Education may not be an obvious segue for a news publisher. But when you look more closely, it can actually be an incredibly powerful way to leverage the expertise of journalists to create something valuable for your audience (and bottom line). The Economist launched its Executive Education pillar in February 2021 as a growth initiative that would allow it to leverage its journalists’ deep knowledge and understanding of global issues.
The education sector itself is vast, and there are many routes publishers could take, from accredited courses to partnerships with schools and universities. The Economist decided to focus on its existing audience, and tailor its courses at highly qualified senior executives. “We’re already catering to the needs of mid-career executives who are upskilling, and that’s our target audience for our courses,” explained Fionnuala Duggan, Executive Director of Education at The Economist Group Media.
“We chose a format for a course and topics that would resonate well with them and at the level they were looking for. The whole operation is pitched to their needs in terms of their ongoing executive development, corporate professional development and career development.”
Now, they are expanding their offering with a new course on fintech and the future of finance. Billed as giving attendees a “future-focused view of the major issues”, the aim is to demystify personal fintech, blockchain, and cryptocurrencies. Notably, the program will draw in implications for both the business and personal lives rather than being solely work-related.
Quality not quantity
Each course runs for an average of six weeks, and requires between 6-8 hours a week from participants. They are delivered online, which was a pre-pandemic decision to widen participation to a global audience. Courses contain a mix of writing, infographics, video, audio and links. Each is led by a head tutor alongside a team of tutors who guide students through each week.
The Economist decided to take a guided approach with scheduled start and end dates rather than run on-demand courses because it offered a higher quality experience. Having tutors that can answer questions, stimulate discussion and provide feedback helps participants get more out of the courses, which underpins the value of the four-figure price tag.
Duggan also noted that having a schedule means they can bring participants together. “There are around 72 countries represented in most courses,” she said. “If you’re discussing something like international relations with people from the U.S., Australia and central Asia, you get all these different perspectives. There’s an enormous amount of learning from each other.”
Although the courses may run to schedule, they are far from being one-hit wonders. The first course Economist Education ran was on International Relations, which is now on its sixth presentation. “Each of these courses takes quite a long time to develop — four or five months,” Duggan said. “That’s why we have a smaller number of courses that are high quality.”
Blending journalism and pedagogy
One key part of the publisher’s approach has been separating the focus of this pillar from the rest of the business. Although there is a great deal of collaboration between the departments, their approach is different. “We’re not in the media business,” Duggan said. “We’re in the business of education. But we’ve benefited enormously from all the things that The Economist and The Economist Group has.”
This has also meant the team are able to acknowledge what strengths they don’t have within the business. Duggan was cognizant of the fact that The Economist had never run courses before, and that this needed additional expertise in order to meet audience expectations. They chose to partner with GetSmarter, an EdTech firm who deliver online education from world-leading universities like Harvard and Cambridge.
“We really wanted these courses to be from The Economist, so that they would be able to carry over people’s expectations journalistically, and also bring the coverage into the courses,” Duggan explained. “At the same time, the journalists aren’t teachers. So we’ve found a really cool way of blending what they’re able to bring with the pedagogical expertise that our partner has.”
“This means we have this very constructive, collaborative relationship with the journalists and all of the knowledge and knowhow and context they bring. Our editorial processes are also involved clearly in the editing of the course. And then we bring in the pedagogical experts who can shape the course, and we have the best of both sides.”
Duggan’s advice for other publishers is to focus on getting the proposition right, and partner up if necessary. “For a media brand to go into education, it’s very important to execute very well,” said Duggan. “But it’s also important to understand what your brand brings.” The Economist brand’s vast reach helps with attracting an audience to the course. But that’s not all: The courses put the publisher’s journalistic expertise front and center of both the courses themselves, and the marketing strategy.
“Bringing the newsroom into our courses is absolutely central to our offering,” Duggan emphasized. “When you’re talking about topics that are extensively covered already in our publications, we need to make sure that the courses have the same take on subjects, the same access to the sources the journalists might use, and of course, the journalists themselves, because they are the best people to comment on these topics.”
Top marks and takeaways
The courses so far have been a success. Each one sees completion rates of around 94%. “When very busy executives are giving six to eight hours a week into a course, that’s quite a lot of time,” she said, noting that the lack of attrition highlights the strength of the content.
The publisher declined to give any specific revenue figures, but did note that each course is attended by between 100-300 people on average. Given the price is £1,475 per person for their current selection, it is safe to assume each course is generating a healthy six-figure sum.
Now Economist Education has established itself and had time to iron out the kinks, they have a wide range of topics they can develop courses on next. Duggan confirmed that their next course will be on sustainability, coming in October. They are also exploring the B2B enterprise market. “From where we are now, there’s plenty of opportunity to continue growing quite quickly,” she noted. “There’s an awful lot of scope in the education sector.”
Although The Economist’s approach is specific to its own needs, there are still plenty of takeaways for other publishers looking to extend into educational courses. First and foremost, it is important to consider what your brand would bring to an education course. There may be lots of opportunities depending on the type of coverage. But educational courses like this are best suited to super-serving existing audiences rather than bringing in additional subscribers.
It is also crucial to acknowledge where skills may be missing at a publication. A well-crafted course will almost certainly need input from educators. Consider partnering with educational institutions or companies who specialize in pedagogy in order to bring the most value to a course.
Ultimately, however, as publishers’ seek ways to build value for audiences and diversify revenue, there are lessons to be learned from The Economist’s successful addition of an Education pillar. Given a media brand’s strength and deep institutional expertise, there may well be value for audiences that want to engage more intently and enhance their own knowledge further.
Once seemingly unstoppable, subscription-based digital media services like Netflix now look vulnerable. Netflix reported seeing a drop in subscribers for the first time in 10 years, prompting a recent selloff that shaved more than $50 billion off the company’s market cap. Other streaming services, from Disney to Roku, also reported similar drops. Many worry that we’re witnessing a phenomenon known as “peak subscription,” where consumers facing an increasingly uncertain global economy are growing weary of committing to a laundry list of ongoing subscriptions.
Some publishers have felt the repercussions of peak subscriptions and competition from free alternatives. Quartz reported that some readers subscribe just to read one specific article and then quickly unsubscribe afterward; behavior that hindered real growth. Although metered paywalls have proven effective at driving subscriptions for many publishers, some believe it is a “blunt-force instrument” that won’t work for everyone.
Even as the total number of subscriptions is still high across publishers and creators, there are concerns that the supply of content sources outstrips demand, particularly when we consider more commoditized content. Despite the fact that the global subscription economy is projected to grow by $51 billion dollars in 2022, competition is fierce – even for the likes of Netflix.
As subscription fatigue becomes a growing concern, and competition among subscription-based content of all kinds continues to intensify, media companies seek ways to go beyond pure subscriptions and increase their revenue. The good news is that various solutions already exist.
Redefining the journey to becoming a subscriber
One of the key solutions to combat subscription fatigue is to let audiences become paying readers and members at their own pace. Instead of asking people to lock themselves into a subscription model off the bat, some companies monetize the subscriber journey in smaller steps.
To move away from relying solely on the one-size-fits-all subscription model, streaming services like Disney+ have opted to offer a lower-cost version of their service that includes ads. The potential rewards of this move are clear: Disney’s own Hulu streaming service has turned commercials into a $1 billion revenue stream. Comcast’s Peacock and AT&T’s HBO Max now both come with ad-supported and ad-free versions. Even Netflix, which stood clearly opposed to integrating ads in the past, will now launch an ad-supported version sometime in the future.
Publishers such as Vox and The Guardian have also moved to a membership model, believing that readers will want to voluntarily support their publication even without the added pressure of a paywall.
Quartz also offers a subscriber-only newsletter that gives paying members exclusive access to additional content and various other benefits. However, it has made content on its main site free to access. Vice News has opted for an even more reader-friendly approach by adding a “tip jar” to its website, in case readers want to voluntarily make a contribution to the publisher.
The demand for incremental revenue streams to reach readers averse to committing to a subscription is why à-la-carte payment solutions emerged for publishers and content creators. These solutions allow users to buy paywalled text, audio, or video content with one-off payments or make voluntary contributions for open content.
Publications understand that having multiple monetization solutions builds engagement from different audience segments. This also feeds the subscription funnel with loyal users. Instead of asking casual visitors to commit to a subscription with discount offers, they are given the chance to engage in incremental steps.
The new era of reader revenue
The shift from relying solely on subscriptions signifies a clear acknowledgment of the need to give consumers flexibility and freedom. For audiences, this is a sure boost to their overall experience.
Digital publishers and content creators will benefit as well. Overall, a growing number of people are willing to pay for content. According to the 2021 Digital News Report from Reuters, 17% of people surveyed stated they were ready to pay for media content — a definite increase from the previous year.
Offering multiple reader-revenue solutions like exclusive memberships, micro-bundles, ad-supported bundles, à-la-carte payments, and even a tip jar makes it easier for publishers and content creators to monetize different audiences segments and capture rich first-party data. Alienating large swaths of audiences with an all-you-can-eat subscription offer will no longer suffice in a world where users are spoiled with choices.
It is also imperative to understand users’ willingness to pay for different types of content. For example, the exact same content bundle might be worth $10 per month to half of your audience and worth $5 per month to the other half. The one-size approach is to offer a $7.50 bundle to everyone. However, the maximum revenue approach entails creating two separate bundles for each of the audience segments. Unbundling content to understand user willingness to pay for each type of content can actually pave the way for publishers to resurrect the appropriately priced recurring payments.
If you’re a subscription-based digital publisher, the message is clear: the time to look for incremental ways to monetize and engage with a wider audience — including the elusive “never subscribers” — is now. Learning from the examples set by the companies above will save you from wasting time forcing one, rigid monetization strategy on an audience that doesn’t want it.
About the author
Dushyant is a Co-Founder & Chief Commercial Officer at Fewcents, a plug-and-play solution that helps digital publishers and creators monetize content with cross-border micropayments in the form of pay-per-content or tips. He spent 13 years at Google where he led strategic partnerships, working closely with some of the biggest digital publishers in Asia. Prior to Google, Dushyant has worked at SAP Ariba, American Express, and two tech startups. He holds an MBA from the ISB, Hyderabad and is an active angel investor & advisor for startups in Southeast Asia.
Publishers continue to remain highly focused on revenue diversification and the value of first party data according to new research from the Association of Online Publishers (AOP), a UK industry body that represents digital publishing companies. The AOP undertook its Digital Publishing: Meeting the Future survey to provide “a snapshot of how digital publishing companies across the UK are continuing to respond to the challenge to change.” The research offers a look at publishers’ business priorities and the future-readiness of the media industry.
The AOP carried out its survey between January 5 and February 9 of 2022. Of the 111 responses, 83% were from publishers and 17% from organizations providing solutions to the publishing sector.
Diversifying revenue streams
Across all types of publishers (B2B, B2C, or a combination), respondents said that their highest priority is developing new revenue streams through product innovation. Ensuring data privacy compliance and transparency ranked second.
The AOP’s publisher respondents ranked opportunities for revenue growth over the next three years. More than half (55%) feel that subscriptions are the big revenue opportunity right now, with lead generation-based revenues ranking second (33%). The report concludes that these findings mean that publishers are highly focused on building direct relationships with audiences and leveraging their first party data.
Audio and ecommerce tied for third (31%) in terms of revenue priorities, which points to continued revenue-model innovation. The research finds that both B2B and B2C publishers agreed that subscriptions have the most potential for growth. However, publishers that target both B2B and consumer audiences saw ecommerce as the most promising revenue generator.
Data dominates
While publisher concerns about ensuring privacy and providing transparency rank high, they clearly know the value of their first party data and seek to maximize its use. According to the report, publishers are focused on building the right ecosystem of commercial, data, and tech partnerships.
In the shadow of cookie deprecation, some publishers are considering collaborating on data initiatives. AOP found that, while 12% of publisher respondents are unsure of their next moves and 12% do not expect to collaborate, many publishers are either already collaborating (20%), are discussing collaborating (16%), or are open to the possibility of collaboration (40%).
The majority (75%) of publishers said that they are working to ensure that audience data informs everything they do and that they are investing in tools to help achieve this. Despite the emphasis on data, however, only 17% of publishers said that all their teams are aligned internally around their audience data. Half of the solutions provider respondents suggest that, while publishers understand being joined up internally around audience data is important, many don’t yet have a strategy in place to achieve their goals.
Workforce and workplace concerns
Interestingly, recruiting and retaining talent, and ensuring a diverse and inclusive workplace, are rated higher (tying for third place with “developing new first party data strategies”) than the tech-based challenges you might expect the digital publishing sector to be focused on.
Most respondents (75%) report that “supporting and retaining current employees” is their top priority when it comes to recruitment and workforce development. This was followed by adapting the publisher’s offering to appeal to new talent entering the industry.
Putting in place recruitment processes that eliminate bias and support the development of a more diverse workforce is ranked third here. However, when asked how they would describe their organization’s diversity, equity & inclusion (DE&I) strategy, respondents suggest confidence in their progress on this challenge. Just over half (51%) believe they have made good progress with areas for continued improvement, and 24% believe they have an effective DE&I strategy. Only 5% of respondents don’t believe they have a clear strategy on DE&I.
As Covid-19 restrictions are being eased in the UK and elsewhere, publishers are evaluating their working environments and plans to return to offices. This survey found that 37% of respondents say their ideal working pattern would be to work from the office two days a week and 24% would be happy to come in for the occasional key meeting, but primarily work from home.
Nearly a third (30%) of respondents expect their employers to be fully flexible and happy for them to choose to work as they wish. However, 66% believe they will be asked to work at least a few days in the office each week.
Clearly, the past couple of years have seen trends like ecommerce intensify and placed increased pressure on publishers to innovate. That innovation has, unsurprisingly, focused on product and revenue. However, it has also required publishers to reexamine workplace culture, recruiting, and retention strategies. The AOP’s survey finds that digital publishing companies that understand the bigger picture challenges and have identified many opportunities. However, it appears that they may still be working through the best tactics and strategies to provide the requisite competitive advantage moving forward.
If we’ve learned anything over the past few years, it’s that almost anything is possible. For better or worse, the future is highly unpredictable, which can make long-term planning difficult. One of the best ways to prepare for the future — whatever it may bring — is by keeping up with industry trends.
That said, one looks to be a sure bet: ecommerce. Undoubtedly, this is a revenue trend that will only grow in importance for publishers. According to GroupM, “By 2024 retail-focused ecommerce will amount to $7T in annual sales activity or 25% of all retail sales.” And the effects of the Covid-19 pandemic have only continued to accelerate the adoption of online shopping and the move away from traditional brick-and-mortar retail.
For publishers, creating an ecommerce strategy that is optimized for impact is more important than ever.
If you’re looking for expert perspective on the trends that are shaping ecommerce and their implications for publishers, take the time to read Ecommerce in Publishing: Trends and Strategies. Published by What’s New in Publishing, the report offers deep insights into the ecommerce space to help publishers deliver an exceptional shopping experience and maximize revenue.
3 trends to watch
Ecommerce is evolving rapidly, as new technologies emerge, and consumer expectations continue to rise. We’re already seeing the impact of these three trends, but they are likely to become increasingly more prominent.
1. Friction-free experiences
Publishers and retailers alike are focused on creating smooth, seamless ecommerce experiences. That means empowering consumers to complete a purchase quickly and easily, in as few steps as possible.
For example, an inefficient ecommerce experience might send readers from your content to a merchant page where they must search for the featured product, visit the product page, add the item to their shopping cart, and finally check out. Shoppable technology can streamline the process, allowing consumers to go directly to the desired product page — or even add merchandise to their cart from a link in your content.
Reducing friction is beneficial for both publishers and merchants, as it lessens consumer frustration and increases conversions. And consumers increasingly expect this type of functionality, so they can shop whenever, wherever, and however they prefer.
2. New payment methods
The practice of buy-now-pay-later (BNPL) is growing in popularity among major retailers, who are eager to provide consumers with easy payment options. This trend is beginning to catch on among publishers as well — especially with those who already leverage ecommerce as a core part of their business.
BNPL is essentially a type of short-term financing that allows consumers to make a purchase now and pay for it in the future — often in multiple, interest-free installments. As consumers get accustomed to this type of payment option in the retail world, it’s likely that publishers will need to follow suit to avoid missing out on valuable ecommerce revenue.
On the outskirts of the payment method trend, a few publishers are experimenting with purchases using cryptocurrency or even text-to-buy — although these are far from common.
3. Social commerce
A frictionless experience is integral to social commerce, which allows consumers to make purchases through apps and social channels. This segment of the ecommerce market is growing rapidly, from $89.4 billion in late 2020 to a projected $604.5 billion within seven years.
With numbers like these, it’s no surprise that publishers are exploring new ways to monetize user engagement on social media. Ecommerce opportunities are the next logical step for influencer-focused channels like Pinterest and Instagram, so users can immediately purchase the products they see.
Channels like Instagram, Pinterest, Facebook, and Snapchat are rapidly expanding their shopping tools and functionality, which can help publishers tap into this trend. After all, research shows that finding inspiration and products to buy is cited as one of the main reasons today’s consumers use social media.
The continued growth of ecommerce has become a potential revenue stream that is too big for many
publishers to ignore. By partnering with platforms, retailers and other service providers publishers can create rich ecommerce experiences, offering the type of online shopping experiences that consumers now demand. Those that don’t risk being left behind, leaving much of ecommerce’s potential unrealized.
About the author
Rebecca Cole is the Director of Content and Communications for Sovrn, a publishing technology platform that provides advertising tools, technologies, and services for content creators to build their businesses, remain independent and thrive on the Open Web. Rebecca has more than two decades of experience driving increased attention through purpose-driven content. She has held communications positions in tech, energy, and consumer brands and was a journalist and editor. Rebecca has an undergraduate degree from The University of Iowa and a master’s degree in journalism from The University of Colorado Boulder.
Digital media companies face fierce competition for the eyes, ears, and wallets of customers. But those who succeed have the potential to win big. With the rise of new content platforms and the emerging promises of web3, media companies have to evolve faster than ever to deliver the right experiences to the right people at the right time.
The pace of critical transformation has been accelerated by the global pandemic. Audiences have always been fickle media consumers. However, Covid-19 drove a massive, rapid change in consumption habits. People have become more demanding and expect better digital experiences to meet those demands.
In conversations with media executives, we’re hearing three major trends that savvy organizations should consider before launching new initiatives.
Data-centricity
The first trend is around data-centricity. Companies are awash in data, and the differences between sinking and swimming hinge on developing a strategy that leverages their customer (reader/viewer/subscriber) data. By gathering all of the information they have—from multiple first-party sources, as well as financial and operational data—into a single repository (which may be a data lake, data warehouse, or other cloud-based platform) companies can effectively manage and use their data.
With a data platform in place, organizations can begin to unlock insights from every angle. Internally, the data can be used to aggregate customer-level insights to create models that achieve acquisition, growth, and retention goals.
Externally, the insights can be used to develop better user experiences that incorporate learnings from across the customer journey. This enables media companies to provide unique experiences that align with the brand. Data also allows products and services to operate more effectively, particularly personalization, recommendations, and the like.
Improving customer experience
The next trend is a focus on providing optimal customer experiences. According to McKinsey:
“The CX programs of the future will be holistic, predictive, precise, and clearly tied to business outcomes. Evidence suggests that the advantages will be substantial for companies that start building the capabilities, talent, and organizational structure needed for this transition. Those that stick with the traditional systems will be forced to play catch-up in the years to come.”
One of the most effective ways media companies can improve the customer experience is through personalization. Countless studies have shown that personalization not only drives better engagement for media brands, it is welcomed—even demanded—by consumers. As audiences continue to expect more relevant experiences, media companies require more proficiency in data science to deliver on those expectations.
Diversifying revenue streams
The final trend is the disruption and diversification of revenue streams. In the past two decades, media companies have built strong digital products and services yet relied on traditional monetization paradigms such as advertising and indirect distribution channels. However, ad-based business models are no longer a sufficient primary revenue strategy for many media companies. This has triggered a shift to monetize their content in other ways, particularly through direct audience-based revenue.
Take The New York Times, which has focused on subscriptions as the key driver of growth. They leverage news, as well as additional content and channels (including cooking, audio, and games) to drive engagement and ultimately readership and subscriptions as well.
Disney has been a master at diversifying revenue streams. If you merely look at their Star Wars franchise, Disney has taken advantage of opportunities to cultivate new fans, deepen customer experiences, and generate new revenue streams. They’ve licensed the brand to Lego to produce Star Wars-based kits; built out new in-person experiences like Galaxy’s Edge at Disney World in Orlando; and added new fans and their subscription revenues by producing the Mandalorian series exclusively for their streaming service Disney+. Disney proves that quality content leveraged omnichannel drives business outcomes. Last quarter, their parks business reported a $2.45B operating profit and streaming added 11.8 million new subscribers.
The future: bumpy but bright
The evolution of digital media may be bumpy, in part because there’s an array of forces at play, such as developments in the web3 sphere, like the metaverse, NFTs, and blockchain, among others. Despite that, we expect the ventures that survive will continue to recognize the primacy of their audiences, by keeping an eye on and leveraging data-derived insights.
As digital businesses diversify their revenue streams, and adopt and adapt to new distribution and delivery mechanisms, the players must think differently and broaden their perspective and knowledge of their customers. Those that invest the time and effort to foster innovation will be the ones that thrive, no matter what changes come their way.
As we head into 2022, we find ourselves living in that mixed blessing: interesting times. Like every industry, we’re rocking in the wake of pandemic-era changes. From staffing challenges and workplace transformation to a consumer base whose priorities and expectations have profoundly shifted, media executives have plenty to manage. Needless to say, it is important that we enter the new year with an informed perspective to be ready for the challenges and opportunities ahead.
We reached out to some of our supporter partners here at DCN and asked about the biggest challenges and opportunities they see as we start off the new year. (DCN supporter partners are companies that do business with premium publishers and are aligned with principles of quality and trust.) Many of them echoed the big trends we’ve been watching. They also offered insights that should prove useful to anyone in the business of digital media.
Industry trends to watch in 2022
Innovation and diversification will accelerate
As we move into 2022, one significant trend that started this year, and will continue, is finding the balance between subscriptions and advertising in order to maximize revenue.
The next step for publishers in 2022 is looking at their business models holistically. Every business will need to find the right balance between subscriptions and advertising to maximize revenue.
—Matt Broad, Director of Optimization Services, Piano
Diversifying revenue streams is the mantra for 2022. This necessitates quick experiments, risk optimization, and data literacy; the precursor to which is an iterative mindset.
—Abhishek, Dadoo, CEO, Fewcents
Recognizing the full potential of video as a primary format is one of the biggest opportunities we see for digital media companies as we head into the new year. This strategic move will not only allow publishers to reinforce their brands and diversify their revenues but build even more valuable and durable relationships with existing and new audiences.
—Andrew Rosenman, Global Product Marketing Lead CTV/Video, Smart AdServer
The biggest opportunity is to harvest advertising from segments of the market that are not just healthy, but those that are lurching forward in leaps-and-bounds. The biggest threat is still running your Before Times playbook, assuming (wrongly) the market has rebounded in mostly same way that you remember. The ad market is like a chameleon. Some parts do look the same shape, but the colors have changed quite significantly.
—Todd Krizelman, CEO, MediaRadar
New strategies and technologies will help publishers navigate the shifting data flow
One of the biggest challenges for publishers heading into the new year is the continual evolution and tightening of data privacy policies. Consumers are also becoming more mindful of their data. Therefore, we predict that new privacy regulations will follow the lead of the GDPR and require publishers and their partners to provide consumers with more transparency and control on how their data is used.
By adopting technologies like privacy-focused universal identifiers, publishers can solve different challenges, including privacy compliance, with one solution. Privacy-first IDs ensure compliance with the latest regulations, protect media owner’s data from leakage – and consequent audience depreciation – while enabling them to monetize their traffic effectively when traditional identification methods will be phased out.
—Jessica Werner, Senior Director of Publisher Development, ID5
The challenge is moving an entire industry to a new way of buying media. Advertisers have over 100 ‘post-cookie’ solutions to choose from – not all are equal. There will also be more consolidation and growth in CTV.
The opportunity lies in education, publishers need to encourage testing and learning as we head into 2022. The chaos we’ve seen over the past year is about more than third-party cookies, it’s about how we use data ethically and responsibly in all aspects of digital advertising. Advertisers and agencies will move out of the testing phase and begin to select partners and solutions that are sustainable and use data ethically.
Going into 2022, one of the key challenges remains the fragmentation of the ecosystem and the difficulties of measuring cross-platform TV viewing and campaign performance.
By leveraging new data and technology capabilities, such as linear addressable, media companies will be able to scale up and facilitate access to their CTV and VOD inventory. This will bring benefits to both sides of the transaction – return on ad spend for brands and optimized yield for broadcasters and other media providers. It is truly an exciting time for premium video and advanced TV.
—Stefanie Briec, Director – Demand Sales, UK & International, FreeWheel
In a market where most publishers are looking to monetize an increasing number of consent-less impressions and with increasing pressure on privacy enforcement, the future belongs to publishers who will find ways to maintain their revenues without collecting personally identifiable information.
This future must be anticipated right now, and our industry should stop holding onto the old world. So, the main focus for publishers should be to find solutions that do not rely on cookies or IDs, but that are still able to qualify 100% of their inventory.
—Fabien Magalon, Chief Supply Officer, Ogury
As the digital advertising industry continues to look ahead to a world with fewer shared personal identifiers, we can expect publishers and brands to turn more and more to AI-powered predictive insights as a way to get to know their audiences next year. As user-level targeting shrinks, and audience-level and contextual targeting grows, AI-powered predictive technologies will help to drive a new age of privacy-compliant targeting.
—Jürgen Galler, CEO and Co-Founder, 1plusX
Heading into 2022, audience, identity, and the challenge around associated data ownership and execution will remain at the forefront of media owner’s minds. Media companies will be navigating a complex and evolving landscape of regulation and regional policies, along with a diverse set of audience, contextual, and identity solutions.
—Leon Gurevich Head of Product & Client Services, IPONWEB
As we look toward 2022, a big challenge within the media industry will be continuing to refine and advance the way we approach audience creation. With challenge, of course, comes opportunity. There is a tremendous amount of opportunity to combine traditional audience approaches with advanced contextual strategies that support quality reach and empower publishers and advertisers to value supply appropriately. The ability to then verify reach and measure the success of those audiences is a critical step for both advertisers seeking ROI and publishers showcasing value in the efforts to further optimize yield.
Media companies will focus on excellent experiences for the win
Publishers shoot themselves in the collective foot, because horrid ad experiences mean less consumer engagement: less homepage visits, less sharing of emails, fewer pageviews per session, fewer session, etc. At a time when publishers need to build tighter relationships with their audiences, we’re pushing them away with giant piles of junk ads (as well as constant prods to enable push notifications, sign up for newsletters, etc.). There’s a huge opportunity in the ad quality arena.
—Gavin Dunaway, Product Marketing Lead, The Media Trust
The biggest challenge is the acceleration of digital from linear channels and the ability for brands to manage a fragmented media environment. Our mixed reality future—part digital, part physical—will change the way business is done from now on. The opportunity for brands, agencies, and publishers is to smooth chaotic user experiences, by embedding insight into every media exchange.
—Laurel Rossi, CMO, true[X] + Gimbal
Over the past years, we’ve seen non-traditional publishers start to double down on advertising, and it’s a trend we expect to accelerate in 2022. Non-traditional publishers take any number of forms, [which] include retail and commerce companies and utility-based sites and apps such as rideshare. Many of these have enormous volumes of traffic, deep customer engagement and the golden goose: first-party data. With non-traditional publishers, it’s vital that it’s vital that ad experiences do not take users out of their walled gardens or detract from the primary experience.
—Justin Choi, CEO, Nativo
The word of the year is quality, which presents both a challenge and opportunity. Brands are increasingly aware of the impact of their media spend, not just on society at large but on the attention that high quality environments can deliver.
—Eric Shih, Chief Supply Officer, Teads
Automation will help level the playing field
We will continue to see self-serve technology impact advertising as we move into 2022. Self-service allows advertisers to manage every aspect of their campaign whenever they need, without talking to a salesperson. Not only does this give users more control, but it also saves time and resources. Self-service generally uses a low-cost technical automated platform to replace the manual tasks in the ad booking process, and that automation allows sales teams to work more efficiently and focus efforts on growing their bigger accounts.
—Peo Persson, Co-Founder and EVP Sales, DanAds
The biggest opportunity for digital media companies is to boldly tackle customer churn across the entire customer journey. Strategic partnerships and subscription bundles are an excellent place to start. Consumers today are ready for easier, more convenient ways to get all the digital content they love in one place.
Digital media companies need a complete retention approach. Start by getting smarter and more creative with subscription partnerships and bundles. And ensure you get the revenue you deserve by using subscription intelligence, automation, and revenue recovery.
—Roy Barak, Chief Financial Officer and Chief Operating Officer, Vindicia
Scaling ad revenues by increasing bandwidth via automation integration. Digital media companies will need to leverage automation to streamline their Order-to-Cash workflows and digital processes. This will enable scale while greatly reducing error margins, increasing internal bandwidth and, of course, increase ROI.
Media disruption has become a fact of life in the digital age. Media disruption is a fact of life in the digital age.ons become more diverse, new channels are emerging more rapidly than most media companies can respond.
This pace places an extreme burden on media companies. They don’t want to throw money at every novel channel in our here-today, gone-tomorrow culture because they can ill afford to waste time and resources. Nor can they afford to overlook the next big trend and risk irrelevancy.
When an ad-supported model drove revenue, companies could risk complacency. With the depreciation of the cookie, there is a growing need to move fast to attract attention and leverage first-party data to drive engagement.
New channels, new strategies
Media companies and publishers have re-adjusted their revenue strategies to focus on subscriptions as per-page revenue from advertising has dropped. In a recent interview, New Yorker editor David Remnick noted that advertising sales in their print magazine largely subsidized the content in the magazine for most of its life. Now, digital and print subscriptions pay for the newest Borowitz Report.
Can a successful subscription service be enough for a media company to thrive in the years ahead? For the New Yorker and loyal reader base, the answer is likely yes. For many others, survival means embracing a truly omnichannel strategy that distributes content everywhere that content can be consumed.
The New York Times went through a tumultuous transition a decade ago as it dealt with substantial drops in print readership and revenue. Yes, they have done well with digital subscriptions. However, the Times has also developed a plethora of content products, built for the changing habits of their audience.
The Daily, a long form audio content for the passive Times’ listener, is an excellent example. It demonstrates how companies like The New York Times provide a range of content formats that meet the broad expectations of today’s audiences. Products like these also access emerging digital engagement channels, which offer new revenue streams and drive subscriptions.
New revenue: ecommerce and events
The definition of media is continually evolving. ESPN and Barstool Sports are content companies that also support new endemic opportunities such as sports-betting. Synergies like these not only create new revenue streams but drive ongoing multi-channel engagement. You don’t just read about or watch the game, you participate in the game along with your favorite content brand.
Ecommerce is also becoming a way to leverage brand recognition and build stronger relationships with consumers by supplementing information with a physical product. It may not be a surprise that HGTV sells doormats. But did you know that Barstool Sports now sells One Bite frozen pizza?
Media company events are nothing new. However, they are becoming an ever more common way to drive revenue, engagement and brand loyalty. ComplexCon, the event put on by Complex Networks, is an excellent example of meeting their Millennial and Gen Z audience how and where they want to engage. The New Yorker Festival just saw its second biggest revenue earnings ever in its new hybrid format.
True omnichannel lies ahead
What are some of the promising omnichannel opportunities going forward? As The New York Times has demonstrated, audio is proving to be quite popular. (As well as a bit of what’s old is new again). Given that audio is a fairly passive content channel, it can exist in the background without demanding focused attention from the consumer. In our multitasking culture, having the freedom to absorb ambient media while also exercising or mowing the lawn is highly valuable.
The once-taboo is now an opportunity for media companies looking to engage. As states begin to legalize online gambling and sports betting, there are opportunities to drive new branding and co-branding revenue streams, creating one of the most direct opportunities for the right media brands to surround and interact with the content. It is critical that companies keep their eye on changing trends and emerging opportunities that align with their brand and target audience.
The long game
Indeed, whatever activity a media company chooses to tap into, they must do it authentically and on-brand. The excellent podcast series on systemic racism Who We Are, created by Vox Media and Ben and Jerry’s, is an example of high-quality brand extension.
What direct revenue will these and other emerging markets create? That’s the billion dollar question. But it also misses the point. Creating a content ecosystem that authentically connects great content to your audience supports behavior that drives subscriptions and ultimately sustainable revenue. The key is being open to experimentation. And experimenting does not mean developing a TikTok strategy in 2022 to gain younger viewers.
Some (well, many) attempts will fail. However, those that succeed could become significant new revenue streams. The advent of 5G all but guarantees a turbocharged environment of innovative new channels for media companies to explore in the coming decade.
The future for media companies demands an omnichannel approach. While content is still king, customers now dictate how and where they will consume it. To win a battle fought on many fronts, media companies need to jump into the arena and embrace change. This means combining insight-driven experimentation with new emerging channels and technologies. That’s the kind of customer-centricity that will ensure content drives new revenue opportunities.
For over 100 years, newspaper and magazine publishers made money in three basic ways: advertising, newsstand sales, and periodic payments from subscribers who awaited the latest news delivered to their doorsteps. Most innovation in the publishing space revolved around the editorial content delivered to consumers rather than how people consumed that content.
Then digital hit, and it changed everything.
News and entertainment are widely available for free online. And the emergence of programmatic ad networks and news aggregators have put immense pressure on ad revenue. This means publishers need to shift toward a subscription-based revenue model if they want to survive—and thrive.
Bringing in new subscribers and building durable relationships with them starts with revenue diversification. You need to segment the audience to focus on those subscribers that will drive higher LTV (lifetime value). And you must have a customer-first mindset.
Your north star: delivering value in unique ways across the entire subscriber journey. The path to success: innovation. Here are three ways to deliver compelling digital experiences that’ll not only drive subscriber growth, but also encourage your subscribers to stick around for the long haul.
1. Diversify your revenue streams
Publishers that offer more flexible subscription plans, innovative acquisition strategies, and hybrid offerings will win over those that only offer rigid pricing models or limited product offerings.
Offer newsletters and companion subscriptions
One way to remake subscriptions for the digital era is to provide new offerings that didn’t exist decades ago. Consider, for instance, Morning Brew, theSkimm, and the many successful Substack offerings. Well-written, targeted newsletters are an increasingly popular way to consume information. They are also a great way to drive additional revenue, be it through subscriptions or sponsorships.
You might also consider developing a companion subscription product to your content offerings. GQ, for example, recently introduced its quarterly “Best Stuff Box.” It features electronics, grooming products, and accessories geared toward the same audience that reads GQ.
Drive interest through events
Events are another great way to drive interest in your subscription products (and to drive revenue on their own). You could hold a live event be it free or paid, virtual or in-person. This might be an in-depth interview with a celebrity or luminary. It could also be access to your on-staff experts, or gatherings of like minded audiences. Then you can use the resulting email list to nurture and help add new subscribers to your core offerings.
2. Segment and personalize your offerings to drive LTV higher
While driving subscriber growth matters, you want to focus your efforts on those subscribers who will stay with you for the long term. Segmenting your audience into logical cohorts and targeting the most promising ones will help you both reduce your acquisition costs and ensure more sustainable growth.
Create and analyze subscriber cohorts
Start by looking at your existing subscriber base. Take a deep dive into the data to understand the characteristics of those subscribers with the highest LTV: Are they subscribed to a particular plan? Are they in a particular age range, income level, or geographic location? Perhaps they tend to take advantage of other offerings, like events or newsletters. Look at what’s working and optimize your subscription offerings appropriately for the cohorts you’ve identified.
Understand churn to boost retention
Looking at the “winners” won’t tell you the whole story. A big part of optimizing your efforts for the highest LTV is understanding who’s churning and why. Identify your “subscriber cliff, which is the point at which subscribers tend to churn. Then, work backwards to understand why they’re churning. Whether it’s due to a price increase, the expiration of a promotional introductory offer, or something else, you now have a starting point for your retention efforts.
Make increasing LTV everyone’s priority
Part of driving higher LTV is ensuring every member of your team is responsible for success across the entire customer lifecycle. Reorient people’s roles around the whole customer journey. For instance, compensate your sales reps based on your subscribers’ product adoption and retention rates, instead of just the price of the deal close.
3. Embrace a customer-first culture, even if you have to rethink your product
To effectively digitally transform your business, you need to be willing to blow up your “sacred cows.” Ignore everything you thought you knew about your product offerings. It’s time to rethink every aspect of your offerings and reorient yourself around what your subscribers demand.
Rethink your product
First, your digital subscription need not be a one-to-one remake of your physical subscription. Say you’re a newspaper: instead of forcing subscribers to pay for access to the entire paper, maybe charge a smaller fee to allow them to access only certain sections, a set number of articles per month, or particular features (just the crossword, for example). Others may not care as much about access to your current journalism but crave access to your archives.
Offer bundles
Another way to orient your product offering around your subscribers is by partnering with a complementary brand (whether publishing or not) and offering a bundled subscription. The New York Times, for instance, partnered with Spotify a few years ago to offer a joint subscription to music lovers that was cheaper than the combined cost of both companies’ subscription plans.
Enact a cultural shift
To adopt a customer-first mindset, recognize it requires incorporating a new product culture and retraining your employees. For many publishers used to “doing things the way they were always done,” this will likely feel scary. But staying static in the way you monetize your offerings makes no sense, not when consumer expectations change so quickly or your competitors are able to move on a dime.
The pay off
The shift to digital has brought with it a tidal wave of change in consumer habits and expectations. The playbooks that served publishers so well for decades just aren’t that relevant anymore. By offering innovative bundles, unique subscription offerings, and creative merchandising models, publishers can build durable subscriber relationships and deliver value across the subscriber journey.
The road to publishing subscription success is paved with a variety of revenue streams. It requires a focus on subscribers that’ll drive high LTV. And it requires a rethink — and possible overhaul — of your product and company culture. No one said it was easy. But it is sure to be worth it.
There is no question the business model of traditional media companies has been disrupted over the past 10 years. Companies that aren’t experimenting with new, unique premium content experiences risk, at best, being left behind their competitors and, at worse, failing. Diversification is key to building a sustainable business model. But survival is not enough. So, here are three things for media companies to consider as they try not only to survive but to disrupt.
1. Embrace the change
The ad supported business model will never again be the sole salvation of the media business. Digital advertising has become dominated by Google and Facebook. These two tech giants pull in over 60% of all digital advertising spend and over 85% of all new digital advertising revenues. Those are 2019 statistics, so their slice of the pie is undoubtedly even larger today.
Innovative media companies are diversifying and building new revenue streams. They have shifted to creating premium content experiences that drive customer revenue through subscriptions and memberships. Media companies are also leveraging events and ecommerce as a new way of engaging their audience and to increasing revenue streams. With the death of the cookie they have no choice.
Fortune Media is a good example of this new product mindset. Historically, Fortune’s primary consumer product was their magazine. They’ve moved to digital subscriptions and diversified interactive content to grow subscriber revenue such as Fortune Connect, introduced in 2020. Fortune Connect is a combination of self-guided learning, best-in-class journalism and weekly networking events for business leaders. It’s an example of using data to discern customer preferences and create a new and different type of brand experience.
2. New players = new competitors for eyeballs and loyalty
There is a no-holds-barred competition going on for the attention and loyalty of digital customers. There are new and disruptive channels emerging competing for hearts and minds from companies creating unique and interactive experiences to drive subscriptions and brand value.
Take Peloton. They certainly don’t fit the traditional definition of a media company. But don’t let the bike fool you. Their business is subscription-based fitness content, which includes spinning, yoga, bootcamps, and meditation. They spent a reported $103 million on content development in 2019 designed to bind their customers to their platform.
It may not matter whether Peloton considers itself a fitness company, a hardware company, or a media company. However, it should matter a great deal to media companies. There are a finite set of eyeballs connected to humans. And they’ve got a dwindling amount of expendable time in their day to consume content.
It is all the more urgent that media companies find ways to deliver value that differentiates and builds loyalty.
3. Be nimble and fail fast
The ethos of many technology companies is to accept failure as a consequence of experimentation. Media companies can even celebrate failure (well, practically) – as long it is a part of the journey to success, of course. Digital media publishers should continually explore new monetization strategies to be competitive, even if some efforts don’t work out. If and when companies fail, it’s critical to do so quickly and understand why so that they can try another approach.
I’m a proponent of “failing smart.” Make a data-driven decision, do your customer research, validate product market fit and understand how your product satisfies a customer need. Identify and remediate issues and unforeseen challenges to drive a successful product. Don’t over-analyze and paralyze. Take calculated risks, listen to your customers and react quickly. Embrace the bold but be smart.
Quibi is a high-profile example of a failure I suspect wasn’t data-driven. On paper, the company seemed to have everything required for success. They had proven executive talent, almost $2 billion in funding, blue-chip media company investors, and A-list creative talent. Yet only 500,000 subscribers had signed up by October of 2020, though it’s reported the company had projected 7,000,000 by that date. Clearly the founders vastly overestimated consumer demand and willingness to pay for premium, short-form content.
To avoid these kinds of mistakes — both market fit and product fit — media companies should invest in product market fit research to validate customer needs, as well as invest in data platforming and cloud architecture to continually improve customer experience and build loyalty through deep learning and truly understanding customer preferences. Media companies can create value and new revenue streams by integrating customer-specific data and insights to power differentiated services.
Take action now
I suspect the definition of a media company in 2025 will be substantially different from the media company of 2021. The disruption by non-traditional media companies has already taken root, forcing traditional media companies to adjust quickly. The pandemic has only accelerated the need for change and innovation. How healthy traditional media companies will be in 2025 depends on actions they take right now.
As digital publishers diversify revenue strategies and develop ecommerce businesses, it is important to understand the consumer purchase process. For many publishers, ecommerce is more than just affiliate links, branded content, and online stores. Publishers are exploring investments in online shops, unique product offerings, wellness programs, virtual learning, and events. With new ecommerce businesses and multiple digital touchpoints consumers, expect an efficient and personalized shopping experience.
BlueVenn, a provider of tools and analytics for marketers, explores consumer purchase behaviors and engagement in a new report, Digital Divide. They partnered with OnePoll to survey 4,000 consumers and 500 marketers in U.S. and U.K.
Key findings include:
Over half (55%) of all respondents in the U.S. report that having a personalized shopping experience with a brand is important to them. Interestingly, only 27% report that brands provide a similar and cohesive shopping experience across all channels.
While marketers report that their businesses collect a lot of consumer data, only four in 10 report using the information. Clearly, it’s important to analyze the data and incorporate the findings to improve the consumer experience.
Fifty-seven percent of U.S. consumer report that they prefer to share their data directly with a brand they trust. This offers a unique opportunity for publishers to grow their ecommerce businesses since they already have a direct and trusted relationship with consumers.
Mobile ecommerce is the new norm in the U.S. Six in 10 U.S. respondents (61%) agree (32% “strongly agree” and 29% “somewhat agree”) that they’ve increased the amount of time they shop on mobile compared to last year.
The top two digital channels that U.S. consumers use to interact with brands include email (61%) and desktop/laptop web browser (51%). Interestingly, Facebook placed fifth (39%).
Close to two-thirds (63% “very important/somewhat important”) of U.S. respondents report that they think it is important for a brand to create a personalized shopping experience.In fact, 58% of U.S. consumers report that they are likely (23% “very likely” and 35% “somewhat likely”) to stop buying a product/service online due to the lack of a personalized experience.
Less than half (43%) of U.S. respondents report that brands understand their shopping need.
Browsing and browsers
When shopping for specific goods and services, U.S. consumers prefer overwhelmingly their desktop/laptop browser. Ranking and ratings:
Clothing, homeware, and exercise equipment – desktop/laptop browser (#1, 48%)
Holiday or leisure – desktop/laptop browser (#1, 54%)
TV, movies, or entertainment – desktop/laptop browser (#1, 38%)
Diversifying product offerings and revenue streams is helping publishers deepen their audience relationship. As publishers continue to build their direct-to-consumer ecommerce portfolios, it’s important to monitor the consumer’s digital shopping experience. Understanding the process of multiple touchpoints and shifts in online shopping behavior provides insight into consumer needs and expectations. There is a growing opportunity for publishers to play an important role in offering consumers a cohesive digital shopping experience.
In the publishing world, Substack has grown into a bit of a phenomenon. It’s a somewhat low-tech, self-publishing newsletter platform. However, it’s gotten outsized media coverage from top brands, including The New Yorker and The New York Times. Substack has also managed to attract a number of high-profile journalists from the industry.
So why does this relatively no-frills newcomer – along with its emerging competitors like Buttondown, TinyLetter, and Revue – get so much buzz? Substack and others like it offer a bit of a twist on the typical software offering: They encourage writers to monetize their newsletters through a revenue share agreement. The company is poaching top writers with upfront incentives in order to build their footprint. This is nerve wracking for premier editors and publishers. Will their own star writers get the bug and make the switch?
The rise in popularity of self-publish newsletter platforms is now forcing media brands to consider whether they’re keeping star writers and reporters happy. It is also forcing them to reckon with their own email programs.
Newsletters are often an under-developed product. However, they have major potential to give writers a platform on which they can build a profile for themselves. They can also drive a lot of revenue. In traditional terms, it’s not much different than a writer having her own “FOB” column. These days, it’s not much different than a reporter’s active Twitter or Instagram profile. Rather than fear these emerging players, publishers should think about how to tap into their ability to retain top talent and make money doing so.
Publishers, make writers and readers happy…
First and foremost, the problem isn’t Substack. Email is a channel with enormous potential for many publishers. Substack, however, is a blaring wake-up call.
Some writers may leave for the big advance that they were promised. But many others are leaving because they want more creative control and a more direct connection to their readers. They also want the ability to directly profit from that connection.
There are publishers who have newsletters written by individual reporters, creating a more personal voice and a lighter touch in editing. CNN’s “Reliable Sources,” run by Brian Stelter, is a great example of this. Often writing late at night, Stelter confides in his readers and shares a bit about his personal life in a way that wouldn’t make sense on the website. He has a huge following. And it’s not just for a faceless roundup of the day’s headlines.
Email is an intimate, low-risk channel with which publishers can experiment to give key reporters a more visible persona. Axios has built a loyal readership by allowing reporters to publish emails under their name, encouraging them to create a human connection. Axios’ Sara Fischer is just one example.
Often, newsletters are templates that provide a list of links. Or they recycle content based on verticals of interest like travel or automotive, but with very little personality. Instead, give your travel editor the chance to write an intro paragraph. Or allow a field reporter to provide real-life snippets of what life is like on the job. These elements create more engaged readers and more differentiation from generic pubs.
Despite this proven approach, publishers are likely worried about giving it a go. They have successfully built reputable names for themselves by holding their identity close and in doing so, ensuring brand integrity and quality. Loosening the grip on the brand by allowing individuals to forge direct relationship with audiences sounds risky.
However, not doing so also creates risk. Stifle the creative potential of individuals who attract loyal followings and suddenly, publishing your own newsletter becomes enticing. Empower those same individuals to help grow the brand and tap into new revenue potential.
…And earn revenue doing it
Speaking of improving email performance, newsletters like Morning Brew, The Hustle, and The Skimm show that entire media businesses can be launched and expanded within the channel with a lot of revenue potential. Individual writers see that. They read these titles and want that same opportunity. The good news is that publishers can give it to them.
Revenue comes from a combination of factors. The first is to create a product that attracts brands. This requires scale, quality content and an engaged audience. Then, the publisher needs to have the tools to optimize advertising with flexible templates, reliable data collection, and good testing capabilities. To maximize engagement and conversion, publishers must incorporate elements like personalization and dynamic content.
Across all of these components, publishers already have major advantages over the upstart platforms. First is the benefit of scale. Even the worst newsletter program at a major publisher is competitive against the entire volume of the independent platforms. (Substack was recently estimated at only 250k total readers.) That scale means that audiences can be segmented. Content can be targeted for more relevance, which provides another major advantage with higher chances of success.
Publishers also tend to have key software capabilities in email like personalization (often tied to customer data from the website, subscriptions, events, and the like). This allows writers to get creative with their content development, offering different elements to readers based on past behavior and content preference, for example. They also probably have tools to create dynamic elements in email. Not every writer wants to pen 1,000 words of prose. Some may be talented producers and want to share videos, TikToks, or snippets of a podcast they recently hosted. Publishers have the tools for them to play with these capabilities, and more.
Substack isn’t a threat if publishers commit to improving their newsletter program. And writers will stay if given the chance. Not only do newsletters provide writers with a relatively low-risk venue for building connections between a brand and its audience, but it’s a revenue machine in the making.
Providing the incentive for writers to make their newsletters successful doesn’t require a jump to a self-publishing platform. In fact, most publishers can provide a much more robust set of email tools for writers with what they already have. This approach just takes a publisher that’s willing to ease up on creative control and allow their reporters’ personalities and names to become a part of the product.
About the author
Allison Mezzafonte has worked in the media and publishing industry for 20 years and is currently a growth consultant, as well as a Media Advisor to Sailthru. A former publishing executive for Bauer Media, Dotdash, and Hearst Digital, Allison serves as a strategic partner to media clients.
The demise of identifiers such as third-party cookies or Apple’s IDFA presents both challenges and opportunities for publishers. Some complain performance marketing will take a hit. This would force marketing teams to refocus on delivering product excellence and ditch bait-and-switch schemes that promised audiences better experiences than they delivered.
Others praise the advance of a more privacy-oriented approach to targeting that will finally prioritize consumer preference. They point to a “golden opportunity for a re-imagining of digital advertising.” Companies would reap the benefits of an ecosystem that isn’t tied to tracking a user’s every move, nor beholden to GAFA. Publishers who wisely embrace this worldview are also taking impressive steps to leverage their valuable direct relationships with audiences.
For some, including Vox Media, Condé Nast and, most recently, Penske Media, this means offering up their own first-party data directly to advertisers. For others, it means leaning further into digital subscriptions. Subscriptions offer publishers a proven monetization model in a post-pandemic environment that has seen digital advertising collapse and revenues driven by paid content rise through the roof.
But winning with a subscription model is hardly a walk in the park. This is more keenly felt at at time when marketing departments may need to spend more resources to collect and leverage customer data to clinch the sale
Driving conversions and convincing consumers to commit to a recurring cost for content demands publishers do their homework and innovate. They must build the capabilities to understand their audience, identify valuable users likely to take the plunge and define clear pricing (at the level subscribers are willing to pay). What’s more, they should muster the resources and resolve to develop, deliver and continually improve a great product that meets customer expectations.
Continuing with our series of video interviews, I talk to Sheri Bachstein, global head of IBM Watson Advertising and GM of The Weather Company. Bachstein has overseen a wildly successful pivot to paid as part of a larger move to diversify revenue at the IBM-owned property. Since launching a premium subscription offering just 18 months ago, The Weather Company counts nearly one million paid subscribers, a figure Bachstein says is seeing double-digit growth every quarter.
Bachstein shares her step-by-step journey to subscription success, including insights on tailoring the product to the consumer, targeting potential subscribers and building a winning customer service team. She also reveals her take on the future of advertising and a call to action for the media industry at large.
WATCH OR LISTEN TO THE FULL INTERVIEW
Peggy Anne Salz, Founder and Lead Analyst of Mobile Groove, interviews Sheri Bachstein, global head of IBM Watson Advertising and GM of The Weather Company.
FULL TRANSCRIPT
Peggy Anne Salz, Founder and Lead Analyst of Mobile Groove interviews Sheri Bachstein, global head of IBM Watson Advertising and GM of The Weather Company:
Peggy Anne Salz: Does it pay to pivot from an ad-supported model to subscriptions? Well, my guest gives us the inside track on the strategy that has allowed subscriptions to become the fastest growing line of revenue in the company. It’s impressive. And we’re going to spotlight some of the step’s publishers can follow to diversify their revenue streams. But first, of course, a bit about us. I’m Peggy Anne Salz, mobile analyst, tech consultant, frequent contributor to Digital Content Next, which as you know is a trade association serving the diverse needs of high-quality digital companies globally.
And now to my guest, she is the Global Head of IBM Watson Advertising and The Weather Company. And The Weather Company is an IBM Business. It offers the most accurate actionable weather data insights to millions of consumers via digital products that we’ll be hearing more about from The Weather Channel, weather.com, as well as Weather Underground. And previously, she was the global head of the consumer business there and was responsible for product management and design, content development, and global expansion across the organization on the weather’s owned and operated properties. So Sheri Bachstein, welcome to Digital Content Next. It’s great to have you here.
Sheri Bachstein: Hi, Peggy. How are you?
Salz: Good. And even better because we’re going to zero in on, I think the question of the hour, the pivot. It’s a time of transition, accelerated change, and you’ve made a move. And I think a lot of publishers are thinking about this move, which is diversifying your business model, specifically ad-supported to subscription, as I said. In a nutshell, why the pivot, Sheri?
Bachstein: So we just found that we want to continue diversifying revenue, it’s really just that simple. You know, to have a business and if you have a bulk of your revenue coming from one stream, that’s dangerous, especially in changing times. And so we started on a diversification path, actually several years ago. And really subscriptions was the next thing in that funnel of what we’re trying to do to diversify.
Salz: I said at the top, it has paid off. I know the numbers. Our viewers don’t. So why don’t you share some of those numbers that show just how subscriptions are evolving?
Bachstein: Yeah, so our subscription business launched about 18 months ago. So I think we’re still just starting, I like to say, because I think that’s a short period of time, and we’ve rolled it out on our apps. And actually, just next week, we’ll be rolling it out on our web platform as well. But in a very short time, we are approaching a major milestone with a million users that are subscribers to our business, and you know, it’s taken other publishers twice as long to reach that volume. So we’re really pleased with the number of subscribers that we’re getting. And then if you look like our quarter-to-quarter growth of subscribers, it continues to be in the double digits. So every quarter bringing on more subscribers.
Salz: That is amazing because this is a time where you’re asking someone to commit to a recurring cost. But it must be that way because they’ve gotten the value proposition or rather, they grasp your value proposition. How important is the product in this mix?
Bachstein: It’s extremely important. It’s the foundation of a subscription business, you know, the value exchange you have with the consumer, very important. With subscriptions, I feel that value strengthens. You actually have higher expectations as a subscriber. I know I do in my own personal apps that I subscribe to. You have a higher expectation. So it’s really important that the product live up to that expectation and that your customer service, very important as well, that you’re able to connect with those consumers if they do have a problem and resolve that very quickly. So the value exchange is very important, whether you’re doing a subscription business or you’re actually doing an ad-supported business.
Salz: I do want to get to those steps, step by step so that publishers can benefit or at least think of a roadmap that they can be following as they make this shift from ad-supported to subscription. But let’s take just a step at a different perspective, just zoom out a little bit because another big question is not just how do I get more value out of my customers, my users, my readers, my audience, but also, what are we doing right now? Because pretty soon the way we do this marketing is going to change very drastically. So from your perspective, what are some of the ways that this shift from cookies and identifiers and toward privacy-first might actually represent an opportunity for publishers because you have certainly grasped that?
Bachstein: So I do agree Google does plan to deprecate the cookie, and so that will go away. But really, I think as it relates to identifiers, identifiers is a really broad word because there’s a lot of ways to identify someone. It could be an email, a lot of different data points. I don’t necessarily see identifiers going away. What I do see is how we use those identifiers is what’s changing. So what’s happening is we’re moving from a society where we had consumers opt-out to a society where we’re having them now opt-in. So that gives them more choice, more transparency upfront, and really the decision of how they want to share their data.
Consumers should have control of their data. So again, we’re really moving into an opt-out society as it relates to advertising and targeting and giving consumers that choice.
Salz: What can you share about what has worked for you and what maybe other publishers need to get right? Because one thing you’ve done is, for example, really focused on getting the product, right, as you said, but there are other aspects of it.
Bachstein: So first, we did exhaustive customer research and listening. We asked our customers, one, “Would you pay for a weather app?” That’s first and foremost and what percentage would. And then secondly, “Okay, if you paid for it, what are the features that you would pay for? What is it that you want?” So we really listened to our customers. And that’s the part of the plan, the product plan came from that. Then we did testing, we did learning, and we kept improving. So a lot of testing went into what’s the right price, you know, to charge for a subscription app?
Again, asking the consumers, “How much would you pay for this feature? So when I think about what are three tips I could give to fellow publishers because I think us helping each other is really important to protect the open web. First takeaway for me is get rid of those perceived inconveniences for your customers.
So for my customers, those that start their day with us, end their day with us looking for weather, some of those customers, they just want to get into the app, find out what their weather is and move on to plan their day, mornings are very busy for a lot of people. And so they felt that ads clutter their experience that it was in their way, so we removed them in the premium experience. So that’s one tip.
The second tip, trusted human expertise is highly valuable. So how can you humanize the information that you’re giving? So for us, you see all this weather data, but how do you give context to that? How do you humanize that weather data for those that want more in-depth coverage?
And so we’re working on that, how to humanize that. And really the third thing is really around what you said before, the product.
Salz: That is really interesting, Sheri. I mean, I know it makes sense to ask the users. I wouldn’t say I would ask the user about the price, but that is surprising because I’ve also read a lot of research that we are actually more willing to pay a price that is higher than even, in many cases, the app developers, the companies themselves would charge. So it does make sense.
The humanizing of the information, now that is intriguing. Is that saying that you tap a team of writers, of journalists, of experts and trying to get that into the app? Because I think our publishers would be really interested in this at a time when, yes, we can automate a lot. And we’ll get to that in a moment. But this human part doesn’t seem to be something that you can automate or in any way streamline. This is roll up your sleeves, get down to work. How are you doing it?
Bachstein: Yeah. So for us, obviously, we’re unique in the weather space. But we do have some consumers that they want more information. So they want a meteorologist to explain, why is an outbreak of tornadoes actually happening? We actually are doing a test right now and we’re using Twitter to do the test where we had a meteorologist create a very short video that really explained how we forecast a tornado, what are the three elements that we look for in forecasting a tornado and describe it so people could see better like on a radar map those areas that may be under a tornado threat. And the response has been great. For those people who like to geek out on weather, they love having that extra information.
And news organizations could do it as well because you have journalists like yourself that have amazing expertise. And how do you take that story, just one level deeper, to really dig in with your consumers around more information that they might want? So almost, probably, getting into some debate, I would imagine, in the news world. So I think there’s ways to do that. But I think, for some, it might be easier than others. But you’re right, it’s something that’s unique. It’s not something I would say that can scale to millions. But if it’s a unique offering, someone’s really willing to pay for it, you could probably get a premium for that.
Salz: Exactly. And that’s the point because subscribers are the valuable users. They’re willing to pay. They’re worth customizing to. Interestingly enough, they also leave a very interesting data trail. They’re frequently engaging with the app or service. They show behavior patterns like no other. That’s why they are the valuable users. What are some early signs for you of a high-value user so that we can also help other publishers focus their efforts and investments?
Bachstein: So we are doing a couple things to really help target who are those consumers that want to be subscribers? One of the things that we’re doing is around propensity modeling. So who are those subscribers that really have an interest in a more premium experience? And so we’re looking at that, we’re using machine learning to do that. We didn’t do it in the early days. We kind of had this one blanket promotion that we did. And we learned a lot from it. Again, it’s that test and learn. And then we learned, “Well, we really need to just focus on these consumers that would be interested in this.”
Same thing that you do in advertising, right? The whole premise around understanding the consumer by the data that they share is so a brand can connect with the consumer. And that’s what publishers do, they bring the two together. So that same type of targeting information is important as you do a subscription business.
Salz: And you’ve leveraged AI to create a more compelling product as I understand it. What has actually worked for you? I mean, you’re lucky, you’re sitting on the source with your AI abilities within Watson, but what has worked for you?
Bachstein: So the propensity modeling I just spoke of, we’re just rolling that out so we can better target the right consumers so we’re not burdening people seeing our promotions who aren’t interested. So that improves the experience. But the other thing that we did is on the IBM Watson advertising side, which is the other part of my business, we’ve created ad-tech solutions rooted in Watson AI.
One of those solutions is a predictive real-time dynamic, creative solution. So I actually took that tech and used it on the publishing side, I’ve got to use my own products, to drive subscriptions. So what that really did was it enables you to create a lot of variations of an ad. So you put in a few images, call to action, and then using AI, it’ll target consumers differently based on what we can learn about them with the information that they share or their behaviors.
And it’s been an amazing tool for us. We actually did a test by using that ad tech. We got three times the number of subscribers than when we just did a normal promo doing it manually on our own.
And so it’s really been beneficial to use AI because you can put all of this data in there. It does the work for you and delivers amazing results. And frankly, we offer that ad-tech to everyone. Any publisher can use it, any DSP, SSP. So we are creating open ad-tech solutions that can drive business for a marketer or brand or it can help a publisher increase their subscription business or even their loyalty programs.
Salz: That is really interesting because dynamic. That’s the key here. It needs to adapt to the users. And actually, publishers need to adapt to this as well. So you’ve also called for industry-wide collaboration on privacy initiatives as we move into our cookieless future. Why is it important for publishers to be a part of those conversations?
Bachstein: It’s extremely important for actually everyone in the ad ecosystem, publishers and ad-tech providers, to be part of that conversation. What’s happening right now is you have about…we have two states. We have Virginia, we have California that have come up with their own privacy laws. There’s another 12 that are thinking about doing that by the end of the year. What happens is we get a patchwork of laws, really challenging for publishers. It’s not scalable to have different laws for different states. It’s really, really hard to be able to scale that and to do that.
And so, me along with many other publishers and leaders within this space, including the IAB, DCN, we are pushing for federal legislation so we can all be working from the same laws, the same rules. And then we have to clear up some of those rules as well. There’s a lot of gray areas when it comes to this. So let’s all be working on the same definitions of words. Very important that we’re all working together so we can become our consumer privacy focus. None of us are saying that we shouldn’t do that. We all think it’s a good idea. Let’s do it together in the right way, and let’s build some consistency across publishers so consumers know exactly what to expect.
Salz: Good point. I’m based in Europe where we’re still figuring out.
Bachstein: Yeah. But at least all of your countries got together and put it together, GDPR. There are still some gray areas, no doubt. But at least you guys took that step to do that, which is important.
Salz: What can help publishers better understand and even stop churn before it starts? So it’s about understanding subscriber behavior and reducing churn.
Bachstein: Yeah, so definitely two parts to any subscription business. There’s acquisition. I think consumers will say, “Well, I’ll try something once,” or, “I’m up to try something.” And certainly, you can give free trials. That’s been a technique that’s worked really well for us. But then the retention side, a really big part of the business. We’ve been fortunate to have retention as high as 75%, which is much higher than the industry. But it all comes down to the product. If you are delivering on the expectations that a subscriber has for your product, you will retain them.
And so, again, it’s really having a great strong product. We’re choosing to enhance the features and give them more as subscribers. So are we improving their experience? And so we found that to be really successful with retention. So we definitely pay attention to that. But I also feel customer service is important. When your subscribers have an issue, you have to respond to them. They are paying money out of their pocket and so they deserve to be listened to and to have their problems troubleshooted as quickly as you can. And so we definitely have made a big investment to focus on our subscribers to make sure that if they have issues that we are solving them for them very quickly.
Salz: You really do love a challenge in your job. What’s the hardest part of your job?
Bachstein: Oh, well, how much time do you have, Peggy? No. It’s funny, I think for every leader, you have to have a strong strategy. And it’s got to be a focused strategy. And then you have to stay focused on that strategy. That can be challenging sometimes because the world around you is changing. But if you really believe in that strategy, only working on that. Stop working on things that just don’t align to that. It’s very important, not only my business but all of IBM is doing that as well.
Salz: What do you see overall as the biggest opportunity on the horizon for publishers?
Bachstein: I absolutely think the biggest opportunity is the use of AI, especially in the ad-tech space. Using AI to really bring together the brands and the marketers with the consumers in a way that uses all different types of signals that doesn’t rely on the cookie is just a really big step forward. And one of the reasons I think so is because AI has the ability to predict. So the cookie only tells us what happens in the past. With AI, we can actually go forward, and we can predict, and we can forecast. And so being able to do that with AI is just, I think, a really great tool and it really has a bright future. I really feel it’s a transformational part of the industry. And really is a new tech that we need to embrace.
Salz: And to your point, I mean, advertising…which works, I’m not saying it’s broken, but through using cookies, identifiers, IDFA, we’re looking backward. And with AI, we’re going to be looking more forward, more predictive. So it does make a lot of sense to say that the opportunity is to understand what I may be doing, what I may be wanting, and to target that rather than maybe my past behavior.
Bachstein: That’s right. It’s all about a new technology, a new foundation or backbone to the ad industry, having it be AI instead of what we’ve been using in the past with cookies. It’s a way forward. I mean, advertising is not going away, but it is evolving. And we can be smarter, and we can use better technologies to connect consumers with our brands and marketers.
Salz: And speaking of connecting, Sheri, it was great to connect with you today. Thank you so much for sharing. How can people stay in touch with you if they want to maybe continue the conversation or understand a little bit more about tips, they can follow to move their app from ad-support to subscription?
Bachstein: Yes, reach out to me on LinkedIn. You can find me on LinkedIn. I’m happy to have a chat. And I’d love to just know what other companies are doing as well and how can we collaborate and work together?
Salz: Absolutely. Well, thank you. And thank you for tuning in. More to come of course in the series. And in the meantime, be sure to check out all the great content, including a companion post to this interview at digitalcontentnext.org and join the lively conversation on Twitter at DCNOrg. Until next time, this is Peggy Anne Salz for Digital Content Next.
