Diversify Your Revenue Streams. Period. Full stop. - IAB CEO to Publishers

“You (publishers) need to diversify your revenue streams. Period. Full stop.”

So says Randall Rothenberg, the President and CEO of the Interactive Advertising Bureau (IAB), in his recent interview for the Digiday Podcast with Brian Morrissey, Digiday President and Editor in Chief.

The interview began with discussions around the impact of COVID-19 on industry, news, and advertising, and ended with Rothenberg’s review of challenges and needs for improving the supply chain in the advertising industry.

But it was Rothenberg’s thoughts on publisher revenue diversification which were most emphatic, and unequivocal. The IAB CEO confirmed what Admiral has been learning about gaps in publisher revenue diversification tools, from talking to publishers at global, national, and long-tail local levels. Rothenberg was responding to Morrissey's challenge from Morrissey, “Is this a wake up call that relying on advertising is a horrible business model?” (timestamp 19:50)

Rothenberg prefaced his opinions with a couple of advertising history lessons. The first from the US newspaper industry between peak circulation in 1984 vs the peak ad revenue in 2001. The second stemming from differences between the US and European reliance on advertising to fund publishing, rather than expectations for direct consumer revenues as a significant stream.

  • The lesson from the newspaper circulation / advertising gap is that the newspaper industry was either willfully ignoring the declining model while focused on a 17 year period of fantastic profits, or they just weren’t paying enough attention to their long term future. In other words, strong but temporary profits reduced the urgency to focus on the fundamental changes necessary to compete in the coming 10-20 years.
  • The disparity in the American and European models has been driven by the large market and accessibility of US advertisers to fund news publishers historically. This easy access to advertising dollars led US publishers to rely heavily on the advertiser, and avoid challenges to circulation caused by consumer price increases.

“In a way we were caught up in this historical anomaly,” states Rothenberg.

In the European model, consumer payments were considered core parts of revenue; consumers were paying more for media, even access to television. In the US, he relates, “The money was so free and easy that proprietors of publishing companies just didn't have to think alot about consumer pay until it became too late.”

Rothenberg sums up clearly, “Why would any company, in any industry, accept one revenue stream rather than multiple revenue streams. That's really the lesson.”

Publishers have not had the tools or the focus on visitors as a core revenue driver. Visitor Relationship Management (VRM) solutions are an idea whose time has come. Every visitor has a unique mindset and pace they wish to engage at. With VRM, publishers can progressively offer the right level of engagement to visitors by segment, demographic, and more, to maximize ARPU. Visitors can be provided options for their ad experience, options for email and social follows, or become paid subscribers, even opt for a multi-site subscription bundle, all with a single consistent UX and coordinated delivery. As Rothenberg emphasizes, "diversify revenue streams. Full stop."


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Four Thoughts on Survival of News Publishing

  1. Some publishers will not survive regardless of the pandemic. “The internet represents a foundational disruption across all industries.”
  2. The news industry is not just newspapers, the assumption is an errant reflex in thinking. News today is massive and complex. TV, cable, digital.
  3. “The consumer need for news is no less than it's ever been. Right now in this (coronavirus) moment, clearly greater than it has been for decades.”
  4. “The mental model we have of news is not the actual way people consume news.” News is more pervasive, diverse, and serves more purposes than a traditional mindset of “we report on fact-based stories in business and politics”

Rothenberg summarizes: “So when we step back from that we see how diverse the news is, and how pervasive a part of people's lives it is, it's quite clear that "the news" is going to survive.

The full Digiday Podcast with Randall Rothenberg is 43 minutes and full of additional wisdom, history, recommendations, and insights. Comments about publishing ad-driven model at 19:50

On the Pandemic Impact to the Advertising Industry and IAB

“We've never been through anything like this (covid) where the outcome is completely unknowable, (coupled with) the pervasiveness of the impact on all segments and sectors.”

Ad strategy during pandemic:

“Trying to zig while others zag” certainly presents some opportunities for cheap and efficient placements, while there is so much inventory available at discounted prices.

However Rothenberg warns there are significant challenges to getting the placement right. Are you in the right category at this time, is your message aligned with the market and media in that category? Will you appear to be a look-alike with others rushing forward with a similar message tied to pandemic factors? Will you appear to be taking advantage of the crisis?

Business Re-entry Strategy as Pandemic Peak Wanes:

“There is no one-size-fits-all (business strategy) for any brand, any category, anywhere. So there's not going to be any one-size fits all marketing, media, or messaging strategy either,” states Rothenberg.

He points out that the re-opening will happen in different ways, different paces, different locations even within single states. There may also be pull-backs along the way. He insists businesses must plan as best they can, but recognize that the numbers being used to plan with have very low confidence.

Suggestions that industry revenues will be 20-30% down are a pretty wide gap to begin with, and could easily be over or under reality, the waters are still too murky.


The pandemic has accelerated some key trends:

  • Streaming video: “We’ve reached that inflection point when the 10,000 channel universe is a reality.”
    • It is “abundantly clear” to Rothenberg that not only is streaming video success an ongoing powerhouse, “taste-tested and becoming an ongoing habit”, but the“ extent to which this is extending down to the long tail of OTT, that's pretty profound”.
  • eSports: Rothenberg finds the growth of e-Sports and gaming networks very interesting. He recognizes Twitch and others were trending up, but “the acceleration has been pretty profound especially given the lack of live sports in other places.”
  • Retail shopping: “Physical brick and mortar stores, are no longer for shopping. They are actually for entertaining, they are for servicing, but they are not actually for discovery and purchasing.”
    • The acceleration of digital shopping is another obvious result. “Pretty much everybody who has not shopped online, has now begun to shop online,” Rothenberg notes that some retail categories that were holding their own, are not flipping to heavy digital shopping.
  • Retail marketing: “I think it's the final death knell for the store-launched brand.”
    • Rothenberg notes findings from the IAB Disrupter Brands research on the concept of “storelessness” or the “storeless brand”.
    • “I think the notion of brands now launching inside stores has been the norm for 150-200 years. That's over,” states the IAB CEO.


Expectations for IAB Events in 2020, Ad Industry Standards, and Ad Supply Chain Evolution

  • IAB Event Planning: We are not planning on it (having in-person IAB events this year). In fact we are planning on not. We haven't foreclosed the possibility, but we think it's unlikely. IAB planners are working on creative ways to bring people together, creative marketplaces to share insights.
  • Ad ecosystem standards: “In the past 8 weeks, we (IAB) have gathered 300-400 people from the publishing industry, agency sector, brand sector, and from technology companies” to discuss standards and use of tools that will improve the advertising industry.
  • Supply Chain Thinking: “It has taken years to get the ad ecosystem to understand the language of supply chains,” says Rothenberg. He admits there is progress, now the industry is talking about programmatic supply chain safety, efficiency, and security.
    • But there is still much work to be done. “The fact that we are still having debates and arguments around things like digital ad measurement, around fraud, around consumer safety, around fake news, is astonishing and enormously dismaying.”
  • Programmatic Supply Chain Lessons: Rothenberg gives three lessons to be learned from the food and auto industries resolving many of their supply chain challenges decades ago:
    • Consumer action can overcome significant industry resistance
    • There are necessary roles for the federal government, state governments, and industry self-regulation.
    • The need for big brands to take ownership of the programmatic supply chain problem and solution. Marketers need to take more ownership of the consumer experience and safety.

Relationships = Revenue, particularly when the publishing business is being disrupted by adblockers, GDPR/CCPA privacy regulations, and the death of 3rd party tracking cookies.

Admiral understands this, and makes it easy to deliver the right offer at the right time to every visitor, grow email lists, manage metered paywall and digital subscriptions, recover adblock revenue, offer compliant consent management, and more. Request a demo to learn more about VRM today.

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