Despite the rising tide of ad blocking, increased commoditisation of display advertising, plus economic uncertainty surrounding Brexit, publishers are (publicly at least) increasingly positive when it comes to their revenue outlook, with most pinning their hopes on video advertising inventory.
Four out of five UK publishers anticipate positive growth in the next 12 months, according to the latest findings from the AOP’s Digital Publishers Revenue Index (DPRI).
The DPRI – a quarterly report of UK publishers from the Association for Online Publishing (AOP) and Deloitte – found that amid the uncertainty surrounding Brexit, more than half of UK publishers reported positive growth this quarter compared to Q2 last year.
In addition, the survey published today (28 September) reveals that UK publishers remain optimistic for the year ahead, thanks largely to the growing optimism over increased advertising yield promised by more video advertising inventory, as well as other sources of revenue, which can offset the more traditional declining revenue sources (see chart below).
Online video, which has increased by 117 per cent compared to Q2 2015, is the fastest growing category in Q2 2016 as more publishers are reorganising their business to put video front-and-centre.
Rises in ad blocking have contributed to a decrease of seven per cent in display ad revenues in Q2 2016, compared to the same period in the last year, but slow adoption of blocker-circumventing formats like native mean display still remains the largest single revenue category for UK publishers.
To keep overall revenue growing, publishers have been forced to explore new revenue streams outside of print, which continues to slide in line with changing consumer patterns.
This includes: publishers beginning to monetise their audience data, as exemplified by MailOnline’s programmatic deal with Infectious Media; experimenting with header bidding as a means of giving publishers the chance to sell inventory to the highest bidder; plus the emergence of publisher alliances, offering the opportunity to better monetise otherwise unsold inventory.
Dan Ison, lead partner for media and entertainment at Deloitte, commented: “UK publishers are now more nimble and willing to change when faced with unforeseeable variables, and this confidence is reflected in their optimism for the year ahead.”
Despite the positive outlook, the lionshare of ad money still lies in the hands of digital behemoths Facebook and Google, which combined command 75 per cent of all new online ad spending. This is showing no signs of slowing, with recent research from eMarketer showing that Facebook, Twitter and Google are set to outpace digital advertising growth in the UK in 2016.
Richard Reeves, managing director, AOP, commented: “In a time of economic uncertainty in light of Britain’s decision to leave the EU, it is encouraging that UK publishers reported such positive growth in quarter two, and that they feel confident about the future growth of the industry.”
“With the emergence of increasingly innovative video formats on the market, it is perhaps not surprising that online video is performing so well this quarter. It will be interesting to see how this category evolves and shapes the future of digital publishing”.
The Q2 2016 DPRI report is based on a survey of 20 UK digital publishers comprising 14 B2C publishers and six B2B publishers.