As ad markets soften, publishers often reduce prices to sell their inventory, leading to a downward spiral as other publishers cut prices to compete. This same race to the bottom is occurring in social media, as nearly 30% of major advertisers plan to decrease their budgets for social media advertising in 2023.
TikTok began charging CPMs 30 to 60% lower than its competitors, including Meta, Twitter, Snap, and YouTube, to counter this. This discount has proven effective as TikTok gains market share at the expense of its rivals.
Paywalls are another way publishers are fighting back against declining advertising revenue. By requiring readers to pay fees to access content, publishers such as the Wall Street Journal and many other quality news brands are implementing paywalls, increasing digital subscriptions.
However, subscription fatigue is a growing risk as more and more services move behind paywalls. This competition also pits media publishers directly against service providers who have mastered other skills. While subscription services have been successfully applied to various businesses, including streaming video services and video games, managing a subscription service requires different skills from content publishing, such as customer acquisition, retention, and subscriber management. As a result, subscription fatigue may reduce the popularity of video streaming services, which are expensive and easily substituted.
Consequently, Netflix, Disney, and Apple increased their monthly subscription fees in 2022, introducing ad-supported versions of their streaming video services at a lower fee. Finally, TikTok is experimenting with a paid subscription service.
