten print subscribers pay for a digital replica.
However, we have found that people will pay for content if it’s done right. In fact, last year, spending on online content access increased by 31%, and the New York Times exceeded one million paid digital subscribers.
Monetization of Digital Content Through Advertising Has Its Challenges
Too many publishers go back to what worked in traditional media. These mindsets do not necessarily work online. Generally speaking, the old model is to amass as large of an audience as possible, then sell advertising on a CPM basis. There are a few problems when companies apply this model online:
- Digital CPMs are a fraction of what publishers see on the print side. One study by Morgan Stanley showed newspaper and magazine CPMs average around $17 while Internet CPMs are only $4.
- Digital publishers are chasing quantity, not quality. This annoys consumers (aren’t you sick of click bait) and drives down digital ad pricing as content supply is exceeding demand. Furthermore, the digital consumer expects more customization, curation, and context.
- Ad blockers exacerbate the situation. Ad blocking has grown from 21 million users per month to 198 million over the last five years and cost publishers $22 billion in 2015.
To Monetize Digitally, Go Beyond Digital Replicas of Print Products and Ads
Web and mobile offerings need to go beyond converting print to a digital replica and selling ads. At The Sterling Woods Group, we developed five new ways of thinking for media executives who want to monetize digitally
- Narrow your focus on a specific niche. Don’t try to be everything to everyone. Instead of worrying about CPMs, find the most enthusiastic sub-group of your audience and help them solve a specific problem. Focusing on a sub-segment helps you make better tradeoffs given limited resources. Start small and corner the market. Then repeat the winning formula in new niches. NetShelter did this well. The technology-focused digital media publisher launched more than 150 vertical sites and were acquired by Ziff Davis in 2013.
- Sell something besides advertising. I’m not saying turn down advertising. I am saying your business model should survive without advertising. Otherwise, you’re not providing enough value to the consumer. Your audience will pay for something that solves a problem. For example, you can offer premium memberships, online courses, research reports, ancillary services. There are dozens of options.
- Only use exceptional content. Over the long run, you can’t fool smart people (or Google) with low-quality digital content. Does your content reflect an understanding of your target niche – their needs and wants? Does your content have emotion or personality that will appeal to them?
- Expedite development with new technology. Many publishers are tethered to legacy systems. I’ve seen good ideas killed because executives were concerned about technical integration. Use off the shelf tools or simple solutions to get started. New technology has made it easier and cheaper than ever. You can always integrate proven successes later.
- Keep iterating until you get it right. Don’t expect overnight success. Set goals and measure progress. Listen to your customers. Make improvements. Measure again.
We know from working with our clients that change is not easy, but it is certainly well within reach with the right leadership and support!
What traditional media mindsets do you still hold on that get in the way of monetizing your content online?
***Want to hear more from Rob? He’ll be speaking at the Niche Digital Conference in Denver!***
Rob Ristagno is the CEO and Founder of The Sterling Woods Group, a firm that builds new revenue streams for media companies and publishers. He is an expert in direct monetization of content. Prior to creating The Sterling Woods Group, Rob served as a senior executive for several niche media and e-commerce companies. He most recently was the Chief Operating Officer of America’s Test Kitchen, considered to be the gold standard in the niche media world for building diversified – and often digital – revenue streams.
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