“Every time we decided to take an action in favour of reader revenue, we had to calculate the probable loss in the ad revenue and only when we saw that subscription would get us a better return, we moved ahead,” Pradeep Gairola, VP and Business Head – Digital, The Hindu, told us in a recent interview.
Stage one of the launch was a soft paywall that only promised an ad-free experience.
Stage two entailed launching a metered paywall in October 2019.
“Here, we wanted to show the paywall to only 2 percent of the users to mitigate the risk of losing ad revenue,” he said. “Data helped us set a limit of 10 free articles, as 98 percent of the users were consuming less than 10 articles on our website every month.”
The later stages of the launch comprised loads of experiments and refining the brand strategy.
For example, the team studied the sources of traffic and data that helped them decide to keep Accelerated Mobile Pages (AMP) and SEO traffic out of the purview of the subscription and to be purely monetised through ads.
Data approach impact on metrics
During the past two years, THG has invested heavily in building capabilities.
“We are not nimble footed and there is a lot of work that needs to be put in on this front,” Gairola said.
THG now does a lot of A/B testing around the various components of subscription, ie, the copy of the marketing message, background colours of the marketing messages, size and colour of Call to Action (CTA) buttons etc.
Gairola said the team did not find any correlation between a payment option and the efficiency of payment gateways, or between the metered paywall and app uninstalls.
“However, other than these few areas directly related to revenue, we have not been able to engineer many changes. Having said so, we are on the path wherein data is a searchlight that is leading us to develop actionable plans,” he said.
The company’s ultimate goal is to become user-first, with sustainability playing an integral role in it, and a focus on data to learn user behaviour.
“We must remember that targeting users with a wrong revenue proposition, that does not best fit their needs, may result in losing them, which is expensive and avoidable,” Gairola said. “We strive to understand which user is better served with ads and who are the ones who should be asked to subscribe. This opens up opportunities in cross promotion, upselling, ecommerce, events, etc.”
He added that for The Hindu, the real challenge lay in creating the right pricing packages to strike a chord with the maximum number of users.
Constant data study and A/B testing has helped the brand tweak prices and create better packages and ARPU (Average Revenue Per User) opportunities.
“Subscription is more of a retention business and less of an acquisition business. A leaky bucket hurts the organisation,” he said.
Gairola cited an example from a few months ago, where one of their data analysts noticed that a large number of Frontline users were also buying The Hindu ePaper.
Employing these findings into practice, the brand launched an ePaper plus Frontline combo offer that proved to be most successful. They have managed to unlock similar ARPU opportunities that have been unlocked by upselling to existing subscribers.
The company is now trying to figure out if higher-priced subscription packages would also work.
“For instance, would a user be willing to shell out Rs 100,000 for a lifetime subscription? Or Rs 25,000 for an annual membership?” Gairola asked.
He admitted to getting the subscription business off to a wrong start by pricing their digital news at a lower valuation than the print products.
“Why I say this is wrong pricing is also because we always knew newspaper cover prices were subsidised by the ad revenue, which accounted for 80 percent of the newspaper’s revenue,” he said. “In digital, no such subsidy will be available. So, digital products should ideally be priced much higher than their print counterparts.”
Preparing for the demise of third-party cookies
Most publishers have a long way to go in building first-party databases. Newsrooms currently use data vendors when a client wants to target a specific set of users on their website. Most of these vendors have built user profiles through third-party data and enhanced them over years of effort.
“These vendors, today, have hundreds of data points on each user,” Gairola said.
“Under the first-party data regime, publishers will have a huge advantage over third-party data vendors in building user profiles. However, it will require sustained effort over a long period of time for the publishers to build rich databases that are comparable to what vendors can provide us today,” he added.
First-party data tactics to drive engagement
The company is now working on refining its understanding of “engagement.”
Gairola cited their newsletters as an example of offering their subscribers a complete experience.
“We no longer want them to click a link and come to our websites to read the content. The content goes to them,” he added.
Similarly, the brand has now started treating push notifications as mini stories – the first drafts of bigger stories in the making.
Gairola said THG has also started concentrating on identifying and differentiating different user patterns and behaviours.
For example, for The Hindu, the nature of stories that get consumed on a weekday do not substantially differ from what is consumed over the weekend. The same holds true for hour-by-hour consumption.
He also pointed out that subscribers consumed 12x more content than non-subscribers.
Consumption and subscription have a high correlation. For THG, the highest consumption happens on its mobile application.
On a monthly basis, the brand has about 5 percent users on the app who contribute to more than 50 percent of the page views.
Social media platforms contribute very little in terms of traffic, and hence, the brand uses them as islands, figuring out individual roles in the brand strategy.
The role of data in acquiring new users is well defined. Organically, THG has defined a funnel and at each level of that funnel, there are benchmarks, which help them understand how they are performing and what part of the funnel needs to be optimised.
Inorganically, Google Search is the brand’s biggest source of acquisition. That said, THG also works with other platforms.
“We flow acquisition data from various sources into Piano (subscription engine), so that we have one consolidated view on Return on Investment (ROI),” Gairola said. “Over the years, due to the insights on ROI, we have made substantial changes to our paid acquisition strategy. However, this is a continuous process. As far as retention is concerned, we have a long way to go.”
Payment stack and pricing strategies
The Hindu accepts all popular payment methods such as credit cards, debit cards, UPI, bank transfers, and in-app purchases.
The company will soon start experimenting with micro payments and wallets to provide Pay Later options to subscribers.
Digital news, unlike newspapers, is a fixed cost business with a low variable cost, said Gairola. Therefore, the brand’s pricing strategies are designed to promote packages over individual subscriptions.
For instance, if a user buys access to The Hindu alone, it costs Rs 1399 (€ 15.16) for a year, against the All Access Pass (AAP) that includes The Hindu, BusinessLine, Frontline and Sportstar, priced at Rs 1699 (€18.41) for a year.
Learnings from launching the paywall
The biggest learning of the team was that without any initiative without a proper understanding of data was a blind run.
“Data enhances your chances to succeed, so an organisation needs to build its capabilities around data. As we work on different platforms and with partners such as Piano, Cue, GA, Clevertap, Botify, DMPs, etc, the biggest challenge is to get one integrated view of the users,” he said.
Launching a subscription business did not mean the brand prioritised reader revenue over ad revenue, which is a large and growing area for THG.
THG’s approach to subscription revenue has been that at any point, the combined subscription and ad revenue has to be more than the ad revenue, which means that the yield per page view has to increase. So, the brand only monetises users and pageviews, where it sees a better opportunity for subscriptions.
In fact, the team is trying to nurture a few additional sources of revenue through events, archives, syndication, affiliate revenue etc.
Data analytics to target different levels of users
THG relies on its subscription platform Piano to target users who have a higher propensity to pay. The brand is currently experimenting with a dynamic paywall, which targets users according to their propensity to pay.
In the early phase of THG’s subscription journey, 84 percent of its subscribers paid on Day Zero – the very day they registered with the brand.
“What is interesting about this behaviour is that all of them had the 30 day free trial option and yet chose to pay immediately. Over a period of time, this percentage has declined. Now, we get more subscribers who pay us if they find our value proposition meeting or exceeding their expectations,” Gairola noted.
Advantages and pitfalls of subscriptions
Gairola said the biggest advantage of pivoting to a subscription revenue stream has been the scaling up of the overall digital revenue, which has grown 2.5x in the past three years. Advertising revenue also grew at a healthy rate.
“So, while both subscription and advertising have played an important role in our growth, given the nature of the journalism we do, in the future, our revenue strategies will be biased towards reader revenue,” he said.
“Having said that, as a publisher we strive to have a balanced portfolio that can protect us from cyclical trends that are witnessed by revenue streams including ads, subscription, ecommerce etc.”