What The Rise Of Internet-Only News Sites Mean For Media Advertising

10/24/2016 07:13 am ET Updated Oct 25, 2016
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The past decade has been a rough one for the news industry across the globe. While print readership has steadily declined, several newspapers have been closed down, journalists laid off and ad sales progressively slumped. Revenue has also significantly plunged. According to the News Association of America since 2012, newspaper revenue has been dropping by 5.1 percent every year with the industry now generating less ad revenue than Google. Thanks to the competition from the internet media, the traditional media is now being squeezed to death.

The readers of the current day have increasingly focused on the internet to access news. This is because of the ubiquity of the internet and that it presents news in various forms and in much more interesting ways compared to the traditional approaches. This therefore means the online media has a substantial impact in the media industry which traditional mass media should embrace or risk being left behind. But what does the rise of the internet-only news sites really mean for media advertising?

News distribution, as well as the independence of journalism, play an indispensable role in informing citizens. The media is certainly the pillar of public life and democratic, pluralistic societies. At their best, they are sources of quality and reliable information that people can understand and trust. However, news gathering and distribution has undergone deep changes over the recent past. There has been an alarming drop in the number of physical newspapers’ circulation as readership declines by the day. As such, advertising revenue from these channels proportionately weakens.

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Today’s readers increasingly incline to the internet as sources of information and news; they expect information in different forms – video, GIF and even photos. Demand for instant information is surging while delayed media (newspapers and appointed news slots on TV) are becoming a thing of the past.

This trend results in a scramble across print publications all over the globe to shape up or ship out of the industry. A majority of traditional print-only publications have adjusted to this new reality by either embracing the online media completely or dropping the print media for the online. Advertisers are also taking advantage of this new development and are getting smarter with their ad spending.

The Internet is now pervasive in the individual lives of nearly everyone in the world. Its ubiquity continues to reshape the media landscape. On the same view, because of technological developments such as smartphones, tablet devices, and even social media evolution, many people have turned to digital publications only.

Business Trends of Media – Acquisition, Investments of Digital Media

There has been a rapid increase in the number of acquisitions of digital media across the globe over the past decade. The most notable ones being the acquisition of Huffington by AOL for $315m in Feb 2011, as well as the acquisition of Dutch digital magazine PRSS by Apple in Sep 2014. The most recent acquisitions include the acquisition of Triad Retail Media by Xaxis for $300m in October 2016, and that of Media.net by Miteno Communication Technology, a Chinese tech conglomerate for $900m in August 2016.

Major corporations around the globe are investing into digital media too, a recent example would be NBCUniversal doubling its bet on BuzzFeed to $400 million in October 2016. This investment continues a trend of traditional TV giants investing in digital upstarts. Besides BuzzFeed, NBCU has invested $200 million in Vox. Vice has $400 million from Disney, and Refinery29 snagged $45 million from Turner this summer 2016.

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Inevitable Death of Print Publications

You might recall how the whole media industry was abuzz in August 2010, when so-called futurist, Alan Dawson, came up with a "Newspaper Extinction Timeline": Newspapers - that is, news on paper - would cease to exist in the US by next year. For Singapore, it would be 2021. By 2040, there would be no newspapers anywhere in the world.

His prediction is becoming increasingly real. Singapore Press Holdings, whose market capitalization of S$6 billion ($4.4 billion) is more than twice that of The New York Times Co., recently merged two of its tabloids, The New Paper and MyPaper to form a new free-distribution publication as part of a restructuring effort. (Bloomberg, Divya Balji, Oct 2016)

Mr Alan Chan, CEO of SPH, said: "Market conditions will remain difficult with the continuing disruption of the media industry. We have had to take difficult decisions on cost control measures to improve operational efficiency. We will continue to innovate and invest in our media products to stay ahead and relevant. At the same time, we will grow our business adjacencies to diversify revenue streams and maximise stakeholder value." (Straits Times, Oct 2016)

Its other business arm, SPH Magazines, has ceased other print publications too. These include Cosmopolitan magazine and FHM Singapore since August 2015. Many more magazines across the globe such as National Journal Magazine, Lucky magazine, and many more are ceasing publication as well. This is a clear indication that digital media is the future has now taken shape.

What does it mean for media advertising?

The internet has been a significant force behind the collapse of the advertising revenue experienced by traditional news media channels, and especially that of newspapers. The availability of digital news has led to consumer switch to the online consumption of news. The effect is that more marketing advertisements are channeled to the online publications from the print-only publications.

In September of 2015, eMarketer reported a probable increase of 18% of the same year in the spending of digital ads globally. It also reported that the increment of digital advertising would take up about 30% of the overall ad market, thus revealing the decline at which traditional media advertising faces, and will continue to experience in the coming days.

With increasing reliance on the internet, digital media will attract more marketing advertisement to reach out to many tech-savvy populations. However, its growth will negatively impact on traditional channels like newspapers and TV. (MarketingDive, Natalia Angulo, 2016)

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Data is Essential for Digital Publications

Aggregator sites such as Google News and Huffington News contribute to consumer switching, exacerbating problems faced by traditional media advertisers. These sites aggregate news originating from diverse sites and provide them in one location. To add icing on the cake, news can be customized based on the preferences of various users of the site. (Susan Athey, Standford Business, 2012)

This led to content discovery platform companies such as Taboola and Outbrain that provides publishers the option to display content recommendations in three ways:

  1. Content discovery widgets
  2. In-stream Native Ads
  3. A hybrid, displaying articles, videos, slideshows and other content, both from within the site and from other advertisers and publisher

Such presentation of the news stories appeals to many readers thereby making waves across the media industry, with its disruptive innovation.

This means that while there are many internet site news, advertisers should get smart with respect to their ad spending. They should use sites that use analytic tools such as Google Analytics and Alexa.com to enable them to reach out to as many people as possible while, at the same time, learning consumer’s taste and preferences. Advertisers can also focus on internet sites that use mobile responsive templates and which are customized for mobile readers, owing to the increased number of smartphone devices used by billions of people around the globe to access news.

Statistics reveal that the past five years have advanced from an emerging trend to normalcy. In America, almost two-thirds of people own smartphones, according to research by Pew Research Center in 2015. The number is also projected to rise in the coming years. As a matter of fact, the Interactive Advertising Bureau (IAB) reported that mobile was the fastest growing digital channel in 2015 while it is expected to proceed with the upward trajectory in the years to come.

Social Media is becoming the Mainstream Marketing Channel

Facebook, Twitter, Myspace, LinkedIn among other social media platforms are the present day tools of the technology changes that has shaped many industries, mainstream marketing channels are no exception. These social platforms are becoming the main marketing channels of the present time. They command a huge following and almost everyone accessing the internet has an account with one of the sites. Facebook alone reports that it records several millions of active logins every hour.

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In the last year, marketing perceptions about social media have changed, with social media now seen as a place where marketers can find highly-targeted audiences and track their campaigns with granular metrics.

As social platforms build up their ad offerings – with a particular focus on mobile and video – marketers are shifting their budgets towards social media. September data from eMarketer projected that social media ad spend would reach $25.14 billion by the end of 2015, a 40.8% jump from the $17.85 billion spent in 2014. That figure is only expected to climb higher in the coming years, with $41 billion projected by 2017.

Many internet news sites, if not all, have made it possible for readers to share news with friends on their respective social media platforms. Advertisers should, therefore, look out for internet sites that have a good social media following.

What’s Trending For Online Publications

In the past few years, instant online videos have become a sensation. Social media sites such as Instagram, Twitter, Facebook and especially Snapchat, have exploited this feature to the benefits of advertisers. This is a special advertising innovation that is way better than the annoying popups many readers blocked before. Many online news publications have adopted this trend by incorporating videos into their articles as well. Such videos play in an instant, with the viewer having the option of turning on the volume.

A survey conducted lately by Cisco Systems reveals that videos from buyers will take up about 80% of traffic in the internet come the year 2019. This is because consumer viewing habits have shifted from televisions toward the streaming of videos. As expected, the innovation is poised to stall TV ad spendings and consequently, its revenues.

Video is where the major growth at BuzzFeed is, according to The New York Times, which said it would generate half of the company’s revenue in 2016, but balloon to 75% over the next two years.

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The latest innovations are seen with augmented reality (AR) and virtual reality (VR) technologies which will have a major impact on media advertising. There are predictions that publications in future will incorporate ‘Virtual Reality’ on their videos.

A Gartner report estimates that by 2018, some 25 million virtual and augmented reality headsets will be sold to consumers (Wall Street Journal, Dan Gallagher, 2015). According to Digi-Capital, AR/VR could capture $150 billion in revenue by 2020, with AR accounting for $120 billion of that pie, attributing a strong swath of AR’s revenues to mobile apps and advertising. Still, according to Gartner's 2015 Hype Cycle for emerging tech, widespread use of AR and VR tech is still a couple years out.

Facebook CEO Mark Zuckerberg has said he sees VR tech spreading in a similar way to smartphones, first among the most tech-savvy consumers but eventually becoming ubiquitous. The social network sees the marketing potential of its Oculus Rift goggles, which was launched in early 2016, and has begun pitching advertisers on the idea of using the tech (Marketing Dive, David Kirkpatrick, Dec 2015).

This will certainly bring a new dimension to media advertising as well and a possible decline to traditional media TV channel ad spending.

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With technological innovations kicking in by the day, life is certainly going to be harder for print-only publications. These latest developments, including the mushrooming of the online news platforms, indicate that it is time for them to shape up with the digital trends (DigiDay, Josh Sternberg, 2012) or bow out of the race completely.

This can be related to the fall of prominent companies due to disruptive innovations such as Woolworths, Jessops, Borders, HMV and Kodak, meaning the time is now. Traditional media must shift their focus as well as change their economics to suit the current market demands. It is a fact that journalism is needed and contend too, but distribution mechanisms must change when better ones come about.

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References

Adams, R. (2011). Huffington Post to be sold to AOL for $315m | Richard Adams. the Guardian. Retrieved 12 October 2016, from https://www.theguardian.com/world/richard-adams-blog/2011/feb/07/huffington-post-sale-aol-ariana

Athey, S., Calvano, E., & Gans, J. (2013). The Impact of the Internet on Advertising Markets for News Media. NBER. Retrieved 12 October 2016, from http://www.nber.org/papers/w19419

Harper, R. (2010). The Social Media Revolution: Exploring the Impact on Journalism and News Media Organizations. Inquiries Journal, 2(03). Retrieved from http://www.inquiriesjournal.com/articles/202/the-social-media-revolution-exploring-the-impact-on-journalism-and-news-media-organizations

Smiley, M. (2016). Digital media acquisitions increased a quarter in first half of 2015. The Drum. Retrieved 12 October 2016, from http://www.thedrum.com/news/2015/07/06/digital-media-acquisitions-increased-quarter-first-half-2015

Understanding the impact of the Internet on news media - The Tartan. (2016). Thetartan.org. Retrieved 12 October 2016, from https://thetartan.org/2016/4/4/news/internet-and-news-media

What the rise of Internet-only news sites means for media advertising. (2016). International News Media Association (INMA). Retrieved 12 October 2016, from http://www.inma.org/blogs/social-media/post.cfm/what-the-rise-of-internet-only-news-sites-means-for-media-advertising

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