The digital tinkering continues - and that's a good thing
Revenues may finally be catching up with the investments publishers have been making in their digital businesses. The most successful efforts, from brands such as Wired and The Atlantic, underscore the benefits of diversified product offerings and a willingness to experiment beyond traditional digital revenue models.
Conde Nast’s Wired is the latest big consumer title to achieve an important digital milestone: The tech brand announced that digital sales accounted for half of total ad revenue in the just-completed fourth quarter. For the year, digital ads comprised 45% of total ad sales, AdAge reported.
And while 90% of those digital revenues came from the Wired website, VP/Publisher Howard Mittman said Wired’s online strategy has evolved well beyond display media and "outdated CPC measurements" to include “rich and multi-faceted digital media recommendations that help to create strong connections with our ad partners.”
“Our diversity is our strength,” Mittman said via email, citing a cross-platform sales strategy that encompasses the web, print, tablet and an emerging conference business. “It’s a very powerful combination, one that allows Wired to tell stories across a multitude of distribution channels and optimize the consumer and advertiser experience based on what works and doesn't work inside a given medium.”
Mittman attributes the success to “a hundred small shifts” rather than one or two high-margin programs. “It’s not one whiz-bang innovation that people are glomming onto, but instead all of our products are more refined, easier to execute and proven,” he said.
A place for paid content?
Diversity of offerings is a critical piece of any digital publishing strategy. Atlantic Media, which has leveraged its “digital-first” strategy into three years of profitable growth, is now exploring paid content as a way to further diversify digital revenues.
Scott Havens, president of The Atlantic, told Forbes that a metered model, while not imminent, is “definitely part of the mix,” even though he expects digital to account for 70% of total ad revenue in 2013. “The conditions are right for experimentation,” he said.
The conditions should always be ripe for experimentation – because that’s the only way to innovate and grow in such a dynamic business environment. Andrew Sullivan understands this. And Hearst Magazines President David Carey stressed the need for fresh thinking in his annual state-of-the-business memo sent to staff last week.
“Our consumer marketing colleagues are collectively rethinking how we bring our titles to market by striking new partnerships with retailers—as they cast aside the ‘same old way’ of doing business—and building world-class digital marketing capabilities,” Carey wrote.
Experimentation and a willingness to embrace new ways of doing business doesn’t mean publishers have to settle for cobbling together a bunch of low-margin programs. Mittman and Havens both object to any characterizations of their digital businesses as stacking “digital dimes” to counter diminishing print dollars.
“That’s not reflective of our current mindset when it comes to digital,” said Mittman. “To imply that suggests that 50% of our revenue stream isn't a significant contributor to our bottom line. I can assure you that this is not the case.”
In an email, Havens said The Atlantic has managed to avoid the downward pressure on CPMs and build a profitable digital business by focusing on four key areas:
- “We brought in talented individuals to run our various platforms – print, digital, events, sales, marketing, technology – and we instructed them not to worry about protecting our legacy businesses. In doing so, we freed them to innovate and build towards the future, which has led to diversified revenue and product mix.
- “We made a strategic decision many years ago to move away from selling ‘boxes and banners’ and evolve ourselves into ‘strategic consultants’ for our marketing partners focused offering custom, content-driven, ROI-proven, ideas and solutions. This helped us avoid the commoditization of the digital ad market and depressed CPMs.
- “We continuously roll out new advertising opportunities, such as native advertising units and cross-platform advertising packages, as well as buzzy editorial products that our audience reads (and shares) such as TheAtlanticWire, TheAtlanticCities, and our tablet app.
- “We invest a lot of time, money, and effort cultivating and engaging a hard-to-reach influential, educated and affluent audience across multiple platforms … and importantly, did not allow third parties to represent our brand in the marketplace (e.g., ad networks/exchanges).
Good lessons for any premium publisher looking to build, and sustain, a profitable digital business.