Why Publishers’ Ad Revenues Skyrocketed Last Year

Last year, publishers across the media industry saw their digital advertising revenues reach record-breaking heights, the result of a culmination of factors––some obvious, others more discrete––that had been years in the making. As in other sectors, the pandemic served as the primary catalyst for this transformation, fast-tracking years of innovation in a matter of months. But adaptation within the media industry, prompted by years of internal restructuring, put publishers in a position to benefit from an increasingly digitized daily life. Below are five charts, illustrated with publisher data and informed by conversations with executives, that shed light on the factors that led the media industry to its historic year. Ad spend rebounded to unprecedented levels After a year of slashed budgets and frozen campaigns, marketers entered 2021 with a license to spend, leading to record levels of advertising for growing channels and brief upticks in the declining ones, according to data from GroupM. As key players in the marketing ecosystem, publishers felt the knock-on effects of this upward surge, said Ryan Pauley, chief revenue officer of Vox Media. “Advertising generally follows consumer demand and GDP growth, and demand was super high last year,” Pauley said. “As a result, advertising spend surged.” As economies across the world recovered from the pandemic, marketers with pent-up budgets spent them in record amounts, added Stephen Colvin, chief commercial officer at Bloomberg Media. “In 2020, everyone kept their powder dry,” Colvin said. “When the economy began to recover, that gave marketers and companies the confidence to do what they're employed to do, which is market and spend the budget.” The portion of total ad spend dedicated to digital increased As advertising spend rebounded, marketers sent an increasingly large portion of it to digital channels, accelerating a trend years in the making, according to GroupM data. The pandemic led to a spike in digital media consumption, which further incentivized marketers to direct their spend to online channels, said David Cohen, chief executive of the Interactive Advertising Bureau. “At the end of the day, we are looking to monetize attention, which has been moving from traditional channels to digital channels,” Cohen said. “That was put on fast-forward over the last two years.” Publishers with sizable digital audiences reaped the benefits of this increased spend, as they had been anticipating this transition for more than a decade, said Jason Wagenheim, president and chief revenue officer of BDG. “If you look at marketer data, digital ad spending was always projected to have this growth,” Wagenheim said. “I just think we're finally starting to realize it.” Diversity of ad vehicles increased average deal sizes Marketers increasingly prefer to work with a smaller number of larger clients, said Brenda White, the head of publishing at Starcom Marketers. This inclination has spurred publishers to create more channels through which advertisers could reach their audiences, such as newsletters, video, audio and connected television. With more vehicles to offer marketers, publishers have seen the average size of their advertising deals increase, a number of sources told Adweek. At Bloomberg Media, its combination of multiple offerings––including speciality verticals like Bloomberg Green and Bloomberg Equality––helped the publisher boost its average deal size for three consecutive years, Colvin said. “On our cross-platform solutions, where clients align with specific content verticals across different platforms, brands that were advertising with us would typically come in as partners across all of those,” Colvin said. Digital subscription efforts have improved publishers’ ad offerings Publishers have seen a number of ancillary benefits emerge from their focus on digital subscriptions, an effort that encourages media companies to cultivate a more granular understanding of their readers. This heightened knowledge of their audience has helped publishers improve their advertising efforts, said Teri Gallo, global gm of Kinesso Marketplace. “If publishers have a healthy subscriber business, there are opportunities to leverage that first-party data to augment and improve their digital advertising transactions,” Gallo said. “As a result, there is an increase in CPMs.” Data from Piano, a digital subscriptions software, reflects the steady growth of publishers’ subscription efforts. As subscriber bases grow, publishers’ advertising efforts will grow more effective, as the two have a complementary effect, said Piano svp of strategy Michael Silberman. “One of the benefits of a subscriptions business is that it forces you to be more thoughtful about user engagement, because you are trying to drive readers into a deeper relationship with the brand,” Silberman said. “So what publishers learn from subscriptions is also valuable in trying to drive deeper engagement for advertisers.” The rise of ecommerce increased related ad spend The pandemic accelerated a number of trends in the media industry, but few rocketed ahead quite as rapidly as ecommerce adoption, according to data from Insider Intelligence. As a result, publishers with strong commerce operations, such as BDG and BuzzFeed Inc., benefitted from the surge in digital advertising that followed as brands sought new customers for their online efforts. “Over the last two years, as people adopted more virtual shopping habits, we saw an acceleration of ecommerce as a core business initiative, and that means more advertising in the digital space,” said Edgar Hernandez, chief revenue officer of BuzzFeed Inc. Likewise, at BDG, the surge in advertising that accompanied the rise in ecommerce helped lift revenues, Wagenheim said. “I think that marketers right now are flush with cash, and they're looking for places to spend their money that perform well and drive conversions,” Wagenheim said. "And publishers like us have a lot of solutions for them.” Audacy Launches Digital Audience Network to Help Advertisers Buy Audio Audiences at Scale

Publishing News

Why Publishers’ Ad Revenues Skyrocketed Last Year, in 5 Charts

For some, the promised future of digital media has arrived

Mark Stenberg

About

Subscriptions

Events

Publications

WORK SMARTER - LEARN, GROW AND BE INSPIRED.

Subscribe today!

Mark Stenberg