Advertising and related income

The first group of income streams come from marketers who have always been a major source of revenue for media businesses.

An electronic billboard advertising various brands. Image: PEXELS

1. Premium display ads

The original ‘banner ads’ that first appeared on the world wide web in the 1990s. Wolmarans said that these were working less and less well for Tiso Blackstar and were becoming harder and harder to sell. Challenges included ad blockers and competition from Google and Facebook. For a (negative) perspective on whats gone wrong with advertising online from one of the people who invented the pop-up ad see Ethan Zuckerman’s interview with New York Magazine earlier this year. The founder of medium.com abandoned advertising last year saying the ad-driven model was broken but it remains a mainstay of many digital publications.

2. Programmatic advertising

Programmatic advertising is automated advertising. Instead of selling ads to individual marketing customers, digital media offers space to intermediaries who place ads according to profiles of who their clients want to reach. It is often combined with automated bidding systems that determine the price paid for the ads. From the media publisher’s point of view, Wolmarans pointed out that it saves time and money — you don’t need a sales team to do it. But revenues are lower and there is also a quality problem. Those Bitcoin investment ads you see on many news sites are usually placed through programmatic advertising.

3. Sponsorships

Sponsorships usually involve a commercial partner supporting and adding their brand to an ongoing content strand or series. Wolmarans says Tiso Blackstar has found strong revenues in sponsorships though there is a danger of over-promising and under-delivering. It requires being able to clearly define the value that the client will receive.

4. Lead generation campaigns

Traditionally marketers just wanted ‘eyeballs’, often priced in CPMs — costs per thousands (technically, “cost per mille”) — but there is a trend for marketers to look for more than just eyeballs. ‘Lead generation’ campaigns are an example of this. They involve the publisher in delivering prospective customers — with their contact details — to the door of the marketer. If media publishers are sending out email newsletters for example they can include information about a product or service and can charge marketers for each person who then expresses an interest in knowing more (by filling in an online form for example).

5. Social media distribution

Social Media platforms have offered publishers distribution through services like Instant Articles which offer publishers the option to place their own ads in stories they publish or to let Facebook place ads for a cut of the revenues. Some major publishers use this platform but many avoid it, sometimes because they are concerned about handing over a core part of their business to what is now one of their major competitors. Its a ‘no’ from Wolmarans.

6. Paid social reach

Digital media publishers often invest heavily in building social media audiences. Some then sell access to this audience to marketers (as do all sorts of social media influencers like Kim Kardashian). Wolmarans warned that it was easy to annoy audiences with this and, as with ‘native content’ (see below) labelling and compromising editorial credibility was a risk.

7. Multimedia

Many news organisations that originated in print have had to look at diversifying their storytelling — producing videos and podcasts for example. Pre-roll ads on videos and ads on podcasts seem to be working for some publishers with marketers willing to pay premiums for these forms of advertising.

8. Native content

Native content is the new term for a very old model — what used to be called ‘advertorial’. Wolmarans argued that digital offered ways of delivering this in better ways. He said this was proving an important revenue stream but required a high level of effort and investment. It needed to be produced in-house by journalists and also needed a skilled sales team. Labelling it clearly was essential.

Audience Revenues

Image: PIXABAY

Print media traditionally charges readers for their newspapers and magazines. Many broadcasters offer their content for free.

9. Subscriptions and memberships

Most major news media houses in South Africa have now moved to a subscription model, introducing paywalls for their digital content. Wolmarans argued that there was increasing evidence that readers were willing to pay. But there was room to innovate. He also described the pressure paywalls put on newsrooms. If people are paying for content they expected high quality. It also needs subscription and login processes to be as seamless as possible.

10. Pay per view

There is plenty of room to innovate in paywalls. One key challenge, especially in Africa, is to move from long-term subscriptions to more flexible pay-as-you-go models that have proved successful in mobile communications. The Sunday Times, for example has introduced a ‘day pass’. In some markets with good and widely used mobile money systems, there could be opportunities to explore mobile micropayments so people can easily pay per article.

11. Syndication

Syndication — selling your content to other publishers to distribute to their audiences — is one of the oldest streams of revenue for publishers. It worked well when publishers were limited to geographies so African newspapers, for example, could syndicate their stories to newspapers in other countries. But the internet has broken down these boundaries and Wolmarans thought there were few examples of successful syndication in South Africa.

Additional Products and Services

Many media organisations, from The Economist and The Guardian to the Daily Maverick have started creating new products or services that extend their brands and offer new income streams.

12. Events

Image: PIXABAY

News media organisations have often built trusted brands. Global groups like The Economist and the Financial Times have extended their brands into major events businesses, hosting events across the world. Tiso Blackstar has created an events division that aims to follow this trend. The Daily Maverick holds an annual gathering. These offer income from ticket sales as well as new sponsorship opportunities.

13. E-commerce

Some media outlets now sell various products from their websites — the Guardian in the UK sells books, as does the New York Review of Books in the US, others like the New Yorker sell merchandising from cartoons to coffee mugs. Wolmarans warned of the dangers of staying consistent with brand values and not compromising editorial independence and credibility.

14. Paid reports

The Economist’s Intelligence Unit and Business Insider’s Intelligence offer in-depth research reports which they promote in their other publications. These often leverage from their work done for their publications.

15. Media and journalism services

Some news organisations are beginning to look at whether their skills sets and capabilities can be offered as services to other businesses. One of our teams in the JamLab Accelerator has experimented with offering consulting and networking services, and other African media outlets are reported to be selling their expertise in data analytics.

Donations and Public Funding

Looking across the media landscape in South Africa, we can see how important public funding and donations have been in sustaining journalism and other media.

16. Legally mandated public funding

Image: UNSPLASH

In South Africa, the South African Broadcasting Corporation (SABC) is at least partly funded through a licence fee which all owners of television sets are obligated to pay. This is similar to the funding model of the BBC in the UK, although in SABC’s case they are mostly reliant on advertising. The MDDA, a public agency partly funded by the media industry has also supported community radio and other media. In South Africa and elsewhere there have been discussions about extending the public funding model to allow a wider range of media organisations to apply for support for publications in the public interest.

17. Funding from foundations and trusts

Looking across the media landscape in South Africa, Foundations and Trusts play a major role. The Mail and Guardian (M&G) has been invested in by the Media Development Investment Fund, a US based non-profit. The Bill and Melinda Gates Foundation also support health reporting in the M&G. Community radio has been supported for many years by the Open Society Foundations — which has also supported many other media initiatives. Across the continent, the Open Society Foundations, MacArthur Foundation, Omidyar Network have all supported media. In South Africa, Omidyar and OSF-SA have funded the South African Media Innovation Program which is investing $4m dollars between 2017 and 2020. JamLab will be publishing a list of funders soon.

18. Crowdfunding

Crowdfunding — raising small contributions from a large number people — has been used by a number of media startups and by investigative journalism teams. It has often been successful for individual journalism or video projects.

What next?

We hope this list is a starting point for any African digital media maker to think about how they can become more sustainable. But be warned — as Wolmarans emphasised in his talk — each of these potential revenue streams requires significant effort and investment to pay off.

AdvertisingBusiness ModelsCrowdfundingfundingMedia Sustainabilitymonetisation

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