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Digital publishers optimistic for the year ahead

Findings from AOP and Deloitte reveal an increase in growth forecasts for the year ahead from 4.8% in Q3 2016, to 6.4% in Q4 2016

The latest figures from the Digital Publishers Revenue Index (DPRI), a quarterly report of UK publishers from the Association for Online Publishing (AOP) and Deloitte reveals that growth forecasts increased for the 12 months from December 2016, driven by an annual rise of 28% in sponsorship revenue.

According to the research, AOP board member confidence on financial prospects improved in Q4 2016 at both company and industry levels. Publishers’ focus transitioned away from cost reduction initiatives and towards new revenue growth through non-advertising services, causing AOP board members to increase their growth forecasts for the year ahead from 4.8% in Q3 2016, to 6.4% in Q4 2016.

Display advertising remains the largest revenue category across all platforms. While display advertising revenue continues to decline year-on-year (-£13.6 million), it still accounts for around two-fifths (39%) of DPRI pool revenue. Sponsorship (20% of DPRI pool revenue) and subscriptions (14%) counteracted the decline of display advertising with a combined year-on-year increase of £23.3 million.

In the 12 months to December 2016, B2B publishers recorded positive growth of 2.5% in DPRI pool revenue, with subscriptions being the key driver of growth, while B2C publishers reported a revenue decline of 2.6% over the same 12-month period.

Richard Reeves, Managing Director, AOP, commented: “Once again we are seeing sponsorship revenue grow steadily, highlighting the shift towards a more involved dialogue between advertisers and publishers.”

Reeves continued: “There is no doubt that ad blocking continues to be a pressing issue for publishers – according to the AOP’s 2016 Content Census it significantly impacts more than half of premium publishers, and is set to remain a priority for the industry in 2017. Therefore a focus on generating increased revenue through non-ad related ventures is not a surprise. The use of data and discussions around viewability are also key considerations for the industry in the continued quest to improve overall user experience while effectively monetising content.”

Dan Ison, lead partner for media and entertainment at Deloitte, commented: “Publishers have raised their forecast for digital revenue growth by a third – further evidence of how relentlessly evolving media consumption patterns are driving publishing business strategies and being monetised at scale: AOP board members raised growth forecasts for the year ahead to 6.4% in Q4 2016, from 4.8% in Q3 2016.”