Digital readership experienced an extraordinary boost during the pandemic – especially in the early stages when online subscriptions soared by almost 150%. Lockdown consumers were avidly seeking both information and distraction, lapping up the diversity of content on offer, from news to podcasts, courses to exclusive member online meetings with journalists. In contrast, advertising spend plummeted and left the publishers relying on this unpredictable revenue high and dry.
That growth pattern may have normalised in latter months. And while ad spend – in particular digital advertising – has also rebounded, this crisis proved how perilous relying on advertising dollars alone can be. The aftermath leaves a significant challenge for media businesses in 2022.
How can they find the right balance between digital advertising and subscription models? How is the industry going to create a sustainable, long-term revenue model – especially with the shifting privacy landscape and its implications for digital businesses?
Rupert Knowles (pictured), General Manager, UK, Piano, explores the changing digital landscape and outlines how publishers can adopt new ways of building reader trust that lead to better targeting capabilities and higher overall revenue from both advertising and subscription models, without compromising on data ethics…
The pace of digital change during the COVID-19 pandemic has pushed many analogue dinosaurs to the brink and beyond. According to a McKinsey Global Survey, the share of digital or digitally enabled products in company portfolios accelerated by seven years in a matter of months. Publishing has been an amazing example of this shift, and many publishers have acknowledged the value of the subscription revenue stream for the first time. But there is still an internal conflict for many organisations – the traditional stand-off between subscription, advertising and editorial can severely constrain publishers’ abilities to monetise the new digital audience.
Retaining customers and building loyalty requires a new approach. While Google may have extended its use of third-party cookies until 2023, reliance on third-party data will be off the table from next year. Yet, readers actively dislike an irrelevant, unfocused experience. Publishers need to survive and thrive in a logged-in world, and this means being able to answer key questions: Why should a reader share their data? How is the reader experience being curated to inspire loyalty? And how can a publisher derive value from (and provide value to) occasional, registered and subscribed users?
To truly optimise this new customer base will require significant cultural change: Publishers must build collaboration between marketing (subscriptions) and advertising and editorial. In a digital world, all three are inherently part of the same overall customer experience. A reader’s decision to subscribe, to register but not subscribe, or just visit occasionally is influenced by many factors beyond the price.
Know Your Reader
Every part of the experience needs to work well, from the editorial decisions regarding the position of content in front or behind the paywall to the number of advertisements presented to each reader. Understanding the reader is essential to deliver the customer value that is key to optimising long-term revenue.
As German Publisher, Funke Mediengruppe discovered: 50% of subscribers who churned were doing so because they felt there were too many ads, and most were low quality. The publisher opted to reduce the amount of ad space by 70%, retaining the higher quality – and higher value – ads, and cut this reason for churning by 50% in the process. By keeping the more valuable ad inventory, the overall drop in revenue was minimised – a drop that was immediately offset by readers being happy to pay a 20% higher subscription for a better reading experience.
This publisher has also separated its titles into “reach”, which are ad-financed with a focus on maximising traffic and “quality”, which are financed by reader revenue. Each title’s revenue stream is optimised by implementing cross-departmental cooperation and cross-marketing.
Understanding Customer Value
Data is key to understanding customers’ digital behaviour – and will inform the advertising, registration and subscription strategies required to successfully manage the customer journey from anonymous to known, to paid, to retained.
For example, registered readers are ten times more likely to subscribe than non-registered. People who pay for a trial are more likely to convert to a full subscription than those receiving a free trial. Emails and newsletters are still the highest converting channel. And the way pricing is presented will have a very significant influence on conversion.
By using A/B tests to determine the success of not just different pricing options, but different pricing presentations across hundreds of customer segments, publishers can gain vital insights that will help them create successful customer retention strategies. Moreover, with analytics and data-driven insight, they can enhance overall Customer Lifetime Value by building stronger relationships and delivering greater value through more relevant content targeted to each reader – whether that is articles, emails, newsletters or podcasts.
Extending Content Value
The content presented to each reader will also influence subscription rates. Subscription platforms that include machine learning will provide vital insight into the reader’s response to specific articles. Which articles convert most readers to subscribe? Or to register? Which articles have high numbers of page views but don’t result in any reader action?
Machine learning can be used to deliver content recommendations to readers based on behaviour and known areas of interest. Providing readers with more relevant content will bring them back more often and encourage subscription. And it also gives new value to content – older articles can be presented again to an interested reader. Content is no longer written today, discarded tomorrow; it has far more long-term value.
The use of content recommendations can also nudge readers from short form to longer form content. One publisher, for example, has discovered that its valuable content recommendations are often seven days old and three or four times the length of most articles. Leading digital publishers including the Spectator are also using author matching, tracking if readers have a preference for a certain journalist or journalistic style and recommending their other articles. Science is supporting art to create the profitability that will be key to supporting high-quality journalism.
There are so many opportunities to improve revenue, and create a personalised reader experience and drive up customer engagement. Intelligent use of data combined with a willingness to continually test and learn is transforming the way publishers can interact with the readership. This can only be achieved with complete collaboration across marketing, advertising and editorial. Now is the time to grasp the opportunity, embrace a customer-centric, data-driven model and optimise the new readership.