There was once a time where the traditional model of media in which there were a team of journalists creating content and a commercial one selling it to the audience that consumes it, was the norm. However in more recent times this has been proving to be increasingly more ineffective as migration has moved to the digital platform. Advertising is being invested more into digital advertising, but this is in the face of it being more widely distributed and any growth attached with up being siphoned off by Google and Facebook And while methods like programmatic advertising have come through, the model tends to favour websites operating at a large scale which can arise a whole new set of issues for publishers like increasing costs while reducing quality. This has led to Google and Facebook being referred to as a 'duopoly in digital advertising' by heads of media businesses, making it extremely difficult for publishers to rely solely on advertising. For this, publishers like Dennis Publishing have taken it upon themselves to diversify into completely different arenas. For example, in 2014 they acquired BuyaCar through which they sell nearly 200 cars a month which helped to generate a reasonable amount of the company's total revenue that year. The challenges that publishers face in digital advertising can also be used to their advantage though, and this can be seen with Economist. Due to the power of giants like Google and Facebook, the company has been able to push down costs to recruit subscribers. So even though advertising revenue may be on a steep decrease, circulation revenue remains to go up. Factors contributing to a situation like this are the price increases of the magazine and also the company's investment into growing its global circulation. With the latter, it's said that social media has helped halve the cost of investment needed to recruit a subscriber. With this it's apparent that diversification should be a consideration amongst publishers.
- The Economist saw an advertising revenue drop from £83m to £76m last year, but its circulation revenues grew 8% to £176m
- Dennis Publishing is one example of a media company that has invested in product diversification, growing its revenue from £59m in 2009 to £93m in 2016.
- In November 2014, Dennis acquired online car dealer BuyaCar and integrated the e-commerce business with its portfolio of automotive websites. Dennis now sells nearly 200 cars a month and BuyaCar generates 16% of the company’s total revenue
- More than a third of last year’s revenue was derived from digital, but only half of it was advertising
This article represents something that we could be seeing a lot of news publishers undergoing in the next couple of years: product diversification. Relying solely on news to keep companies afloat is looking increasingly less prudent, so ranging into completely different areas may be the more sensible thing to do. What's particularly interesting here though is this idea that 'the same forces [social networks] that are causing these long-established models to crumble are enabling new opportunities for brands to evolve' and perhaps continue to thrive.
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