July 18, 2018 | Authored by: Kevin Cancilla
Can subscriptions replace ads for publishers?
Ads: No matter how unlikeable they are to some customers, today ads play a central role in revenue generation for online publishers.
However, the growth in the use of ad-blocking tools, the unpopularity of ads, the extremely low click-through rates, and the dominance of Google and Facebook in ad revenue generation have created challenges. Many businesses, publishers among them, are looking to alternative monetization models, which include subscriptions and ad-free subscriptions, to replace or supplement ad revenue.
While there are many ideas floating around, the fact of the matter is that ads occupy a central place in the internet ecosystem, and moving beyond ads will take time and experimentation.
Ad-blocking technology, sentiment on the rise
Online users now have more power to block ads. According to MarketingLand, which reported on a gated Adblock Plus study, 40 percent of U.S. consumers used an ad-blocking tool in the last month. Of those, 68 percent did so on a laptop, 51 percent on a desktop and 22 percent on a smartphone.
It's not only internet users pushing this change forward. Google recently ushered in new ad standards that respond to customer complaints about intrusive ads, such as full-page screens that block viewing or pre-roll videos with sound. Google designed the new standards after months of research and will enforce blocks on ads that don't conform to user experience standards.
Publishers exploring alternatives to ad-based models
With more scrutiny applied to ads, online publishers have begun developing monetization approaches to secure revenue that ads may otherwise have captured. One of those businesses on the leading edge is Medium.com. A long-form, blog-oriented site created by the founder of Blogger, Medium has become a go-to source for millennials to read and share their own stories. Recently, Medium launched a subscription service that costs $5 a month for consumers to read anything beyond three free initial articles. Evan Williams, CEO, told Wired that while the switch to an ad-free subscription model is a bold one, "the signs are good that it's working."
Internet-age publishers aren't the only businesses ready to consider subscriptions over ads - legacy publications are very much interested in being on trend as well. The Wall Street Journal reported that, as early as 2016, The New York Times was talking about introducing a premium subscription service that would allow users to opt out of ads. Meanwhile, Digiday reported that The Journal, which earns more from subscribers than ads, sent out a survey to readers asking for thoughts on ad-free options.
Deemphasizing the role of ads in revenue creation is not altogether an easy step for publishers to take. However, as the draw of subscriptions becomes greater and more consumers value premium services, the opportunity is there for online publishers to develop new approaches to monetization. And when doing so, businesses will need an experienced partner to help them navigate the subscription lifecycle and provide them with the tools to fine-tune their offerings. Contact Vindicia today for more information on how our years of experience and deep knowledge of the subscription landscape can help you pursue success. You'll learn why they call us the Subscription People.
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