Relying on digital growth alone is not the answer for regional publishers looking to regain the profit levels of the past, according to Neil Thackray in The Media Briefing.
Thackray provides an intriguing analysis of recent revenue reports from regional publishers like Trinity Mirror, home of the Daily Mirror. He notes that while these regional media groups are making “good progress” growing digital readership and revenue, this alone will not be enough to return the bottom line to the good old days.
For example, to continue last year’s revenue growth based on an 87% growth in digital audience, the company would need to have more than 20 billion digital readers in 10 years…clearly not possible!
While not as dramatic, similar findings were noted for Johnson Press, another regional group in the UK.
So what’s a regional publisher to do to make a go of it with digital revenue? According to Thackray, one of three things needs to happen:
- In increase in digital ad yield, which he classifies as “unlikely” due to the current state of the digital ad market;
- An increase in digital audience, which the numbers show to be not sustainable;
- Cutting costs, although Thackray notes that these regional groups are already running close to the bone.
A better solution, according to Thackray, is to emulate the success of many B2B publishers of late.
“The real challenge is that regional media needs more product from which to make revenue. There are lessons to be learned from B2B media and specialist consumer media which are also in the business of serving communities,” he writes.
He cites events, e-commerce and good old print as viable ways to boost revenues. And he cautions that cutting corners on the print side is a dangerous game.
“Print may be underperforming as a direct result of the cost cuts,” he notes. “Johnston Press employs an average of four journalists per title. Is that enough to create a compelling experience for readers?”
“Our experience in B2B is that the more we invest in content, the better the print and digital revenues become. The real challenge for the public listed regional media companies is how to do that without hurting earnings in the short term,” Thackray warns.