Ads are fast becoming an extinct revenue stream for media publishers

As we plummet into the third lockdown in less than 12 months, readers continue to turn to digital media publications. With printed media’s immediate future looking unsustainably bleak, and ads failing to yield previous levels of income thanks to privacy and data concerns, it’s time to look at alternative revenue streams.

Did Covid Kill Ad Revenue?

Pre-covid, ads were beginning to fall short in terms of revenue. Readers were already increasingly sourcing breaking news and information through social media outlets. Local newspapers had all but lost local advertising investors. The traditional long-read digital article or printed paper was fast becoming a ritual for the few, no longer in demand by the many. 

Though ads had been steadily declining, many publishers were not quick to turn to paywalls. Those who did not employ these subscription models watched as to whether it worked for others while waiting for other revenue streams to reveal themselves in the meantime. Afterall, why take the risk of losing readers when it might not be the best investment? Then Covid hit.

As the rest of the world coming to a halt, ad revenue spends began declining dramatically. Ad revenue “fell by a median of 42% in the second quarter from a year earlier.” But this was preceded by already declining revenue. By Q4 2019, advertising revenue had declined by 6.4% on the previous year.

In the midst of declining ad revenue, those offering subscription services through paywalls are reaping the rewards. B2C publishers saw a 22% increase in subscription revenue in the same period. Additionally, B2B publishers saw a 10% increase.  

What’s the problem with ads?

To understand the decline in ad revenue, we need to separate the issue into two periods; pre-Covid and now. 

One of the biggest hits to the media advertising revenue stream came from the ever dominant digital advertisers Google and Facebook. In 2017, Facebook alone made $39 billion in advertising revenue. Within 6 months, they attained over 1 million new advertising customers; small and medium-sized businesses. By 2019, they had attracted 30-80 million small and medium businesses globally. 

This issue alone has starved local and regional media publishers of a valuable revenue stream. By January 2020, we saw the social media digital advertising monopoly growing evermore, harming even the biggest media publishers. By this time, some of the world’s most respected publishers had instructed their own subscription services. Paywalls and calls for donations began popping up everywhere. The New York Times, The Wall Street Journal, New York Magazine. However, this tactic slowly began to pay off, slowly offsetting the impact of the lack of ad revenue. Then Covid changed the ad game practically overnight.

With increased readership with individuals looking to search for information, you’d like to think that ad spend had increased. Yet, despite promising readership reports, ads have failed to fuel revenue uptake. Why? Because advertisers have blacklisted their adverts from appearing next to articles that refer to Covid-19, even the positive ones.

Adding salt to the already sore wound, advertisers continued to run ads across social media, despite any reference to the coronavirus pandemic. Therefore, with digital advertisers continuing to favour the social media outlets, paywalls and subscription models become not just important but essential for digital publishers. Read more >