According to the annual PricewaterhouseCoopers report on digital advertising, global digital consumer magazine advertising revenue will be US$12.4bn in 2018, rising at a 17.6% CAGR (compound annual growth rate). This compares to a decline of -3.9% CAGR for consumer magazine print advertising revenue. At this point in the digital transformation, most magazine advertising is centered on magazine websites, which is often used just to get people to subscribe to the digital edition. As digital circulations increase and become the preferred reading medium, electronic editions will become increasingly popular for advertisers.
According to PwC.com, spending on digital advertising is expected to dramatically increase to $3.8 billion in 2017, when it will represent a quarter of overall advertising, up from $2.4 billion in 2012. Customers who actually purchase digital content will also increase from $275 million in 2012 to $1.4 billion in 2017.
On the down side, the percentage shift to digital advertising is almost directly proportional to the rate of decline in the print industry. In 2008, a record 9.8 billion was spent on print advertising, fell to $7.9 billion in 2012, and is expected to diminish further to $6.4 billion in 2017.
The questions that digital magazine publishers must ask are: how is consumer behavior changing, and how should digital publishers and advertisers respond to this changing behavior.
The obvious and growing number of people who are switching from the printed page to the Internet for information and entertainment is increasing exponentially. In order to succeed and prosper in this new digital reality, magazine publishers and media buyers must respond.
At present the majority of consumers still prefer to read print copies of magazines, but an increasing number, especially younger readers, are also interested in reading and viewing digital content, including videos, interactive surveys and quizzes.
Because of the early pay models (or lack of pay models) in digital publishing, consumers now expect to pay more for printed content than for content distributed electronically. This trend is changing, but it takes time to change customer expectations and educate them that they are getting value in digital format. Research suggests that customers are seldom prepared to pay more than half the amount they would pay for a printed magazine.
Often the consumer thinks that digital-only content is a substitute for printed content. It is incumbent upon digital publishers to create digital-specific content and add value to digital offerings by giving the reader an immersive, responsive experience.
Magazine publishers that are succeeding in the digital space are those that have recognized that digital media require different business models from those they have developed to support their traditional print operations. An important component for success in the digital environment is using customer metrics in an effective way. The old adage “know your customer” has never been truer, and fortunately the technology is available to do so in a big way.