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InContext / An inside look at the business of digital content

Subscription motivation and acquisition tactics

February 12, 2020 | By Matt Lindsay, President—Mather Economics @matherecon

As the art and the science of acquiring digital subscriptions has progressed, the use of advanced analytics to profile potential subscribers and target them with subscription offers has become standard practice. The early days of 20 articles-per-month metered access have given way to hybrid Freemium models that offer premium content to subscribers in addition to metered access to free content for non-subscribers. And certainly, balancing advertising and subscription revenue remains paramount to many publishers. This is particularly true for those with advanced programmatic advertising revenue capabilities.

My last post discussed the tactics for maximizing total digital revenue, audience, and advertising revenue, by using an intelligent paywall strategy. This post builds on that discussion with additional insights on how audience analytics add value to the subscription revenue model. The goal is to help publishers refine their acquisition strategies to reflect the motivations of different customer segments for subscribing. These same analytics can help publishers take steps to retain customers once they have taken the leap of subscribing.

Propensity to subscribe

Our recent work with publishers developing propensity-to-subscribe models has identified several reasons why individuals subscribe to digital content products. These factors have also been written about by the American Press Institute in their research on reader revenue that used surveys of recent subscribers.

These factors are often cited by many subscribers as their reason for subscribing:

  • Community – Refers to a reader’s interest in local news and events. 60% of the API survey respondents mentioned local news as a reason they subscribed.
  • Cost – Receiving a discounted offer at the right time is also a common factor in subscription decisions. 45% of the API survey respondents mention discounts or promotions as a reason.
  • Content – The desire to read content that the reader finds interesting. 40% of survey responders gave this as a subscription reason.
  • Contribution – Supporting local journalism, whether the reader is actively engaged with the publication or not, was mentioned by 31% of survey responses.

Key variables

In our econometric models of subscription propensity, these same reasons were identified as important for predicting customer behavior. Local news content is consistently one of the significant drivers of subscription purchases.

Offer price is also an important factor in our models of propensity to subscribe. Variables that are correlated with interest in content, such article page views, average time on site, and frequency of visits are important predictors. These statistical results developed on observed customer purchase decisions validate the stated subscription reasons in the survey data.

Harder to measure empirically is the influence of the contribution motive on an individual’s likelihood to subscribe. However, we do observe a consistent proportion of digital subscribers that have very low engagement following their subscription purchase. This behavior supports the belief there is a large audience segment that wants to support local journalism despite low engagement with the product.

Understanding value

As an interesting aside, there are precedents for people placing economic value and paying for resources that they do not use. Environmental economists measure the value individuals place on the fact that certain natural resources exist, such as the Everglades or Redwood forests, even though they may never see those resources or use them directly.

Understanding the motivating factors for subscribers is helpful for selecting acquisition and retention tactics to implement, and it helps explain why freemium models are replacing metered models at many publishers. For those readers motivated to subscribe by interesting content, premium content is an effective acquisition tactic as readers motivated to access a particular article will accept a subscription offer. Premium content also gives those wanting to contribute to the journalistic mission a low-friction path to subscribe relative to a multi-article metered strategy.

Pathways to subscription

For publishers that have had a premium content strategy, the trend is to increase the proportion of content categorized as premium. Le Monde recently shared they now have 35% of their content as premium, even though it may negatively affect advertising revenue. Schibsted in Norway has also increased the percentage of their content designated as premium.

We often find that less than half of new digital subscriptions are sold via a paywall. The other subscription sales come from newsletters, emailed promotions, and the “subscribe now” option on the site. Personalized newsletters and email promotions can focus offers on those readers who have hit the meter one or more times but not subscribed at the standard offer. Paywalls can provide this type of offer targeting, but there is a risk in having dynamic pricing on a site itself as many customers find this type of targeted acquisition pricing confusing. It is also hard to implement since many customers come to a site from different devices and browsers.

The current state of the art is deciding what content is premium to each reader at what time. There are a growing number of publishers using predictive analytics to assign content as premium based on its expected subscription conversion performance. However, most often the editorial staff are making these premium content decisions. Combining this tactic, dynamic premium content decisions, with an intelligent paywall can maximize subscription sales while still protecting advertising revenues.

My next article will describe how retention tactics that reflect these subscriber motivations can be applied to each customer segment to minimize digital subscription churn.

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