Until recently advertising revenue was often the priority for publishers. It delivered more income than subscriptions, newsstand sales, affiliate, ecommerce and events revenue. However, the pandemic has had a big impact on the ad market, with fewer brands advertising.
Instead, with an increased demand for news on the health crisis and entertainment with people spending more time at home, it’s subscription revenue that’s delivering the lion’s share of income for many publishers.
While the pandemic has highlighted the fact that publishers can’t depend on advertising revenue for growth, the good news is there’s a huge opportunity to drive subscription revenue and become a profitable subscriber-first business. This is even once Covid, which is helping to drive subscriptions, is gone. Being subscriber-first will also help future-proof publishers’ income and make them less reliant on more fickle ad revenue.
Key benefits of being subscription-first:
- Flexibility. You can easily experiment and make changes quickly based on prevailing market conditions and consumer needs.
- Secondly, you can deliver increased return on customer acquisition cost (CAC), driving profit margins.
- It’s possible to accurately and reliably predict a revenue stream with subscriptions, and secure valuable long-term recurring revenue with engaged and loyal subscribers.
This latter point is important because subscribers will fuel other revenue generating strategies via cross and upsell, for example. In fact, 75% – 95% of revenue comes from subscriber renewals and upsell, and only 5% – 30% from acquisition.
Publishers must change their mindset to become a subscriber-first business. This requires them to have a transformational mentality over the long-term. To start with they need to set a cross company goal that everyone is clear on and works towards – driving subscriber acquisition and retention. It also necessitates putting the customer at the heart of your business. This provides the opportunity to obtain valuable customer data and insight, which is pivotal to decision making. This in turn will inform the acquisition strategy to deliver a better experience, and also increase customer retention by developing strong relationships with subscribers.
It’s worth highlighting that this all takes time. There are additional steps that can be taken quickly, in conjunction with the approach above, that will help drive subscription revenue growth.
A good place to start is to identify where in the acquisition journey visitors drop off – for example, step one in checkout – and at what point during the subscription do subscribers churn. To do this effectively map the end-to-end subscriber journey for key segments (such as device, channel and propensity for acquisition, and tenure and engagement cohorts for retention). Then analyse each journey – look at key acquisition data such as drop off, bounce rate and conversion rate, and retention data, such as churn and product engagement. Finally, identify the highest performing journeys and understand what makes them high performing for both prospects and customers.
Deploy attitudinal and behavioural research to identify the acquisition and retention drivers, barriers and hooks. This enables you to ask and answer questions such as: what are the points of friction and anxiety preventing prospects from subscribing? What drove people to subscribe? Why haven’t people signed up to the newsletter? Why do subscribers cancel and what would prevent it?
Use these insights to build a data-driven, customer-focused strategic roadmap to ensure you focus on the biggest revenue growth opportunities. As part of this, start by identifying the ‘just do its’ (JDIs) that come out of the research – the simple things like the FAQs aren’t clear. For this you don’t need to test or experiment with the changes you make, just update them. Then identify, prioritize and plan strategic projects, such as value proposition development, a new pricing strategy or possibly a paywall based on the data you have. Do look at experimentation based on the research. You will have many ideas you want to test, though it’s important to prioritize based on the data and insights collected and a prioritization framework, then build a roadmap to follow. Finally, develop an always-on research plan. If you always undertake research, collect and analyze customer data, you have your finger on the pulse of what your customers are saying and want. You can then continuously learn and look for new opportunities to improve conversion and subscriber retention that will feedback into the strategic roadmap.
Initially the goal with prospects is to increase the number of meaningful interactions they have with brand touchpoints, whether on or offsite. The more they engage the more likely they are to purchase a subscription. As an example, you should look to optimise the home page layout, website navigation and article layout on your content website to make it easier for prospects to find and engage with your content. Also, look at offsite engagement to drive them back to your site. This can include encouraging newsletter signups, follows on social media and podcast listens.
Increase awareness of the subscription offering and the value it offers to motivate prospects to visit your subscription shop. Awareness of a subscription offering is often low, so if it’s not clear on the site prospects might not see it. A key part of this is to have an effective messaging strategy on your content site fuelled by research and research and experimentation.
Once visitors reach your subscription shop it’s important that prospects can easily understand the value of a subscription and have a seamless experience in exploring and selecting one.
To drive this, use research and experimentation to:
- Create a strong value proposition, with clear features and benefits.
- Reduce effort to purchase – make it as easy as possible – by improving the user experience (UX) and functionality.
- Address any points of anxiety that may prevent prospects from subscribing.
- Make sure the subscription packs you offer meet the needs of your prospects.
- Find an optimal price that fits the needs of customers and helps retention to maximize customer lifetime value.
The main goal with retention is to create habits. It can be hard to assess these with a print title because you can’t see subscribers opening a magazine or newspaper and how they are interacting with it. You can, however, increase the frequency and breadth of product usage and engagement online as part of the subscription, with podcasts, apps, and the content website.
The best way to retain customers is to create an onboarding experience – a process that should increase awareness of all products and subscription features. Firstly, brands need an online onboarding experience starting when new subscribers land on the order confirmation page. A second key part of the onboarding experience is to develop an onboarding email campaign with high value messaging, to drive deeper product engagement with customers over the first 30 days.
For ongoing subscriber engagement beyond 30 days it’s important to increase the number of touchpoints the customer engages with. This includes creating a subscriber hub – a webpage which highlights the full value of the subscription. This will communicate what else subscribers can enjoy beyond their standard subscription. Also, deliver an email campaign to drive customers back to the web product, such as other content not in print that is prized to the reader. And always try to make the digital content as personalized, relevant and valuable as possible.
Look to cross-sell other products and subscriptions. Develop a branded digital shop promoting all products and subscriptions – these could be events, holidays, subscription boxes and other magazine subscriptions to drive additional revenue and help unleash growth. Targeting email campaigns based on customer needs and interests work well.
There’s so much opportunity to future-proof your publishing business by adopting a subscriber-first model. Clever use of research and customer insight will drive engagement that will and not only deliver acquisition but maximise customer lifetime value and recurring revenue.
Head of Optimisation, Daydot