The Digital Publishers Revenue Index (DPRI) is a quarterly report on UK publishing from the Association of Online Publishers (AOP) and Deloitte.
Revenue from subscriptions and sponsorship rose by 24% and 10% respectively in Q4 2019 compared to Q4 2018. However, growth in these areas failed to offset significant declines in display advertising and recruitment, which were down by 22% and 20% in Q4 2019.
Just over half (53%) of publishers reported revenue increases in Q4 2019, down from 58% who said the same in Q4 2018. The proportion of publishers reporting high growth however grew year-on-year, with 24% reporting growth in excess of 25% in Q4 2019, a rise from 16% who reported the same in Q4 2018.
Total digital revenue was down by 6.3% in 2019 compared to 2018, primarily driven by a significant downturn in advertising display formats of almost 18%, and a smaller decline in online video at just under 7%. However, there was positive news with subscriptions seeing a near 16% increase, partially offsetting the impact of the decline in advertising revenue.
On a 12-month rolling basis, B2B revenue increased by 2.2% to £80.4m in December 2019, up from £78.7m in December 2018. Growth was driven by increases in sponsorship revenues (27%), alongside modest rises in display revenues (6%) and online video (5%). B2C revenue declined by 7.9% from December 2018 to December 2019, driven by a fall in revenues in display (-20%) and online video (-7%), but partially offset by a 30% rise in income from subscriptions.
According to a survey of AOP board members on the year ahead, taken as the implications of Covid-19 were becoming clear, the proportion of AOP board members confident in the financial prospects of the digital publishing industry dropped by 80 percentage-points from the previous quarter, reflecting the uncertainty across the industry. Similarly, the proportion of participants confident about the financial prospects of their organisation’s digital business fell by 93%.
The Q4 2019 AOP board member survey also found significant shifts in digital publishing strategies. 60% now cite advertising revenue growth, non-advertising revenue growth and cost reduction as a high priority for their business over the next 12-months. In comparison in Q1 2019, 100% cited non-advertising revenue growth as a high priority, while 67% were prioritising cost reduction and the introduction of new products, services or expansion. Just 40% cited the introduction of new products, services or expansion as a priority in the latest member survey.
Richard Reeves, Managing Director, AOP, commented: “The latest DRPI findings indicate the challenging times ahead for the UK publishing industry, set to be further exacerbated by the impact of Covid-19. Publisher plans in 2019 looked primed on diversifying revenue sources in 2020, but a difficult Q4 2019, and tougher times ahead indicate this is to be stifled as publishers retract to their core services. While digital publishers have been seeing great audience figures during the global pandemic, this has not been matched with advertising revenue coming in and so we expect to see publishers place a greater emphasis on alternative revenue streams such as ecommerce to compensate. Collaboration has always been to key to addressing industry challenges, and in difficult times we often see true innovation. With seismic change on the cards, digital publishing could well reshape for the better over the next 12-months.”
Dan Ison, Lead Partner for Telecommunications, Media and Entertainment at Deloitte, commented: “In the final quarter of 2019, which included a general election, we saw a remarkable 24% increase in digital subscriptions; the fastest rise for six quarters. This is welcome news for the industry, given the parallel continued decline in revenue from advertising display formats. The ‘subscriptions spike’ underscores UK society’s reliance on the digital publishing industry as a key source of information and entertainment, and could continue in the next DPRI report which will capture the lockdown period. As households and business leaders remain cautious of discretionary spending during COVID-19, communicating the value of subscriptions will be fundamental in ensuring revenue growth in the year ahead. In the longer term, subscription revenue will grow in importance as a solid bedrock for publishers looking to diversify their business models.”
