WAN-IFRA: What signs in the European news publishing industry give cause for optimism in 2014 and why?
Mirja Telzerow: The total reach (print, desktop, mobile) of publishing brands continues to increase because of the growth of digital content. According to a study by the BDZV (German newspaper publishers’ association), circulation of e-paper editions increased by nearly 100 percent in 2013 in Germany. Consumers are aware of the main news brands and extend their usage to other platforms.
While circulations continue to decline, sales revenues are growing in many markets. Although sales revenues do not compensate for the loss of advertising revenue, that nevertheless indicates ongoing consumer price elasticity for the rising copy prices.
France just lowered the value-added tax (VAT) for digital media products and triggered a further discussion about possible VAT reduction for digital media products elsewhere in Europe. Indeed, a net price reduction might further boost consumer consumption of paid content.
Will 2014 be the year in which European news publishers finally get a grasp on mobile publishing and begin earning serious revenues from it? Why or why not?
Even though circulation growth rates for e-paper editions are high, those editions are still circulating at a very low level. But e-paper circulations are expected to rise further, triggered by three major developments: better mobile devices, increased mobile broadband access, and more user-focused content.
Smartphone penetration is already between 60 and 80 percent across Europe, and the tablet is expected to reach the mass-market stage eventually. Voice communication becomes less and less important. The new 7-inch tablets are small enough to carry but have a display size large enough for app use. On top of that, device prices decline constantly, making tablets affordable for more and more consumers in Europe.
For the mobile user experience, sufficient network speed and ubiquitous access are critical. Mobile broadband penetration is already high in Europe, but 4G LTE (long-term evolution) network coverage is still slow to improve. However, within the next five years a significant change is expected, resulting in a much higher data usage volume than today.
Better devices and faster access will raise consumers’ expectations. Publishers have to cope with the large variety of devices and speed, and must offer solutions with responsive design for their mobile websites. Furthermore, they might have to analyze the user, the usage behavior, the current location, etc., to customize the content delivery for the respective user. A 15-year old is obviously interested in other topics than a 45-year-old commuter is. If news providers want to serve both, they need to adapt their content delivery.
Improved devices and high-speed access represent a big opportunity for publishers to offer enriched, multi-media content. At the same time, they are a burden. Many e-papers still are simple PDF solutions of the print versions. With better alternatives available, the user will not accept that any more. But enriched content usually carries higher production costs and license fees, which raises the issue of profitability. An understanding of the audience’s expectations, a unique offering, a sound business case, and patience are necessary when considering how far to move into mobile publishing.
Will sponsored content (sometimes called content marketing) develop into a significant revenue source for European news publishers in 2014?
The success story of Buzzfeed has triggered a new discussion about content marketing. Many content providers want to mimic it and consider it the “Holy Grail” solution to diminishing revenues. But content marketing is nothing new; in fact, it is rather a natural development of advertorials (which date back to 1946, according to Merriam Webster) or native advertisements. Even 20 years ago many newspaper supplements were often pure content marketing. The request comes from the advertiser, who would like to ensure a customized environment for its brand or products and better overcome some consumers’ resistance to advertising.
Advertisers have became more and more focused on the return on investment (ROI) of their media spending. To keep advertisers, publishers have to offer content marketing possibilities. And they probably already have to think about the next level of partnerships for joint offerings, such as sharing revenue from e-commerce.
In Germany, online users seem to be increasingly willing to pay for content, according to surveys by Bitkom and Eco. Does this signal a breakthrough for news publishers? Why or why not? How can publishers best take advantage of this situation?
Consumers are and will remain willing to pay for content. They are used to it when listening to Spotify, watching a movie from Watchever or getting a new weapon for Angry Birds. They pay for a unique offer and added value with a clear use case, e.g. mobility of their favorite music.
Unfortunately, most news is still available for free – there is only very limited uniqueness in the web so far. For locally focused publishers it might be easier to identify the unique content. Big national publishers have their own large investigation and research teams and can offer unique stories, similar to special interest niches such as business (very successful in paid content) or sports.
Once the USP (unique selling proposition) is established, the next steps are community building, user analytics and product diversification. The objective is to form a relevant audience and to strengthen the “stickiness of the reader”. As in any other industry, it is usually much cheaper to retain a customer than to acquire a new one.
The biggest task remains evaluating cooperation models and partnerships for the future.