Prior to the COVID-19 pandemic, newsrooms were diversifying their revenue streams in many creative and innovative ways. However, with advertising being a big casualty of the pandemic, the need to do so has never been greater.
In Reuters Institute’s “Journalism, Media and Technology Trends and Predictions 2021” report, it states “how important diversification has become, with commercial publishers citing, on average, four different revenue streams as being important or very important to them this year.”
Mark Glaser agrees, telling E&P, “Diversifying revenues is the best way to be sustainable.” Glaser is the founder of MediaShift; innovation consultant at the New Mexico Local News Fund; and associate at Dot Connector Studio, a media strategy and production firm.
Gwen Vargo, director of reader revenue at the American Press Institute, added, “Ultimately, I think we’re going to see more hybrid models. There are going to be opportunities for publications of all sizes and shapes to get money directly from their readers, sponsorships and advertising, events, and from foundations that have an interest in media or their communities. We should never rely on just one stream of revenue.”
Here, E&P explores where some of these opportunities will be heading as we move further into a future post-pandemic.
Creating Value for Readers
An important question as 2020 turned into 2021, and even now, is: Was last year a trend-setting year for subscriptions, or a departure from what is normal?
News publishers, at least, have committed to subscriptions going forward. Seventy-six percent of industry leaders say that subscriptions are likely to be important or very important for their company in 2021 (setting this revenue stream ahead of ads), according to the Reuters Institute’s report.
Both Vargo and Glaser believe that distinct major news events, such as COVID-19, the 2020 presidential election, and racial and social protests compelled consumers to seek out news outlets.
“It made people realize just how important it was to have accurate, fair, well-reported information,” Glaser said. “If you couldn’t make the case to sell a subscription or donation or membership to someone last year, I don't know when you could.”
Many publications did successfully make the case. From The New York Times, which reported it added 2.3 million digital-only subscriptions in 2020 (and now exceeds 7.8 million subscriptions for its digital and print products), to the Los Angeles Times, which saw a surge of 52.8 percent from January to December, according to the Local News Initiative.
Recently, Mather Economics conducted an analysis of news outlets in 138 markets of various sizes and found that digital circulation was up 51.2 percent from November 2019 to November 2020. The analysis also found that 25.6 percent of all subscription starts in 2020 were digital.
More impressive is that these numbers were accomplished even when so many publications dropped their paywalls for COVID-19 related coverage. This fact makes Vargo’s and Glaser’s points even more important: when publications provide content that is relevant and important to consumers, they will be successful in garnering subscriptions.
If news publishers continue to provide significant content to their communities for the remainder of this year—of which there will be no shortage of news stories—they will see another big year for subscription gains.
To make subscriptions work for the media industry in the long run, Vargo anticipates that it will need to be creative with defining what a subscription actually means.
“When we think of subscription, we think of a newspaper that comes to your house or online access,” she said. “But subscriptions are evolving…sometimes they feel more like memberships. It may not be exactly what we saw a subscription to be at the onset, but there’s room for publications to have recurring revenue.”
The Return of Ads
Advertising sales plummeted across the news industry as the coronavirus pandemic began to heat up in the United States. According to Pew Research Center, advertising revenue fell by a median of 42 percent for major chains that own more than 300 daily papers between Q2 2019 and Q2 2020. As a result, a significant number of industry leaders are relying less on advertising as a revenue stream.
In Reuters Institute’s report, 66 percent of industry leaders said that display ads are likely to be important or very important for their company in 2021, and 61 percent said that native advertising is likely to be important or very important in 2021. This is down from 81 percent in 2018 and 67 percent in 2019, respectively.
The shift away from advertising may also be further encouraged by changes to the third-party cookie. Half of small publishers (whose annual revenue is $10 million or less) “plan to rely more on non-advertising sources of revenue when third-party cookies are phased out at the end of 2021,” according to Digiday, who surveyed 114 publishing professionals. Additionally, 30 percent of publishers that generate more than $50 million in annual revenue said they would rely more on other sources of revenue.
However, this doesn’t mean the industry has seen the end of advertising as a viable revenue stream just yet. Even if it’s not a main source of income anymore, it can still help add to a publication’s bottom line.
Ryan Dohrn is a sales coach, creator of the 360 Ad Sales Training system, and founder of media sales training firm Brain Swell Media. He also writes a sales and advertising column for E&P.
“There are other highly profitable and popular revenue streams like contests and promotions that are tied to print,” he said. “For example, a client might buy a contest called ‘Teacher of the Month.’”
From the community paper level, his current observation is that 55 percent of revenue is tied to print, 35 percent to digital/promotions, and 10 percent to events. In addition, as the pandemic subsides, the event business will pop back up and be responsible for more revenue.
Glaser believes that selling advertising can still work, but it must be done right. When a publication understands the needs of the business and can better serve them, they can get them in front of an audience that cares about their service or product—and that will be a winning scenario.
Dohrn echoed the same sentiments, stating “advertisers want to be led.”
“There are so many things that are changing out there,” he said. “When you go in and ask somebody what they want, they don’t really know. If we can lead these people, I think we’ll be very successful.”
Dohrn suggests news publishers should offer the following choices to their advertising clients: promotion and events, digital (which should focus on collecting permission-based data), niche publications, and—most importantly—a commitment to the news that people want to receive.
Content marketing is a vast revenue space that allows for the creativity that today’s industry demands. It was also a bright spot when it came to successful sales last year.
Research conducted by Borrell Associates and The Branded Content Project (a full-service branded content product development, content creation, education, distribution, and monetization resource for local publishers) estimated the amount spent on content marketing will be down just 1.5 percent to $63.3 billion in 2020. Julia Campbell, general manager of The Branded Content Project, also said that at Borrell Associates’ October 2020 SMB (small and medium-sized businesses) panel, 56 percent of those businesses said content marketing would be more of a priority in 2021.
Funded by the Facebook Journalism Project, The Branded Content Project is a joint venture between the Local Media Consortium (LMC) and the Local Media Association (LMA). According to The Branded Content Project, media outlets working with the Project have sold more than $1 million in content series sponsorships.
“Trends around branded content are showing massive revenue growth for local media organizations of all sizes,” Campbell told E&P. “Small and medium businesses saw the need to communicate longer form messages during the challenges of the past year, and branded content was a solution to explain, educate, and engage audiences looking for information.”
Campbell also shared that audiences have embraced this type of advertising since the purpose is to provide education. She pointed out that audiences don’t visit a news site to look for an ad, they go looking for information, which is what branded content as an advertising method can provide.
Campbell believes this is this the year that content marketing “explodes for the local media industry.”
“We have seen an inspiring amount of creativity for clients and quality advertiser storytelling develop at local media outlets during the past year,” said. “We only expect those initiatives to become stronger in the coming months. We need to help our advertisers cut through the clutter of the millions of marketing messages flying around the marketplace. The way to do that will be through content.”
News publishers were at risk of losing significant revenue when the COVID-19 pandemic shut down events, which has gained traction for publications over the years. However, instead of throwing in the towel, publishers quickly pivoted and successfully shifted to virtual events instead.
The Texas Tribune moved two of their popular events online: The Texas Tribune Festival, an annual weekend-long, in-person ideas conference, and the TribFeast, a gala fundraiser that brings major donors together. Both the Tribune’s efforts to make the most of TribFeast and the decreased budget of the event itself helped them hit 99.6 percent of its fundraising targets, according to an Indiegraf article. The festival, which took place over the course of a month instead of a single weekend, was able to recruit high profile speakers, like former U.S. Secretary of State Hillary Clinton, Sen. Ted Cruz, and investigative journalist Nikole Hannah-Jones. It was their strongest line-up in 10 years, Texas Tribune CEO Evan Smith said in an announcement.
“Not having to travel to Austin over a prescribed set of days, it turns out, means saying no to an invitation to participate is nearly impossible,” he said. “We could shoot for the moon, or maybe for the Zoom, as we built our speaker list.”
Will virtual events stick around post-pandemic? Most likely.
A Global DMC Partners survey reflected that 72 percent of event planners are either moving their live events to virtual or hybrid (face-to-face live programs with a virtual component) in 2021.
TIME Magazine is one publisher that has displayed a commitment to virtual events moving forward. The magazine launched “TIME 100 Talks,” a virtual event series that convenes members of the TIME 100 community.
Ian Orefice, head of Time Studios, told Digiday that the virtual event series didn’t even exist in March 2020, but now is a tentpole he doesn’t see leaving the brand anytime soon.
Glaser doesn’t think virtual events are going anywhere any time soon either; however, he is hearing from some publishers that they are hoping to host small, outdoor, in-person events this summer. (Fifty-seven percent of event planners are predicting less than 250 attendees at their largest 2021 event, according to the Global DMC Partners survey.)
“There might end up being these hybrid events that happen. I do believe that people have really learned how to produce online events and realized that there is a savings there,” he said. “So, I think these online events will probably continue in some form, even when people are back doing in-person events…just because it is easier (and) it is cheaper. If you can do it right, it can really pay off.”
Asking for Support
Philanthropy and donations have increasingly helped many media companies keep their doors open, especially during the COVID-19 crisis.
Frank Mungeam, Local Media Association’s chief innovation officer, believes that the “pandemic and the interrelated challenges awakened in the philanthropic community a new level of recognition that their goals are deeply aligned with those of journalism.”
Last year, LMA launched the COVID-19 Local News Fund, which has served as a great example that there is an opportunity for journalism to be funded through philanthropy. According to Lindsey Estes, LMA director of strategic initiatives and member services, $1.74 million was raised by more than 200 publishers who created a fund.
More recently, with funding from Google, LMA launched the Lab for Journalism Funding, a six-month lab that explored the capabilities of philanthropy to fund local journalism. Mungeam said that the 16 participating publishers have so far raised on average more than $100,000 per publisher, with some the larger publishers raising up to half a million dollars.
As a result, many publishers in the Lab have been able to fund reporting resources, Mungeam said. Both The Post and Courier in Charleston, S.C. and The Advocate/Nola.com in Louisiana raised funds to sustain their investigative reporting teams, while The Record Journal in Meriden, Conn. was able to hire a reporter dedicated to covering Latino communities. Ten of the 16 publishers also earned enough to participate in the Report for America program and added more journalists to their staffs.
There was a time that only nonprofit newsrooms were a part of the philanthropy conversation, but that is now no longer the case. Mungeam said that many of the newsrooms in LMA’s Funding Lab were for-profit.
“Rather than sorting by for-profit versus nonprofit, I think we’ll see a more audience-centered model emerge where the sorting is by commitment to the principles of serving the community, and there are a number of for-profit new organizations that are deeply committed to those core values of journalism,” he said.
Glaser also believes last year was a trend-setting year for for-profit newsrooms who are utilizing philanthropy. Between the efforts of Report for America and LMA’s COVID-19 Local News Fund, for-profit publishers have realized that they are valuable to their community, and their work is a public good and just like any other public good, people can donate and support it.
“It’s a change in mindset for a lot of these for-profit publishers,” he explained.
It’s also important to note that many for-profit newsrooms are converting to a nonprofit status. Axios recently reported that the Institute for Nonprofit News (INN) helped facilitate five newsroom conversions to nonprofit status in 2020. It also reported that INN’s News Match fundraising campaign exceeded $5 million for the first time last year, with a 34 percent increase in newsroom participants.
Whether they are converting to a nonprofit model or launching philanthropic initiatives, for-profit news companies are using this approach more to raise funds to support their journalistic missions and to make up for the loss from the traditional advertising model. As time goes on, we should expect to see philanthropy play an important role in more newsrooms.