71.4% of all respondents had experience working with reader revenue models
The peculiarity of the functioning of regional media is that they work at the local level, which logically implies their close connection with the local community and business. At the same time, the media outlets themselves do not see the possibility of forming partnerships with local businesses, although the latter have the need and budget to pay for advertising services.
As a result, almost the entire local advertising budget is spent on Google and Facebook. The competition is relatively low among local content producers, and the demand for marketing competencies among businesses locally is growing. Thus, media projects could create new opportunities for monetization, meeting the demand for quality advertising content for local brands.
One of the key problems of most respondents is the lack of a development budget. Relying solely on organic growth, these media are either advancing very slowly or being stagnant, and in the event of a crisis have a high chance of ceasing operations.
In the previous study, we noted that the media help local businesses by providing SMM support. This gives hope that the media business will be able to take over some of the functions of local business such as marketing / customer acquisition, and entrepreneurs will be able to focus on the quality of services and products. Those media outlets that have deployed SMM support services are actively moving to the next level and opening content studios. Creating quality content in collaboration with businesses is a great signal for finding more models for monetizing and improving the media market.
A reader revenue model with a direct support from the audience is just beginning to be implemented in Ukraine, and it is in the regions of the country that it has the greatest long-term potential. There was a noticeable trend last year with the launch of reader revenue models in a number of independent Ukrainian media from the national to the hyperlocal level - Ukrainska Pravda, hromadske, Liga.net, The Ukrainians, Tsukr. It is a process based on mutual trust between the media and the audience: the outlets offer readers content while expecting financial support.
So far, most of the media surveyed have experimented to some extent with reader support and are satisfied with the results. At the same time, no media counts on the reader's model of support as the main source of funding in the near future. Still, almost all respondents have plans to invest in the development of a reader model or crowdfunding.
The development of communities around local publications is a long process that requires significant investment, and therefore should become one of the strategic goals of the organization and an important expenditure line of the development budget to give tangible results.
Lack of diversification and focuson the advertising model
he study covers 35 independent regional media outlets from all regions of Ukraine.The responses to questions regarding monetization models demonstrate that the main sources of funding for the surveyed media outlets are advertising and donor funding. The peculiarity of the situation is that donor grants are an important investment for the launch and development of independent media in the regions. However, the grant market cannot and should not support all of the independent regional media.
In order to compete, have high quality content and retain leading journalists, independent media need to develop a wide range of services and products that can bring them income (events, programmatic, native advertising, services, etc.). Focusing on just one model, unfortunately, is now an unwarranted risk. The Ukrainian media market pushes the media to actually build a system of media businesses, where profits are achieved through the synergy of several different business processes.
Source of income
Nowadays, advertising is the fastest growing source of income, despite the fact that it is still not the main one (grant support is still 60-100% of the media budget). Playing according to market rules does not always lead to a deterioration in the quality of journalism, an example of this is Ukrainian regional outlet
6262.com.ua
This media from Slovyansk in eastern Ukraine was originally created on a commercial basis, like any other company. The media quickly balanced profits and losses, and now has become commercially profitable.The availability of alternative sources of income is the exception rather than the rule. Reader revenue models are not available for regional outlets (few national-level media can implement them), because there are not enough people who are ready to support local organizations at their own expense. However, a situation is possible when a media organization combines its own work as a media outlet and as an enterprise. Regional TV channels can work as video productions, for example, filming advertising for local businesses. Editors can provide SMM services for business.
RIA Media
RIA Media (owners of the 20 Minutes media network) held educational conferences with local businesses and marketers about the possibility of advertising for them in the media.
A minority of surveyed media outlets plan their workflow through Excel, calculating in detail the cost of all their products, without taking into account forecast, seasonal and situational market changes.
About 40% have financial planning and make management decisions based on this. Compared to the previous year, there was an increase — from 33% to 40%. This is obvious progress, given that almost all media plans have been thwarted by the Covid-19 pandemic. At the same time, for the successful functioning of media organizations and the media market in general, it is necessary that financial planning be carried out not only by the strongest outlets, but by all media organizations. At present, we see a situation when 60% — the majority — do not use financial planning tools, but actually build their organizations blindly.
Another one of the biggest problems of regional media is the absence of a separate commercial team or a designated person who would be solely responsible for the commercial component. In some outlets, one employee can combine several functions: 50% of the time working as a journalist and another 50% — a sales manager. Sometimes the editor-in-chief combines the functions of a sales manager with his work.
Сommercial department in the media
One of the main shifts that occurred during the pandemic was the transition of businesses from offline to online, and the increasingly active use of digital marketing. Half of the surveyed media saw and took advantage of this opportunity. They have expanded their list of tools for providing advertising services and working within partnerships.
Partnerships in the media
77% of newsrooms have a press kit, which is a positive trend, which means that media organizations have an understanding of their commercial services and their value. However, the press kit is not always a document that is used and updated on a regular basis.
There are many links between press kits, service costs, salaries, and discount systems for customers. These are four factors that strongly influence each other. Media organizations that have a well-designed press kit and a clear understanding of the price of the services it provides are less likely to make discounts than those that do not have a press kit. If the organization underestimates the price for its services, it undermines the market in which it operates.
Commercial media directors complain about donor-funded projects for failing to stay within the market boundaries: "They (donor-funded media) try to work with the commercial model, but distort the market by setting high salaries, while dumping prices for advertising products. This also affects the work of commercial media, as they have to lower the prices of their services, at the same time they suffer financially and cannot raise wages for employees to the same level as the grant funded media. Then, when media outlets launch systems of large discounts on their products and services, they do not take into account that they begin to affect the market in the long run. In the short term, the money that was earned is coming in handy here and now. In the long run, the media will not be able to raise prices for these services and products to make money on it. "
Depreciation of products and the provision of significant discounts (up to 50%) is due to a lack of understanding of the pricing of products sold by the commercial department.
The way out of the situation is the implementation of financial planning, calculation of the cost of work of all employees, cost of products at each stage of production, and establishing real value.