According to the Association of Online Publishers (AOP) and Deloitte’s latest quarterly Digital Publishers Revenue Index (DPRI), subscription revenues grew strongly from April to June, up by a strong 44.9%, reaching £34.5 million.
The takeaways:
- Overall, digital publishing revenues in the UK fell by 14.3%, to £96.6 million in Q2 2020, compared to Q2 2019. This drop was less steep than anticipated.
- Whilst subscription revenues enjoyed healthy growth, display advertising, the largest revenue category, declined by 25.2%. Revenue from smaller categories such as recruitment, sponsorship, and online video also fell compared with the same period last year.
- B2C publisher revenue decreased by 7.5% over the year to June 2020, with display advertising revenue declining by 20.4% on a rolling 12-month basis. B2B revenues saw a more modest decline of 0.9% over the same period, with display advertising only decreasing by 0.4%.
The big picture
On a 12-month rolling basis, subscription revenues performed well, growing by 27% to reach £112.3 million.
Yes, but: this growth failed to offset the substantial reduction in revenue from all other categories including display advertising, online video, sponsorship, recruitment and other classified.
Overall: total digital revenue decreased by 6.4% in the 12-months to June 2020.
Subscriptions are keeping publishers afloat
The industry’s focus since the pandemic hit has fallen greatly on growing readership and subscriptions. Whilst this has been a success for many, the challenge moving forward will be to sustain it.
- According to Deloitte research, more than one in three (36%) UK consumers read more news online a result of staying at home during the pandemic. A further 42% expect to continue to do so at similar levels once lockdown restrictions have lifted.
“In time, advertising revenues will build again, but it will be subscription revenues which provide publishers with the resilience they so badly need in the months ahead,” said Dan Ison, lead partner for telecommunications, media and entertainment at Deloitte.
Reassessing the role of advertising
The report unequivocally reflected the importance of growing non-advertising revenue.
- 100% of members surveyed selecting this strategy as a high priority over the next 12 months, compared with 88% in Q3 2019.
- No member saw advertising revenue growth as a high priority strategy, compared with 13% in Q3 2019, supporting an industry-wide focus on revenue diversification.
- Over two thirds (67%) of members identified cost reduction as a high strategic priority, up from38% in Q2 2019, as publishers double down on cost-saving and business continuity measures due to the impact of the pandemic.
Growth by acquisitions: One third (33%) of publishers now seek to grow their business through acquisition, in contrast to a Q1 2020 report, when no AOP member reported seeing expansion as a strategic priority.
The roll-up: confidence in the digital publishing industry has rebounded strongly from the fall earlier in 2020, suggesting initial fears about the detrimental impact of COVID-19 on publisher revenues may have been overestimated.
