4 Strategies That Show Why Publishers Need To Get Serious About First‑Party Data
Digital publishers know that their business models need to change. While digital ad revenue grew 20 percent last year, Facebook and Google snagged the vast majority of that growth. Demand-side platforms have clobbered digital media, greatly reducing the rates that can be charged to advertisers. Increasing the volume of ads isn’t an option, either. Cluttered, slow-loading web sites irritate readers and encourage the use of ad blockers.
As a result, the solution for many publishers is first-party data. Many digital publishers already collect this information. However, they often hand it over to their advertising clients, rather than using it to strengthen their own businesses.
For digital publishers, collecting, analyzing and leveraging first-party data is the key to developing sustainable business models. Here are four data-based strategies that can help publishers achieve transformational results:
1. Development of Owned Channels and an Owned Audience
First-party data allows publishers to hold and nurture their relationships with readers. It also allows them to own those relationships in a way that is impossible on third-party platforms. Content syndication and social media may help publishers expand their initial reach, but they don’t deliver an engaged, loyal following.
By collecting, analyzing, and leveraging first-party data, publishers can create channels and an audience that is truly proprietary. The publisher becomes the single best way to reach their audience. And the publisher also has the most powerful insights into what their audience will find relevant, meaningful, and engaging.
Those who doubt the value of an owned audience need only look at the near-panic over Facebook’s latest algorithm changes. In at least some cases, that panic seems to have been justified. Newsfeed changes eliminated about 75% of the organic traffic of women’s publisher Little Things. In February, Little Things announced that it was shutting down because of the changes — despite having 12 million Facebook followers. Brazil’s biggest newspaper, Folha de S. Paulo, has stopped publishing on Facebook. Meanwhile, publishers are scrambling to invest in channels that allow them to use first-party data to reach audiences directly. Chief among these: email.
2. The Ability to Develop New Products That Readers Want and Will Pay For
If you don’t know who your audience is at the most granular level, it’s almost impossible to design new products that they’ll pay for. Developing a new product doesn’t have to mean starting from scratch. Recognizing the loyalty of its fans, The New York Times spun out its crossword puzzle into a separate subscription product.
Other new products are major initiatives. The Times used its understanding of its readers to create new products that it believed would appeal to aficionados, Cooking and Watching among them. The Economist, understanding that its flagship publication can be a bit intimidating, has found great success with Espresso, a daily newsletter that costs $2.99 a month.
Investopedia studied its readers’ interests to develop online courses about investing, launching its Investopedia Academy. These courses represent a new revenue stream for Investopedia, and importantly, give the publisher a new way to monetize international traffic.
3. The Ability to Deliver a Better Audience to Advertisers
Publishers that successfully develop owned audiences suddenly have a powerful alternative to demand-side networks that offer lookalike audiences at low rates. It’s not just publishers who need engaged readers; these audiences are also coveted by advertisers. The highest-performance campaigns target actual individuals with real, and known, interests.
NBC took a step in this direction with its recent Olympics coverage. The network realized that someone watching the Olympics during a prime-time broadcast probably shared many of the interests as someone watching the event online – and in many cases, these were the exact same people. So NBC considered all viewers, no matter how they were watching the event, to be part of the same audience. NBC charged advertisers the same amount to reach an Olympics fan online as they did to reach one during broadcast coverage.
4. The Ability to Transition to Subscription Models
Because subscriptions are making a comeback at many media companies, it only makes sense that those who best know and appreciate a publication’s content — the readers — should be the ones to pay for it. However, with so much ad-supported content available, publications need to create something unique, and in many cases superior, if they expect readers to pay up. That means developing a deep knowledge of what readers want, expect, and will find most compelling.
The New York Times recently announced that 60% of its revenues now come from subscriptions, and that its digital-only subscribers number about 2.6 million. Wired recently put up a paywall, allowing four free articles per month before requiring readers to subscribe. The Atlantic has said it will experiment with different subscription models as it expands, thanks to a majority investment from the Emerson Collective, a not-for-profit run by Laurene Powell Jobs.
In developing successful subscription products, the quality of the user experience is inseparable from the quality of the content itself. Without first-party data, publishers are hamstrung in their efforts to create an exceptional user experience. They’re stuck providing a deluge of stories and hoping readers will magically find the ones most meaningful to them. Thanks to first-party data, publishers can use technology to assist readers in unearthing personally relevant content, ensuring that they become highly engaged, return to the publication often, and support the sustainable growth every publication seeks.