Digiday Research: C-level publisher executives bank on branded content for growth

This research is based on unique data collected from our proprietary audience of publisher, agency, brand and tech insiders. It’s available to Digiday+ members. More from the series →

At the Digiday Moguls Summit in March in Vail, Colorado, we surveyed 33 C-suite publisher executives on how they expect to grow revenues in 2018. Check out our earlier research on how publishers earn e-commerce revenue here. Learn more about our upcoming events here.

Quick takeaways:

  • Thirty-two percent of C-suite publisher executives in Digiday’s survey said branded content has the biggest growth potential in 2018.
  • Survey respondents said branded content was the most important revenue stream for publishers.

2018 is about diversifying beyond advertising
Spending on display advertising and video advertising is expected to increase in 2018. Despite this, C-suite publishers surveyed by Digiday believe alternate channels provide the biggest opportunities to grow revenues, with 32 percent choosing branded content and 23 percent selecting subscriptions as the revenue channel with the most potential, while just 6 percent said digital advertising and 14 percent said video advertising.

The fact that a growing share of display and video advertising is transacted programmatically — where publishers don’t always see premium prices for their inventory — could be incentivizing U.S. publishers to turn to branded content or subscriptions for revenue growth. Research from Warc on U.S. programmatic spending found that only 40 percent of every advertiser dollar spent reaches the publisher, with the rest going to middlemen. Given the high tech fees of programmatic, publishers are looking for more transparent revenue sources.

Spending on branded content is expected to reach $7 billion dollars in 2018 and projected to nearly double by 2020 to $13.7 billion, according to native ad platform Polar. That makes branded content a much faster-growing revenue channel than either display advertising or video advertising.

C-suite publisher executives in Digiday’s survey also view subscriptions as a big growth opportunity in 2018. Following The New York Times’ success with its subscription business, publishers including Bloomberg Media, Business Insider, Wired and Vanity Fair recently launched their own offerings. Financial publisher TheStreet is pivoting from branded content and video advertising to subscriptions.

It’s unlikely that all publishers that pivot to subscriptions will succeed. While subscriptions offer the promise of consistent revenue, they come with risks. “We haven’t done any paywalls on our sites just yet,” one Moguls attendee told Digiday. “It’s hard to justify taking a chance on that and risking a loss in scale of the ad-supported business.”

A May online poll of Digiday+ subscribers found that 85 percent believe most companies will fail at developing subscription products. Part of the problem is people are reluctant to pay for content. Dotdash CEO Neil Vogel highlighted another issue at a Digiday+ members event in May: Publishers need passionate audiences for subscriptions to work. Additionally, given the proliferation of similar content across the internet, publishers like Dotdash could never succeed with a subscription product because similar free content is available.

Branded content is the most important revenue stream for publishers
After display advertising, branded content is the most employed revenue channel for publishers, according to Digiday’s earlier research. Eighty-eight percent of publishers reported revenues from branded content, but for the vast majority, it accounted for less than a quarter of their company’s overall revenues. Regardless, 32 percent of the C-suite executives surveyed by Digiday said branded content was the most important revenue channel for a publisher, while 26 percent chose display advertising and 32 percent selected video advertising.

Publishers have gone to great lengths to produce branded content, which could help explain why some executives view it as the most important revenue source. Meredith pitched the branded content studio it recently acquired from Time Inc. at the NewFronts. Vice also acquired a branded content studio, and one Moguls attendee lamented that his company hadn’t done the same. “Vice had the gumption to do what I haven’t been able to convince my CEO, which is to invest in an agency acquisition,” he said. “You’re going to need an infrastructure to jump-start the agency part of your business.”

Branded content studios are not without their critics. Vogel insisted that publishers that focus their offerings around branded content are “crazy,” noting that Facebook’s and Google’s inability to capture 100 percent of new spending on advertising, coupled with increasing display and video spending, leaves opportunities for viable business. Furthermore, BuzzFeed’s embrace of programmatic advertising only emphasizes how challenging it is for a publisher to build a business supported mainly by branded content revenues.


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