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Monetizing Digital Editions

Publishers experiment with selling strategies.



By Jason Fell
12/30/2008

From Texterity, to Nxtbook and Zinio, to others like Zmags, Advanced and iMirius, digital platform vendors have been cropping up left and right over the last few years. It’s no wonder. With consumer and b-to-b both realizing a precipitous decline in print ad pages through the first nine months this year, publishers are looking for new ways to monetize their editorial content.

“Digital magazine editions are the natural and logical extension of paginated media for the successful future of the publishing industry,” says Bob Sacks, an industry consultant and frequent proponent of digital technology. “Magazines that have been designed [to be digital editions] are and can be brilliant, easy to read with no zooming of text and a comfortable and relaxing reading experience.”

Most publishers acknowledge digital editions are a useful, cost-savings tool for serving readers, particularly international audiences, but one that has fallen short when it comes to actually generating revenue. Some include digital editions as value-adds, but as more publishers begin producing digital editions, the challenge is how to effectively monetize them. How do publishers convince advertisers to take the plunge? And with no such thing as a digital edition rate card, are publishers charging advertisers a flat rate or a rate based on impressions? Are they charging users registration or subscription fees?

Package Digital Ads With Print

Item Publications—which has partnered with Nxtbook to produce the digital editions (U.S. and Japan) of its engineering market Interface Technology magazine—charges its U.S. digital edition advertisers 12 percent of what it would cost to run an equivalent ad in the print edition, vice president Graham Kilshaw says.

“The key is to package digital ads with print and price them in a simple way for your customers to buy,” he says. “This has worked for us and we currently have 66 percent penetration of our print customers also buying the digital edition.” As of late 2008, Item’s revenues from its digital editions were about $150,000, or approximately 10 percent of overall revenue. In 2009, Kilshaw says he hopes to build revenue from digital editions by roughly 10 percent.

Earlier this year, Terrence O’Hanlon, publisher of industrial maintenance and reliability portal Realityweb.com, partnered with Nxtbook to launch a digital edition of his bi-monthly print magazine, Uptown. O’Hanlon also packages digital ad sales with print.

“The Nxtbook format gave us the ability to add value to existing advertisements by increasing [circulation],” he says. “It also allowed us to sell the ‘sizzle’ of high tech features.” Those features include edition sponsorship (the ad displayed to the left of the cover upon loading), toolbar banner (which is included in RSS feeds and more recently the Liberty mobile platform for Kindle and smartphones), jolt ads (adding Flash animation to a print ad) direct response forms, tabs and video or audio insertion.

While he declined to say how much revenue he’s been able to bring in from the digital edition, O’Hanlon says he has already sold nearly half of his 2009 ad programs and roughly 40 percent of his “every issue” publishers increased their ad spend between 10 percent and 20 percent on average.

Charge the Readers

Consumer off road enthusiast publisher Hi-Torque Publications has taken the opposite sales strategy by targeting readers for revenue (Hi-Torque partnered with Zinio to digitize its Road Bike Action, Mountain Bike Action and Dirt Wheels magazines). “We don’t charge [print advertisers] additional fees to be in the digital issues,” Road Bike Action editor Brad Roe tells FOLIO:. “For the short term it is an added bonus for our advertisers and a way for us to grow circulation in a relatively cost-efficient way.”

Hi-Torque charges users fees for a 12-month subscription or for individual issues (the same price as the print edition). According to Roe, Mountain Bike Action, Hi-Torque’s best selling digital edition, sold more than 3,000 digital issues ($4.99 for single issues and $14.99 for 12-month subscriptions) through November 2008.

Next year, Hi-Torque is looking to offer advertisers a print/online/digital package for its coverage of the Tour de France. “In this economic climate, we want to make sure we are offering more than our competitors in both the editorial and advertising realms, and are working harder and more creatively to earn their business,” says Roe.

Digital Editions: A Work in Progress?

Despite some publishers having reasonable success monetizing their digital editions, others say they aren’t seeing the results they were hoping for.

“We charge advertisers a fixed price, and I guess we’re doing reasonably well, but I’m honestly not sure the digital product has evolved to where it should be,” says one b-to-b publisher who has partnered with one of the major digital magazine vendors.

While the publisher declined to say how much profit, if any, he’s been able to turn on his digital editions, he said he brings in “a couple thousand dollars” in sponsorships per issue. “Obviously, reader behavior patterns are different digitally than in print, but we’ve seen them go to the table of contents, search for a feature they want, read it and then maybe pass it along to one of their associates,” he says. “I’m not sure, at least for our markets, that our open rates, or our ad sales, are as good as we would like. The maturation of the product just isn’t there yet.”

One possible explanation for lower advertiser engagement, according to Smart Media Sales president Josh Gordon, is because little is known about how well digital ads are performing.

“Many media buyers do not understand the value of digital magazines as an advertising medium,” Gordon wrote in a recent blog post on Foliomag.com. “I believe this is because the basic research to measure the impact digital magazines have as a unique advertising medium has not been done.”

By Jason Fell
12/30/2008







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