The latest Association of Online Publishers’ annual census offers a bullish forecast. New AOP director, Ruth Brownlee, assesses the key findings and what they tell us about the state and outlook for the online publishing sector.
My inaugural task as incoming director was to oversee this year’s AOP Census; a flagship piece of research we conduct annually, now in its sixth year. I was buoyed by the optimism of the survey results - they reflect the business performance of the biggest names in digital publishing in the UK and give some great insights into some of the key trends and opportunities in the industry.
Our membership is representative of all of the major media owners in the UK with established digital businesses. Members span across all sectors of the industry – from newspapers, magazines, TV and radio broadcasters, through to digital specialist publishers. The diversity of media businesses surveyed – such as Conde Nast, the BBC, Guardian Media Group, Channel 4, GCAP Media – gives members a unique barometer; allowing them to benchmark their performance and gauge how producers of quality branded content feel about current trading conditions, editorial output, consumer behaviour and business performance across all KPIs of a digital publishing business.
Our survey this year showed overall that UK digital publishers experienced a 52% increase in total digital revenues over the same period in the previous year. (Revenue from online advertising was up 33% and content revenue was up 68% from last year.)
Nearly 80% of respondents said that the current online advertising model was a sustainable revenue stream, with display and sponsorship being the highest categories in terms of revenue.
Key trends and opportunities
The two key trends anticipated by AOP members for the online publishing industry in 2008 are personalisation of content and targeting. The increased understanding and take up of effective behavioural targeting is a key driver of this. Other predictions were more about community and media-sharing services.
This confirms the general feedback we’ve had from our members, as they have found the UK’s appetite for technology, particularly broadband take-up in the home (UK has 57% broadband penetration, source: Ofcom May 2008), has had a hugely positive effect on media owners providing increasingly rich content on their sites and on other platforms. This was reinforced when AOP members were asked about the opportunities for their businesses: high-speed broadband, behavioural targeting, user generated content, mobile and streaming content were highlighted as the top five opportunities.
As businesses embrace new platforms and formats for the future, they are investing in getting the right people to make this happen within their organisations. This tallies with the 80% of AOP members who say they will increase the number of digital staff hired this year.
When members were asked what key skills they looked for in new employees, the top two requirements were "audience development", indicating a significant criterion for business growth; and "cross-media skills" – 62% of members felt that the latter would be important for the future. Mobile and IPTV were two other skill requirements noted by businesses as important.
In an industry that is showing no signs of slowing down, there is a constant need for good people across all functions of members’ businesses. Tackling the operational dos and don’ts of integration and making that critical multi-media transition from a traditional newspaper or magazine business successfully continues to feature highly on the agenda.
Regarding content delivery - AOP members feel their role is to provide quality content across multiple platforms, 64% of those surveyed agreed that publishers need to make content available on third party sites as well as their own. With further opportunities identified in the social networking area.
However, even with the growing popularity and understanding about user generated content, 64% of members felt that user generated content would not overtake professional content – this being a core competency of our members’ businesses – they felt their role was assured in providing current, quality content demanded by their customers. A defining feature of our member publishers is that they still employ journalists!
Following on from this, our surveyed AOP members viewed content delivery important, as all key methods saw an increase in investment in 2007: IPTV, mobile, vodcast, podcast and RSS feeds.
The wider economic context
|Importance of Content Delivery
Given the financial turmoil which has dominated the mainstream news for the past few months – and which had been bubbling since the last quarter of 2007, it’s worth taking a look at member opinion on this. Our survey was conducted during 6-25 January 2008; the credit crunch was already a major topic in the US, and it had started to bite the UK financial markets. Nevertheless, I found it interesting that only just over half of the AOP members cited the economy as a threat to their businesses. Their performance was significantly up and they were bullish in their forecasting – anticipating total business growth for 2008 at 8%, with digital expected to grow 31%.
While these figures could be dismissed as optimistic, they sit within a landscape of a relatively strong sector of the media. The IPA produces a quarterly Bellwether report based on marketers’ spend in each category. Each year since 2002 (Q4), marketers’ investment in digital has gone up. In 2008 Q1, only the digital category went up in terms of spend. All other categories (TV, Print, Cinema, Radio) either remained static, or went down. While the Advertising Association reported in June this year, in its Advertising Statistics Yearbook, that ad spend on the internet rose 39.5% year-on-year in 2007 to just over £3bn, accounting for 16% of total UK ad spend.
It’s a growing area as the medium is taken up as a key marketing channel.
One of the key issues for our members is accountability online. The AOP, through JICIMS, is working in collaboration with four other industry bodies: the IPA, IAB and ISBA, to address this. Plans are well afoot to have an accepted online measurement system in place by the end of the year. This was supported by the AOP Census, as just over half of members said that a common online currency would be beneficial.
Our mission is to help media owners build successful, creative digital businesses. Next year’s census will give us the actual stats to judge whether this year’s optimism is confirmed or not, but either way – our members are continually reviewing and adapting their business models, growing their audiences and delivering content and levels of engagement that keep those audiences loyal. These publishers now have established digital business, so for them it’s about being competitive and creative in a fast and converging market place. It’s about staying ahead of that market and learning, learning, learning!