The 117 specialist media people taking part by and large expect their revenues to grow over the next two years, but from a rapidly expanding range of sources. Business to business media are seeing more dramatic change than consumer markets, but many publishers are experimenting with new digital platforms, social media and are actively looking to launch new incarnations of their traditional media brands.
When asked, “What keeps you awake at night?”, most business to business publishers said they worry about how to develop revenues from digital editions, how to charge for online content and how to convert free to paid. Consumer publishers are most concerned about declining online ad rates. In spite of these sleepless nights, 71% of respondents were optimistic about the future of their business, and most expected revenues to grow over the next two years.
The survey was skewed towards MDs and publishers in smaller independent businesses, with 58% under £5m turnover, 47% having fewer than five media brands, and 52% twenty employees or fewer, while over half of respondents were owners, MDs or publishers. So maybe the agile independent has a greater opportunity to thrive in the current uncertain environment than the larger publisher – unsurprisingly 73% of those surveyed agree!
Here are the headlines on what your peers are thinking about the future of specialist media.
* Plenty of experimentation taking place with digital editions, ereaders, mobile apps, archives but a strong focus on sponsorship or reader-funding.
* A substantial minority are testing social media and seeing some results; all are keen to expand their customer databases significantly.
* Most still charge for ads on tenancy basis, and classified is shifting online, but growth expected in sponsorship and contract publishing.
* Digital ad, marketing and editorial skills gap is a big issue – both training and freelances will be needed.
* While print is declining sharply, it will still be main revenue source in next two years, as digital revenues are still small.
* B2B newsstand will be replaced by subs, and many expect paid online content to grow.
* Print will be more resilient in consumer markets.
Experimentation with new digital media platforms
Right now, only a minority (26%) charge for online content, but 52% have plans to develop paid content models. 22% charge for digital editions now, but 55% expect paid subs revenue from digital editions to grow, and 60% expect growth in ad revenues. Just 26% have a mobile app already; but a further 51% plan to have one. Half of current mobile apps are free, with the rest sponsored or on subscription, but the planned apps are far more likely to be sponsored or paid-for than free.
Around a quarter are planning an ereader version of their content, with the plan of funding by advertising or subscription. About a third plan to digitise their archive – a great resource for established media brands – with an equal split between those who plan to charge for access and those who will keep it free to draw traffic through search and grow ads. 40% plan to add video and audio content, with the overwhelming majority planning to fund this from advertising rather than pay to view.
Testing the water with social media, and data building
Interestingly, business to business media owners seem a little more advanced in their adoption of social media, with 49% in the B2B world considering social media very or quite important, compared with only 35% in consumer media. The main platforms used are as expected: business media use LinkedIn, Twitter, Facebook and YouTube in that order, while consumer media starts with Facebook, then Twitter and YouTube, with specialist forums also a popular choice. Objectives of social media activity are to drive traffic, awareness and grow profile with target audiences. A sizeable minority (27%) feel social media is having a big impact, and a further 53% a small impact on their business.
Social media is one channel to grow customer databases, which are an area of focus with 54% expecting their database to grow by over 20% in the next two years. Media businesses are spending less marketing money on traditional print DM and telemarketing, and putting more emphasis on email marketing, online marketing and events. Cross-selling to in-house databases is significant, with 64% selling print products, 56% online publications, 54% live events, 25% books, 25% list rental, 23% training and 17% directories.
Gradual shifts in advertising models
In the specialist sector, a surprisingly high proportion (62%) say that online advertisers are principally buying ads on a fixed sum or tenancy basis, 30% on CPM and just 13% on CPA with only 6% on commission. There’s not much expectation that this will change in the short term. Most are experiencing a shift in classified advertising from print to online, with a quarter saying that over 75% of their classified ad base is now online. This will change only gradually, as 47% still expect to have print classified in two years’ time. Many are exploring new sources of commercial revenues, with 38% expecting contract publishing to expand, and 36% stating that event sponsorship is very important to their business.
Bridging the digital skills gap
When asked what will stop their business from achieving its goals in the next two years, after finance (48%) and senior management time constraints (47%), the next biggest concern was staff skills gaps (34%). Top of the list was digital ad skills (51%); then digital marketing (47%) creating audio and video content (36%) and writing for SEO and social media (35%). So training and skills development is a big issue. Some will bridge the gap by hiring in experienced staff, principally in digital advertising (29%) writing for SEO and social media (29%) and digital marketing (25%). This implies a growth in demand for digitally skilled freelances.
Evolution of subs and digital revenues
The survey also asked about sources of revenue, both now and in two years’ time. This uncovered some interesting trends, with an expectation of revenue sources diversifying, and consumer and business media evolving at different rates.
Print and events – “traditional media” will still be the major revenue source, although in continued sharp decline. For business to business publishers, print advertising is expect to decline sharply - by 42% - and conferences and events will slip by 6%. However, print subs are expected to grow by 52%, so overall “traditional” media revenues will still contribute 44% of overall revenues. Consumer publishers also expect strong growth in subs (+19%) while print newsstand and print ads both fall by 20%, so again the “old media” will still contribute 65% of revenues.
Meanwhile digital revenues are expanding rapidly, albeit from a low base. Business media owners expect dramatic growth from digital editions, and online subs - but they will only account for 15% of revenues. Online advertising will continue to expand, contributing a further 9% of revenues. Consumer media are changing more slowly, but they still expect online ads to expand to 9% of revenues, and most are exploring paid online content, mobile and ereader versions, even if the volumes are still low.
Long term future of print
So the next two years will simply see a continuation of current trends, but what about the very long term? It looks like there will be dramatic shift for business media over the next decade. There is a clear consensus from the survey that newsstand will gradually disappear as a channel for B2B magazines, with 66% expecting printed B2B magazines to be subs only in ten years’ time. 38% think this will happen in three years. A significant minority (36%) think all printed B2B magazines will cease in ten years’ time. Within ten years, 49% expect 50% of online B2B content will be paid-for by users rather than free.
Print will be a bit more resilient in consumer media markets. The shift to subscriptions will also be seen for consumer print, albeit more slowly - only 31% expect consumer magazines to be subs only in ten years’ time. Only 18% believe that consumer magazines will cease to exist in print in that time-scale, and 53% think this will never happen. Specialist markets will hold out for longer, with 44% agreeing that in ten years’ time only specialist magazines will exist in print. Charging for online consumer content is more of an uphill battle, with just 33% thinking that 50% of consumer online content will be paid-for in ten years, and 34% feeling that this will never happen.
This research has prompted some lively debate on the Specialist Media Network on LinkedIn. Many feel print will always have a place, although others point out that as publishers and readers get more comfortable with the interactive opportunities of digital magazines, their use will expand. Mark Bishop feels that online ad rates will never recover to past levels, so other sources must be explored. Miles Galliford warns that “born digital” publishers are the hidden threat to traditional print publishers, and forecasts that the dividing line between websites and mobile apps will blur as more people browse the web using mobile devices. Andrew Petherick sees many small publishers grabbing opportunities in video with both hands. If your experience is different, feel free to join in.
I’m cheered both by the level of experimentation already taking place among specialist media owners, and their flexible approach to some significant changes on the horizon. Whilst they are worrying about how to develop paid-for business models, they are actively broadening their range of revenue sources. There is a significant skills gap around digital advertising, marketing and editorial content, but I do believe there are grounds for optimism for agile, independent media owners.
