Fast-forward a few years, and subscriptions have become a more stable revenue line for a sustainable media company. Now, most publishers have some form of membership or reader revenue offer. For publishers to thrive in 2023—a challenging economic period, with ad revenue falling—they need to have reconciled the coexistence of advertising and subscription business lines in order to grow both.

“How to balance advertising and subscriptions, how to use the value of a subscriber audience as a lure for advertisers—they’ve got more data on them, they are more engaged—that is where we see it headed,” said Michael Silberman, evp of strategy and social at Piano, which works with publishers on subscription strategies. 

The strength of the bundle

With the rise of open web programmatic—and the potential for data leakage, fraud and appearing next to unsavory content—publishers were looking for a quick way to monetize online pages as print revenues started to fall a decade ago. As a result, they filled their sites with too many low-value ad slots sold on the open marketplace and decoupled themselves from individual assets, leaving revenue on the table.

Nowhere is this better exemplified than in the success of both subscription and ad revenue growth within The New York Times’ bundle, an area it’s focused on growing next year, execs told Adweek.

Since the beginning of the year, the publisher, which has more than 9.3 million subscribers, according to its Q3 earnings report in November, has been aggressively marketing audiences to subscribe to all five of its products: news, Games, Cooking, The Athletic and Wirecutter. It now has more than 1 million bundle subscribers, thanks to efforts such as adding Wordle, which it acquired in January 2022, to the main feed of its core news app and rolling out a “Play” tab.

This has also meant that sales and marketing costs in the third quarter of 2022 decreased by $19 million, or 22.7%, compared to the third quarter of 2021, per its earnings.

“We knew that we needed to take a destination-first approach, with subscribers building a direct relationship with us, on our platforms,” said David Rubin, The New York Times’ chief marketing and communications officer. “This healthy, direct relationship with our readers is not only good for our subscription business but good for our entire business.”

Bundle subscribers read more and more regularly; between 10% and 20% more bundle subscribers “engage each week than news-only subscribers,” said CEO Meredith Kopit Levien in the earnings call. Those subscribers also pay more for the privilege (to the tune of 50% more than news alone).

More importantly, the bundle offers advertisers access both to new and existing audiences, but in new contexts.

“Clients are super excited about the opportunity to advertise on the products we are launching,” said Mohit Lohia, svp and head of digital advertising. “The way traffic is moving, a good portion is going into Games and Cooking. Ad revenue starts moving to where traffic is growing.”

Lohia wouldn’t disclose how much ad revenue is generated by non-core news properties versus news. But despite the short-term economic challenges, advertising is a long-term growth driver, partly thanks to the publisher’s first-party data capabilities, audio business, standalone businesses like The Athletic and added supply for advertisers. 

A return to ad scarcity

In 2023, where there will be fewer ad budget scraps to fight over, publishers have to prove to advertisers how they differentiate from the scale of the open marketplace and platforms like Meta and Google. The nature of a bundle lends itself to more ad scarcity, as long as publishers can wean themselves off quick revenue fixes and short-term incentives.

Succeeding in 2023 requires a return to that shortage, fueling exclusivity and a focus on the user experience.

Bloomberg Media announced in early October 2022 its plans to pull all its ads from the open marketplace beginning on Jan. 1, giving it more control over users’ experience, which will benefit its advertising and subscription revenue streams.

“Depending on the [publisher] partner, viewers are impacted by having less advertising, so there’s less work cutting through the clutter and fighting for competitive market share,” said Ronen Benatar, group director, new economy investment, portfolio lead at agency Wavemaker.

But the road to scarcity is long. A lot of publishers are wedded to the additional revenue from working with content recommendation sites, like Taboola. They don’t necessarily have the tech or resources to compete on a similar product, outsourcing those recirculation ad slots in the page to a company that aggressively optimizes them, so people click.

With the ad business slowing down, per publisher earnings, short-term fixes are all the more appealing.

According to Magna’s U.S. forecast from September, in the publishing (news and magazine brands) sector, U.S. net advertising revenue fell by 2.5% for the full year in 2022. Magna forecasts a further decrease of 1.1% in 2023. 

Marketing sectors such as consumer-packaged goods and finance verticals are forecast to see flat or decreasing ad spend due to a sluggish economy and inflation, while there will be bright spots in industries like entertainment, auto and travel due to regulatory relaxation and supply chain issues easing.

“We’ve seen a lot of bright spots in our b-to-b business, which is part of our overall proposition; whether that’s business services or b-to-b tech, there is a good deal of interest beyond just marketing,” said Washington Post CRO Joy Robins, who pointed to the work the publisher has done with telecom giant AT&T since 2020.

Embracing registration

Next year will see a more pronounced focus on registered accounts, a hugely important cohort in terms of driving subscriptions and offering scale for advertisers.

“The main challenge of executing on a shared subscriptions and advertising business is delivering an effective registration strategy. Logged-in users are vitally important to both,” said George Montagu, head of insights at FT Strategies.

The Wall Street Journal, with nearly 3 million subscribers, has had a robust advertising revenue stream, partly due to its focus on professional leaders and corporate credit cards, where demand is more stable and business critical.

Parent Dow Jones uses dynamic paywall technology to optimize onsite advertising inventory, drive registration, capture first-party data and convert unpaid readers into subscribers. The paywall’s latest iteration predicts a reader’s willingness to subscribe to determine who is offered the option to register for access to a limited number of articles.

So far, the publisher said, more readers are subscribing when registration is deployed in the right context, and registered users are more likely to subscribe compared to anonymous users. It declined to share specific details.

“Some publishers are too protective when it comes to providing transparency around granular insights, audience sizing and what is user-disclosed versus what is publisher determined,” said Benatar.

As economic headwinds tend to refocus marketer investments on the lower part of the funnel, “publishers should prioritize their contribution to the creation of a clean room ecosystem, allowing to push measurement to the next level,” said Delphine Hernoux, chief data and analytics officer, North America, at Wavemaker.