Digital media monetization

Matthew Baily/Ovum
05 Apr 2016

Mic, a digital publisher targeting millennials, has acquired Hyper, a mobile video aggregation app focused on human curation and magazine-style delivery. The deal embodies two key trends in the digital media space: the shift toward video as an engagement tool and monetization vehicle; and the growing importance of curated offerings.

Many digital publishers are placing an increased focus on video as we move from a text-based content culture toward a visual one. However, while publishers look to harness the reach of social platforms through a distributed content strategy, there remain advantages to publishers owning their own mobile video platforms. BuzzFeed’s recent launch of a dedicated video app, in addition to Mic’s acquisition of Hyper, is testament to this. It is essential that such dedicated platforms offer an engaging viewing experience, differentiated from that found on existing social platforms, and retain a publisher’s distinctive tone and voice to maintain the continued user engagement that is necessary for significant monetization.

Publishers have long struggled to shift circulation revenues to digital platforms, with most consumers unwilling to pay for content if they can get similar content elsewhere for free. As a result, the vast majority of digital consumer publishing revenues comes from advertising. Although publishers will grow their digital circulation revenues over the next five years, advertising will continue to represent the biggest revenue opportunity in the digital publishing space.

Over the next few years, much of the growth in digital advertising will come as a result of robust expansion in video internet advertising revenues, which are increasing especially strongly for mobile.

Consumers and advertisers have been drawn to video because it is an engaging medium, requiring much less effort on the viewer’s part than it does to read a text-based article, especially when features such as autoplay are introduced. Between November and December 2015, Facebook Video accounted for 49% of BuzzFeed’s total content views, demonstrating how consumers are discovering and engaging with mobile video on social platforms.

A number of publishers are now actively syndicating their content across a number of social and alternative publishing platforms, such as Facebook, Snapchat, and Twitter. Some kind of cross-platform presence is essential for digital publishers that are aiming to attract and engage their target audiences. However, while such initiatives offer publishers an extended reach, they also come with a loss of control over content and advertising, as well as an over-reliance on third parties.

Mic’s acquisition of Hyper can be seen as central to its ambition to bring millennials to its own controlled platform to watch a curated selection of mobile videos, rather than relying on other third-party platforms. The launch of BuzzFeed Video could be seen as a similar move for BuzzFeed.

However, the company’s preference for shareable sponsored content over more mainstream mobile video advertising means that it is more likely that its strategy is focused on having sponsored content found, watched, and shared to other platforms.

In Ovum’s view, video will become an integral aspect of consumer content experiences over the coming years and, as such, should become a crucial part of digital publishers’ strategies – whether through original video production, the incorporation of video advertising, or, as in Mic’s case, operating their own video platforms.

Human curation will be critical to personalization, audience engagement, and monetization

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