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Home Digital

From advertising revenue to reader revenue: New model for media houses

by Michael Bratt
November 27, 2018
in Digital, News
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No magic bullet: How online media makes money
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The primary focus of the recent Africa Digital Media Conference was on revenue generation for media houses, a tough task in these tricky economic times.

“In the past five years of being on the international conference circuit, what I’ve heard is that there’s been a massive pivot to customer or reader revenue. The digital advertising environment has become extremely difficult. Prices are lower than they’ve ever been, there’s an abundance of inventory as we know, so basic economics dictates that that’s a really bad place to be for all of us,” says Tiso Blackstar head of digital, Lisa MacLeod.

“Programmatic has added to the confusion and the pressure between advertisers, clients and most certainly hasn’t helped publishers in any way. The time has really come to rethink what we’re doing,” says MacLeod, who is vice president of the World Association of Newspapers and News Publishers (WAN-IFRA), the global body that hosted the conference.

MacLeod is optimistic for South Africa because the country’s media is able to observe funding trends in international markets and skip some of the pain that they went through.

Held last week at The Capital On The Park hotel in Sandton, the gathering brought together speakers from across the continent to brainstorm ideas and share case studies.

Case studies highlighted

Several examples of revenue generation strategies were discussed at the event, including Tiso Blackstar Group, Netwerk24, Caxton and Daily Maverick.

Riaan Wolmarans, managing editor, digital at Tiso Blackstar Group says paywalls are across most of the group’s online assets, and that he believes South African readers are quite receptive to paying for quality content.

“The big job for us as publishers is to say ‘yes people are willing to pay, but from our side, we have to get extremely high quality content in place and deliver it at the right time and in a way that is easy for readers to access, and determine the right price point,” he cautions.

His biggest tip for media houses who are considering erecting paywalls, is “ask yourself whether your content is worthy enough to be paid for, and operate within your limitations in terms of number of paid stories”.

Cutting out agencies

A significant effect of this shift from advertising revenue to reader revenue could be the exclusion of agencies in the advertising process.

While Wolmarans says South African media houses are years away from seeing advertising revenue as a ‘nice to have’ (due to an extremely high level of reader revenue), agencies need to start thinking about the fact that most publishers will have subscriber bases at some point, and how advertising can be tailored for both the free market and subscribers.      

“It will be a nice situation to be in, in some ways. I see the difficult situation our ad sales team faces every day, almost being blackmailed if you will, by agencies or clients into massive discounts and playing us off against our competitors … Stable reader revenue will allow us to be more resistant to those kind of things and charge certain rates without having to back down,” he stresses.

The latest paywall

Daily Maverick a couple of months ago introduced Maverick Insider. The model is about “more than just asking for financial support” and is “about how we can move from serving our readers content to also creating a community, around unique experiences…”. The title wants its content to be free as, “We truly do not believe that only those with money should have access to our daily opus”. So it punts a model of ad-free browsing (coming soon), special newsletters, access to members-only events, being able to comment on stories (also coming soon), preferential tickets to The Gathering and Q&A sessions with its top journalists and editors.

“The business models in media are at this point, are that there are no rules and nothing is scripted and so it’s been a very exciting space to be involved in. To look at the research and see what’s out there, and work in an environment where people aren’t scared to experiment and take risks,” comments Brett Lensvelt, product manager at The Daily Maverick.

“The challenge is to find a product offering that persuades the marginal readers to subscribe. Engaging with our loyal readers through surveys helped determine what they liked about Daily Maverick and price points,” he added.

He revealed that a high proportion of Daily Maverick readers, 10 – 12% use ad blockers, stressing the importance of an ad free browsing experience (which benefits reader revenue as opposed to advertising revenue) and that a comments section is very important, as readers want to have their say and share their experiences and opinions.


Michael Bratt is a multimedia journalist at Wag the Dog, publishers of The Media Online and The Media. Follow him on Twitter @MichaelBratt8 


Tags: ad agenciesadvertising revenueAfrica Digital Media conferenceagenciesBrett LensveltconferenceDaily Maverickdigitaldigital fundingDigital MediaeventfundinggatheringLisa MacLeodmediaMichael Brattpaywallpaywallsreader revenueRiaan WolmaranssubscriberssubscriptionsTiso Blackstar GroupWAN IFRA

Michael Bratt

MIchael Bratt is a multimedia journalist working for Wag the Dog Publishers across all of its offerings, including The Media Online and The Media magazine. Writing, video production, proof reading and sub-editing and social media. He has plied his trade at several high-profile media groups. A passionate writer, news connoisseur, sports fanatic and TV and movie addict, he enjoys spending time with family and friends, reading and playing x-box.

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