The impact of COVID-19 on the media industry has been sudden and dramatic. Most obviously, revenues have plummeted while audiences – at least temporarily – surged. The effect in the Global South is likely to be even more severe than in the North.
MDIF has been working with scores of independent media from Asia, Africa, Latin America and East and Southeast Europe throughout the crisis, helping them to respond to the changed conditions, changes that go straight to the heart of any media business. As one of our clients explained, “Any crisis like this will magnify any problems you have already as an organisation. It is not just about plugging holes in the boat, but look at anything that was needed before.”
Although the challenges are profound, we have been lucky enough to witness numerous innovative responses by media seeking to develop new revenues, deepen their engagement with audiences and build more resilient businesses in very difficult conditions.
The view from the ground
Many media companies we are working with have experienced a 40-60% downturn in revenues. Advertising and B2B partnerships have largely collapsed as companies cut marketing budgets ahead of the impending recession and alternative revenue sources of income, such as events, have disappeared for many.
An aggravating factor is the atmosphere of uncertainty. Media, like everyone else, are uncertain about the duration of the crisis and how long it will take for revenues to return – if they ever do – making long-term planning impossible. Even the biggest media companies with strong advertiser relationships are suffering. Faced with a deep financial crisis and no indication when it will end, the default position of many companies is survival.
On the positive side, however, media and most certainly news outlets, saw a surge in audiences as the virus started to take hold. The thirst for news enabled many of our clients to connect with more people and further their mission to provide reliable public interest information. From Q4 2019 to Q1 2020, companies for which MDIF collects digital data increased their number of users by 33% on average.
Nevertheless, evidence shows that the audience bump is temporary. There are clear signs that COVID news fatigue is setting in in many markets, which challenges outlets to find different ways to engage more closely with more readers, listeners and viewers, as content consumption habits continue to change during the pandemic. This, in turn, opens possibilities for new audiences, reader and client relationships and, potentially, revenues.
Against this backdrop of disappearing revenues, some media are thinking creatively about possible solutions to deal with the crisis.
When lockdowns began and it became clear that the world’s economy was on pause, the first move by many media was to hoard cash to help them stay afloat until the situation improved. Prudent media also aggressively cut costs, halted hiring and eliminated any expenses that were not strictly necessary. But as time has gone on, media have started to innovate in how they engage with audiences and to explore creative ways to mitigate advertising losses.
One response adopted to the fall-off in advertising is ‘ad matching’. It is an approach where media organisations use advertising to support local small businesses through free and/or matched pricing, providing a win-win for media and local traders. The idea has been taken up by MDIF clients in many parts of the world with some positive results. For example:
- Outlets in Central America, Africa and Southeast Europe have launched ad matching programmes where for every media buy an SME makes, the media will match 100% (or close to 100%) in advertising value. The matching ads provide significant value to SMEs struggling with their own economic restrictions. This forward-thinking approach is important because, rather than heavily discount, the media company is presenting the ads as added value and developing a partnership with the SME.
- In Latin America, a media organisation shared its experiences of running a similar programme in 2019 where they offered free advertising to businesses that had some relationship with them – like subscribing to a newsletter – but did not advertise. One year later, one-third of the businesses are still engaged with the outlet through advertising and/or social media.
- An African media company followed a US idea to offer dollar-for-dollar matching advertising to former and potential new customers. This strategy generated purchases of commercial packages totalling several thousand dollars per month.
There may also be potential to offset lost revenues from events by moving them online or by creating new COVID-related online events that support revenue or build business relationships:
- In South Africa, an outlet held a sponsored webinar providing information for small enterprises dealing with the crisis – 4,000 people signed up.
- In Indonesia, a niche outlet providing legal information successfully moved events online. Although the number of attendees dropped, reduced set-up/operating costs led to higher margins.
In terms of audience, better engagement is vital in countering the likely decline in readers, listeners or viewers after the initial bump. During the crisis, some media have used their strong relationship with the communities they serve to launch membership campaigns where they have asked readers to support them financially.
To build relationships, instead of trying to provide breaking news – which is often better covered by larger media organisations – smaller media should consider providing more personal coverage that provides a direct service to their audience. One innovative example is:
- In Central America, a media company helped people cope with the fact that they were unable to attend funerals by creating an online tribute to those who had died, enabling families to pay their respects publicly to relatives.
There is also space for media to innovate with COVID-19-related information products that can both provide a service and support revenues. Governments and local administrations may be good partners, particularly if media can access health budgets. For example:
- A media outlet in Latin America launched a COVID-19 guide sponsored by the national government.
- Another Latin American media company created a COVID-19 tracker. Municipalities pay for access to the service which helps them track how the virus is spreading.
Creative ideas like these give media hope for the future. The relationships outlets are building to help them navigate the current crisis may also help provide answers to the longer-term challenges of financial viability.
Photo by RTV 21/Facebook