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The missing £2.7billion

Brands that don’t advertise in news brands make less profit and Newsworks has conducted lots of research to quantify that. CEO Jo Allan looks at some of the key findings from their latest study.

By Jo Allan

The missing £2.7billion

In 2018, Newsworks released one of its largest and most in depth studies that showed that advertisers were missing out on an eye-watering £3billion of potential profit from underinvesting their advertising spend in news brands.

Three years on and we decided to revisit and update this work. The Bottom Line study has been a huge and painstakingly long and complex process of analysis – taking in over 1,000 econometric models across 30 advertiser categories – and I have to admit I was nervous as I waited for the results to come in from our insights team and our partners at effectiveness consultancy Benchmarketing.

Even though readership has grown impressively over the last ten years – with a huge spike last year as more people than ever sought out trusted sources of information – and we had seen three periods of consecutive growth in advertising investment in 2019 (Source: AA/WARC), the impact of Covid loomed large over this progress.

However, any anxiety was soon put to rest when I saw the first top line results because they immediately showed just how remarkably resilient news brands are, despite the best efforts of Covid. Across those three years (2018/19/20), advertiser profit, derived from investment in news brands, had increased by £268 million, a 10 percent positive swing. And if we adjust the results to remove the Covid year (2020) from the equation, the profit levels would have been even higher again at circa £500 million. Looking forward, we forecast that an extra £1billion of advertiser profit will be realised between 2017 and 2025 if we continue on the same growth trajectory.

These results are further evidence of the growing significance, relevance and reach of news brands. Journalism matters to more people more than ever before, and advertisers are realising the increased profits they can achieve by working more closely with us.

Untapped profit

But before we get carried away, let’s be under no illusion here, there is still £2.7billion of untapped profit out there. It is clear many advertisers are still not optimising their ad spend in news brands. However, I am convinced that if we continue to collaborate, and act as a more unified industry, we can surpass our own forecasts.

Advertisers and their agencies are now more acutely aware of where their advertising pounds are going and the impact they can have on society. Just this week, The Conscious Advertising Network – supported by 250 signatories including brands and media agencies such as GSK, Ben & Jerry’s, British Gas, Ebiquity and Havas Media – published an open letter calling out the social media companies around climate change misinformation and the advertising revenue misinformation generates. Our own research shows that over half the people in the UK are concerned about the levels of misinformation on social media, and 69% said that they looked to UK news brands to tackle this misleading information.

Tackling fake news and misinformation through trusted journalism is of course hugely important. But cutting off the advertising revenue that helps to fund fake news is even more critical. Not just from a moral standpoint in helping to create a safer and more healthy online experience but also because it will help to improve advertisers’ profits.

If we dig a little deeper into our Bottom Line study, we begin to see some interesting trends emerge especially when we separate out established media from general online digital display. For almost all established channels (Radio, TV and news brands), increasing investment improves the profit return on investment. And for news brands, the rise is by far the most impressive, increasing by 60% in print and 62% online. On the other hand, increasing general online display budgets – which doesn’t include established online channels – has a negative impact of -23% on an advertiser’s profits. That is a pretty unwelcome number by any standard, and one that advertisers should take note of.

The magic of advertising happens when brands appear in places where there are real people, who are really engaged in trusted and professionally crafted content. We already know that seeing an ad in a quality environment drives greater engagement, better brand response and is 42% more cost effective (Source: Value of Quality, GroupM 2018).

Our latest study has just taken that one step further as we can now see the increased profits brands can make from investing more heavily in contextually rich environments. We just have to convince more advertisers that it really does pay to be in news brands.

We forecast that an extra £1billion of advertiser profit will be realised between 2017 and 2025 if we continue on the same growth trajectory.

You can hear Jo Allan being interviewed by James Evelegh on a recent episode of The InPublishing Podcast, which was sponsored by Air Business, a leading supplier of distribution and subscription management services.

This article was first published in InPublishing magazine. If you would like to be added to the free mailing list, please register here.