First Branded Content Project Study reveals one-third report profit margins over 50%
NEW YORK, June 11, 2019 – The Local Media Consortium and the Local Media Association today released the results from their first Branded Content Project study on ways local media organizations approach and profit from sponsored campaigns. An innovative partnership funded by the Facebook Journalism Project, the project invests in identifying best practices and expanding programs to help facilitate industry-wide revenue growth, engagement and success through branded content.
The study draws on findings from the first phase of the branded content pilot program, which generated applications from nearly 40 diverse local news organizations open to sharing their branded content experience and success stories, and is published in a white paper. It reports on 13 data points, including revenue, profit margins, client insight, content creation/formats, business categories most likely to use sponsored campaigns, marketing and Facebook’s role in branded content initiatives.
“This white paper contains a wealth of information and education about successful programs that can help publishers of all shapes and sizes better understand branded content revenue, renewals and client categories,” said Julia Campbell, white paper co-author and branded content project lead. “With one-third of respondents reporting margins over 50% and one-quarter seeing client retention rates over 80%, this data informs us that when sold to businesses that need to educate or inform local audiences, branded content can be a successful way to increase and diversify revenues.”
The application process began as a way to identify a small group of publishers to form an alpha group for testing, research and planning to inform the broader industry. The organizations that applied to the Branded Content Project reported high profit margins, high renewal rates and increasing revenue potential. Creating content primarily in-house, including native articles, social media and content series on multiple platforms, the organizations worked with health, financial, entertainment and other clients toward a common goal to inform, inspire and profit.
Some of the findings reported in the white paper include:
Branded content annual revenue totals for local publishers in 2018 were nearly evenly split with over 35% hitting at least $500,000 and 17% over $1,000,000.
Profit margins are strong across the board on branded content initiatives. Over 30% report margins of 50% or better and 72% have margins better than 21%.
Percentages of digital revenue budgets dedicated to branded content are still low. Only 9% of respondents report the percentage of their digital budget at over 50%, and only 9% reported that number over 21%.
Many organizations are balancing a client count between 1-25, with 45% reporting their count in that range. More than 27% of respondents claim 26-50 and another 18% fall between 51-100 clients. A small portion of news organizations manage more than 100 clients.
Client retention rates are strong for branded content initiatives. Over 24% have a retention rate that reaches past 80% and another 24% cross the 50% mark. With more media organizations looking for initiatives that are sustainable for the long term, branded content is a clear choice for many moving toward products that renew year over year.
When reporting on platforms included in sales packaging for branded content initiatives, social and owned and operated digital are dominating the space. Nearly all respondents, 97%, use some sort of social platforms for advertisers.
Business categories fall into industries that often need to educate or inform the audience. The top five categories include:
Health and Wellness
Financial and Insurance
When asked if revenue sold was primarily locally sold vs. national-direct or national-programmatic, the responses were clearly on the local side. More than 73% primarily sold branded content locally. And it isn’t just local but hyperlocal.
The publishers responded overwhelmingly that branded content is produced with in-house resources. In all, 92% report that content creation is handled internally.
When asked which department handles the creation process, over 55% reported the sales/marketing department and 38% reported the news team.
Respondents reported the most common pieces of content created for advertisers are sponsored native articles, with social posts/videos in second place.
When asked what role Facebook plays in their planning and branded content initiatives, 92% of publishers reported that its most common use is for content distribution. At 79%, the second most popular use is handshake/sponsored posts, and 64% of respondents used Facebook as a promotional vehicle. Facebook Live opportunities were reportedly used by 34%.
When asked about marketing and promotion, owned and operated and social platforms dominated the responses, with 87% using social media, 71% using owned & operated (O&O) online properties and over 53% using paid marketing strategies.
“We were inspired by how many organizations wanted to participate in this program because they understand that no one organization has all of the answers,” said Campbell. “They see the value in working together to find the right mix of branded content offerings to better serve their advertisers and readers. This white paper only scratches the surface of the branded content knowledge we hope to share with the industry moving forward.”
To read the full white paper, including infographic charts, visit https://www.localmedia.org/wp-content/uploads/2019/05/BCP_white_paper.pdf.