This drop was less steep than anticipated, given the UK was in lockdown for much of the period.
Subscription revenues grew strongly from April through to June, up by a healthy 44.9% compared with Q2 2019, to reach £34.5 million. However, display advertising, the largest revenue category, declined by 25.2% while revenue from other smaller categories such as recruitment, sponsorship and online video also reduced compared with the same period last year.
On a 12-month rolling basis, subscription revenues performed well, growing by 27% to reach £112.3 million. Miscellaneous revenues also grew 25.2% to £38.3 million. However, this growth failed to offset the substantial reduction in revenue from all other categories including display advertising, online video, sponsorship, recruitment and other classified. The decline in display advertising revenue was particularly significant, decreasing by £45.4 million in 12 months. Overall, total digital revenue decreased by 6.4% in the 12-months to June 2020.
B2C publisher revenue decreased by 7.5% over the year to June 2020, with display advertising revenue declining by 20.4% on a rolling 12-month basis. Subscription revenues were particularly strong among B2C publishers, however, growing 41.9% in 12 months.
B2B revenues saw a more modest decline of 0.9% over the same period, with display advertising only decreasing by 0.4%, while recruitment and miscellaneous revenues fell by 24.5% and 16.1% respectively. Online video revenues grew 36.3%, although they still only make up a small proportion of B2B revenue, and subscriptions increased 8.1%.
A survey of AOP board members (fieldwork conducted in Q3 2020) reveals confidence in the digital publishing industry has rebounded strongly from the fall earlier in 2020, suggesting initial fears about the detrimental impact of COVID-19 on publisher revenues may have been overestimated. Confidence in members’ companies’ financial prospects rebounded equally strongly as confidence in the industry as a whole.
The importance of growing non-advertising revenue was universally recognised, with 100% of members surveyed selecting this strategy as a high priority over the next 12 months, compared with 88% in Q3 2019. No member saw advertising revenue growth as a high priority strategy, compared with 13% in Q3 2019, supporting an industry-wide focus on revenue diversification. Over two thirds (67%) of members identified cost reduction as a high strategic priority, up from 38% in Q2 2019, as publishers double down on cost saving and business continuity measures due to the impact of the pandemic.
Unlike sentiment data reported as part of the Q1 2020 report, when no AOP member reported seeing expansion as a strategic priority, one third (33%) of publishers now seek to grow their business through acquisition.
Richard Reeves, Managing Director, AOP, commented: “A drop in digital publisher revenue was unfortunately inevitable in Q2 2020 given the COVID-19 pandemic and the impact of the associated national lockdown. But it is heartening to see the decline was not as steep as the industry initially feared, and that some revenue categories such as subscriptions continue to see strong growth. It is also promising to see publisher confidence rebounding, with all our members surveyed prioritising non-advertising revenue growth in a quest to diversify income streams, and some even considering expanding their businesses through acquisition. With another lockdown now in place publishers don’t have an easy road ahead but these figures provide reassurance the industry is working together in a positive direction.”
Dan Ison, Lead Partner for Telecommunications, Media and Entertainment at Deloitte, commented: “The industry’s focus during Q2 quite rightly fell on growing readership and subscriptions - the challenge for Q3 and beyond will be to sustain it. According to Deloitte research, more than one in three (36%) UK consumers read more news online a result of staying at home during the pandemic, with 42% expecting to continue to do so at similar levels once lockdown restrictions have lifted. Building new ways for consumers to consume and enjoy content will ensure that the subscription spike is not short lived, but continues to support the industry as it navigates market uncertainty. In time, advertising revenues will build again, but it will be subscription revenues which provide publishers with the resilience they so badly need in the months ahead.”
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