Knowledge Bridge

//Constantine Kamaras /January 16 / 2014

Mobile publishing: A reality check

Most digital industry veterans would agree that something’s missing if a New Year isn’t accompanied by the customary prediction that 20XX is going to be ‘the year of mobile’.  Joking aside, it’s tempting to draw a parallel with the Aesopian myth of the boy who cried ‘wolf!’  Given media consumption trends, it’s likely that if and when this ‘mobile year’ finally arrives, the news industry won’t believe it after so many failed predictions and so won’t be ready to respond and adapt in a timely and effective manner.

This would be quite a calamity, as what has truly hampered news publishers’ ability to innovate and reposition is not so much the need to restructure their business model for the digital era but, rather, the fact that this era is forcing on key industry players ever shorter cycles of disruption.

Take the printed press. It had decades to accustom itself to a multi-channel TV media environment and then a dozen years or so to adjust to the desktop internet, whereas today it barely has a year or two to be fully ready for the ‘mobile internet’ – let alone futuristic- sounding concepts like the gradually emerging ‘Internet of Things’.

In the past, content providers from less mature markets (from, say, the European periphery or Latin America) could take heart from the fact that they could learn from the successes and errors of pioneers, as publishers in the USA or the larger European markets would inevitably be – it is indeed a rare privilege to have constantly, through peer experience, a crystal ball at one’s disposal. But probably not this time: as ‘second tier’ digital economies go through a leapfrogging process, with swathes of new users coming online directly via mobile (having never gone through the, possibly intermediary, stage of the desktop or laptop), most news providers have to start with a slate that is unnervingly clean.

Still, sceptics of the mobile revolution abound – not so much with regards to the medium’s usage proliferation but its potential for advertising sales.  Indeed, with the percentage of mobile visitors to news sites rising inexorably – a current estimate would put it at an average of one in three – it is hard to dispute the prognosis that, in the near future, close to half (or more) of website visitors will be accessing content and services through a smartphone. Which means that publishers will need to find a coherent and sustainable strategy for monetizing the mobile half of their audience – and this is where things get complicated.

Any monetization strategy will rest on one fundamental parameter: the size and form of mobile advertising.  Unfortunately for publishers, this remains a major question mark.  Most pundits predict that the ‘time spentTime SpentThe amount of elapsed time from the initiation of a visit to the last audience…//read more /dollars spent’ gap will narrow, as it did for the desktop internet over the last ten years – i.e., the fact that users spend more than 10% of their media consumption time on mobile devices yet only 1% or so of ad revenue is directed at this channel is unsustainable and will converge, possibly quite rapidly. Though there have been dissenting voices claiming that mobile will never be a branding medium (and absorb those big budgets) and so never become a leading marketing solution, the consensus – as outlined recently by eMarketer – is that mobile advertising will grow at an annual rate of 50% over the next two years, while desktop ad spending will remain broadly stable. Indeed, in 2017 mobile advertising is predicted to overtake desktop spending.

In theory, this would be welcome news for news providers worldwide as it highlights the key growth area while also underlining the potential weight of the different components; again, eMarketer considers video to be the strongest category, with rich mediaRich mediaAdvertisements with which users can interact (as opposed to solely animation)…//read more  and native advertising a close second. However, a closer look at the current state of the mobile market can only be a cause of major concern: Google, Facebook and Twitter are absolutely dominant, leaving less than 20% of budgets to be contested by other providers. In short, publishers will struggle to gain what, in the end, may prove to be petty cash.  Indeed, in many ways the writing’s on the wall: mobile banner advertising tends to command lower CPMs and, even worse, is often sold on a CPCCPC (Cost-per-Click)CPC or cost-per-click is the cost of advertising based on the number of clicks…//read more  basis; ad networksAd networksAd networks provide an outsourced sales capability for publishers and a means…//read more  often represent news brands, yet treat this inventory in a purely quantitative rather than qualitative manner. And while the most advanced digital markets count on the emergence of video ads and better creative (such as the IAB’s “mobile rising stars”) to reclaim the branding promise and increase value – and thus price – to the advertiser, at present the picture remains fairly grim.

Does that mean that charging users for content and services will be a sustainable strategy for most news providers? Probably not. Unless a publisher can provide truly unique content (if, for instance, it is the only news provider in the local community or offers some ultra-niche thematic content), it’s clear that the ‘drift to free’ that dominated the desktop web for years is replicated in the mobile environment. This is not to say that all mobile content and services will be free – rather, paid content is going to be more the exception than the rule and it is going to represent only a fraction of overall revenues for publishers. Indeed, as is the case already today with leading news brands, paid content on mobile is going to be part of a broader ‘one subscription’ (probably freemium) scheme that encompasses print, desktop, mobile and tablet.

So, if mobile advertising is mainly going to the global giants and, in addition, user revenues are not enough to sustain a quality news provider, what strategy can improve in the near term a news publisher’s position, especially those not at the very forefront of the mobile transformation? Possibly one that rests on three fundamental pillars, namely:

• A content mix that does not replicate the entire gamut of print or web content but that recognizes the particularities of the platform and the way it is consumed, i.e. during commute times or as a ‘snacking’ medium. This translates to a tailored product with an emphasis on the (latest) news stream – including (even bare bones) live coverage of events, particularly sport, as well as practical, often ‘static’, location-based information (e.g. where is the nearest XYZ?).  Based on examples of major news brands, two extra points need to be borne in mind. First, it may at first appear counter-intuitive given screen size, but short-form video content also scores very highly in user preferences, though its monetization is often problematic as pre-roll ads need to be edited down to be proportionate with, say, a 30-second clip. Second, for publishers active in app publishing, push notifications appear to be a key element in user satisfaction, leading to better affinity metrics and repeat visits – thus either to greater advertising inventory or improved chances to charge for some content or service.
• A marketing strategy that is heavily skewed towards social media, particularly Facebook and Twitter. This does not refer to advertising solutions that these two platforms offer, but to an active posting/tweeting policy. Simply put: research from all regions finds that Facebook and/or Twitter are the new ‘home pages’, also for news, particularly for younger demographic groups. What this new form of aggregation means for the news industry is that publishers seeking to build their mobile audiences should be present at the news streams/feeds of their fans and followers in order to maximize referral traffic. They should also fine tune their specific editorial policies to each platform’s profile and consumption patterns. As things stand, it appears that Twitter is used for ‘harder’ news and Facebook for ‘softer’, and that Twitter works best on weekdays and Facebook on weekends.  Finally, it should come as no surprise that multimedia material, especially video, performs much better than straight text/photo articles.
• A commercial approach that does not rest on ineffective mini-banners, often sold through ad networks which means that revenues are only a fraction of a CPMCPM (Cost per mille)Online advertising can be purchased on the basis of what it costs to show the…//read more  that is already low, but relies on two principal elements. First, a drive for sponsorships, particularly for native apps, possibly as part of a cross-media deal, that gives maximum visibility to one partner through intrusive creative such as launch ads or interstitials – making a brand ‘co-own’ mobile content is one of the few ways to deliver value and raise noteworthy revenue, at least in less mature digital markets. Second, and more importantly in the medium term, a native advertising offering – with clear rules in terms of layout/notification, pricing and frequencyFrequencyThe number of times an ad is delivered to the same browser in a single session…//read more  – whereby branded content appearing in the publisher’s news stream is likely to yieldYieldThe percentage of clicks vs. impressions on an ad within a specific page. Also…//read more  positive results. It is hardly a coincidence that Facebook and Twitter’s meteoric rise has rested on varying forms of native advertising.

Will such an approach resolve all questions related to mobile strategy? Does it address all opportunities and threats portable devices pose to digital news publishing? Certainly not. However, it does provide content providers with a solid and scalable first step that does not require a massive investment in capital, human resources or technology in both a challenging macroeconomic environment and an uncertain emerging media ecosystem.

Finally, it brings further to the fore publishers’ key asset: news. Either as a main thrust of mobile content or as a critical ‘social promotion’ tool or as a way to present (clearly labelled) advertising, it is refreshing and encouraging to see that the newest of digital media may rely anew on our industry’s timeless core mission.

Article by Constantine Kamaras