AAM survey 2012

AAM’s 2012 Digital Publishing Survey


PURPOSE OF THIS SURVEY

In 2009, the Alliance for Audited Media (then known as the Audit Bureau of

Circulations) first surveyed its U.S. and Canadian newspaper, magazine and

business publication members to learn more about their digital initiatives

and strategic plans. With four years of responses from this annual survey,

AAM has accumulated valuable data about the progress many media

companies have made, with unique insights into their experiences and

future plans. The 2012 survey was conducted in conjunction with

Roslow Research.

TABLE OF CONTENTS

Introduction ..............................................................................................3

Section 1: Expanding Apps ......................................................................6Section 2: Rising Paywalls .....................................................................12Section 3: Creating Profits .....................................................................14Section 4: Providing Accountability ......................................................18

Conclusions ............................................................................................20

Respondent Profile and Survey Information .........................................22

About the Alliance for Audited Media ...................................................23

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INTRODUCTION

In the past decade, digital publishing has become widespread, thanks to expanding consumer adoption of tablets and other mobile devices. For traditional media companies, digital content has progressed from static replicas of a print edition and basic website content to dynamic, engaging smartphone and tablet apps. Meanwhile, new media companies and platforms are emerging that drive innovation, audience engagement and new business models. With the explosion of devices and publishing platforms also comes a slew of choices. Publishers must decide which devices offer the best opportunity to reach their consumers, what content to provide for each platform, and perhaps most importantly—how to profit from producing content on multiple platforms.

The Alliance for Audited Media polled its large membership of media brands to gather insight into how they were adopting and embracing mobile media. We asked publishers to share their experiences and plans for paywalls, apps, revenue models, devices, auditing and a lot more. Here’s some of what we learned:

· More than ever, AAM media companies are distributing their content via mobile devices. When we conducted our first survey three years ago, 51 percent of respondents claimed a mobile presence. Today, it stands at 90 percent. Even more encouraging, the remaining 10 percent plan to develop mobile-optimized content in the next year.

· In a market flooded with competing devices and operating systems, publishers are distributing their content on multiple platforms, eager to get in front of readers on their device of choice. Eighty-five percent have iPhone apps, 87 percent have iPad apps, 67 percent have Kindle apps, 57 percent have Nook apps and 75 percent have Android apps.

· While Apple products still dominate the market, Kindle and Nook apps are growing at an astonishing pace. The number of publishers developing Kindle apps has grown two and a half times, up from 24 percent in 2011 to 67 percent in 2012. Nook apps have increased more than four times, from 14 percent in 2011 to 57 percent in 2012.

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· And publishers aren’t offering just a single app on each device. On average, companies are producing 3.4 iPad and iPhone apps, 3 Kindle apps and 2.4 Nook apps.

· With regards to app publishing technology, our survey respondents were split. Seventy percent are producing native apps—downloadable programs built for specific operating systems—while 67 percent are producing Web apps, programs that use web browsers to deliver content and are optimized for specific screen sizes. When we dig deeper into the data, we note a difference between magazines and newspapers. Eighty percent of magazines are leveraging native development technologies for at least one app versus 50 percent using browser-based Web apps. In the newspaper market, 69 percent are using native apps while 74 percent are using Web apps.

· Another trend that emerged in our study was the wide variety of platforms and tools used by publishers. Of the respondents who provided feedback on their platforms, more than half indicated they are simultaneously producing content using two or more different content management and development platforms. And of the publishers who provided feedback on their content analytics tools, one-fourth indicated they are using two or more different solutions to track content consumption. Still other publishers expressed their frustration with legacy tools that only allowed the creation of basic content experiences instead of the rich content they want to produce: “If you have legacy systems, it’s very difficult to offer a good digital product.”

· The impact of HTML5 as a new additional publishing technology is still undecided for most publishers. When asked to think about the next year, 41 percent said they plan to continue using native apps while 31 percent said they plan to try HTML5. Forty-four percent are still undecided.

· The million-dollar question is how are publishers monetizing mobile and how is that revenue offsetting print declines. Seventy-seven percent agreed mobile revenues must stem from both advertising and circulation, up from 52 percent in 2009. Fifty-four percent of respondents said mobile currently represents up to 9 percent of advertising revenue. Similarly, 56 percent said mobile represents up to 9 percent of circulation revenue.

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· Publishers anticipate mobile advertising revenue will continue to grow through the end of 2014. By that time, 46 percent of publishers expect mobile to represent at least 10 percent of their overall ad revenue.

· Overall, 56 percent of AAM publishers charge for their iPad apps, 42 percent for their iPhone apps, 38 percent for their Kindle apps and 31 percent for their Nook apps. Nearly 40 percent said they are not currently charging for their content on any device.

· We also asked respondents about their website strategies, particularly about the growing number of paywalls cropping up in the industry. In the newspaper industry, paywalls were virtually nonexistent until the last few years. Now, 48 percent of newspaper respondents said yes, they have a paywall.

· The most popular type of paywall is a metered paywall, where customers receive access to a predetermined number of articles before payment is required. Almost 40 percent of publishers are using this type of paywall while 17 percent are using a hard paywall where payment is required to read any content and 33 percent are using a combination paywall that restricts access to premium content.

· Despite the promise of mobile publishing, our survey respondents are still pragmatic about their print publications. Less than 15 percent said they have plans to reduce their print publishing frequency and less than 3 percent think their publication will only be produced digitally in the next five years.

· Sixty-seven percent of AAM publishers acknowledge that advertiser demand for independent, third-party verification of mobile metrics is increasing. Sixty-six percent said it is in the industry’s best interest to audit and verify digital content accessed by mobile devices and 62 percent said the publishing industry should begin disclosing digital usage metrics such as access rates and time spent.

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AAM’s 2012 Digital Publishing Survey6

Apps, apps everywhere. That seemed to be the theme of this year’s survey. With mobile penetration nearly at capacity, most AAM media companies are now taking the skills and learnings they gained from their initial mobile forays to expand their app libraries.

Publishers are now more familiar with how their readers are viewing their content on mobile devices like smartphones and tablets. Judging by the growth in apps, many think the app offers the best reader experience. As one respondent stated, “It is still the quality of the content that matters most; more than cool, high-tech enhancements.” Still, there’s no doubting consumer demand for apps is high and publishers are responding.

SECTION 1: Expanding Apps

Graph A – Ninety percent of survey respondents said they have mobile content. The remaining 10 percent said they planned to begin distributing mobile-optimized content within the next 12 months.

Graph B – For the first time since we began conducting this survey in 2009, publishers are developing more apps for the iPad than the iPhone.


Graph C – On average, survey respondents are producing the most number of apps for Apple products – 3.4 for both the iPad and iPhone. Amazon’s Kindle follows close behind as does generic apps for the Android OS.


While Apple products still dominate the market, Kindle and Nook apps are growing at an astonishing pace. The number of publishers developing Kindle apps has grown two and a half times, up from 24 percent in 2011 to 67 percent in 2012. Nook apps have increased more than four times, from 14 percent in 2011 to 57 percent in 2012.

And publishers aren’t offering just a single app on each device. On average, publishers are producing 3.4 iPad and iPhone apps, 3 Kindle apps and 2.4 Nook apps.


SECTION 1: Extending AppsSECTION 1: Expanding Apps

With regards to app publishing technology, our survey respondents were split. Seventy percent are producing native apps—downloadable programs built for specific operating systems—while 67 percent are producing Web apps, programs that use web browsers to deliver content and are optimized for specific screen sizes. When we dig deeper into the data, we note a difference between magazines and newspapers. Eighty percent of magazines publish using native technology for at least one app versus 50 percent that publish via Web apps. In the newspaper market, 69 percent are using native apps while 74 percent are using Web apps.

“We must do both now, although we still deliver a better experience with native,” explained one newspaper publisher. “Apple’s charging for subscriptions are a drawback and Amazon does not have acceptable economics for publishers.”

A consumer magazine publisher also shared an opinion, “Apps will continue to be important, but we’re also looking at Web solutions for the long term.” Another respondent summed up the multi-channel publisher’s mission: “To optimize the content based on each device.”

Graph D – Publishers are focusing on creating native and web apps almost equally.


SECTION 1: Extending AppsSECTION 1: Expanding Apps

Graph E – Magazine publishers show a desire to stick with the native app format. Newspapers and business publications are still undecided.

The impact of HTML5 is still undecided for most publishers. When asked to think about the next year, 41 percent said they plan to continue using native apps while 31 percent said they plan to try HTML5. Forty-four percent are still undecided.

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The type and number of different technologies used to create apps may also have some impact on the type of content publishers are serving. Currently, 73 percent of apps are an exact replica of the print product, which seems to indicate the challenge publishers face scaling their production workflow to support more costly rich content versus more easily produced replica content. Conversly, 21 percent are delivering unique content unrelated to a print edition.

And just as in print, the ever-present deadline looms in digital where any friction in production process eats away at valuable time. As one publisher expressed, “Creating an optimized workflow is critical for time-sensitive publications like ours.”

Graph F – Most publishers are still producing apps using the content from their print editions.

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Graph G – Publishers are most likely charging for content on Apple products, including the iPad and iPhone.

Charging for content is also a mixed bag and, once again, Apple products are in the lead. Fifty-six percent of AAM publishers charge for their iPad apps, 42 percent for their iPhone apps, 38 percent for their Kindle apps and 31 for their Nook apps. Nearly 40 percent said they do not charge for their content on any device.

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Media companies are taking many different routes as they try to determine the best path to reach audiences on mobile devices. Despite these differences, 63 percent agree that tablets are the most important digital channel for their publication’s future.


After years of giving away content for free, many AAM media companies have modified their strategies and implemented paywalls to help recoup lost subscription revenue. The results have been positive and our survey shows it is a trend likely to continue in 2013. In fact, our survey respondents were adamant about the benefits of a paywall, many lamenting that it took so long to fall into fashion.

“We should have put that wall up years ago,” said one survey taker.

Another observed, “Locking down our websites has kept our total circulation fairly stable for the past four years. Free web content will not contribute to a successful business model in the future.”

Graph H – More and more publishers are considering the benefits of a paywall. Business publications and newspapers are more than twice as likely to have implemented a paywall as magazines. Of those currently not using a paywall, 44 percent plan to implement one in the next 24 months.

SECTION 2: Rising Paywalls


SECTION 2: Rising Paywalls

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The most popular type of paywall is a metered paywall, where consumers receive access to a predetermined number of articles before payment is required. Almost 40 percent are using this type of paywall while17 percent are using a hard paywall, where payment is required to read any content. And 33 percent are using a combination paywall that restricts access to premium content.

Graph I – The metered paywall, where consumers receive free access to a predetermined number of articles before payment is required, is the most popular. Combination paywalls that only charge for premium content is a close second.

Expect the paywall trend to continue in 2013. As one respondent noted, “The growth for digital editions is from our Web users, not from converting print readers to digital users.”


Media companies are bullish on the revenue streams offered by mobile content. Unlike the old print model where advertising revenue was king, respondents were insistent that in the digital world, revenues need to be generated from both advertising and subscriptions. It’s the million dollar question: How do publishers make mobile profitable? The answer may be they already are finding ways.

Seventy-seven percent agreed mobile revenues must focus on dual revenue streams, up from 52 percent in 2009.

Graph J – More media companies are realizing the importance of receiving both ad and circulation revenue from mobile products. In 2009, 52 percent thought it was important. In 2012, 77 percent said it was necessary, up 25 percent.

SECTION 3: Creating Profits


Fifty-four percent of respondents said mobile currently represents up to 9 percent of advertising revenue. Similarly, 56 percent said mobile represents up to 9 percent of circulation revenue.

Graph K – For 17 percent of publishers, mobile currently represents at least 10 percent of their overall ad revenue. And within the next two years, 46 percent of publishers expect mobile to represent at least 10 percent of their overall ad revenue.


Graph L – By the end of 2014, 41 percent of publishers expect mobile to represent at least 10 percent of their overall circulation revenue.


Mobile isn’t the only channel where publishers are growing revenues and reaping profits. Other products in their digital portfolios are also growing and supporting themselves.

Graph M – Publishers expect smartphones and tablets to double in profitability by the end of 2014. Other digital products will see smaller, but still significant, gains.



Graph N – Sixty-two percent of AAM publishers are offering readers access to content on all print and digital platforms for one price while 47 percent prefer separate subscription offers.

Strategies on generating revenue from print and digital devices may vary from newspaper to magazine, from local to national audiences, from older to younger demographics. What’s key is getting audiences to acknowledge the value of quality content.

As one respondent pointed out, “We must avoid positioning digital as a ‘cheaper’ solution. Customers are paying for our content, not paper and ink.”


By the end of 2014, 20 percent of AAM media companies expect their portfolio of digital products—websites, mobile, social media—to account for at least 25 percent of their advertising revenue, up from just 4 percent now.

As for circulation revenues, the majority of publishers are taking the bundled approach where readers pay once to access the content anytime, anywhere. “Subscribers want it all at one cost,” said one publisher. Another pointed out, “Audiences are self-selecting. We are seeing combinations we would have never constructed for print.”


Although publishers are growing more confident in expanding their product set, the same cannot be said for mobile measurement including basic measures like reader engagement.

One survey respondent explained, “The publishing industry needs to work more closely with the platform providers (Apple, Barnes & Noble, Amazon, etc.) to get better reporting. We currently can’t tell exactly how many digital copies of a particular issue are being accessed by subscribers. We have to make assumptions with the available data to guess at the right number.”

The challenge is getting the data from vendors first. Second is establishing some standards and parameters around that data to create a level playing field. In the words of one publisher, “there are no standards.”

Sixty-seven percent of AAM publishers acknowledge that advertiser demand for independent, third-party verification of mobile metrics is increasing. Sixty-six percent said it is in the industry’s best interest to audit and verify digital content accessed by mobile devices and 62 percent said the publishing industry should begin disclosing digital usage metrics such as access rates and time spent.

Graph O – Demands for independent third-party verification are on the rise. Sixty-six percent of publishers say the industry needs to step up to third-party audits and 67 percent agree that advertiser requests for audited data will continue to grow.

SECTION 4: Providing Accountability


Despite the promise of mobile publishing, survey respondents are still very optimistic about their print publications. Less than 15 percent said they have plans to reduce their print publishing frequency and less than 3 percent think their publication will only be produced digitally in the next five years. In the next two years, publishers do expect about 23 percent of their audience to read their content only in its digital form.

Graph P – Business publications and newspapers expect at least a quarter of their audience to only access their content via digital platforms within the next two years.

Earlier this year, The Economist announced plans to offer buyers a digital-only rate base in response to increasing interest for digital guarantees from publishers. With digital magazine audiences increasing, this may be the direction the industry is headed but for right now, only 5 percent of magazine respondents said they had plans to offer a digital rate base.

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SECTION 4: Providing Accountability

And just how do publishers plan to provide this accountability? Seventeen percent already are by using AAM’s Consolidated Media Report. The CMR is AAM’s customizable report that allows publishers to show advertisers their entire media footprint by reporting audited information on various distribution platforms, including print, websites,social media, apps and more. Another 18 percent plan to publish a CMR in the next 12 months and 64 percent said these types of reports are becomingincreasingly important.


CONCLUSIONS

Publishing on digital devices is the new norm. And the environment is complex, with publishers providing content in multiple apps on multiple devices. When we first fielded this survey in 2009, about half of media company respondents said they published content on mobile devices. In three years, mobile publishing is widespread, with 90 percent of respondents currently producing mobile-optimized content.

AAM media companies have quickly adapted to distributing content on mobile devices. Content on iPhones and iPads is most prevalent—85 percent and 87 percent, respectively. But other devices are also growing in popularity, and publishers are not shying away. Sixty-seven percent are publishing Kindle apps, 57 percent have Nook apps, and 75 percent have apps for other Android platforms. Perhaps what’s most impressive is how these percentages have grown in just one year. Just 24 percent of publishers had Kindle apps and 14 percent had Nook apps in 2011. Adding to the complexity of the mobile market, publishers are creating multiple apps for each device.

Publishers continue experimenting with technologies to decide which works best for their needs.

Even as the market matures, media companies are still testing and revising their strategies to best provide editorial and advertising content to their consumers. They are just about split on using native apps designed for specific devices versus web apps that function across devices. Seventy percent are publishing native apps, while 67 percent are publishing web apps. “Test and test and test again,” one respondent offered as advice. “And don’t be afraid to change developers.”

Some respondents noted that the quality of content might matter more than the technology used to deliver the content. “Readers will pay for quality content with a good user experience,” noted one publisher. Another explained, “It is still the quality of the content that matters most, more than cool, high-tech enhancements.”

Mobile monetization is a major focus.

While the majority of AAM publishers have content on tablets and smartphones, not all charge for content on these devices. Publishers were most likely to charge for content on the iPad (56 percent), followed by the iPhone at 42 percent, Kindle at 38 percent and Nook at 31 percent. But content cannot be the only revenue source. Respondents agreed a dual revenue stream from advertising and subscriptions is necessary to make digital platforms profitable.


Signs point to progress in implementing a cross-media business model. Half of respondents say their websites are profitable today, while just 22 percent say their smartphone and tablet apps are profitable. But over the next two years, 51 percent of publishers expect these apps to become moneymakers.

After years of giving content away on websites, publishers are implementing paywalls and new pricing models.

2012 seems to have been the year of building a paywall, especially for newspapers. After years of allowing customers to access online content for free, many publishers are following the trend started by companies such as The New York Times and Wall Street Journal and charging for some or all of their website content. One respondent who has had a paywall for several years commented on its success: “Locking down our websites has kept our total circulation fairly stable over the past four years. Having free web content will not contribute to a successful business model in the future.”

This is the first year we asked about paywalls, but results show that a number of newspapers—48 percent—are following the trend and putting up a paywall to charge for some or all of their content. Combined percentages for newspapers, magazines and business publications show that 41 percent that currently use a paywall. Of those not currently using a paywall, 44 percent plan to implement one in the next two years.

While some media companies are moving to digital only publications, print is still part of the cross-media mix.

Digital is still a small—but increasingly significant—fraction of publishers’ total distribution. In a separate analysis of AAM data, U.S. consumer magazines reported more than 5.4 million digital replica editions, which account for approximately 1.7 percent of the total circulation in the first half of 2012. For U.S. newspapers, digital circulation accounts for 15.3 percent of newspapers’ total circulation mix in September 2012, up from 9.8 percent in September 2011.

The growth in digital is obvious but print is still important to media companies. This survey showed that nearly one fourth of publishers expect their total audience might be reading in a digital-only format within the next three years. But this doesn’t mean that print publications are going to disappear. Only 3 percent said they expected their publications to be digital only within five years. “Readers enjoy the immediacy and portability of the digital version, but still have the greatest affinity for the print,” said one respondent. But another noted, “Everyone is going mobile so we have to change to maintain subscribers.”


The in-tab sample consisted of 210 respondents. Interviews were completed online between October 8 and 26, 2012.

Note that this is the fourth year that the AAM has fielded a digital/mobile survey among its membership. For this 2012 edition, many of the questions are new or have been modified to reflect the rapidly changing marketplace. Where relevant, in those instances where questions are comparable, the earlier results are cited and compared to the current survey results.

This survey was conducted by the Alliance for Audited Media in conjunction with Roslow Research.

RESPONDENT PROFILE

Total Sample .........................................................................................210

Those who currently distribute mobile content ..................................188

Type of Publication Consumer Magazine ............................................................................58 Newspaper ........................................................................................122 Business Publication ............................................................................24 Other .....................................................................................................6

Gender Male ..................................................................................................124 Female ................................................................................................84

Average age (#) ....................................................................................47.7

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ABOUT AAM

The Alliance for Audited Media (AAM) is a nonprofit organization that connects North America’s leading media companies, advertisers and ad agencies. Founded in 1914 as the Audit Bureau of Circulations, AAM is a preeminent source of cross-media verification and information services, providing standards, audit services and data critical to the advertising industry. The organization independently verifies print and digital circulation, mobile apps, website analytics, social media, technology platforms and audience information for leading newspapers, magazines and digital media companies in the U.S. and Canada. In 2012 AAM joined forces with Certified Audit of Circulations. To learn more about the Alliance for Audited Media, visit the AAM website.

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www.auditedmedia.comwww.auditedmedia.ca

AAM’s 2012 Digital Publishing SurveyCopyright © 2012 Alliance for Audited Media. All rights reserved.

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AAM survey 2012

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