UK publishers facing ‘digital tipping point’ according to latest report from AOP and Deloitte

UK publishers generated digital revenues of £100.5m in Q1 2016, a rise of 8.3 per cent compared to the same quarter in 2015. Display advertising ­ which accounts for 35 per cent of this revenue ­ declined by eight per cent year-on-year. However, this decline was more than compensated for by significant year-on-year growth in online video (+43 per cent), subscriptions (+29 per cent), and sponsorship (+27 per cent) revenue.

On an annual basis (April 2015 ­ March 2016), UK publishers generated combined digital revenues of £411.4 million. This increase of 6.2 per cent from the corresponding period 12 months earlier was driven by substantial growth from non-recruitment classified ads (+34 per cent), online video (+25 per cent), and sponsorship (+20 per cent).

The DPRI also found annual mobile revenue increased by 2.6 per cent year-on-year. This overall increase was driven by a 19 per cent rise in revenue from smartphones, offsetting a decline of 12 per cent in revenue from tablets. Larger smartphone screen sizes may be the reason for the growth of mobile revenue from smartphones, rather than tablets.

On a sector basis, revenue by business-to-business (B2B) publishers grew by 7.0 per cent in the year to March 2016, while business-to-consumer (B2C) revenue grew by 6.0 per cent across the same period.

Dan Ison, lead partner for media and entertainment at Deloitte, commented: “In the last year UK publishers have generated strong revenue growth from online video, sponsorship, and smartphones, indicating that investment in digital has paid off. Since 2012, digital revenues have grown 6 per cent and we see a clear indication that the UK¹s online publishers have reached a tipping point in the physical versus digital debate. While it would be wrong for UK publishers to move away from physical entirely, adopting a digital-first business model is an important step to help sustain revenues in the medium term.”

Richard Reeves, managing director at AOP, said: “Despite the obstacles and challenges publishers face around digital, it is promising to see media owners embracing and benefiting from the opportunities. The Q1 2016 DPRI shows publishers¹ digital revenues are continuing to grow steadily and highlights the beginning of the shift away from display towards more creative ways of monetisation, including online video and sponsorship advertising.  This is a trend we expect to continue throughout 2016.”

More about this research from AOP.

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