- Revenues from digital audio subscriptions are about to reach a record high in the U.S. as growing advertising shares cause an inflection in the digital audio market.
- The ad industry marks a record growth in 2022, as the global ad industry is expected to reach the $1 trillion mark by 2025.
- Axios reinvests its profits to accelerate internal growth and build the brand.
- New York Times launches a new audio app aimed to create direct relationships with its users and to reinvent how audio apps utilize discovery tools.
- Industry Dive utilizes email, accurate strategic execution, leveraging of a niche market, and ads to set itself up for an expected $100 million revenue generation in 2022.
- Google and Facebook get sued by close to 200 local newspaper publishers in an antitrust lawsuit.
- Cookie compliance is still a major hurdle despite three years of GDPR as many top publishers still remain non-compliant.
- Electronic Frontier Foundation states Google’s Manifest V3 guidelines require a better approach as they limit legitimate extensions and do not solve privacy-related issues efficiently.
Ad Tech Trends For Publishers
Growing advertising shares causes inflection in the US digital audio market
As the ad spend grows for audio content, eMarketer forecasts that digital audio subscription revenues in the US are slated to peak at 63.9% in 2022. The share of the subscription revenue will start declining from 2023. Ad spending on digital audio will slump to 36.1% in 2022 but is expected to increase to 37.9% of total audio revenues by 2025.
Revenues from US audio subscriptions should remain stable between 2022-2025, but rampant competition in the category is expected. Spotify remains the major player in the field, but Amazon, Apple, and Google are also trying to make their mark.
Paid audio subscribers are also expected to increase by 11.2% from 2020, and reach 121.9 million in 2021. However, a future increase in subscriber numbers is expected to be modest as penetration in this area has reached saturation. Subscription revenue from each paid subscriber of digital audio is also expected to increase in the coming years as publishers stop offering promotional discounts and hike subscription prices.
Subscribe to our weekly roundupStay informed with the latest adtech news
Ad industry expected to hit the $1 trillion mark by 2025
This year the ad industry grew at a faster rate than has ever been recorded in recent history. A major part of this growth can be attributed to digital advertising, which accounted for 64.4% of total global advertising in 2021. As per updated forecasts by GroupM, the global advertising growth rate in 2021 marked a historical year-over-year growth standing at a whopping 22.5%.
$766 billion is the current standing of the global ad industry, which is expected to reach $1 trillion by 2025.
This massive growth can be attributed to numerous opportunities being discovered in light of the coronavirus pandemic. These include small businesses going online, eCommerce being widely adopted, and platforms like Amazon attracting increased ad spending.
While global ad spending grew in 2021, the growth was disproportionate amongst the leading markets of the world. China, the U.K, and the U.S accounted for 70% growth in the ad sector. Yet, they only shared 60% of the global ad spend. China, however, invested extra into digital advertising in 2021 to reach overseas markets. Growth was most prominent in countries that tackled COVID vaccination most effectively and efficiently.
80-90% of total global digital ad spend outside of China, however, belonged to three distinct companies. These were Amazon, Meta, and Alphabet, which grew at historically fast rates themselves.
Strategies From Top Publishers
Axios invests in internal growth
A recent Digiday podcast featured Roy Schwartz, president, and co-founder of Axios shared insights into the internal growth of the company. Here’s what we learned from it:
- Axios is profitable, but it reinvests the money to accelerate its growth. When it’s not investing, it spends its capital on hiring. In other words, if you’re at the initial stage of your business, try to scale it faster with the help of your profits.
- The company always wanted to build a subscription business. But it acknowledges the importance of growing its brand before placing any hurdles to access the content. People won’t pay until they don’t know you well.
- Axios is open for funding partners. But, at the same time, it’s ready to acquire other ventures if it finds value in them. So, growth can come via multiple routes; only the publisher can choose what’s right for him.
New York Times launches a new audio app
Tomorrow, the New York Times is slated to privately launch the beta version of their new audio app, “New York Times Audio”, in the form of an iPhone app. The app aims to allow The Times to experiment with new audio journalism features. It also aims to create a unique app to build a direct relationship with its users, instead of relying on platforms like Spotify or Apple for the distribution of their podcasts.
The app also aims to reinvent how discovery tools work on audio apps. While most apps rely on recency, the design for this new app would enable users to pull relevant audio products from The Times’ staggering archive, resurfacing them based on situational relevance. This bespoke discovery tool contains three sections:
- The Today’s tab,
- The Browse tab, and
- The Following tab.
The app will not feature any ads on its display but will include an ad experience in its podcasts like any other platform. For now, the app remains outside the paywall system. However, it could be promoted as part of The Times’ subscription bundle in the future.
Industry Dive cruises to $100M in revenues
Industry Dive, a modern B2B digital media business that does not believe in paywalls and aims to keep journalism at the forefront, is on its way to making $100M in revenues in the coming year. This 340 employees strong company has already made $85M in revenue this year and aims to reach the aforementioned goal by next year. Their EBITDA margins for the year were over 25%. The secret to their success includes:
- Focus on execution rather than a vision. Having started with only a few publications, Industry Drive has 25 publications to their name at this moment. These became a success through the provision of a refined user experience, heavy investment in design, a focus on the right industries, and investing in quality content.
- Targeting particular industry sectors and converting niches into scale. They achieved this by focusing on industries that were rapidly changing due to tech or regulatory developments, spending high capital, and creating a buy-and-sell side for users.
- Leveraging email to create personally identifiable user profiles, tied comprehensively with each user’s behavior. Their current email subscriptions stand at an impressive 2.5M.
- Taking advantage of ads, A majority of Industry Dive’s revenue is generated entirely from their marketing budgets and activities. They are the prime example of a media business thriving on advertising.
Google and Facebook were sued by more than 200 newspaper publishers
Google and Facebook have been sued by a group of 30 companies that own more than 200 local newspapers in a consolidated antitrust lawsuit. The lawsuit claims that these tech giants have monopolized the digital ad market, accruing revenues that should otherwise go to these local newspapers.
While the Charleston Gazette-Mail, a local West Virginia newspaper was the first to file this lawsuit, many others have filed similar lawsuits since then. A coalition of lawyers, who are funded by contingencies at the moment, aim to help these local newspapers by:
- Recovering past damages (some of the newspapers might be entitled to “treble damages” settlements. Compensation received would vary from paper to paper.),
- Encouraging the establishment of a system where newspapers can thrive instead of simply competing against big tech companies.
Google has previously been sued in 2020 by The Justice Department, while Facebook faces a similar charge filed by state attorneys general and the FTC. The unredacted complaint which includes internal documents from Google alleged how Google’s AMP pages generate 40% less revenue for publishers, how Google charges exorbitant fees owing to their staggering market share, and how they colluded with Facebook to influence header bidding auctions amongst other anti-competitive practices.
The courts have myriad options to try these cases. Some could be selected as bellwethers, testing all the cases for each individual claim, or these suits could be sent back to their originating states to be tried.
Cookie compliance still remains short of expectations
Digiday recently highlighted how most websites aren’t complying with GDPR even three years after its release. It says, 92.6% of the premium sites place at least one tracker in the browser before the visitor accepts cookies. Of the 200,000 analyzed cookies, half of them were marketing-related, and 82% of them were from third parties. 32% of such cookies didn’t wait for consent. 70% of the marketing-related cookies sent the user data outside the EU. In a nutshell, most top publishers aren’t compliant with GDPR.
The findings came from a study by UserCentric, a CMP, and Ebiquity, a media consultation company. It’s concerning because GDPR violations can land publishers in legal trouble. Also, advertisers want their partners to be responsible and trustworthy. Every publisher should ensure compliance with privacy laws to avoid legal issues and business-related hurdles. We suggest you conduct periodic audits for privacy compliance.
Google’s anti tracker need a better approach
Google announced Manifest V3 in June 2019. It is a set of new technical guidelines for Chrome extension developers. Google says that the purpose of these new specs is to provide a safe and secure browsing experience to the user. Preventing extensions from stealing data is one of the main focal points.
Last week, the Electronic Frontier Foundation published its opinion about the initiative. Here’s what it says:
- Manifest V3 is harmful to privacy efforts. It limits the capabilities of the extensions that protect users from harmful trackers.
- A legit tracker and a malicious tracker may collect the data the same way, but how they use the data makes all the difference. So, If Google wants to protect the user, it should implement a thorough review process instead of placing limits.
- MV3 also hinders the extensions that actually improve browser performance.
Moments That Matter
- A quarter of Instagram’s ad revenues can be attributed to Instagram Stories – eMarketer
- US news market share analysis across print and digital – pressgazette.co.uk
- Eyes, pupils, and heart will be used to target ads in the metaverse – euronews.next
- WSJ to Take On Wirecutter With New Ecommerce Shopping Site – Observer
- Chartbeat releases traffic and engagement trends for 2022 – Digiday