Month: December 2019

The AG’s office may not be able to enforce the CCPA until mid-year, but at that point it will be able to penalize companies for privacy violations dating back to the beginning of the year. By then companies may already be feeling the privacy law’s pinch with some advertisers planning to pull back on targeted advertising and the potential for sites’ CCPA-mandated notices to scare off visitors to publishers’ properties.

“We’ve already talked to some companies who either have decided or are considering to pull their marketing programs from California. So there may be some fallout. It might just be a temporary thing for them to see where the cards fall,” said Rachel Glasser, global chief privacy officer at Wunderman Thompson.

Even if only temporarily, advertiser pullback would put publishers’ and ad tech companies’ businesses in a bind. But those companies are also facing more permanent predicaments.

Any company that sells California residents’ personal information under the law’s broad definition of sale is required to put a “clear and conspicuous” link on its homepage titled “Do Not Sell My Personal Information” for people to request the company to stop selling their information.

One publisher said they hope the notice will meet the same banner blindness as sites’ cookie notices, multiple ad tech execs said that some publishers are fearful enough that the notice will sabotage site traffic that they are considering not adding it to their sites even if it seems they would be required to do so. “Unfortunately there are some law firm attorneys running around saying this is a button of shame,” said one ad tech exec.

Shame should be less of a concern to companies than lawsuits. Even publishers that have had to comply with the GDPR and would seem well positioned to comply with the CCPA are concerned that lawyers and consumer privacy advocates will pressure-test companies for failures to comply with CCPA-related data requests. If they do, publishers that don’t have many logged-in users and rely on cookies to collect information would be in a particularly precarious position.

“If you visited our site on Jan. 5 and in May you reach out and say ‘I visited your site in January and want to know everything you have on me or I opted out and want you to prove you didn’t collect anything on my session,’ that’s going to be extremely hard for a lot of publishers to comply with,” said a publisher.

And that’s all just preamble to July when the AG’s office gains the ability to enforce the CCPA. For anyone of the mind that the AG’s office will wait to enforce the law, California AG Xavier Becerra appears set on disabusing them of that notion.

In a press conference on Dec. 16, Becerra said that his office will be “aggressive” and “early” in its enforcement of the CCPA, especially with respect to the personal information companies collect from children under the age of 17, according to the San Francisco Chronicle. “Our job is to make sure there’s compliance, so we’ll enforce,” Becerra said.

While these publishers are still in growth mode for subscriber acquisition, this won’t last, and 2020 will see them joining more mature subscription publishers in fighting a constant battle against churn. The top five percent of publishers in a Shorenstein Center and Lenfest Institute study had a 97% monthly retention rate. If people are, on average, likely to pay for one news subscription and up to three entertainment subscriptions (Reuters Institute Digital News Report) the pool for acquiring new readers quickly dwindles.

“It’s very hard for anyone now to keep hold of subscribers, particularly the more mature subscription publishers,” said Nic Newman, digital media strategist and author of the Reuters Digital News report. “What this comes back to is collecting more data and testing to see what keeps people from churning.”

The Financial Times has created a formula using recency, frequency and volume to keep people using its product, the easiest indicator that readers will retain. But smart publishers need to build up propensity-to-churn models that identify before someone leaves, deploy catch-and-save teams that use journalist’s knowledge, zero-in on operational factors like credit card expirations, employ skill sets and tactics from businesses outside of media and toy with pricing models.

In European countries like Sweden and Norway, the willingness to pay for news is greater than the U.S. and U.K. The subscription publishers are also relatively mature. In Sweden, MittMedia stops people from leaving by letting them pause monthly payments based on the season. In Norway, Schibsted has made it easy for people to stop subscriptions and feedback on why they are leaving. Publishers like Axel Springer’s tabloid Bild Plus has switched pricing structure from a heavily discounted or free first-month to a more expensive monthly payment, discounted if bought for a year. So far, it’s seen the number of people staying on for the second and third month and the 13th and 14th-month increase significantly.

Just how difficult it is to manage subscriber retention hinges on publisher’s acquisition strategies. More money is spent on marketing to acquire new readers than on keeping existing ones, churn also compounds over time and leads to large changes in revenue with small drops in retention. Pulling in tons of cheap subscribers costs money in marketing, and readers quickly spin out when they realize how little value they put on the product. NRC Handelsblad in Holland, for one, has sworn off cheap discounts as an acquisition tactic.

But coming off the hits of high acquisition numbers is tough. In 2018, The Economist spent over £28 million ($37.11 million) in six months on marketing its full price subscriptions. Since, it’s been directing more investment to retention, launching a dedicated app to combat churn.

Publishers need to be mobile enough to try all tactics to fight off churn, even those that seem counter-intuitive, like bundling audio and text on the same subscription platform to boost value, like Danish publisher Zetland.

“[Publishers] need to place more emphasis on the value proposition and customer experience, whilst delicately balancing churn reduction with high-quality subscriptions growth,” said Adam Hillier, head of digital and media practice at consulting firm Wickland Westcott.

Where they make money
Direct-sold ads were the brightest spot for publishers’ online revenues in 2019, according to Digiday Research.

Of the 135 publishers surveyed by Digiday more than 50% of publishers reported that direct-sold advertising was a large or very large source of revenue for them. Video advertising is also another bright spot, with 28% of publishers reporting it as a large or very large source of revenue, as were programmatic ads, with 35%.

Things have slightly changed from a year prior when branded content was a major source of revenue for publishers surveyed: 76% said their companies had seen branded content revenue grow from 2017. There are certain challenges with branded content, and turning that revenue into profit — it can be hard to make, loaded with hidden fees and brands are increasingly skeptical of branded content’s effectiveness.

Despite all the noise with the pivot to paid, subscriptions aren’t a source of revenue for 40% of publishers. Affiliate commerce is either a small source of revenue or not at all a source of revenue for the vast majority of publishers — 82% of them. This is in line with last year’s benchmarking research, which found that revenue streams via affiliate links were nascent and small parts of the business. Last year, less than 10% of publishers said e-commerce was responsible for more than 25% of their revenue.

Where they’re focusing next year
Despite this, growing direct reader revenue remains the biggest priority for publishers heading into 2020. Almost 46% of respondents said growing subscriptions were a major focus for them over the next six months.

Other major priorities are building direct-sold ads: 64% of publishers said that was either a large focus or a very large focus area for them.

Neither comes as much of a surprise. Subscriptions are an important and controllable way to generate revenue. Sometimes that even comes at a lower resource allocation cost — Digiday Research conducted last year found that 75% of publishers surveyed allocated less than 25% of their company’s resources to subscription products. In an increasingly unstable digital advertiser landscape, any way to have sustainable revenue streams is a priority.

Platform relationships
Publishers’ relationship with platforms continues to be rocky, even as they rely still on platforms to drive ad impressions and new audiences that can funnel down into subscribers. Publishers report that platforms delivered even less value in 2019 than they did in 2018.

Barely half of publishers surveyed say platforms create value. Only 55% of publishers who post to platforms say they’re happy with any platform partner. Just 38% say they’re satisfied with the traffic increase they get from Google AMP, and only one-third of publishers who post to Facebook News Feed say they’re satisfied. Publisher satisfaction falls to around 20% for the other platforms we surveyed. For 2020, publishers surveyed say they plan to invest in smaller platforms and scale down relationships.

Hiring and talent concerns
Product roles have increasingly become the must-have job capabilities inside publishers. Behind this issue is one of a changing business model: Publishers are increasingly looking for people who can work with both business and editorial (especially as subscription revenue becomes more important) and also work on diversifying revenue opportunities by developing new products, such as new events, new newsletters and new multimedia opportunities.

And while hiring is a challenge for the vast majority — 71% — of publishing executives surveyed by Digiday, hiring for product roles is the hardest. Fifty-eight percent of respondents said that hiring product developers and managers was very important or important. The second most important was data analysts which 53% of respondents said was important. Journalists came in third, followed by programmers.