By Lee Kah Whye
“The foundation is building the value proposition around your subscriptions offering that is compelling for readers that readers want to support financially and that has to be priority number one before we think about anything else,” Venkataraman said.
He shared the positive results from the Americas digital growth programme that ran earlier this year over six months.
Publishers who participated saw a 90 percent increase in digital subscriptions, a 50 percent increase in paywall hits, and a substantive decrease in the churn rate. The results are still being compiled. More information will be shared in a future GNI newsletter.
The results affirmed the key themes emphasised during the labs, which are the importance of growing your known readers, using discounts to drive conversions, and the importance of tightening the paywall to create more opportunities for conversion. After a user subscribes, the key to retention is to improve user engagement and create more frequent subscriber touch points.
Key factors for subscription success
The findings primarily focused on the GNI Latin American Subscriptions Lab, which involved eight news organisations. The lab collectively supported nearly $7.2 million in incremental subscription revenue during the lab’s 18 months.
According to Venkataraman, the key factors for subscription success are:
- Developing differentiated high-quality content that helps meet your readers’ information needs and that readers are willing to pay for
- Deepening engagement with readers to increase their likelihood to subscribe
- Converting the anonymous user into a known reader (using an email address to build a direct relationship)
- Maximising subscription sales opportunities, minimising advertising revenue loss (“Goldilocks Problem” – how to get the balance just right)
- Minimising friction in the purchase process
- Retaining your subscribers once you have them (help them understand the value of your product)
- Increasing average revenue per user, where possible, over time
Venkataraman then went into the key learnings from Latam Labs, breaking the findings into three topics.
Key engagement factors that drive propensity to subscribe
Using data from more than 100 of their own clients globally as well as GNI Latam Subscriptions Lab participants, Mather Economics and GNI performed an econometric-driven analysis to understand what factors drive likelihood to subscribe.
They found that for 72 percent of readers, there are three main factors.
First, converting anonymous readers to known readers by introducing a registration wall or implementing a newsletter strategy to collect email addresses, and following that up by developing a direct relationship with readers to develop a direct relationship with them, including tailoring messages around subscription offers and reminding them to return to the website more often.
“This is the most important engagement factor and one that every publisher should ensure they have a strategy around,” said Venkataraman.
Venkataraman added that being a known user and having an email address accounts for about 20% of a reader’s likelihood to subscribe. Furthermore, known users are shown over a three-year time horizon to contribute three and a half times more revenue than an anonymous user.
Second, increasing visit frequency. Both unique visits per month and unique days per month are highly correlated with the likelihood to subscribe.
Finally, visit depth where the metrics are how long readers are spending on your website and how many articles they are reading.
Breadth of content an important factor
Another intriguing finding is that users who read across topics are more likely to subscribe compared with a user who just reads a single topic. The analysis therefore suggests that breadth of content is an important factor in increasing the perception of value of the subscription for a reader.
Venkataraman added, “When we think about our content recommendation strategy, we have a tendency to just focus on promoting the articles from the most read articles from the most read topics or categories. This would suggest that there might be a reason to display articles from other topic areas to show the breadth of what you have to offer as news organisations when you try to encourage your readers to consume more articles on your website.”
Another fascinating observation from the analysis is that although visit frequency is an important factor in subscription conversion, there is a diminishing return on the propensity to subscribe with increasing visit frequency beyond 10 visits per month.
“There’s not a huge difference between the likelihood to subscribe for someone who comes to your website 8 times per month or twice a week versus someone who comes to your website 15 times a month, 3 times a week.”
Therefore, the analysis indicates that publishers should focus their marketing resources and editorial strategy on getting as many readers to that twice a week habit rather than focusing on getting readers who are already coming twice a week to come more regularly.
Understanding path to subscription conversion
By analysing results from the Latam Subscriptions Lab, Mather Economics was able to put together a framework that addresses publishers’ questions about premium content strategy and what to put behind their paywall. In addition, it also provides a guide on how to optimise content mix to support a subscription strategy.
Content published by the Latam Lab participants was tagged and separated into four categories based on proportion of high propensity users per article. For each article, Mather Economics evaluated two dimensions – the number of high propensity readers (for example, brand lovers) and the percentage of that article’s readers who were high propensity readers.
Using the two dimensions, Mather Economics were able to plot the various content types into four categories on a chart which shows which content types are best candidates for a premium content strategy.
Citing a Brazilian publisher who participated in the Lab as an example, Venkataraman demonstrated using a chart that although political and economic content did not receive a lot of readers, these articles were plotted close to the premium content quadrant at the bottom right-hand side. This means the readers of these two content types were high-propensity readers who are likely to subscribe.
This further suggests these are articles that could be put behind the paywall. They do not have many page views, so it is likely that there is not going to be a huge impact on advertising revenue.
At the same time, these articles attract readers who are most likely to become subscribers. This could be a really helpful strategy in thinking through which articles go behind the paywall which ones you might want to keep open for everyone.
Another example on the chart is international content which receives a lot of page views, but few of these readers are likely to subscribe.
An interesting discovery was that across the entire cohort, two-thirds of the content produced by publishers did not show up on the path to conversion 30 days prior to conversion. The readers who converted consumed only one-third of the articles published and these articles also accounted for 86% of all article page views.
Venkataraman continued, “How you present those topics, what articles are resonating, what articles are not resonating from a subscriptions perspective can help inform the editorial strategy and can be a way that you have a data driven or data informed conversation with a newsroom around an editorial strategy that is more aligned with a subscriptions strategy or a subscriptions business strategy.”
Optimising the paywall strategy
GNI found from analysing conversions that came from different engagement segments that unsurprisingly, the most engagement segment, the “fanatics,” accounted for less than 3 percent of total users but nearly two-thirds of the conversions.
What was surprising was that the transient readers – those that are unknown or anonymous – accounted for more than 20 percent of conversions.
This led to Mather Economics proposing a “rainbow paywall” strategy that encourages publishers to be a little more restrictive with the paywall for those anonymous readers. Venkataraman reasons that some portion of the anonymous readers are masked engaged readers who are using an incognito browser or some other device. Subscription offers should be shown to these readers.
The other anonymous readers are likely just flybys who come to your website once or twice per month. They can be shown a more restrictive paywall without hurting advertising revenue.
The readers in the other segments can be introduced to a more relaxed paywall, which gives publishers the opportunity to work towards building more loyalty and engagement for future conversions.
‘Hard paywall’ experiment
A couple of noteworthy results from the Latam Lab were related to a “hard paywall” experiment and that propensity to subscribe after hitting a paywall increases for a while and then declines.
Firstly, an experiment using a “hard paywall” scenario across all Latam publisher participants discovered that only 25 percent of advertising revenue was at risk. This suggests that by adjusting the meter limits, and the amount of premium content and targeting the right users with the paywall, all publishers should be able to mitigate the advertising risk to nearly zero.
This further suggests there is an opportunity to tighten the paywall without a huge impact on advertising revenue, given that such a small percentage of readers get to the more than three times or five times per month visit frequency.
However, this may be reflective of only the Latin American cohort that we worked with. It could vary from cohort and region.
The second interesting finding is that once a reader hits the paywall 10 to 15 times, the likelihood to subscribe is going to begin to decline. This means there is an opportunity to use a more aggressive conversion tactic. For example, these readers can be shown a discounted subscription offer, or asked to do a survey or click a rewarded ad to unlock the additional articles.
Offer something that makes you essential
In conclusion, Venkataraman summarised the factors that are essential for reader revenue success as follows:
“Deeply understanding your readers’ information needs. Building a differentiated value proposition around those needs … Really thinking about how do you offer something that can make you become essential to your readers, that deepens that connection between you and your readers and the community that you serve.”
“Communicating that subscriptions offer simply and powerfully. Making it easy for readers to subscribe or contribute. Continuously strengthening the relationships with subscribers particularly in those first 90 days and then thinking about creative ways to deepen that relationship over time.”
“Ensuring that across the business side, the editorial side of your news organisation, you really understand the role of your subscription strategy in the context of your broader reader revenue strategy.”
About the author: Lee Kah Whye is Director at Project Mercury, a media business consultancy. Prior to this, he spent nearly 20 years at Reuters and was head of the news agency business for Asia.