You don’t have to choose sides in the advertising vs subscriptions debate

advertising vs subscriptions
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The great refocusing on reader revenues shunted advertising sales down the priority list for many publishers over the last few years. Post-pandemic growth has seen advertising sales rise back to the top of the agenda, and now publishing strategists are wondering what’s the correct choice in the advertising vs subscriptions struggle. But there is a middle way that lets publishers leverage the best of both worlds.

  • In the hunt for sustainable business models, publishers often relegate one struggling element of their business in favour of another that promises improved performance. Advertising sales, dented by a print slump and a digital ad market dominated by Google, Facebook and Amazon, suffered that fate for several years.
  • Paid-content absolutists stole industry headlines with products exclusively funded by readers, promising never to sell out to the admen. The collapse of the ad market through the COVID crisis appeared to vindicate this move away from advertising, but then the pandemic began to recede and the ad market grew at historic rates.
  • Now, with a return to some kind of post-pandemic normality and inflationary pressures squeezing spending on subscription products, advertising is re-staking its claim on publishing’s bottom line. And more than ever, publishers are wondering whether to centre their businesses on advertising or subscriptions as the main revenue driver.
The ads vs subs narrative

Writing in the Toolkits newsletter, Jack Marshall says the adversarial nature of the advertising vs subscriptions narrative has been fueled by a handful of high-profile companies choosing one camp over the other.

  • At one end of the spectrum are the ‘all ads are bad’ publishers with an evangelical commitment to subscriptions, while at the other end are publishers chasing scale with commoditised content. Marshall describes these stances as strategic, designed to create a ‘point of differentiation’ in the market, to appeal to investors looking to jump on the latest industry bandwagon or simply to get headlines.
  • But Marshal says, in practice, almost every media company that vows never to take advertising or sell subscriptions ends up doing both, because it is ultimately in their best interests. He uses the examples of The Athletic rolling out ads to try to break even, The Information selling ads into its newsletters and the growing number of sponsored newsletters on Substack.
  • On the subscriptions side, Marshall says publishers previously wedded to “advertising-only” models are launching premium resources including courses, research reports, and data products on a subscription basis. He said:

It’s becoming increasingly clear that a blend of advertising and subscriptions provides the optimal approach for maximizing revenue, driving sustainable growth, and meeting the needs and expectations of audiences.

The benefits of blended revenue

According to Marshall, publishers monetising their operations with a blend of advertising and subscriptions revenue typically see a range of benefits. These include:

Increased revenue
Not all content is worth paying for. Opening up ‘lower quality’ content can grow traffic and generate incremental revenue through advertising.

Revenue diversification
Multiple streams help boost overall revenue and can help insulate businesses during challenging economic times.

Audience growth
Funding some content with advertising creates the opportunity to reach new audiences via search, social and other open-access channels.

Meet broad audience needs
Combining advertising and subscriptions allows publishers to serve the needs of their overall audiences; casual readers get free access while subscribers get premium content.

Subs data fuels adv sales
Data from deeply engaged subscribers delivers ‘strong signals’ to help inform segmentation and targeting on behalf of advertisers.

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