The survey, carried out in February this year, suggests that a healthy looking 15% is the average rate of digital revenue growth that publishers expect to see in 2013. Of course we should always be aware of averages and it’s true to say that, in reality, there is a mixed expectation in the market with 60% of publishers expecting growth of less than that 15% average, whilst 40% are more bullish about their prospects and see growth in excess of 15% this year.
The Organisation Census is now in its fifth year and has evolved over time to give a deeper view of the key drivers within the digital business of many of the UK’s leading publishing companies. It acts as a benchmark for the digital publishing industry in terms of where publishers are currently at and also captures their intentions for development over the next twelve months. At its core, the Organisation Census covers a number of areas including growth of products for the coming twelve months, people issues, investment in development and technology, revenue focus and future challenges for the forthcoming twelve months.
The digital publishing industry will continue to innovate, and new product launches remain high on the agenda in 2013, with nine out of ten publishers expecting to have new product in the market this year, a growing number over the last two years. The appetite for acquisition remains strong too with one in three publishers expecting to acquire this year, a similar number to last year when the focus on acquisitions became much stronger than we’d previously seen.
There’s an interesting breakdown that AOP has introduced for the first time this year when looking at growth prospects, which is to look at UK and International intentions. Of course the web is global and international audiences for UK publishers are in many cases becoming more and more significant. Almost two thirds of publishers responding to the Census suggest that they see those international audiences as either of growing importance or already very significant in terms of traffic whilst one in two feel the same about international revenues. That is clearly significant, as growing traffic and attracting new audiences is interesting, but actually being able to monetise those audiences, either by targeting with advertising or charging for access to content is an increasingly key component of strategy which is bearing fruit on a much greater scale and creates a new set of challenges and opportunities for digital publishers to grapple with.
In line with this growing internationalisation, we are seeing almost one in two publishers expecting to launch new product into international markets and one in eight publishers actively looking to make international acquisitions in the coming year.
Mobile & tablets
Not surprisingly, whilst publishers are continuing to expand their digital businesses across multiple platforms to meet the increasingly diversified means of reaching audiences where and how they want to consume media, mobile and tablet are continuing to become the priority areas of focus for development and output. That in itself isn’t new of course, but with smartphone internet access now exceeding that of featurephones and tablet penetration of the UK market being in excess of 20%, coupled with a recently reported decline in the sales of PCs for the first time, the need to move to mobile is gaining at a faster pace. Indeed, comScore figures would suggest that one in three web visits in the UK is made from a mobile or tablet device currently and some brands are seeing much higher levels of non-PC access.
Against this backdrop, the Census reports that mobile sites and tablet apps are the priority areas of expansion for more than one in two publishers whilst core websites will be priority for just under one in two. Smartphone apps and digital editions offered by direct distribution (ie. via the iTunes store or Amazon), then come next in terms of priority.
Paid content has always been a hot potato, and although it’s a while now since the Times bit the bullet and introduced its subscription model, we haven’t seen other consumer facing sites follow suit, yet. Nevertheless, the recognition that good content can’t be created and distributed for free is growing in momentum amongst publishers. A number of publishers, particularly in the news sector, have gone public with their intentions to introduce some form of metered access to content, in some cases having already trialled successfully with audience segments such as international consumers.
It’s not surprising then to see the Census reporting that only 12% of publishers are unlikely to increase paid-for elements somewhere in their portfolio in 2013. This may not mean publishers are racing to embrace subscription models of course, but it is about recognising there is a value exchange that consumers are increasingly realising is part of the relationship with the brands that they want to consume. It might be that paid-for elements reflect a degree of usability as well as the content itself, as mobile apps and digital editions become more widespread, providing consumers with access in more convenient modes versus the traditional core website.
Despite the move towards more paid access to content and services, advertising is still seen as the revenue growth priority for the majority of publishers with one in two suggesting that display formats or creative solutions are a key source of growth. That said, just under one in two have subscriptions revenue as a key priority and the same number have mobile up there too, clearly there still being a gap between the aspiration and the actuality, as the ratio of traffic to revenue on mobile is stacked towards the former. To complete the top streams of revenue focus, data and sponsorship are recognised by 41% and 34% respectively as key areas of revenue growth in the coming year.
The main challenges for publishers in 2013 are inevitably led by developing a publishing strategy that allows the seamless delivery of content and that enables conversations (engagement) on multiple devices and platforms. Device proliferation and multi-channel usage increasingly requires publishers to deliver consistent, highest quality user experience, content and engagement, yet the commercial model for each individual channel does not necessarily return on required investment. The single biggest challenge for many is moving quickly enough from a technology perspective to execute on ideas in the face of increasing and agile competitors.
Increasingly, publishers are becoming technology businesses as well as media businesses as the distribution via multiple platforms pushes user experience to the forefront of challenges and poses two big challenges - one around acquiring and developing the necessary skills to increase proficiency with technology and the other around the degree of investment required in technological development, either from an in-house development or in partnership with external providers.
For the fourth consecutive year, we can expect to see a growing number of publishers increasing their recruitment of new staff, 62% of publishers expecting to do so this year. One in two of those publishers are looking to recruit developers and a similar number will recruit analytics roles. This move increasingly puts publishers in competition with non-media businesses for skills to take their businesses forward. It’s likely that recruitment costs will be higher, and there is a challenge to attract key staff to media against the perceived dynamic opportunity offered by pureplay digital and tech companies.
Over the last twelve months, we have seen the growth of product staff in publishers’ businesses and mobile and apps development and ad ops roles have grown too. Building technical teams in-house has led to development spends likely to be increasingly spent within the business rather than externally, although overall there are more publishers, nine out of ten in fact, suggesting that they will increase their investment in technology in 2013. Most partnerships for technology development will be on mobile and tablet site and app development, data management and video, similar to last year.
Measurement is the area that stands out where publishers are more likely year on year to increase partnerships; now one in three publishers expect to do so versus one in four last year. The increasing focus on analytics roles is driven by the need to understand usage and audience in greater depth and investments in technology in this area are expected from two thirds of publishers, again a growing number year on year.
Is there an opportunity for publishers to collaborate to drive technology development faster and more efficiently? Last year, almost three quarters of publishers thought so and now in 2013 that number has risen to 85%. As one publisher poignantly noted, “the industry is plagued by duplication of effort in digital platform development - very unlike the print supply chain, which is largely shared. Publishers should be talking to each other about collaboration for core functionality.”
Overall, in summary, this year’s Organisation Census presents another bullish view of growth by digital publishers in 2013, the challenge will increasingly be technology led and publishers are consequently moving to change the shape of their organisations to manage the twin challenges of delivering great content with great user experience. We’ll see more new skillsets entering the business and we’ll see a device led strategy at the forefront of publishers’ thinking as we move towards a mobile and tablet focused output rapidly becoming the preferred method of access by consumers.
34 publisher members of AOP took part in the Organisation Census this year. AOP members can access the full report here.