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Industry-Research

Identifying optimal subscription management practices

In the wake of the pandemic-era rise in subscriptions, news publishers are intently focused on retaining subscribers. Reducing churn and increasing retention are fundamental business practices of any subscription business. However, with a vast variety of tactics to engage users, figuring out which ones serve your business best is the million dollar question. The American Press Institute (API) addresses this question in their survey of 526 news publishers to find out what practices are used to maintain customer loyalty. Important to note, the term “subscribers” here encompasses subscribers, members, and donors.  

Jeff Sonderman and Gwen Vargo’s analysis of the survey data offers insight into the strategies utilized. The authors identify the top 10 retention tactics and note 12 of the least employed strategies practiced.

Most utilized retention strategies

Four of the top 10 most retention practices use email and social platforms to introduce content and offer reminders of subscription benefits.

  • Encourage new subscribers to sign up for their email newsletters (90%).
  • Send welcome emails that highlight features of their subscription(s) including apps, e-editions, rewards programs, etc. and respond to individual concerns and complaints on social media platforms such as Facebook, Twitter, etc. (78%, each).
  • Email subscribers to remind them about the overall benefits of their subscription (69%).

Analytics also play an important role in subscriber retention. Four core practices analyze subscriber usage on a macro and a micro level.

  • Use analytics to track what subscribers are reading (89%).
  • Track data about which digital content online users engage with (86%).
  • Identify reasons for a cancellation or lapse (74%).
  • Send surveys via email (68%).

Further, studying subscriber interests and behaviors is important to increase user intelligence. However, most publishers rate their proficiency in doing so as moderate.

The last two of the top strategies use special offerings (72%) and campaigns (69%) to attract and retain customers. Additional backend analysis by demographics, psychographics and content usage also helps optimize pricing by target group.

Least utilized retention tactics

Sonderman and Vargo identify 12 retention practices used by one-third or less of publishers. Importantly, the authors suggest that publishers should review their current practices to see if there are new tactics they can deploy in order to retain subscribers.

Maintaining updated credit card information to eliminate potential friction is important. Approximately 33% of publishers communicate one-to-one on site with subscribers to update credit card information. Many publishers use a third-party resource to automate this process, eliminating the need for personal outreach.

Further, the ability for publishers to identify subscribers at risk of cancellation allows publishers to get ahead of potential churn. Thirty-one percent of news publishers report that they target subscribers with low engagement before their renewal date. They try to re-engage these subscribers with content of interest. Similar, 28% of news publishers report that they segment their subscribers based on a risk of cancellation. Profiling subscribers at risk in advance, can provide the time to re-engage them and reduce churn.

Additional issues and opportunities

Additional retention practices, used by quarter or less of publishers, include targeted content and more personalized approaches to keep subscribers engaged.

  • Ask visitors to answer a survey while they are on website or app (25%).
  • Send individual subscribers personalized messages about the content and services they have used (23%).
  • Personalize content for subscribers to see on website or app based on what they previously consumed (20%).

The authors note that one of the biggest technological needs for publishers is to integrate CRM software that links all subscribers’ identities to their digital engagement. Unfortunately, many news publishers, especially smaller ones, do not have the software, employee bandwidth or budget to execute these analyzes.

Some publishers try to create face-to-face (and virtual) connections to subscribers. Close to one-third of news publishers (31%) offer meetups for subscribers and reporters. While meetups help establish a community connection between reports and readers, they are not easy to executive.

In addition, there are a few practices that are usually managed outside of the publisher. Again, bandwidth and budget are often reasons for publishers to underutilize.

  • Offer a reward program and discounts on local products and services (27%, each).
  • Send them free gifts (25%).
  • Bundle other news and entertainment services for free or discounted prices through partnerships (17%).

With subscription revenues now core to news publishers’ business models, retaining subscribers is crucial to their financial success. Identifying retention practices and investing in business analytics is an important to reduce churn and increase retention. Finding the most effective way to introduce users to the benefits and value of their subscription as well as content of interest pays off.  

Innovation | Perspectives

What publishers can learn from D2C brands (who learned it from them)

Successful D2C brands have a strategy for each and every customer touchpoint. This new crop of startups have made this specific way of marketing and selling into a model all its own. They have a renewed focus on understanding what customers want, expect, and need every step of the way. This includes everything from research to purchase and returns along with everything before, after, and in-between.

This approach borrows much from what is perhaps the oldest “direct to consumer” industry in existence: publishing. Publishing has always been the purest form of providing what the consumer wants, whether news or entertainment, in text or audio or visual form. Publishers have to be direct with consumers. Their value proposition is clear: This is what we offer, and here it is for your consumption. And today’s most successful D2Cs mirror this process in their sourcing (and marketing).

Traditional publishers recognize the power of subscription models and advertising on editorial content, but many of the new class of publishers have gone above and beyond. To name just a few: Food52 transitioned successfully from recipe blog to culinary business, leveraging their recipe site, and engaged its community to create a thriving home kitchen, cooking and specialty food business. Buzzfeed’s Tasty pivoted (or pivoted their pivot) into Pet by Tasty. They harnessed the undeniable combination of the internet and animal content. And they use it to power a natural pet food business. And of course, in 2014, Emily Weiss metamorphosed digital beauty destination Into the Gloss into the multi-billion dollar juggernaut Glossier. This new class of publishers understands —  and monetizes —  the power of brand equity, loyalty, and community. 

Lean into your D2c roots

Even the more “traditional” publishers are well positioned to do the same. They’ve already accomplished the hard parts, like building a community, establishing trust, providing consistent value, and earning brand equity and cachet. Now more than ever, publishers are sitting on an unmined vein of pure gold. And with today’s level of technology, the next step for publishers is much more achievable than, say, sourcing a sustainable make-up factory or producing industrial quantities of pet chow.

Publishers now have the tools and expertise readily available to marry editorial with branded content  thoughtfully and intentionally. They can respectfully leverage the enthusiasm and engagement of their communities and the eminence of their brands to create novel revenue streams. We can say farewell to the numbers game, where more clicks and eyeballs meant everything. It is being (rightfully) subsumed as a jaded consumer population demands quality, relevance, and a bit of respect in how they are advertised to. Publishers have already done the hard part as the original D2Cs.

Here’s a few more lessons that they can re-borrow from today’s most successful D2C companies. 

Let your content lead your commerce

D2Cs quickly developed a new mastery of advertising everywhere their consumers already were, in podcasts or specific niches of social media. Even then, these brands did their best to match the theme, tone, and even appearance of their surroundings. In no way can an ad or branded content take a reader/viewer out of the experience. Your brand has worked so hard to give the consumer a consistent “universe” of experience. Don’t let bad advertising take them out of it and ruin all the established good will. 

Feelings, lifestyles, brands > products, services, logos

Luggage D2C Away doesn’t sell suitcases. They give consumers the ability to live the jet setting lifestyle they’ve always wanted. Casper doesn’t sell mattresses. They imagine a world where everyone is well-rested and sleep is a pillar of personal fitness. Today, the bigger picture is the bigger seller, especially when everyone knows they can get an objectively similar product from a dozen places instantly. With everything so commoditized, consumers want to be a part of something bigger. Chances are that consumers already associate your brand with a lifestyle, feeling, or movement. Identify it and become a proactive champion. 

Taking back the lead

Publishers are the “OGs” of D2C. Publishers boast the power of brand equity, loyalty, and community. So, they are uniquely positioned to capitalize on the opportunities that D2C brands have to work so hard to achieve. All publishers have to do is to continue to focus on their consumers and take back the lead in crafting, monetizing and commercializing the products their consumers want, expect, and need – a trusted brand with content. 

Industry-Research

Streaming services will retain subscribers even after the pandemic

The media ecosystem is constantly evolving to embrace new forms of content, platforms, distribution, and technology. Social platforms, user-generated content, and streaming services all play a part in transforming the consumer relationship.

As a result, digital publishers increasingly look to a direct to consumer (DTC) business models as a go-to strategy for content distribution. For online consumers, access to a streaming video service is a daily connection point. According to Brightback’s third annual State of Industry Report, 98% of online consumers subscribe to streaming media. In fact, the majority (75%) of this audience subscribes to two or more services.

Subscription adoption

The pandemic is a key influencer in consumer adoption of streaming subscriptions. More than one-third (36%) of consumers state their subscriptions started with the onset of Covid-19. Significantly, 86% of subscribers say they plan to maintain their streaming services even after the pandemic. While many direct to consumer (DTC) subscription services registered increases compared to last year, technology-first subscriptions outpace physical goods subscriptions.

Managing cancellations

Online consumers want a seamless process from sign-up to cancellation. Some state regulators (i.e., California and New York) require digital subscription vendors with an online registration process to offer customers an online cancel option. And most consumers (60%) also favor an online cancellation option.

Interestingly, almost one-third (32%) of this audience changed their mind about canceling a service after being offered an incentive. Of those who did not cancel their service(s), the incentives included:

  • 49% discount;
  • 28% account credit;
  • 26% pause plan;
  • 25% downgrade;
  • 22% skip payments;
  • 21% switch product or plan; and
  • 20% partner offering or bundling.

It turns out that cancellation is a big part of the consumer satisfaction equation. In terms of providing the best cancellation experience, Netflix ranks highest at 23%. Amazon Prime places second with 10% of participants’ vote.

Streaming subscription services offer a strong DTC distribution channel for digital content companies. They also offer new consumer engagement opportunities. And, according to Gartner, by 2023, three-quarters  of DTC businesses will offer a subscription service but only 20% will succeed in customer retention. Growth is critical, but a positive overall experience — even cancellation —  factor into keeping the customer satisfied and keeping the customer in the long term.  

Industry-Research

Retention strategies are critical to combat streaming churn

According to Deloitte’s Media Trends Report, at the start of 2020, consumers subscribed to an average of three paid streaming video services. Ten months later, in October 2020, consumers subscribed to an average of five services. However, while consumers have shown a large appetite for streaming content, the number of services is proliferating fast.

In this very competitive marketplace, streaming video services are spending heavily to attract new subscribers. In fact, an estimated $200 per year is spent on marketing to attract each new subscriber. To make back these costs, services must retain a new subscriber for up to 15 months. With high acquisition costs and little friction to cancel, streaming video services must work diligently and strategically to retain subscribers.

Choice and churn

Deloitte’s data shows that even while the number of subscriptions increase, consumers now cancel services more often. Twelve months ago, one in five respondents (20%) report canceling a streaming service. However, in October 2020, close to half of the respondents (46%) report canceling at least one service.

Further, in May 2020, 9% report that they both added and canceled a streaming video service. By October 2020, slightly more than one-third of consumers (34%) state they both added and cancelled a service. Unfortunately, less than half of all subscribers see their streaming video subscriptions as a must-have.

Engagement in this new era

Investing in content is expensive and necessary to differentiate a streaming video brand. More than half of respondents (55%) report they subscribe to a streaming video service because it includes a broad range of television shows and movies. Forty-three percent subscribe because the service offers both original and exclusive content and 27% subscribe to a new service because it offers ad-free viewing.

While content is king, consumers who subscribe for a particular show may not stay long enough to find another. In fact, 62% of respondents who sign-up to watch a specific show, then cancelled once they finish watching it. Obviously, engaging and retaining subscribers is critical to business. Respondents report the following offers help stop them from canceling a service:

  • 28% a reduced cost, ad-supported tier of the service.
  • 27% exclusive new movies or new series.
  • 23% in-home viewing of a theatrical release the same days it’s released in theaters.
  • 22% multiple people under the same account can watch at the same time.
  • 18% watch movies with others on social platforms.
  • 18% discounts on related merchandize and entertainment.
  • 17% download and watch content offline.

Subscription (and ad) appeal

The impact of Covid-19 on household finances also appears to play a role in determining which services consumers hold onto for their entertainment. Subscriptions to at least one-ad supported service increased from 40% in January 2020 to 60% in October 2020. Individuals are willing to watch ads in exchange for a reduction in the subscription cost. On average, respondents report seven minutes of ads per hour is reasonable.

Streaming video services need to continually deliver value to their subscribers. In the subscription business, it is important to think beyond payments as a touchpoint. Understanding and getting closer to the consumer is the holy grail. The good news is that first-party audience data can provide highly useful insights.

Leveraging insights to tailor programs and memberships for different type of viewers can also offer a more personalized user experience. This way, audience fragments become super-served niches and loyal viewers become VIP members — who will stick around and pay off in the long term.

Revenue

8 ways media companies can diversify revenue

Traditionally, many media companies earned the bulk of their revenue from display advertising. But as the pandemic continues, media companies face an increased need to explore more innovative models of monetizing their content. Here are several ways media businesses can generate new revenue streams:

1. Data

Data is the future of driving revenue. Consider what Conde Nast is doing with first-party data, with its Now|New|Next Segments. These explore what consumers are buying now, how the behaviors might change, and who will spend next. Increased audience engagement is driving the ability to discover new customer segments, opening the door for advertisers whose doors are closed during the pandemic.

Advertising spend decreased during the early months of Covid-19, but now media companies are starting to look at data offerings to entice advertisers. GDPR and additional privacy laws have dictate that this monetization strategy must emphasize a cookie-less future.

2. Monetizing Talent

Reputation and brand are important in the media industry. Quality journalism keeps people coming back — and talent is a big part of that. Media has begun to recognize the value of monetizing the individual. For example, Spotify gained exclusive rights to Joe Rogan and Michelle Obama podcasts, and The Athletic gathered a cult of the best sportswriters. Quake, a subscription-based podcast founded by media veterans, just launched in October 2020 with $2.5M in seed money. Its exclusive shows are headed by top talent in politics and media, like Laura Ingraham, Soledad O’Brien, Mike Huckabee, Andrew Gillum, Marc Lamont Hill, and Buck Sexton.

If media companies don’t start monetizing talent, the best journalists will begin creating their own micro-brands instead. This will further crowd the competitive space and the talent is likely to take their dedicated followers with them.

3. Ecommerce/Affiliate Marketing

Ecommerce in news media is poised for explosive growth. According to Digiday, 85% of CPG marketers are planning to buy more ads from retail media networks. Many media companies are forming partnerships with retail brands, as retailers are piggybacking on the reputation of established media brands, and vice versa. This could be especially lucrative during the holiday season. 

Some ways to explore the Ecommerce opportunity include:

  • Creating newsletters with embedded content to promote either brand advertising or direct-response advertising.
  • Allowing partners to pay for news real estate by writing their own opinion pieces.
  • Opening an online shop, like BuzzFeed.
  • Offering affiliate links for products mentioned.
  • Opening a pop-up boutique and e-commerce shop for the holidays.
  • Promoting events with merchandise (for its livestream with Billie Eilish, Spotify is promoting with an exclusive t-shirt).

4. Paywalls

More media companies are putting digital subscription strategies ahead of other initiatives, and the numbers show that’s paying off. The New York Times has reported an increase in subscribers of 2 million year over year, and their digital subscription model is now finally more profitable than their print model.

And the latest report from the Digital Publishers Revenue Index, shows an overall increase in revenue from subscriptions over the past decade. 10 years ago, subscriptions made up only 7% of digital revenue, and now the data show that has increased to 22% of total revenue. Many publishers have begun to explore paywalls — from soft, hard, metered, and dynamic models. If you’ve not yet done so, now’s the time. 

5. Communities and Membership Models

With the cancellation of in-person events and social gatherings, there has been a huge decrease in networking opportunities. Companies like Fortune are successfully solving two problems with one (big) concept. Problem 1: What’s a way to monetize virtual events to decrease revenue loss? Problem 2: What is a new way to bring in revenue and create a loyal customer base?

Traditionally, Fortune’s live events were designed for a finite number of people; there could only be 50 people at the Top 50 CEO’s retreat, for example. But Fortune realized an opportunity to grow its community to include previously untapped leaders and create a broader community by launching Fortune Connect in the fall of 2020. This online learning platform and community provides ongoing networking events and educational content to aspirational mid-tier leaders. Fortune is using a membership model to build, and grow, a sticky community.

6. Over The Top (OTT)

A growing list of brands are expanding into broadcast and streaming TV to grow their brand, engage their audience where they go, and bring in a new revenue stream. TIME & Univision won an Emmy. Vox has a top-ranked Netflix show. Axios is on HBO. Vice, New York Times and BuzzFeed have turned to streaming content. Beyond their well-known “Explained,” Vox has branched out further into unbranded production shows.

OTT is no longer an opportunity limited to legacy video or television brands. Media companies of all sorts are finding creative ways to monetize their video investments because it engages a new audience and establishes a new habit for the consumer to connect to the brand. 

7. Education

Media companies are providing a growing number of learning/education courses for readers. For example, TIME has expanded its iconic TIME100 people with TIME Talks. The Wall Street Journal launched a mobile app to help provide resources on managing finances during the pandemic. Morning Brew has been putting together 101 courses on topics like Marketing, Finance, and Branding. And Axios is starting 101 video courses on topics like 5G, which are sponsored by companies related to the topic. 

Publishers are seeing an opportunity to develop deep subject matter expertise and be the go-to source on certain topics in addition to news stories. It improves the value they can provide to subscribers and pulls in more targeted advertisers since they can reach a highly engaged niche audience on long-shelf life content that can continuously draw an audience.

8. Evergreen

Most hard-news outlets saw a drastic hit to their advertising revenue this year. Even an increase in subscription revenue failed to offset the advertising losses. But evergreen sites like Dotdash — which owns sites like SimplyRecipes and TreeHugger — have seen an 18% increase in revenue. While Dotdash does rely on an ad revenue model, they use ads about ⅔ less than a traditional news outlet and bet on fast page load and better UX for their growth. 

What makes it particularly effective is their diversification of brands and content. Their travel brand ads, for example, have decreased while their health verticals have exploded. Having evergreen content allows them more flexibility in what content to create and how valuable each piece is to them since it doesn’t have a shelf life. 

As news media becomes increasingly competitive, companies must find innovative new methods of generating revenue that also help attract and retain new customers. By exploring a wide range of approaches, with a focus on your core competencies and customer needs, news publishers are able to stay competitive and build healthier diversification of revenue sources.

Industry-Research | Revenue

Evolving culture and tech savvy critical to publishers’ subscription strategies

Even prior to Covid-19, premium publishers were turning to audience revenue, mainly in the form of subscriptions, to grow profits. In an uncertain ad market, consumer offerings are critical for publishers. In fact, Reuters Institute confirmed this strategy in early 2020 reporting that 50% of digital leaders identify reader revenue as their income focus for the year. Now, fast forward mid-fourth quarter in the midst of a global pandemic and we find publishers further prioritizing audience-first initiatives with new products.

Recently, I spoke with Constantine Kamaras — who is the project lead for best practices in digital publishing at OPA Europe — about the long game for publishers. Kamaras (CK) offered keen insight into the reader-centric model and shared highlights from their new report Subscription Strategies for Digital Publishers.

RP: In OPA Europe’s new report, you speak about a cultural transformation for many publishers. What do you mean by this and what is the significance to publisher operations?

CK: It does not refer so much to the pivot from an ad-centric to a reader-centric model. This is something so well documented it’s becoming a cliché. One should look beyond the headline as there are several “sub-manifestations” of this transformation. For instance, the new relentless emphasis on UX — be it in design, in user journey, in ease/speed of registration/subscription or indeed payment options.

Just as importantly, there is a new culture of self-reliance, notably on in-housing some critical tech. Publishers can then focus more on marketing efforts within their properties rather than platform “top-of-funnel” advertising. The significance here is not so much in restructuring operations but in the need for new talent in all these areas. After all, the principles of transversality and agility are well established by now. One should note that due to the pandemic-induced recession, there will be, sad as this is, plenty of great talent to choose from, especially from the agency side.

RP: Can you discuss the benefits of having editorial working with those in charge of subscription products?

CK: The benefits are quite clear: Deconstructing the offering translates into a better understanding of its key components — content, design, UX, marketing, underlying tech, etc. This emphatically underlines that editorial does not and cannot operate in a vacuum. They are part of a whole, possibly the most important part but only a part, nonetheless. 

The game changer here is the generational shift. As the print generation of grand editors retires so does its zealous devotion to all aspects of the historic “Church and State” separation. Needless to say, there are fundamentals that are still — and should always remain — in place, for instance not permitting advertising considerations to influence editorial content. Still, a new generation comprehends nuances better in most areas such as developing product, deploying analytics to inform decisions etc. Editorial should work closely with the business side, particularly those that deliver on publishers’ most promising revenue source.

RP: How should premium publishers look at advertising as part of the long-term framework for their business model?

CK: Frankly, with some sense of optimism. The first thing to get rid of is the either/or mentality whereby one can have either an ad centric or user-centric model. The chronic disappointment over digital advertising trends — with the triopoly stubbornly dominant — is understandable. So is the consequent focus on subscriptions however several partly related developments may be pointing to a changing tide. 

Regulation, browser policies and new tech capabilities are a confluence that distinctly elevates the value of first party data. Major brands know this well by now. Hence the growing discussions about various forms of second party data deals and partnerships. If one adds scale through alliances, then the ultimate differentiator can be unleashed: users’ trust. This can redefine — or indeed reverse — outdated models of brand safety. In a post-pandemic “trust economy,” quality journalism wins in advertising too.

Premium publishers, with their trusted and direct consumer relationships, are thinking differently about a reader-centric business model. Many editors now work with their subscription and product development teams to meet consumer needs versus making a product retrofit. And new in-house tech is working to create a well-defined user experience. These advances along with new product offerings place publishers in a prime position to generate demand.

Featured Post | Revenue

Widening the funnel: Where are news sites finding new subscribers?

Nobody ever said subscription success was easy. Yet over the last few years, the press in the U.S. and U.K. have had some things stack up in their favor. Political heat triggered a slew of signups as did frenzied interest in trustworthy information around Covid-19. And audiences, particularly younger ones, have generally become more willing to pay for subscriptions. 

It would be premature to suggest that any of those trends is nearing its zenith. However, publishers are always trying to attract the next great swath of subscribers.

Unfortunately, competition for those audiences is only going to become fiercer. The majority of financial reports from news brands — large and small — over the past year have made plain that advertising revenue is in decline. The New York Times’ latest report, for instance, states:

“Digital readers were the only growth business for The Times. Every other unit fell. As online subscription revenue rose 34 percent, to $155.3 million, print subscriptions decreased 3.8 percent to $145.7 million. And advertising sales, once the lifeblood of the newspaper business, dropped 30 percent, to $79.3 million.”

The proportion of people paying for a digital news subscription is up across the board. Notably, younger audiences are far more likely to pay than those over 55. Those are both excellent indicators of the future health of subscriptions. It’s less clear, however, that there will be enough subscription revenue to go around, especially in the short term. Many vital papers will – grim as it sounds – probably not last to reap the benefits of these positive trends.

So, where are the successful publishers seeking out new audiences?

A common tongue

For the most part, media companies have — due to a lack of resource and local knowledge — tended to focus on their core geographical markets. Many have bureaus or access to wires within other countries to draw from. But few have made them a focus of revenue growth.

Where it has occurred, it’s typically been media brands in countries that share a common language. The Guardian overreached itself with its launch of Guardian U.S., but is forging ahead in Australia. Earlier this year The Economist redoubled its efforts to become a name brand in the states.

Magazines have made the leap too: The Week Junior’s launch in the U.S. was predicated in part on the shared language. The title’s chief executive Kerin O’Connor said that: “The first week actually has been fantastic, we’ve sold 1,000 subscriptions. I mean, I think that’s incredible for a product that no one’s ever seen in America. I know it’s a big country, but that is a hell of a starting statement in terms of the enthusiasm that we’re feeling for this product.”

Breaking language barriers

On other occasions, foreign expansion makes sense when there is significant lexical similarity between countries. El Pais, the second-largest Spanish-language newsbrand, has a limited presence outside of Spain, with English-language inserts in titles including The International Herald Tribune. Despite that, in 2013 it launched a Brazilian Portguese site in an attempt to grow its audience outside its home nation, an effort that has led to El Pais brand becoming the second-most used news site in Latin America last year.

The practice of launching in countries without a shared language is more common among well-resourced English titles. In 2016 it was widely reported that Forbes, among others, were eyeing France as a target for expansion. Given Forbes’ model of providing a platform for writers, it’s unsurprising that expansion using its existing platform is continuing.

Others might well follow suit, as titles increasingly try to leverage their brands to launch in new territories. In September, the London-based newspaper The Independent (no stranger to capitalizing on its brand) announced plans to launch Independent en Español, a new website created to serve the Hispanic audience in the U.S. and other Spanish-speaking markets.

In doing so it seeks to take advantage of an extremely lucrative new audience, as the InPublishing write-up makes clear: “According to recent data from the Selig Center for Economic Growth, Hispanic consumers have a buying power of $1.5 trillion – larger than the GDP of Australia, and a 212% increase in a decade.”

Under pressure

While The Independent’s focus is on brand partnerships and advertising, other subscription-based publications are making similar moves. As the pressure on advertising revenue becomes more acute, I would be shocked if more publications did not take the plunge and launch subscription products in other countries.

The early movers in that space, with significant brand recognition, will be the key beneficiaries. The titles that have the benefit of being primarily published in the English language could even eschew translations, as The Washington Post did when it launched the still extant Today’s WorldView in 2017 to grow its international subscriptions.

A wider funnel

Of course, publishers should not neglect any opportunity to build their domestic subscription bases. The proportion of people willing to pay for digital news specifically tends to hover around the low double digits in many countries. As a result, news publishers are widening the top of their marketing funnel in an attempt to bring as many people into the fold as they can.

That’s especially true when it comes to attracting young audiences. The vast majority of digital subscription titles offer student subscription prices. They do so with the tacit understanding that they are taking a hit on present revenue while investing in future subscribers. Student subscriptions are nothing new, but the breadth of titles aimed specifically at professionals, like The Financial Times, offering them widens all the time.

Creative product offerings

Nor is it always quite so mundane as a discount. The New York Times uses its flagship The Daily podcast as a free introduction to its content. Four million daily listeners to the podcast alone offers a huge audience for marketing messages, particularly used in partnership with adjunct products like newsletters. I’ve written before about the value of other subscription products as additive value to the total package, with Crosswords and Cooking both adding significantly to The Times’ total subscriber base.

The same is also true of other titles. Publications like The Guardian use non-news products to introduce people who might not pay to support news alone to the subscription mentality:

“There were notable increases in the number of people subscribing to the premium version of The Guardian’s mobile phone and tablet app, plus people subscribing to the Daily edition and the new Guardian Puzzles app. About half of the regular contributors are from outside the UK, aided by growing numbers of readers in Australia, the US and across Europe.”

One thing that all these products have in common? They skew younger than traditional news and information. Younger people are more habituated to pay and could provide greater lifetime value than older audiences. Small wonder, then, that media outlets are trying to appeal to as many of those people as possible. Between new products and new territories, newspapers are looking ahead to mitigate any potential slowdown of subscription revenue growth.

Perspectives | Revenue

Why product is the best subscriber-retention strategy

The subscription model is not new, but it has taken on a new significance. Over the past seven years, revenue for all subscription companies – from software to healthcare – grew by 321% on average. In the case of apps, this positive trend was bolstered by a 32% year-over-year increase in the number of users who sign up for a subscription after installing an app. 

Fast forward, and publishers report a massive bump in subscriptions and a surge in audience interest since the coronavirus outbreak. In just one week, subscription technology platform Piano observed that subscriptions across the European newspapers in its network increased by 267%. From Condé Nast and The New York Times to Disney and Viacom, subscriptions are big business for the media. 

However, these record increases may be short-lived. Already aggregate data from subscription technology platforms shows monthly subscription rates for digital news has declined from 3x the average (over the previous 12 months) in March to 2.4x in April. Growth rates, despite signs of slowing, still outpace pre-pandemic rates by a healthy margin. But there are other developments publishers need to watch. 

“News fatigue is [also] setting in, and the short-term and long-term economic impact of the crisis is likely to be profound,” warns the Reuters Digital News Report 2020. It combines insights about digital news consumption and the survey results of 80,000 online news consumers in 40 markets to highlight the factors “likely to accelerate long-term structural changes towards a more digital, more mobile, and more platform-dominated media environment.” 

Move to a retention-first model

As advertising budgets are slashed and a recession looms, content companies have two choices. They can persuade more people to pay directly or they can find ways to keep their existing subscribers. 

It’s not a toss-up. Seminal research reminds us that it can cost five to 25 times more to attract a new customer than retain an existing one. The Financial Times sums it up in cost savings. Drawing from internal research, the FT concludes that “it is four to five times cheaper to retain an existing user than to acquire a new one.” 

The task of keeping customers active and interested turns up the pressure on media companies to adopt a retention-first mindset. That starts with understanding who your customers are and then investigating the “why” of what motivates your audiences to interact with your content and keep coming back. That is where marketers need a retention framework that will allow them to develop a more nuanced view of customer engagement and stop churn before it starts. (I’ve written here on DCN about a new Engagement Pyramid model, also known as AIC. But you should choose the model that is right for your company and your audience.)

To help companies as they architect strategies to cash in on the “corona bump” and maintain robust subscriber numbers, I draw from two standout interviews with retention marketers and app publishers  featured on Retention Masterclass, the video podcast series I co-host with fellow Forbes Senior Writer John Koetsier.

Build a “radically superior” product 

Marketers who want consumers to commit to a recurring cost need to offer a product worth paying for in the first place. But they should also be prepared to “burn some boats” to get there. This was the advice offered by Nick Hobbs, an ex-Google manager who is driving a phase change in thinking around how to design and grow a subscription news product. Today he is the founder and CEO of Brief, a news app aimed at GenZ and Millennials and doubling its subscriber base every month. He told Retention Masterclass this growth is fueled by his determination to build a “radically superior” product. 

“It can’t be the same product with a new coat of paint,” Hobbs says. It also can’t be a product that is a little bit better than the rest. “It has to be fundamentally a completely different experience that’s vastly superior to what came before it.” 

One terrific example of a company taking this approach is Spotify, which does more than distribute music tracks. They offer an emotional soundtrack that delivers what audiences want and need. More importantly, Spotify has built a business model on access, not ownership. “Gen Z doesn’t want to buy things anymore,” Hobbs explains. “They want access and they want services.” 

Accordingly, Brief is a customized news service produced by human journalists and algorithms. Rather than offering audiences endless news to scroll, or a lot of options to personalize their feed, Brief focuses on curation. “Instead of trying to feed you more content, we’re trying to give you less.” The takeaway: When “product is the new marketing,” enabling a better experience is essential to achieve high subscriber numbers and strong retention rates.

Keep it fresh with “situational” communications 

Push notifications are growing up. And content companies are getting smarter about ways to deliver them. I’ve written that organizations, including ABC News, get high marks for strategies that use push and other communications channels to power personalized news experiences. 

However, while push notifications can be incredibly useful, they can also be noisy. Christian Eckhardt, CEO and co-founder of full-stack mobile marketing and tech consultancy Customlytics, called out companies for using push to alert users of every mundane activity. It’s a practice sure to backfire, Eckhardt told Retention Masterclass.

Push is part of product

Companies have to shift from attempting personalized push (which no company has mastered) to delivering more “situational” communications, Eckhardt says. This approach to communications is shaped by real-time analytics to “continuously improve the messaging, determine what is working and do more of it.” 

So: Is push related to mobile CRM or marketing? “If done right,” Eckhardt explains, “it’s probably more part of product than it is of marketing.”  Ultimately, push is a great asset for driving retention and engagement. Harness analytics to customize messaging to the situation in which users find themselves in your product.

Product-first marketing

What my conversations with Hobbs and Eckhardt demonstrate is that whether you are looking to add subscribers or retain them, the power of the product can not be underestimated. And, as we see that retention needs to be top of mind in any subscription model. And, again, product takes the front seat. 

The explosive growth of subscriptions for content online and in-app is a clear confirmation that users are willing to pay a monthly fee provided the value exchange is on the money. These days, a me-too product may help you attract new subscribers. But it’s the ability to offer a consistently excellent experience – informed by analytics and customized to audience activity – that builds relationships to last.

Perspectives

OTT subscriber acquisition strategies for a new reality

Amidst the gloom of a global pandemic, the rapid growth of OTT subscriptions has sounded a rare positive note: it is estimated that global revenues for the sector will grow by an unprecedented 55% in 2020, according to Videomind.

Traditional pay-TV and broadcast subscriptions are falling away, particularly in the U.S. Therefore, it would be easy to reach the conclusion that Covid-19 stay-at-home orders have accelerated our arrival at the tipping point where on demand and OTT become the dominant models for video entertainment consumption.

The truth, however, is that the road ahead for OTT brands in an increasingly crowded and competitive market remains uncertain and fraught with challenges. Some of which come in the form of:

  • Unknown post-lockdown churn with continual changing global circumstances
  • Potential slowing of subscriber growth as the world returns to a sense of normal
  • Raised expectations in line with what customers have grown accustomed
  • Change as the only constant, with the ability to adapt quickly to meet continuously shifting needs

Opportunity from uncertainty

The net result is that subscriber acquisition is likely to be more important than ever in 2021. And the fact is that subscribers themselves will represent a more demanding, constantly moving target.

Our recent OTT playbook explores the opportunities for OTT brands to experiment and innovate at every stage of the subscriber acquisition journey. To succeed, brands need the ability to innovate, experiment and adapt quickly. This capacity has long been held back by everything from a lack of customer insight and inflexible business models to monolithic technology platforms that set limits on the pace of innovation.

However, that is starting to change.

Broad customer insight

No-one yet knows whether the pandemic-era spike in new subscribers will be temporary or convert into long term loyal customers. Subscriber growth– be it short or long term – offers clear financial benefits. However, it also offers something potentially more valuable and enduring: insight. 

It seems that recent subscribers were drawn from every section of society, not just the traditional heartland of the 18-35s. In fact, some of the most significant growth was among older age groups, with around a third (32%) of 55-64-year olds and 15% of over-65s using subscription streaming services, according to Ofcom.

What’s more, it would be a mistake to assume those demographic changes are entirely transient. Research from EY found that 19% of households agreeing that the pandemic has irrevocably changed their viewing habits.

As a result, OTT brands could attract and engage a much broader cross section of society, accompanied by diverse needs and behaviors. So, success will depend on understanding and adapting to a broader set of demands.

The good news, for those brands able to convert data into action, is that subscriber growth during 2020 has provided the basis for hugely valuable customer data. Interrogating that data, to understand customer needs and behaviors can be the basis for multi-faceted, adaptable and, above all, effective subscriber acquisition strategies.

Agile, flexible subscriber management

The brands best poised to act on that insight, and the ability to keep pace with a constantly moving subscriber sweet spot, will have a significant advantage. The scale of that advantage will depend how far along the digital transformation journey they have traveled.

Those still wrestling with monolithic legacy systems will struggle to keep pace with change. Siloed data will hamper customer insight. And complex systems requiring technical resource will limit the ability to innovate, adapt and experiment in response to change.

On the other hand, a new breed of fully integrated cloud subscriber management platforms will provide forward thinking brands with all the flexibility and agility they need – and at lower cost. These will allow OTT brands to innovate and experiment in every aspect of the subscriber acquisition journey. This will take hours rather than months, without the need for technical skills. These factors offer a critical competitive advantage in the months and years to come, as we all adapt to a new reality.

Experiment and innovate

In the post-pandemic world, there can be no standing still. OTT brands will need to constantly experiment and innovate in every element of the subscriber acquisition journey in response to diverse customer needs and rapidly changing behaviors, coupled with a demand for greater flexibility and choice.

Revenue

How Crain Communications uses pricing research to grow revenue

Veebha Mehta is the CMO at Crain Communications, a diverse business publisher with titles spanning the advertising, healthcare, investment, automotive, and plastics industries. When she assumed this role, she quickly landed on three crucial questions to answer in order to grow the business. However, she certainly couldn’t have anticipated the global pandemic that descended just a few weeks into her tenure. 

As it turned out, these unexpected events only sharpened her focus on the hunt for these answers. Mehta recently shared those revelations with Piano, illustrating the process she went through around research, testing and data.

The full discussion between Veebha and Piano’s SVP of Strategy, Michael Silberman is available as part of our Piano Academy webinar series, Maximizing Acquisition: Perfecting Pricing and Promotions. We’ve distilled the highlights here. 

1. How to effectively leverage a discount program?

An early observation Mehta made upon joining Crain was how extensively the publisher used heavy discounts to build subscription velocity. It’s common for publishers to offer low introductory rates or even free trials to bring in new users. However, without the right pricing strategy, customer churn and conversion can become detrimental. 

During the Covid-19 pandemic, publishers reported a resilience in subscriptions as more people turned to digital outlets for news coverage. This presented a surfeit of new users up for grabs and discounts are an effective way to bring these potential new readers into the fold. Using a combination of price research and live price testing, Crain ran a promotional program to drive up their subscriptions. 

Significantly, they discovered that many of their trusted products were priced far below what consumers were willing to pay. This data empowered Crain to adjust prices in order to meet revenue targets, as well as experiment with trial offers to attract and retain new subscribers.

2. How to balance revenue and circulation?

Pricing doesn’t exist in a vacuum. Changes to pricing and promotions naturally impact  readership. Tactics such as gating certain content behind a paywall, raising or changing pricing structures, or even shortening trial periods can positively impact revenue. However, they can also reduce a publication’s reach. 

During radical changes like the Covid-19 pandemic, longtime readers’ priorities and price sensitivity may shift. Publishers must account for that and be willing to adapt their strategies.

Crain Communications is developing a more sophisticated understanding of what people are willing to pay for each of its products. This would lead to creating a distinct pricing and offer strategy for each brand. 

In particular Mehta says Crain found that it was valuable to decouple its print and digital pricing. Price testing for Crain’s Chicago Business — a weekly business outlet with both a print and digital edition — showed that while both the print and digital editions were highly trusted within the market, demand for digital was higher than for print.

Prior to this analysis, the pricing was similar for both outlets. These crucial data points helped Crain adjust pricing for its digital edition in order to fully monetize that untapped demand. It also allowed them to prioritize further demand for digital subscriptions. This resulted in more digital revenue share, and a 39% overall conversion rate on subscription offerings.

3. Driving conversions through content and pricing

Finally, Mehta wanted all of Crain’s publications to focus on driving new subscriber conversions through a combination of innovative content strategy and smart pricing rather than relying on deep discounts. Using pricing research and testing, Crain was able to more clearly understand the pricing psychology of their core consumers. They also discovered the content that they most valued and use those insights to develop a conversion focused content strategy. 

Price research on some of Crain’s flagship business products showed a delta between what the publisher was charging and what its customers were willing to pay. It also revealed a need for specific content. This insight allowed Crain to optimize its promotional efforts toward the content that readers valued most. By locking specific articles and creating premium verticals, Crain was able to communicate that value of specific content and drive higher rates of conversion on its most valued content. 

Intimate knowledge of a specific audience is at the heart of publisher’s offerings. But without a complete view of an audience’s pricing psychology, as well as their willingness to pay for information, the data is simply incomplete. Harnessing the power of price testing and research can help even the most sophisticated publishers better understand their audience and serve them the content that will drive them to convert at a higher price point. 

Industry-Research | Revenue

Publishers show digital growth amidst pandemic closures and consolidations

Digital subscriptions have helped shape a stronger business for publishers. FIPP’s latest Global Digital Subscriptions Snapshot (Q3 2020) shows that subscriptions are serving to support publishers during the pandemic. In fact, research by Press Gazette reports that during the Covid-19 crisis the largest newspaper groups in the US and UK gained more than one million new digital subscriptions. Not only are large publishers faring well but smaller, regional and specialist brands are also showing record subscriptions.

Despite positive performances in digital subscriptions, Covid-19 brings with it challenges to the industry. Zenith Media expects a 9% decline in internet ad spend this year. The agency estimates a 6% recovery in 2021, driven by the rescheduled Tokyo Olympics.

On a global front, the middle east and Africa will be hardest hit with a 20% decline in advertising revenue. Western Europe anticipates a 15% decline and Latin American a 13% decline in ad spend. The Asia Pacific, Central and Eastern Europe markets are estimated to decline by 8%, respectively. North America expects to register the smallest decline (7%) due to the large spend on political advertising this year.

FIPP Q3 findings:                                            

News publishers’ subscription growth

  • The Athletic reports 1 million subscribers as of September 2020. Unfortunately, with only a few new subscribers in Q1 2020 and cancellation of live sporting events, the company laid off approximately 8% of its staff. In addition, there were pay cuts across the company to offset expenses.
  • Caixin Media in Beijing grew subscriptions by 70%, adding 210,000 new subscribers for a total of 510,000 this year. It’s the first media company in China to place all of its content behind a hard paywall.
  • Dow Jones reports that digital revenue now accounts for 71% of total revenue, up from 63% compared to the same time period last year. Total subscriptions, across print and digital products, is at 3.8 million, driven by a 28% increase in digital subscriptions. Interestingly, 2.2 million of the Wall Street Journal’s 3 million subscriptions are digital-only. Across the entire Dow Jones group, digital subscriptions account for 67% of subscription revenues.
  • Gannett is centering their business around digital transformation. To date they are close to one million paid digital subscribers.
  • The New York Times’s added 669,000 new digital subscriptions in 2Q 2020 for a total 5.7 million digital subscriber. In fact, for the first time ever, digital revenue now exceeds its print revenue. Overall, the company’s operating profit of $52.1 million is down 6.2% compared to same time period one year ago.

Magazine closures

  • South Africa magazine closures:
    • Associated Media – company closure
    • Caxton – selling off 80 titles
    • Media 24 – closed 2 of 5 titles
  • UK magazine closures:
    • Immediate Media – closed 11 titles
    • Bauer Media UK – closed 10 titles
    • Broadly – exited New Zealand, closed 8 titles and consolidated with Australian Mercury Capital
    • PLC – closed 6 titles
    • T1 media was acquired by Future

Streaming growth

  • Netflix consistently delivers content with new productions and licensing deals to the consumer market. As of Q2 2020, there are a 193 million subscribers globally.
  • Amazon Prime Video, part of Amazon Prime, is very successful in the SVOD market. Subscribers reached 150 million globally.  The company does not break out Prime Video from Amazon Prime. The company does not provide details on active users of Prime Video. However, the Kantar Entertainment on Demand Report offers a third-party analysis SVOD users. The Kantar Q2 2020 analysis shows that Amazon Prime Video subscriptions account for 23% of all SVOD subscriptions. That marks a 14% increase from the prior quarter. 
  • China’s merger discussions between Tencent Holdings and iQIYI could establish the world’s largest streaming service with more than 231 million paying subscribers.
  • Disney+ is exceeding all expectation with currently has more than 60.5 million subscribers.
  • Apple TV+ claims 10 million subscribers. However, many subscribers are part of a 1-year free trial offer because they are users of the hardware. Further, Bloomberg estimates that about half of Apple TV+ subscribers never used the service.

The coronavirus’ impact on the advertising industry further strained publisher revenues and forced several to close their doors and others to consolidate. The pandemic also showcased the consumers’ need for trusted news and entertainment content. This need feeds into the relationship of publisher and consumer. Its why consumers value the content and are willing to pay for it.

Featured Post | Innovation | Revenue

Insight killed the video star: The role of video in premium subscriptions

It doesn’t seem so long ago that premium video was the great hope for publishers. Newspapers including The Daily Telegraph were investing heavily in building up their video teams, only to have the ground fall away from underneath them when platforms changed the terms of agreements. The result? Newspapers cut their losses and jettisoned the teams around which they had so recently built their strategies.

Premium video now finds itself in a bit of a limbo. It is no longer the star of most publishers’ offerings (save for a few examples). And it has taken a back seat when it comes to the marketing of news paywalls. Instead, insight and access are the new tentpoles of subscriptions. That’s never been more clear than when the Telegraph, fresh from abandoning its video unit, launched an out of home ad campaign heralding its unfettered access to Westminster.

The Athletic has taken a similar approach. The sports analysis site, which has outperformed during Covid, has emphasized the access its journalists have with athletes (and the access its subscribers get with the journalists). Crucially, The Athletic has eschewed video for the most part. The company does create or licensing video. However, it does not view it as central to its value proposition, as this interview with its president and cofounder Adam Hansmann demonstrates:

“According to Hansmann, the industry’s sense of news, often based on daily newspaper deadlines rather than what readers will pay for, is outdated. ‘The modern fan already knows what happened in a game, whether it be from Twitter or Instagram or Facebook. They’ve seen the highlights a million times on the internet’”.

Short and social

Hansmann’s nod to the popularity social video is telling. Mobile video is still far and away the largest growth market for the medium. That’s especially true in markets like China, where short-form video dominates any growth charts. Users spent a total of nearly 600 million hours per day watching short-form videos on mobile in April 2019. That’s more than in any other category.

Additionally, premium video is expensive to produce and the ROI is less clear-cut than for the mass-produced videos on YouTube. As Vanita Kohli-Khandekar explains: “Because [ad-supported] video is free, platforms will do anything to get eyeballs. But subscription-supported programming (usually) is well-researched, written and produced – whether in entertainment or news.”

So, the bottom has dropped out of the video advertising market on platforms. Short-form video is the new normal. And even sports-based digital publications don’t feel the need to make premium video part-and-parcel of their offering. Is it now time to call “cut” on the concept of premium news video at newspapers?

Not news

News publishers do license footage and social video to accompany breaking news. However, the reality is that, unless premium video is a newspaper’s key focus, it just doesn’t make sense for them to invest in strictly news-centric video. For one thing, news video has a shorter tail than other types of video. For another, given that individual papers have a far smaller footprint than other platforms, it’s unlikely that they can attract enough eyeballs to compete with viewers on, say, YouTube.

That is, in part, why publishers like Joe (and its current affairs-based YouTube spinoff PoliticsJOE) choose to produce vox-pops and simple interviews. Frankly, they suit the ad-based platforms better. Even The Financial Times, which does produce longer form videos, typically hews close to the interview-led format on its in-house videos. This format entails a relatively low investment in terms of time and editing, despite looking extremely professional. However, they don’t match the level of production quality of traditional broadcasters or OTT entertainment services.

Head of audio and video for The Evening Standard Chris Stone said: “When a breaking news event happens there is obviously massive spikes in traffic, and everybody’s very interested in this one thing that’s happening. And so, it’s actually quite easy to serve video to that audience, because there’s people out there that are looking for that right then. But it tends to be a shorter tail. And that spike will disappear very quickly. And then you’ll be on to the next thing.”

The lifestyle lifecycle

Instead, he argues that lifestyle video content is the way forward for newspapers. It has a longer lifespan and greater opportunity for commercial partnerships.

Paul Newman is brand director for Future Plc’s home interest titles. Speaking about its own “pivot to video” with the Real Homes Show, he notes that: “Real Homes Show… has been a huge success since we launched it last April. We generated hundreds of thousands of views of the show. It’s proved incredibly popular with commercial partners.”

“I think the important thing is just to start with a good solid business plan, and to understand why you’re creating video, rather than just creating video because you think you should, or because somebody in senior management thinks, ‘Oh we haven’t gotten the video content, maybe we should get on with creating some.’”

The success of lifestyle content in attracting users to sign up for a subscription has already been clearly demonstrated by The New York Times, whose Cooking app is frequently cited as a reason for paying. It is, unsurprisingly, heavily based around video.

Similarly, major lifestyle publications have made their archive of health and fitness videos available as part and parcel of their memberships. The reality, then, is that while video is still a good investment for newspapers for driving subscriptions, oftentimes news video is not.

Marketing medium

So, does that mean that there is no opportunity for newspapers around news video? Not at all. Just look at the success of Vox’s Explained series on Netflix. It delivers an awful lot of value to the parent brand in other ways that aren’t primarily monetary. At the time of Explained’s launch, Vox’s editor-at-large Ezra Klein stated that “… the Vox team did think about the overall Netflix audience, which is much bigger than Vox’s. But not as much about whether those people were watching on phones or tablets or other devices.”

Newspapers also recognize that video consumption habits are different among their key demographics. Consumption is growing across the board. However, it is effectively the primary means of media consumption among younger audiences. The Guardian, which hit one million subscribers on its YouTube channel last year, is keenly aware that those younger audiences are the key to its future.

One million subscribers may not sound like a lot on YouTube. It is considerably smaller than many individual’s channels, and any ad revenue it generates is likely to barely cover production costs, if at all. That, after all, is why many larger (non-media) YouTube channels operate Patreon or donation models as well.

The longer-form explainer news videos that The Guardian produces and makes available for free is effectively the best form of brand marketing possible. It hits audiences where they typically spend their time and can be used as a lure to drive interest back to the paper’s own membership scheme. More than that, as audiences shift to seeing YouTube as a primary source of news, it helps demonstrate that the brand can be trusted above all the conspiracy and polarized videos that typify the platform.

News publishers are serious about the quality of their journalism, no matter the medium. As younger people’s consumption habits lean further towards video, then investment in news video is a way to communicate that quality. It just requires publishers to recognize that the return on that investment is unlikely to come quickly or easily. Rather, it will come from a deeper overall relationship with the audience segment on which they will soon depend.

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