How are publishers budgeting for mobile?

Advertisement

Mobile publishing is getting plenty of attention, but is the money following? Much like the transition to web publishing, media companies must answer one big question as they forge ahead into the mobile space: How do we pay for it?

Forecasts and other market data certainly underscore the potential of the mobile publishing market and serve to justify investment. Informa Telecoms & Media predicts mobile advertising revenues will surpass $24 billion by 2015 – up from just $2.3 billion in 2009. Apple has more than 300,000 apps in the iTunes App Store, while Google claims more than 100,000 apps in its Android store. Gartner predicts that app downloads will reach 4.5 million this year, nearly double 2009’s 2.5 million total.

The numbers, along with the increasing functionality of smartphones and the larger screen sizes of the iPad and a new generation of tablets, are making even the most digitally unsavvy publishers take notice of the possibilities.

But the reality is, with budgets tight (if not shrinking), it’s tough to justify heavy investment in a market that still accounts for a relatively small chunk of a publisher’s overall revenues. The entrance costs are not cheap: Lauren Wiener, senior VP of interactive at Meredith, estimates that developing custom apps costs between $25,000 and $300,000.

“We’re trying to put together a product roadmap where price times volume has to exceed the costs,” she said.

The high cost of doing mobile right could explain why Meredith and other publishers say they’re still in the “test and learn” stage regarding mobile investments.

I asked a handful of magazine executives how they’re funding their mobile initiatives. Not all were forthcoming with specifics, but collectively they provide some sense of direction for other publishers that are still unsure of how to move forward.

Consumer Reports: Funding innovation

At Consumer’s Union, the publisher of Consumer Reports, mobile efforts have been funded with new money from the company’s innovation fund. “Every year we try to put some money aside for innovation and new product development,” said Jerry Steinbrink, vice president of publishing. “We saw the mobile wave coming and created a budget for prototyping.”

While the company’s initial mobile efforts were within budget for the first year, Steinbrink says his team underestimated the time and resources required to make quality mobile products, which include the new Mobile Shopper iPhone app.  

“It took us longer than anticipated,” he said. “We’re doing apps that are delivering a lot of information, and because we’re charging for them they have to be worth the value. There’s an enormous amount of back-end work required.”

That work included a new publishing system for mobile content. “We realized early on that our database publishing system is meant for heavy-duty print or web publishing,” said Steinbrink. “We needed a vendor that could take product and content databases and port it to a mobile environment.”

Consumer’s Union partnered with mobile developer Kargo to build what amounts to a mirror of its publishing database for the mobile environment. The result is what Steinbrink calls a “slick, flexible database and content management system that’s geared for mobile devices.”

Time.com: Taming the ‘Wild West’

At Time.com, the online arm of Time Inc., mobile initiatives are funded through the product development group. While Time.com’s mobile investment in terms of hard costs has increased over the past year, the company has not reallocated a significant portion of its budget to mobile.

The reason? “We’re not making any outrageous expectations about mobile advertising revenue,” said Craig Ettinger, vice president of marketing and business operations at Time.com.

Ettinger added that while Time.com will be expanding its mobile initiatives next year, the dollars put against mobile may actually come down as the company streamlines its processes and improves vendor management. 

“We’re getting much better at resource allocation,” said Ettinger. “It’s been a bit of the Wild West over the past two years – who are the vendors, who’s doing the best work? We’re much better at managing that now.”

Soft costs are another matter. “We’ve definitely putting a significant amount of resources, in terms of time, into mobile,” said Ettinger. Those resources cut across sales, marketing, editorial and design.

Bonnier: An evolving app strategy

Bonnier’s Technology Group, which publishes Popular Science, Science Illustrated and other tech-related titles, funds its mobile efforts through advertising and app revenues, said Gregg Hano, VP and group publisher. As the market evolves, the Technology Group is recalibrating its mobile efforts.

For example, the just-released update to its Popular Science iPhone app supports advertising for the first time. (Ford is the exclusive launch partner for the new app.) 

“We’re excited to open this new revenue stream,” said Hano. “Experience has shown us that when we build a quality app, users and advertisers will pay for it, and it’s a model we intend to continue to expand on.”

Popular Science was one of the showcase publications to launch with the iPad in April. Last month, the Technology Group released an iPad version of Popular Photography. Each of those apps is priced at $2.99.

Hano said his group has an internal task force to help identify the mobile devices that make sense for the brand. It uses both internal and contracted resources to develop custom apps for each platform.

“We firmly believe that our content is best presented when we have designed something specifically for each device, which is why we have separate iPhone and iPad apps,” he said.

Mobile's potential as a new content distribution channel is intriguing. Mobile should certainly be a priority item for publishers preparing for 2011. But even larger publishers know they have to invest wisely until they find a sustainable business model that can drive profits and lead to additional investment.

Sponsored Resources


Join the discussion

Log In or leave an anonymous comment.