In an era of multiple publishing revenue streams one is prized above all others - subscriptions. Yet getting people to commit to pay for your media product over a period of time can be a long and complex process and relies not just on offering a quality product, but also delivering imaginative and compelling marketing.
When you have subscribers too how do you deal with churn rates - what is the best way to keep your customers coming back for more?
At FIPP World Congress in London two speakers tackled the subscription issue from very different perspectives.
Later Geoff Ramsey, chair and chief innovation officer, eMarketer, explains how to build a pure play B2B subscription business for the modern world.
First though Michael Brunt, chief marketing officer, and MD circulation The Economist, took the delegates through the opportunities that have enabled his company to grow a very successful business largely driven by subscribers.
Michael kicked off with a quick history lesson explaining how The Economist was founded in 1843. Since then it has continued to thrive even though, as Michael admitted, it is not entirely immune to industry trends such as declining ad revenue. Michael said his presentation aimed to share how The Economist has reacted to the digital disruption of recent years.
He first displayed a chart that showed how The Economist’s global circulation has been relatively static in recent years, yet its gross margin has improved.
This has been down to a change in the way The Economist handles subscriptions.
In 2006 subscriptions were, in Michael’s words, “a loss making entity designed to sustain growth in ad revenues by building audience that advertisers wanted to reach. Yet the last few years has seen the focus change and we have witnessed an unparalleled growth in subscriptions. They have been a key revenue generator”
So, asked Michael, “why is an obscure journal founded in 1843 still thriving?”
He gave five quick reasons for this:
1. We are a smart guide to the forces that shape the future.
2. We are a trusted filter on world affairs, we are finishable and we create the world every week.
3. We advocate positive change - this doesn't always resonate with views of the subscribers.
4. We always take a global perspective.
5. Our readers find our journalism valuable and are prepared to pay for it.
Michael then highlighted four pillars to circulation and profit growth.
1. Migration from print to digital
2. Charging more for the print and digital bundle
3. Raising prices
4. Investing in efficient scalable marketing
To underline how things have changed Michael pointed out that half of new subscribers choose the premium print and digital bundle. This means that the average revenue per subscriber is rising.
“Demand for The Economist remains high,”argued Michael, “which is important in an age of fake news. Also market penetration is still low meaning it can be scaled more efficiently.”
Michael added that he felt there were many reasons for optimism that The Economist could maintain, and possibly even exceed, its current growth levels.
“Content overload on other platforms means consumers get tired of endless streams. They then return to brands. Also there is a price elasticity in our subscribers. You can increase the price and not see significant churn. We believe in price rises infrequently, but for a big amount - say every three years.”
Michael then asked ‘who actually reads the Economist?’
He thinks they are interested in politics and business news and want a trustworthy source. They also want to be, and be seen to be, informed. They have a preference for high quality brands and are interested in travel, arts etc
This gives The Economist a huge potential market - 76 million people who have that criteria. So Michael believes that the company is far from saturating the market.
Next Michael asked “how then do you drive subscriptions?” In The Economist’s case it used to be print posters, Now the spend is on digital formats - such as interactive posters and TV. The Economist has also enjoyed a degree of success in placing provocative ads in associated publications and websites. These work well if the ad content is topical.
The ads are supported by attribution software as well as social media - which Michael believes is the cheapest route to new subscribers after paid search.
Next to speak on the topic of subscriptions and how they can be used to build a business, specifically in the B2B world in this instance, was Geoff Ramsey, chair and chief innovation officer, eMarketer.
Geoff kicked off by describing eMarketer as a B2B information service for businesses to understand what is happening online. It is primarily a paid subscription offering - 80 per cent of revenues are subscriptions based.
As Geoff explained “we exist because we understand that being in the digital age is like being in a forest overnight. You never know what will come at you next. Our mission is to help companies make more informed decisions in a world that is being transformed by digital.”
“By aggregating, filtering, organising and analysing essential data and perspectives from multiple sources we are able to deliver insights for clients to act upon.”
Geoff then ran through the history of eMarketer from its founding in 1996 through to its sale to Axel Springer in 2016
He then went through the lessons he has learned from running a B2B subscription based company.
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