The survey, carried out in February, suggests that a healthy looking 16% is the average rate of digital revenue growth that publishers expect to see in 2014, slightly higher than the anticipation of the previous year. Of course, we should always be wary of averages and it’s true to say that, in reality, there is a mixed expectation in the market with 57% of publishers expecting growth of less than that 16% average, whilst 43% are more bullish about their prospects and see growth in excess of 20% this year.
The Organisation Census is now in its sixth year and has evolved over time to give a deeper view of the key drivers within the digital business of many of the UK’s leading publishing companies. It acts as a benchmark for the digital publishing industry in terms of where publishers are currently at and also captures their intentions for development over the next twelve months. At its core, the Organisation Census covers a number of areas including growth of products, people issues, investment in development and technology, revenue focus and future challenges for the forthcoming twelve months.
A total of 32 organisations, representing well over 700 publisher brands and publications, completed the survey this year.
Growth opportunities
Once again, the digital publishing industry will continue to innovate, and new product launches remain high on the agenda in 2014, with seven out of ten publishers expecting to have new product in the market this year, with almost nine out of ten looking for growth from core products. The appetite for acquisition appears less strong with 14% of publishers expecting to acquire this year, compared to 24% in 2013.
In terms of international intentions, a third of publishers are looking to launch into new markets and one in two to grow their core business overseas, although none currently see overseas acquisition opportunities in the pipeline. As last year, almost two thirds of publishers responding to the census suggest that they see those international audiences as either of growing importance or already very significant in terms of traffic whilst more than one in two feel the same about international revenues, a growing figure year on year.
Mobile first
There has been major growth in audiences consuming content on mobile and tablet platforms, 60% reporting a major increase in tablet traffic and 71% a major increase in mobile (smartphone) traffic. The continuing focus is on publishers expanding their digital businesses across multiple platforms to meet the increasingly diversified means of reaching audiences where and how they want to consume media.
Recent reports show that mobile is becoming the first screen for internet consumption and that the time spent daily consuming media on mobile devices is higher than tablet, laptop and even TV.
Once again, the census reports that mobile sites and tablet apps are high priority areas of expansion but we are still seeing a focus on desktop, actually ahead of tablet apps and on a par with mobile.
Data monetisation
Interestingly though, the highest priority for publishers this year is data monetisation, for more than one in two publishers. 89% of those surveyed are planning to grow their investment in data technology in 2014. The survey also revealed that hiring staff with data skills has grown in importance over the past year. In total, 58% of publishing houses are looking to hire data and data analytics personnel in the next twelve months, up from 30% last year. The overarching impact of data in digital publishing is also expected to impact partnerships over the coming months, with 57% of those surveyed expecting to develop technology partnerships in data management this year – coming above anticipated partnerships in mobile or tablet apps.
Paid content continues to be an area of growing opportunity; eight out of ten publishers expect to increase the amount of paid elements in their portfolio as the recognition that good content can’t be created and distributed for free continues to grow in momentum amongst publishers. The Telegraph and The Sun are two high profile examples of news brands that have adopted a payment model in the last year.
The opportunity to increase paid elements is seen to be highest via tablet apps with one in two publishers looking to increase monetisation that way, ahead of smartphone apps and the desktop, both seen by a third of publishers as the area of opportunity.
Programmatic advertising
Despite the move towards more paid access to content and services, advertising is still seen as the revenue growth priority for the majority of publishers, with one in two suggesting that display formats or creative solutions are a key source of growth. The focus on growth from programmatic advertising is now almost as high as direct sell with seven out of ten seeing it as a priority area of growth compared to eight out of ten for direct sell.
Despite the focus on ads, one in three have subscriptions revenue as a key priority. Perhaps surprisingly, given the scale of audience adoption, only one in four have mobile up there too, behind the latest advertising phenomenon of native, which almost one in two see as a clear area of priority, although of course that is not to say native ads on mobile sites are not being considered. Data driven revenues are seen as a key priority for four out of ten publishers now.
The challenges
Although this year’s census shows a positive outlook for 2014, publishers continue to recognise the challenges they face growing their businesses. The challenges to development this year see a shift in focus from last year’s. Most publishers now find the degree of investment in the digital business, new product development, and people skills development the biggest challenges they face, compared to last year when tablet apps / digital editions development, people retention and maintaining / growing market share were the biggest challenges.
Publishers continue to become technology businesses as well as media businesses and distribution via multiple platforms is pushing user experience to the forefront. This poses two big challenges, one around acquiring and developing the necessary skills to increase proficiency with technology and the other around the degree of investment required in technological development, either from in-house development or in partnership with external providers.
Tech recruitment
This year sees a renewed enthusiasm to expand with a growing number of publishers increasing their recruitment of new staff, 65% of publishers expecting to do so this year. Similar to last year, it is seen as important to grow technology areas within the business, with advertising operations (programmatic), analytics, and database / data analysis as the key areas of focus. Recruitment in the editorial area is also on the rise, a clear shift from last year when the number of publishers focusing on that area was less than half of what it is now.
Building technical teams in-house has led to development spends mainly happening within the business rather than externally, however this year there is a slight shift towards more publishers (just over a third) allocating spend externally. Nine out of ten publishers overall are suggesting that they will increase their investment in technology in 2014. Most partnerships for technology development will be on data management now, ahead of mobile and tablet site and app development, video and measurement, all similar to last year.
With the increasing reliance on data to assist in both the development of content - identifying opportunities to create new products or interest streams and increasing personalisation for users - together with the necessity to grow audience data to maximise advertising sales opportunities, particularly via programmatic trading, the partnering of publishers with data management platforms is an area of focus and expansion for the majority. Increasingly, it is about publishers being in control of their data and managing it to maximise the value of their audiences and media brands.
To sum it up, data has been talked about in terms of its importance for a long time but we are now seeing a real focus on driving its collection, analysis and interpretation as it permeates every aspect of the digital business from content creation, to marketing and revenue generation. We can expect to see growing sophistication in its usage going forward.
