Publishers Make a Fraction of Revenue From Third-Party Platforms: Here’s What To Do About It

Mar 22, 2017


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Article ImageDigital publishers eager to reach more eyeballs often turn to external distribution platforms to disseminate content to the masses. But new research reveals that this strategy may not be paying off as effectively as digital content providers have banked on.

In fact, according to a report published earlier this year by Digital Content Next (DCN) entitled “Distributed Content Revenue Benchmark Report,” publishers are generating revenue much lower than expected after placing their content on third-party distribution platforms run by companies like Google, Snapchat, and Facebook. The report indicates that, in the first half of 2016, the (mean) average premium publisher garnered $7.7 million in revenue via this strategy – which equates to only approximately 14% of overall revenues for a publisher over this time span.

Some of the challenges publishers face with these platforms, per the study, include program restrictions via Facebook Instant Articles that make it difficult to monetize at rates comparable to a publisher’s own site; YouTube prioritizing its own skippable video ad inventory over non-skippable partner inventory; and Snapchat’s recent announcement of a new Discover channels licensing model that could limit monetization potential for publishers.

Rande Price, director of research for DCN, says offering content on social platforms is a critical decision for publishers – one they often struggle with when trying to justify return on investment. “Publishers are wrestling with how much monetization they should shift from their site to off-platform after assessing the potential for revenue gains against the loss of control over content, audience and ad sales,” says Price, who was personally surprised by the report’s findings. “It was surprising to uncover the extent to which publishers have no control over the user experience, functionality, and ad products on third-party social platforms.”

This lack of control is among several “pain points” identified in the report and felt by publishers trying to successfully monetize on third-party platforms; others include financial pressure to develop new and protect old revenue streams; fragmentation of audience that can occur with multiple partners; and lack of resources and legacy management structures.

Digital content providers need to evaluate the degree to which the relationship with a third-party platform is additive or complementary versus competing with on-site activities. “Publishers also need to ensure that there is a senior-level executive at third party negotiations that leverage a master service agreement,” Price adds. “They should have someone that understands the agreements across the platforms and knows the nuances of each social platform. The negotiations should address data issues like third-party measurement integration and audience data and management reports, as well as ad server integrations.”

Also, “the inclusion of subscription monetization options is important for publishers offering subscription models,” says Price.

Additionally, publishers can maximize potential with third-party distribution platforms by taking the right approach, says Kim Garretson, research fellow with Reynolds Journalism Institute. “We are entering the age of individualization, meaning publisher strategies and tech investments need to treat each audience member individually in speeding and easing the creation and delivery of content they have requested,” says Garretson.

To enable this individualization, a publisher could, for example, embed an option for opting-in to future content alerts at multiple touch points, Garretson suggests. These alerts can be fine-tuned according to topic, reporter, or even saved keywords chosen by the reader.

“The level of engagement will rise considerably when the individual gets alerts on specific requested content, meaning monetization will improve for various revenue sources,” says Garretson.

The DCN report further recommends that publishers: concentrate on products that are replicable, generate new money, leverage their core business, and have the capacity to scale; measure and test content monetization and consumption on external platforms and contrast these findings with measurables from their own sites; and employ active cross-functional teams or centralize duties for managing third-party partnerships.

“In the future,” predicts Price, “we will see third-party platforms shift from being a marketing vehicle to a monetization engine. But in order for this to happen, third parties will need to provide more control to the publishers and offer add server integration, third-party measurement integration, usage metrics, and direct subscription offerings.”