We're Starting to Get Real Numbers on COVID-19's Impact on Advertising and Subscriptions

Hey everyone… Welcome to a new week of social distancing. So far, I’m pretty comfortable at home, though I’m starting to find that Zoom calls are actually as exhausting—if not more exhausting—then just having a conversation with someone face-to-face. Or maybe it’s just that there are more calls than ever before.

I took last week off because I have a family member who has been hospitalized with COVID. She’s slowly recovering, but everything is put into context when you think about how a few months ago, none of this was on anyone’s mind. For paid subscribers, would you like to receive an email in the future letting you know I am taking off? This is new to me, so let me know your thoughts on that.

Suffice it to say, I’m back and it’s good to be thinking about media again. When this is done, we’re all going to have a lot of work and I’m excited to have this community to share ideas with.

Now let’s jump into what’s going on…

We are beginning to see real numbers related to COVID-19’s impact on media businesses—in particular, how the advertising business has been hit incredibly hard.

According to a story published on Friday in The New York Times:

Overall spending on digital ads for March and April is down 38 percent from what companies had expected to lay out, and ad spending has fallen 41 percent on TV, 45 percent on radio, 43 percent in print publications, and 51 percent on billboards and other outdoor platforms, according to the trade group IAB.

A 51% drop in billboards is expected and, honestly, I would have expected it to drop even more. However, a 38% drop in advertising in March and April is absolutely gutting.

I’ve seen some rate cards over the past few weeks and the numbers are in line with these findings. The goal is to get business in the front door, even if it’s not a significantly high rate. Like any market, though, I anticipate there will be smart brands that start to advertise again because the rates are lower, so we’re not going to zero anytime soon.

But for many brands, there is still resistance in allowing their ads to show against news related to COVID-19, which is having a material impact on publishers. According to a statement put out by UK newspaper publishers:

While all news brands have seen a surge in demand from readers for quality, accurate reporting, advertising industry ‘blocklists’ are preventing adverts from appearing alongside online stories about coronavirus. 

If the pandemic lasts for another three months the total loss to news brands is expected to be £50 million.

In a letter published today a united news industry asks advertisers to remove blocklists from trusted UK news brands to ensure they can continue to fund quality British journalism at a time of national crisis. 

As we discussed a few weeks ago, ad businesses are hurting.

And yet, it’s not all bad news. Especially in times like this, it’s important to call out the wins that are taking place—and there certainly are some wins.

I think COVID-19 is reminding people that it is important to pay for news sources. Even if the COVID-19 news itself is not being gated, we’re seeing growth in subscriptions at many publications.

According to a memo from The Atlantic’s Editor in Chief, Jeffrey Goldberg, the publication had a record March. In it, he wrote:

We have never, in the 163-year history of this magazine, had an audience like we had in March: 87 million unique visitors to our site, and more than 168 million pageviews. The number of unique visitors is astonishing -- more than double the previous one-month record. But the most notable statistic, the one with possibly the greatest salience for The Atlantic's future, is this: Your work has brought in more than 36,000 new subscribers over the past four weeks, even as we have lifted paywall restrictions on our coronavirus coverage. This subscription success has happened only because readers in crisis found guidance, information, and illumination in The Atlantic's journalism...

They took an approach to this that many others have started to deploy, which I wrote about a couple weeks ago. Instead of gating the COVID-19 content, The Atlantic, instead, uses all that additional traffic to remind people that while this piece of content is free, it’s not actually free to produce the news.

At the end of a recent COVID-19 article, there was a blue ribbon that spread across the entire screen that looked like this:

People seem to forget that news costs money to create, but publishers are becoming far less bashful about letting users know how to subscribe and in some cases, why it is so important.

It does bring an interesting point to the conversation that I heard from one reader and is supported by a recently published article on Poynter. In it, the author writes:

Imagine you operate a once-profitable business that has recently fallen on hard times. Revenue is down. Way down. Then, suddenly, there’s a newfound interest in your product. Demand is up. You have an opportunity to bring back some of that lost revenue. So you look at your prices and decide … to give away your product for free.

How’s that for a business strategy?

And yet that’s what most U.S. newspapers are doing during the coronavirus crisis. When the pandemic hit, we adjusted or eliminated paywalls to make our coronavirus coverage free. You can read it online, whether you’re a paid subscriber or not.

The full piece is worth reading, but to sum it up, the author argues that it’s ludicrous that there is an expectation that news should be free during a crisis, but every other service still costs money.

I don’t disagree with the overall premise of the argument. There is this bizarre notion that content should be free when everything else has to be paid for. The author then continues by saying:

There’s a belief among some industry leaders that the good feelings generated by a caring newspaper during times of crisis will yield paid subscriptions in the future. But there’s no research to support that. In fact, experiences during recent Florida hurricanes — when many newspapers made their online coverage free to all — suggests there’s little loyalty once the paywall goes back up.

Unlike a loss-leader in retailing — in which a store takes a loss on one product to lure customers, knowing from experience and research that enough customers will buy other things to make the venture profitable — there’s no data to support the free-content-now-and-they’ll-subscribe-later strategy. It’s just an idea.

I’m of the opinion that we are starting to see the data to support that if a publisher opens up specific types of content, but then is unashamedly using strong calls to action to become a paying subscriber, people will actually sign up. The truth is, most publishers do a poor job of explicitly asking for subscriptions—instead relying on the wall to do all the work—when a good, strong CTA can do a lot of the work.

And let’s also not forget that it’s not just the content people are paying for. There is a community that forms around the mission of the organization, which is something people will also pay for even if the content is open.

Ultimately, I believe there’s a balance that publishers need to find with this. On one hand, this rush of traffic is good for getting people to learn more about the quality of the brand. In turn, smart publishers can use this as an opportunity to get people signed up for newsletters or becoming paid subscribers thanks to strong calls to action. On the other hand, without a paywall, will people ever pay?

I am looking forward to seeing how the next couple months play out with subscriptions. Will these people remain subscribers or will they be a higher churning user than truly paywalled readers?

What will recovery look like?

It may be a little early to discuss what the recovery could look like, but now that some Asian countries have experienced some recovery, we’re beginning to see signs of a resurgence in advertising.

According to a story on Digiday:

Bloomberg CEO Justin Smith said it’s seeing Asia open up again and the beginnings of more activity happening there. One major international news brand is expecting to sign three contracts last week from three of the biggest countries in China and the immediate area (one has already been signed). Another major international news publisher said a campaign from Hong Kong that was on pause has been restarted. 

The blows to advertising are sector-specific. Technology, consultancy, law and accountancy are still active, according to news publishers. The number of business-to-business branded content campaigns were down 9%, compared with the weekly average, for the week ending Mar. 29.

The question is what type of recession is this then? There are two that come to mind:

  • V-shaped: A sudden, but short decline to the economy followed by a very strong recovery.

  • U-shaped: A sudden decline that could take much longer to recover

With ad buys starting to return in China, the question is whether they will reach levels seen prior to COVID-19. If it happens quickly, that is very much V-shaped.

Could the same thing happen here in the United States? If, thanks to social distancing, we see number of cases drop and we get a good grasp on how to ensure they don’t return, could we start to see the economy recover in time for the holidays when most ad spending occurs anyway? I’m not an epidemiologist and I certainly have my thoughts on the inefficiency of our quarantine. But, at the very least, we’re starting to see recovery in Asia and that can give a little hope for publishers.

That said, I worry a lot about publishers that were reliant on events to help them with revenue diversification in 2020. Without a clear understanding on how long this is going to take and with growth in travel directly tied to this pandemic being behind us, I have a hard time imagining any real events happening for the rest of this year. Some will try, but I imagine there is going to be an inherent worry about travel that lasts until a vaccine is developed.

But that’s not a nail in the events business coffin. There is real value in being around other people that virtual events cannot replicate. We’re trying to make that work, but it’s very hard. We’re a social species and I believe that, once this pandemic does get behind us, events will come racing back. Admittedly, though, I don’t believe we will see nearly as many as we did the last decade.


What about you? What are you seeing in your business? Are subscriptions up or are you not seeing much change irrespective of strategy? Paying subscribers can leave comments and start a conversation.

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As always, thank you for reading. If you have colleagues that would find this useful, please share it with them. I’ll see you all on Friday.

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