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Advertising: Future significant source of revenue for the scholarly publishers?

Apr 8, 2013 | DGunter | Advertising, Business Model, Scholarly Publishing | 2,983 Comments

Advertising has played a major role in the print subscription model for a number of publishers prior to the Internet.  Print advertising was and still is quite prominent for a number of publishers, specifically in medical and other specialty journals.  Outsell Inc., the information industry research house, estimates that advertising represents 7.5% ($2.2 B) of the industry’s  $29.8 B revenue.[i]  The number of publishers incorporating advertising into their revenue stream is quite small when you consider the 7,000+ publishers worldwide.

The scholarly publishing industry’s (SPI) user group has embraced the mobile device.  The research community is now using smart phones, tablets and second screens.  Mobithinking.com estimates the global mobile device to be 5.9 billion devices with the USA approaching 1 billion devices[ii].  The scholarly publishing industry has been and will continue to be under tremendous pressure as a number of factors will continue to challenge the library budgets and the publisher’s business model and revenue streams.  These pressures coupled with the growth of the mobile device market and the changing needs of the researchers are presenting a challenge and opportunity to the scholarly publishing industry.    Could advertising be that new opportunity for scholarly publishers?

These are the early days and the jury is still out on this question of advertising and the role it will play in the current and future revenue streams of the scholarly publishing industry.  To help the scholarly publishing industry to better understand the origins of advertising and the potential opportunity it may present, PSP’s (Professional Scholarly Publishers) www.publishers.org  Electronic Information Committee’s spring seminar series will focus on advertising.  This three-part series http://bit.ly/11FOI5c will focus on the history of advertising, the opportunities and the future of advertising as it relates to scholarly publishing.  In the spirit of full disclosure, I am the co-chair of the EIC committee along with John Purcell.

As the research community is consuming scientific peer-reviewed literature and other related information via a number of devices, it is presenting the scholarly publishing community with a great opportunity for a new revenue stream consisting of advertising.  The Interactive Advertising Bureau’s (IAB) annual report http://bit.ly/ZaRYS6 provides a number of interesting facts about the growth of Internet advertising and the recent developments of mobile device usage.

According to IAB the 2012 numbers are not yet available, but in the first three-quarters of the year, Internet advertising revenues climbed to $26 billion (a high for the period) and up nearly 15 percent from the prior year. Full-year figures for 2011 showed our industry attracted more advertising dollars than cable television, magazines or newspapers. Digital media are now mainstream media.[iii]  The global mobile advertising market is valued at $5.3 billion in 2011[iv].

With the global mobile device market growing beyond 6 billion devices, we can safely assume that the advertising dollars will follow.  The mobile device manufacturers are selling mobile devices in all shapes and sizes.  The industry is working very steadfastly to better understand how to deliver advertisements to serve the needs of the reader in the most constructive manner.  The IAB, in partnership with 4A’s http://www.aaaa.org/ and ANA http://www.ana.net/ has embarked on a new advertisement measurement initiative called The Making Measurement Make Sense (3MS) initiative.  The goal is to help marketers and advertisers follow suit by evolving the way media is bought and sold to increase efficiency, value and understanding.  This initiative can be found on page 8 of IAB’s annual report.

If the scholarly publishing industry is going to better understand the internet advertising opportunity, it will be essential that it embraces the key associations, players, vendors, agencies, etc.  Developing a 360° degree view of the advertising industry is extremely important if the scholarly publishing industry will develop advertising from a minor role to a new major source of revenue.

As mobile usage continues to grow, the scholarly publishing community can take a look at the consumer trends to determine how they will behave in the scholarly publishing arena.  For example, 63 percent of digital video screening on mobile phones does not happen on the go, but rather at home[v].  What if this statistic holds true for scholarly researchers?  How will this affect how the researchers consume their daily scholarly information and what type of advertisements will work in their environment?

These questions and many others  will be asked and answered over the next few years as many will have much to say about this topic.  But one thing is for sure; the scholarly publishers who embrace the possibility of advertising becoming a significant revenue stream will open themselves to the opportunity.  For those scholarly publishers that shrug their shoulders at the idea of advertising generating significant revenue they will find themselves on the outside looking in asking the same question, “What is the business model?”

My answer: To be in business!

[i] http://bit.ly/ZaLwKB

[ii] http://bit.ly/17l2yw8

[iii] Source IAB, http://bit.ly/ZaRYS6

[iv] Source: global mobile Advertising market U.S. IAB, IAB Europe, and IHS Screen Digest

[v] Source: IAB mobile Phone video diaries Conducted by On Device Research for IAB


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