Save your FREE seat for Streaming Media Connect this August. Register Now!

Video Publishers’ New Normal: Booming Audiences and Spiralling Costs

Article Featured Image

If you’d told publishers 6 months ago that their traffic would soon double, most would have jumped for joy, assuming there’d also be a jump in ad revenue. And in fact, that doubling occurred. According to playback data from our publisher community, views to pages carrying videos doubled in the first two weeks of April versus the first two weeks of January.

Of course, no one is celebrating these increases because their driving force, a global pandemic, brought with it catastrophic losses. And at the same time audiences are consuming record amounts of media, advertisers are staying away.

As of April 7, 95% of the U.S. population were under orders to stay at home. And as the crisis continues, the demand for information about it continues to rise. The strongest growth in video consumption is currently around virus-related news, though we don’t expect the increases to subside when infection rates decline. Instead, we predict that this experience will result in key new consumer patterns, and things like increased home-working, reluctance to travel, and a thirst for both information and diversion will remain, feeding ongoing heightened time spent with media.

With Consumption Comes Cost 

If only looking at the viewing increases, one would see an amazing opportunity for publishers to generate revenue. But in the current climate, monetization is immensely challenging. Across every content vertical, advertisers are steering campaign delivery away from coronavirus-related content, delaying campaigns until later in the year or cancelling ad spending all together.

But the problem isn’t simply that advertisers are keeping their wallets closed. As brands scale back spending, publishers experience a domino effect of consequences that set the goalposts for success back even further. Spending cutbacks reduce the variety of tools and services necessary to produce quality content. Layoffs reduce headcount and hamstring workflows for remaining teams. Content quality and quantity suffer as demand rises. And amid this context of uncoupling audience supply and advertiser demand, there’s yet another problem publishers face. You see, when it comes to media distribution, content has a cost. 

To publish video, news organizations typically require four pieces of infrastructure: hosting, player software and monetization tools (often bundled into one-stop shop online video platform (OVP) packages), plus a content delivery network (CDN) for efficient distribution. With the way these vendors typically price their offerings, the decline in advertising is causing a spiralling burden of delivery costs.

The Peril of Popularity

When publishers enlist video infrastructure, they typically buy buckets of video-serving credits, based on their estimated future demand. These costs can be substantial.

But the pandemic consumption spike means many publishers have quickly burned through their video-serving credits and need to buy another, larger bucket to meet sustained heightened consumption. Compounding matters is the fact that most of these vendors require money in advance, and they want to be paid for delivering videos even if they’re not monetized. 

I am hearing of some publishers being whacked with a 100% to 200% mark-up to reach viewers of content from which advertisers are walking away.

This isn’t just painful; it’s borderline immoral. Now, more than ever, publishers need to have cash flow visibility; they don’t need to be committing advance lump sums. So, besides cutting human costs, publishers should urgently examine their infrastructure contracts to establish whether their spiralling vendor costs are hurting them as much as advertisers’ shyness is.

Think Outside the Box

Until vendors move to billing retrospectively for content delivered, and only for that which was actually monetized, publishers are going to have to help themselves. They can start with pivoting their content strategy in order to attract and retain pandemic visitors during the current reality. For those that have the resources, now is the time to invest, not to retrench.

Time Out, whose purpose is to provide a guide to going out, was blunted by coronavirus. They’ve managed to refocus to the new shelter-in-place paradigm, rededicating themselves to providing the ultimate guide to at-home dining and entertainment to keep the title alive and readers loyal. Sports news sites that have no new games to cover can make the best of their archive and mine social media for the raw materials of new articles.

The current crisis is also a timely opportunity for publishers to add affiliate businesses to offset the loss of advertising. This has long been suggested as a worthwhile additional revenue stream; publishers need only look at the media brands like Wirecutter and Discovery to see how affiliate commissions can be a meaningful part of their business plan. 

And the emerging consumer trends which will stick after the virus is gone may be a fertile hunting ground for a new wave of revenue opportunities. For example, surging interest in online education, videoconferencing, and home delivery from independent businesses are all emergent behaviors that suggest new product innovations.

The Next New Normal

Things are different this time around. Even accounting for the 2008 economic crisis, we haven’t lived through a time in which ad budgets were crashing but video consumption was taking off.

While Google’s announcement that it will temporarily waive Ad Manager fees for news publishers is welcome, it’s hardly the permanent and meaningful change needed by all publishers. Until that change happens, publishers looking at the long term need to be proactive and find alternatives that enable them to align costs with revenue by only paying for an online video platform when that platform is driving revenue for them. 

If they can find a way to rebudget their infrastructure costs and embrace the new reality, news brands may well get through—and beyond—coronavirus unscathed.

[Editor's Note: This is a contributed byline from AnyClip. Streaming Media accepts vendor bylines based solely on their value to our readers.]

Streaming Covers
for qualified subscribers
Subscribe Now Current Issue Past Issues
Related Articles

Fitness, Education Video Use Skyrocketing During COVID-19, Says Mux

New data from Mux Video customers shows just how much video delivery has grown for B2B and niche markets during the COVID-19 crisis.

Interview: PreK-12 Distance Learning During the COVID-19 Shutdown

Christ Episcopal School Director of Technology Bob Krieger discusses distance learning measures for early childhood to high school students implemented since the school shut down in mid-March in response to the spread of COVID-19.