With ad blocking gaining traction with consumers, media companies are getting increasingly desperate to find ways to generate revenue from content: and if ads can’t deliver it, then perhaps it is time to resurrect the paywall?
Ad Blocking is an issue that’s been playing out for some months now, so it’s no surprise to see that the World Telemedia conference will be giving it plenty of coverage in Marbella on the 18th – 20th October.
To give the issue some context, according to the 1st quarterly review of ad blocking behaviour by the Internet Advertising Bureau (IAB) and YouGov stated that 22% of British adults now use ad blocking software, up from 18% Oct. And elsewhere, a report by PageFair and Adobe estimates that ad-blocking cost advertisers $22 billion in 2015.
It’s an indication of a growing consumer fatigue on how ads interrupt the user experience and mistrust on how their user data is shared.
There is clearly an appetite for a user experience uninterrupted by ads. The games market for example has experienced a rise of in-app gaming payments, you can conclude that consumers understand this value-exchange and will pay for good content that is free from marketing messages.
More mainstream publishers have also experimented with the ‘paid for’ model in an attempt to redress the balance. The New York Times for example installed a paywall back in 2013. And asking people to take out a paid subscription to view content has paid off, with 727,000 subscribers reported in the first quarter – earning the publisher more than its online advertising. While digital ads brought in $32.9 million, the paywall raised a $37.7 million in 2013 – a ratio that has more-or-less stayed the same up to today.
“Whilst paywalls clearly have a place, there is a further consideration. Consumers also like to snack on content, browsing and consuming spontaneously to meet a need that is felt in the moment,” says Rob Weisz CEO at Fonix
Adding in a layer of friction, such as payment, at the paywall needs to be achieved as a simple process – a no brainer. Filling in credit card details and entering personal information isn’t going to cut it: the time-poor consumer wants the content instantly not after a lot of thumb work, especially on a small device.
Direct carrier billing provides both an alternative revenue stream to advertising and effortlessly adds small transactions – micropayments – to the user’s phone bill. This chimes directly with business models that media companies are trying to exploit – to get consumers to pay small amounts of money for small bites of content.
“This has been a consistent message from the Telemedia industry for some years now and why this year’s conference is so relevant for media groups, content owners and publishers,” says Jarvis Todd CEO at World Telemedia Events.
He contiunes: “Media companies need to commercialize “connected consumers” – as they engage with premium content across an ever expanding range of media distribution channels. The telephone bill is ubiquitous and so telemedia payment solutions offer a compelling proposition to both sides.”
Television companies face similar challenges: how to make money from a more pay as you go kind of content consumption. Ad revenues on all but the main channels are being hit hard, yet online advertising can’t make up the shortfall. Charging for content, as in the newspaper world, seems the obvious answer, but is there a thirst among consumers for a pay-as-you-go model for TV content?
Sky’s launch of its streaming service, NowTV back in 2012 has successfully tapped into this trend demonstrating how there is a shift it consumer taste and demands.
For TV companies, voice short-codes and operator billing have long been the default way to serve a more snacking model, like voting on X-Factor or participating in a TV quiz. That logic is easily transferred to paying for the main event – the TV content itself – renting a film, watching a specific sporting event or paying for access for a defined period of time.
And why stop there with ‘traditional’ media? Netflix and Spotify have already launched a ‘pay by mobile bill play’ to offer access to content. Both of these are examples of ad-free services – paywalls – and both work extremely well.
If anything, the advent of ad-blockers has shown us that online and on mobile, large sections of consumers dislike the ads that interrupt their user experience and eat up their data allowance. Yet somehow content needs to be paid for. What’s important is taking consumers on a journey, by giving them a choice as to how they want to access that content.
You could now go on to read this excellent FT article on paywalls and The Independent going digital. But you’ll have to pay.
You can contact Fonix on 0208 114 7000 or email hello@fonix.com OR better still meet Rob and his team in Marbella at World Telemedia 2016 on the 18-20 October. Visit http://www.wtevent.co.uk/ or email Jarvis@worldtelemedia.co.uk for more details
