Big shifts in online content monetization

In this post, I want to discuss changes that are happening to online publishing and online content in general. In the last 10 months, Kelly and I have talked with 100s of publishers and website owners and are happy to share what we learned. Here we describe an inevitable shift which is happening slowly but inevitably and also discuss its consequences for online publishers and consumers.

Trends.

Since 1994, the best way to monetize online content was advertising. And it is still true. But in the last 5 years, we can observe some big trends which cannot be ignored. And if you are an owner of an online newspaper or any company which offers content, you either already know about these trends or you are in denial of them. There are at least 3 trends which seem inevitable and are here to stay:

• Worldwide adblocking software usage is up 30% in 2016. By the end of 2017 and 2020, 21% and 37% of US internet users will use Adblock, respectively. These numbers are higher worldwide.
• Average CTR goes down, currently at 0.3%, but it declines by 5% every year. New generations of internet users have grown blind to online ads and simply ignore them. Moreover, 70% of internet users ignore online ads and among those who clicked on ads 60% said that they did it by accident.
• Up to 80% of online readers dislike ads mainly due to poor reading experience and very slow load times. Overloading webpages with intrusive ads damages your brand, and on Mobile it increases the bounce rate.

Though scary for online publishers and website owners, we believe that these trends will have a very positive long-term effect on the Web. All trends push ad revenue down and thus force publishers and content creators to think more creatively about alternative revenue streams.

To give a visual of just how much Adblock has grown:

Predictions for website owners.

Here are a few predictions for online publishers and website owners in the face of declining ad revenue:

• Online publishers and content creators will have to ask themselves about the uniqueness and redundancy of their content. If content is unique and provides value to readers, then readers will be willing to pay for it. In this case, publishers and other creators will be able to charge up a significant portion of the audience providing a paywall/membership system is implemented in a user-friendly way. By talking to and working with content creators and publishers, we learned that not all content is equal. For example, time-sensitive (like fantasy sports data), educational, video, financial or long-form analytical content sell relatively well.
• Some online publishers and creators will not be able to charge for their content. Sometimes we hear it from publishers in their frustration with their first attempts to charge readers. In most cases, it is not the matter of how you implement the paywall/membership but a fundamental attribute of the content itself. For example, news is a very redundant type of content that most people are not willing to pay for. For about 20 years, online news has been and still is free to access. We surveyed online news readers in the US and over 80% have confirmed that they do not like paying for news because “I can find the same content somewhere else, for example on social media”. Again we learned that not all content is equal, repetitive short-form news content does not sell well.
• Some publishers and website owners will not be able to evolve. For some of them, not all, there is an alternative strategy. If the UX/UI of ads is improved on the webpage, publishers can start an open conversion with readers and ask them to whitelist the website on Adblock’s settings. Readers would never pay real money but would agree to support websites indirectly via disabled Adblock.
• To battle low CTR and poor UX/UI, online publishers and other website owners must develop and adhere to strict guidelines. It seems that Google and Facebook do understand the inevitability of this. Facebook has strict ad guidelines and Google Search began punishing the SEO of websites showing intrusive popups. Another interesting move from Google - owners of Chrome extensions are not allowed to use Google Adsense to monetize their extensions, instead Google allows developers to charge single or recurring payments.

Predictions for readers.

• When a particular website decides to ask you to turn off Adblock or moreover, pay a single or subscription fee, you will have to decide for yourself to stay or leave that website. Avid internet users, who browse a lot of different sites, will have no problem with deciding whether to stay or leave. Usually it takes a few seconds to answer the key question “Am I going to find similar content for free on some other website?”. If the answer is yes, you leave, find a new website and build a new habit of visiting it. Whether publishers like it or not, your ability to distinguish between unique/great and redundant/poor content is what makes publishers create great content and not publish click bait all the time. Sooner or later, you will have to decide on which 4–5 websites you would pay and which 20–30 websites you would whitelist on Adblock. If you do, the Web (which is basically content) will re-structure for the better.
• There could be two types of websites on which you would be offered to pay. One type is big publishers, who create both good and bad content, and ultimately ask you to buy a subscription for access to all content. Good example here is NYT. Another type is a platform, which does not yet exist, but very likely it will. A company like Medium may figure how to pay to content creators, and if it does, it may ask you to pay for access to the content on the platform. It is likely that big publishers, like NYT, will stay independent and not join platforms, so a subscription to say Medium will provide you with access to the content from many individual creators.

The Web will change. The good news, it will change for the good. It will largely consist of independent publishers (like NYT and WaPo) and platforms (like Medium and Blendle) with unique and great content, and both of them will be able to convince you to pay. There will be independent publishers (your local newspaper? Business Insider?) and platforms (Flipboard) where you will tolerate ads but these ads will be dramatically improved: less disruptive and load faster. As with any evolution, some publishers and website owners will not evolve. Those who spend more money on advertising technology and less on content creation and readability will likely go extinct.

In future posts, I discuss how to implement different monetization strategies and how to decide which one is the best for particular content. I also outlined some of the best practices for paywalling content.

My name is Tima, Kelly and I build tools for website owners to monetize their online content in the most user-friendly way. We’ve open-source code for both Adblock detection and a paywall/premium membership. Check up Drizzle.