OPA Intelligence Reports

Posted in News on 12/27/2012 By Mark Glaser & Courtney Lowery Cowgill

Top 10 Stories of 2012

2012 was a big year for publishers in navigating the rapidly shifting sands of digital media. Monetizing content became less about the promise of pay walls and more about the concrete success of them. And mobile delivery – of both content and advertising – became an ingrained part of most publishing strategies, with some big wins and a lot of expectations. The year also brought two big boosts to traffic and ad revenues: the presidential election and the Summer Olympic Games. In 2013, big data is going to give publishers an edge, once they get a handle on all the metrics. While new viewability standards bring new hoops to jump through, they also provide more accountability to advertisers. It was another year of of big change and challenges, but change for good and challenges met. Here’s to another exciting, promising year in publishing in 2013!

1. Pay walls become de rigueur

When the New York Times first launched a metered pay wall in 2011, Times writer Jeremy Peters called it the “most watched experiment in American journalism.” In 2012, that experiment paid off – for the Times, for those who followed it and maybe, just maybe, for American journalism in general. In the fall, 15 months after erecting the pay wall, the Times had counted 509,000 digital subscribers, which helped boost overall circulation revenue 8.3 percent, offsetting the declines it has seen in print circulation. That was certainly encouraging. Combined with the success of the Financial Times’ pay wall and the Wall Street Journal’s pay wall, “encouraging” turned into “emboldened.” Late in the year, Poynter reported that as we close out 2012 and ring in 2013, more than 360 U.S. papers will be charging for digital content. That includes big and small papers. Already, the likes of Gannet, Tribune, MediaNews and Media General papers are on board as well as papers like the Houston Chronicle and Boston Globe. And then there are others like Crain’s New York and the newly digital Newsweek. In 2013, even the Washington Post, one of the last big holdouts, is planning a pay wall.

Gannett, the newspaper chain, reported in its anxiously-awaited third quarter earnings that its 33 percent jump in net income was partially due to the rollout of metered pay walls at 71 of its newspapers across the country. Circulation revenue overall was up 10 percent and CEO Gracia Martore told Bloomberg that she expects circulation sales will jump 25 percent to $100 million next year. Naysayers presisted, however. The New York Times’ David Carr, for example, writes, “For different reasons, The New York Times’s positive experience with online subscriptions is probably not one that will scale across the industry.” And GigaOm’s Mathew Ingram writes, “I’ve tried to make the case before that pay walls are a sandbag strategy—one that can help keep the rising waters (in this case, the ongoing rapid decline in print advertising revenue) at bay, but not much else.”

2. Online video comes to the fore

Online video has arrived not just as a cat playing a keyboard, but as a true bottom-line addition to the revenue mix. That means that publishers and brands alike have started to incorporate online video into their strategies. comScore reported in 2012 that more than 88 percent of online users watched at least one online video a month. And 22 percent of online videos seen were ads. Early in the year, eMarketer predicted that the online video space will grow more than 40 percent annually for the next few years. David Cohen, the chief media officer at Universal McCann told Ad Age’s Michael Learmonth and Nat Ives that online video “represents the most explosive growth area in the digital space in the next three years.” It’s so promising that for the first time, an online publisher went all out with online video this year – and not just nicely packaged pieces here and there, but a full-time live video endeavor: HuffPost Live. HuffPost Live features original programming 12 hours per day, 5 days per week, including live Google+ Hangouts with audience members as well as experts – all staffed by 100 people, which the Huffington Post hired for launch. The experiment is being watched ever so closely because everyone wants to know: Can the talk radio model translate to streaming video and online chat?

For their part, brands are anxious to capitalize on more video inventory – and drive it as well. According to Adap.tv, video ad spending rose on average 27 percent in 2012. And the company says it could grow another 20 percent in 2013. But what loses as video gains? That’s the surprising part. The company’s research showed that the money isn’t coming from TV ad budgets – rather, from print and display ads. No matter how meteoric the rise of online video, it’s still tiny compared to traditional TV advertising. A Kantar Media study showed that of the more than 4,100 brands that advertised nationally in 2012 with video (both on TV and online), 77 percent use only TV ads. Just 11 percent use online video exclusively and 23 percent said they were mixing TV and online.

3. Elections make rain for media biz

Barack Obama wasn’t the only one who won Nov. 6. In the media industry, there were big winners too, including advertising revenues and digital journalism. Combined, the Obama and Romney campaigns spent more than any other election in history on advertising—upwards of $1 billion. And the entire election season, which included tight congressional races and other high-stakes down-ticket fights, brought in $6 billion overall to the advertising market. But TV still took the most of that pie – $1.1 billion on local TV in 12 states for the presidential race alone, plus another $200 million for local cable, according to a report from Kantar Media. That means that as quickly as online election spending is rising – IAB says it was up to $160 million this year, compared to $20 million in 2008— it’s still just a small segment of the overall spend. But, as targeting online gains momentum, that is bound to change.

Traffic-wise, though, this was an election that played out online like no other. Across the board, online publishers shattered traffic records with political coverage. CNN had a four-year traffic record on election night. FoxNews.com had its biggest night ever with 17.6 million unique visitors. And Politico reported 9.4 million uniques for its biggest day ever.

4. Olympics boost ad revs

Despite the criticisms (even the viral ones on social media such as #NBCFail), NBC and the media business scored big time with the 2012 Summer Olympics. It was the first to be called the “Social Olympics” and indeed, the Games were experienced, perhaps for the first time, fully cross-platform. More tweets were sent in one day during the 2012 Games than all 17 days of the Beijing Games in 2008. Fans got to interact with athletes and the games themselves in ways unheard of four years ago. NBC’s multi-platform push brought the games to 7.6 million online – or “second screen”—devices. And NBC TV dominated, too. In the first 10 days alone, Nielsen reported that 33.6 million viewers tuned their TVs to NBC during prime time – the most for any non-U.S. Summer Games in 36 years. According to Kantar Media, Olympic ad spending brought NBC’s ad revenues up 30 percent, bringing the network and its cable channels nearly $1 billion in advertising.

5. Mobile ownership, expectations soar

2012 really was the year of mobile. Pew research tells us that nearly a third of all American adults now own a tablet or e-reader. In 2012 alone, tablet ownership doubled, according to end-of-the-year Forrester research. Forrester also estimates that 50 percent of U.S. adults now own a smartphone. Analyst Mary Meeker’s year-end report estimates that globally, mobile traffic now accounts for 13 percent of all Internet traffic. That’s not just fun and games. Pew Research Center’s Project for Excellence in Journalism and the Economist Group found that nearly half of adults have mobile web access and their most popular activity, after email, is checking the news. The Online Publishers Association (OPA) released a report in 2012 that shows a large majority, 93%, use their phones to check in with content regularly. Twenty-nine percent use their phones to get local news and 24 percent to get national news.

Are publishers and brands taking full advantage of all those eyeballs? They’re getting there. The OPA report shows great promise: 42 percent of people who buy content on a smartphone said advertisements are hard to ignore and 25 percent said smartphone ads motivate them to research or purchase items. And 79 percent of those who buy content took an action after seeing a smartphone ad. The research firm eMarketer forecasts mobile ad spend in the U.S. will reach $2.3 billion in 2012, up from $1.17 billion in 2011. eMarketer’s Clark Fredricksen told GigaOm’s Ki Mae Heussner, “The big underlying reason is that smartphone growth and mobile Internet usage is growing very quickly in the U.S. and you’re starting to see a tipping point where a majority of people are starting to use smartphones…or mobile Internet. That’s causing a lot of interest from advertisers.”

6. Native advertising rises

While banner ads are losing their luster, native ads became the trendy idea for 2012. Well, really a retread of an old idea: advertorials. In this new twist, native advertising runs in the editorial stream as branded content or sponsored packages. Native ads include any approach that integrates fully into the design or content of the website or app. So what’s bringing native ads to prominence? Business Insider was the most recent to jump on the wagon, along with Atlantic Media, BuzzFeed, Gawker and Forbes – all of which are now offering advertisers an opportunity to brand in-stream content on their site. Business Insider’s president and COO Julie Hansen hopes that in a couple years, branded content could account for half of the site’s total revenue. According to a study from Solve Media, 49 percent of media buyers say they will allocate money in 2013 to native advertising. “It’s not a trend, it’s a reality,” Solve Media CEO Ari Jacoby told PaidContent’s Jeff John Roberts. Two out of five media buyers told Solve they will put more than 10 percent of their budget toward native advertising.

7. Big Data gets bigger

Data and how it’s collected is going to change the nature of everything online, particularly publishing, and 2012 was just the start of that. Whether it was an increased ability to measure traffic or the push on the advertising side to collect as much information about readers as possible to help campaign effectiveness, 2012 saw a love affair with data for publishers and brands alike. Why is it a big deal? NPR explained: “What’s new is the way data is generated and processed. It’s like dust in that regard, too. We kick up clouds of it wherever we go.” For publishers, Vikram Somaya, a former VP of operations and audience at Reuters, put it this way to PaidContent: “Anyone who hasn’t picked an [audience data] product, is behind… it’s not an option to ignore anymore.” Expect 2013 to take Big Data even bigger, but not without some murky waters to wade through. Privacy concerns have spurred interest to regulate just how much data can be collected and how – which is bound to be a sticky debate.

8. Facebook: a roller coaster year

It was one of the most anticipated tech IPOs in recent history. But when Facebook went public in May, there were fireworks alright, but not all were celebratory. First, there were the trading glitches that had traders and investors on edge. And that would set the tone for the rest of the year for the social giant. At first, the company opened at $38 per share and raised about $16 billion, with a valuation at $104 billion. But by the time the company’s first earnings reports came out in July, the stock was dropping. Even though that first report was positive – revenue grew 32 percent to $1.18 billion in the second quarter – investors weren’t overjoyed. Most of the shakiness has come from Facebook’s inability to really show two things: a sustainable revenue plan and a mobile strategy. Toward the end of the year, though, the company had started to show progress in both areas with a few new advertising ideas, including the Facebook Exchange – a crack at real-time ad bidding—Facebook Gifts, a better mobile ad plan and even a new way for users to pay to promote their posts. By the end of the year, its stock was hovering at about $26.

9. A new plan for measuring viewability

Marketers, industry analysts and publishers spent 2012 working on something that could change the very nature of online advertising in the blink of an eye – viewability standards. Until now, impressions were the main measure for a campaign’s success, but the problem is that many visitors to a page don’t see the ad that is clocking the impression. And so, in late 2012, the Interactive Advertising Bureau (IAB) released its “Making Measurement Make Sense (3MS) Initiative,” meant to give all players a roadmap to measure not just impressions, but viewable impressions. What will this mean for publishers? That depends on how the new standards are adopted. “It’s not a situation where you have everyone signed on and magically, on Jan. 1, everyone sees the light,” David Rittenhouse, media director at Razorfish told Adweek. “Certainly there will be more jumping on board as there is more data and viewability proves itself.” At the outset, it could mean a drop in some revenue for publishers as advertisers shun “nonviewable” inventory. But Curt Hecht, chief global revenue officer at The Weather Company told Adweek: “The real story in 2013 will be about more effective advertising. Why wouldn’t we embrace this? A world without a focus on effectiveness becomes a world defined by cheap impressions. We can increase quality.”

10. Newsweek ends print run

When Newsweek announced this fall that 2012 would be its last year in print after 80 years – and that it would begin anew with a digital-only strategy—naturally, the big question it raised was: What does this mean for the future of print magazines? Will it prove that content is content, no matter the delivery? Or is it a harbinger of less print pubs? According to a New York Times story, Newsweek’s total paid circulation in 2001 topped 3,158,480. By June of 2012, circulation had fallen by more than half to 1,527,157. The writing was on the wall. Tina Brown, editor-in-chief of the now combined Newsweek/Daily Beast Company, and Baba Shetty, its CEO, wrote in a statement on The Daily Beast: “In our judgment, we have reached a tipping point at which we can most efficiently and effectively reach our readers in all-digital format.” Brown has been bullish that Newsweek can reinvent itself, but what will that look like? No one knows for sure, but it will be behind a pay wall and it’s certainly going to mean less staff. What does this mean for others in the newsweekly game? We may see the answer in 2013.