Lookback: 5 Key trends from this year’s D2C Summit
With direct-to-consumer revenue models set to become the primary source of revenue for most media businesses, FIPP’s D2C Summit in June arrived at a pivotal moment. At a time when publishers are drawing up strategies to upgrade their tech stack, build membership programmes, stop the post-pandemic churn and grow digital subscriptions, FIPP assembled experts in all these fields – and more.
After two weeks of fireside chats, presentations and discussions with everyone from The Atlantic to Zephr, here are some of the main trends and lessons to come out of FIPP’s D2C Summit 2021.
Membership programmes are in style, and here’s why…
As publishers strive to build lucrative, long-standing relationships with readers, membership programmes have become increasingly popular. An indication of their effectiveness is the fact that one of the world’s most prestigious magazines, Vogue, has adopted a membership model as part of parent company Condé Nast’s plans to diversifying its revenue streams.
The three-tiered Business Vogue membership programme, launched late last year, caters to professional audiences and offers insights into the fashion industry. Vogue is also looking at memberships around Vogue Runway – showcasing designers and the shows in a curated way – as well as exploring B2C opportunities.
“We’ve really embraced diversifying revenue streams,” said Kate Bird, Executive Director of Consumer Revenue at Condé Nast.“Whether it’s shopping, cooking schools, membership, education or other options, we’ve been exploring a lot of new e-commerce spaces.”
Bird stressed the importance of data when it comes to building customer relationships. The publisher is constructing a global CDP (Central Data Platform), which makes it easier to identify and target audiences more appropriately.
“Data is everything,” said Bird. “At Vogue, we’ve spent a lot of time digging into the core needs of readers. We talk to people who are part of Vogue Voices regularly – loyal customers who give us their opinion.”
A big pluspoint being part of a mammoth publishing house is that Condé Nast shares insights, learnings and failures across its global team so that everyone can learn from them: “At Vogue in particular, sharing what we’re doing around membership strategy has been critical,” Bird pointed out.
Bird acknowledged that many magazine businesses are hesitant to broaden beyond their original channels into new opportunities in paid content and memberships because transformation takes time, and it can be scary.
“We have to appreciate the heritage of brands, while taking them into new spaces,” she explained. “At Condé Nast we’re not a start-up, so we’ve got a lot to work with already and we’re building out from that.
“You need to include partners, editors, product teams, data teams, audience teams. Specifically in a content business, you need editors on board. And don’t be afraid to fail. Testing, learning, taking the audience with you – it’s the only way to do it. We’re in a world that is constantly evolving, whether it’s technology or people’s behaviour. You have to go with it and have fun along the way.”
For publishers who don’t have resources to launch membership programmes internally, help is at hand through groups like The Membership Puzzle Project. Founded in 2017, MPP is a public research outfit designed to offer support to newsrooms around the world as they seek to shift towards membership models.
“What MPP does is to help these publications create a truly digital membership programme,” MPP’s Fund Director, Ariel Zirulnick told delegates. “Part of that is developing specific skillsets among staff, like relationship-building skills, since membership is not just a monetary ask but a social contract between reader and newsroom. There’s a whole new skillset that journalists need to equip themselves with to nurture these relationships.”
Digital marketing is a skill that’s critical when running a membership programme. “That’s because essentially, a membership is a tiny e-commerce business,” explained Zirulnick. “You also need skills in editorial, and product management – because this is an iterative project that needs to be responsive to audience needs.
“Then there’s analytics – you need the ability to store and act on data. Editors traditionally made decisions based on hunches and newsroom hierarchy, but now we have data to inform us. Finally, you need technical skills for processing payments and maintaining members’ data.”
One of the first issues MPP tackles is to draw a clear distinction between memberships and subscriptions. “For MPP, membership is redefined as a social contract in which members give their money, expertise, time, etc. to news organisations, which in turn offer transparency, ways to meaningfully shape the organisation and chances to expand the impact of the work and the cause,” said Zirulnick.
Subscriptions, on the other hand, are more about paying for access to a service. “This access is what you’re monetising,” Zirulnick added. “Crucially, subscriptions can usually scale much more quickly than membership. However, membership is more relationship-based and therefore has less churn. People stick with it.”
Value alignment – from cars to shoe clubs
As a business, what you stand for has become as important as what you can offer. According to a survey carried out by 5W Public Relations, 71 per cent of consumers prefer buying from brands that align to their values. It’s a growing trend that has seen the rise of some iconic D2C businesses. For the media industry, there is a lot to learn from the way these companies connect with customers and use a focus on impact as a strategic advantage.
Few people are better qualified to chart the success of D2C brands than Ira Ehrenpreis, an early investor in Tesla and SpaceX and founder of DBL Partners, pioneers of double bottom line venture capital – a growing field of investing that seeks to optimise both financial return and positive social impact.
At the D2C Summit Ehrenpreis pointed out that technology and innovations are changing how companies operate, and that these advancements are resonating with values-driven consumers.
“We are seeing this play out in real time where some of the best consumer products are going through this metamorphosis and they don’t have to give up anything,” he said. “They are creating their products either through evolution or revolution that are delivering value along the lines of sustainability.”
Tesla has been particularly good at building a relationship with customers.
“When you think about so many industries where the relationship with the customer is everything – how you monetise that, how you build long-term value – it is all built on the embedded relationship that you build with that consumer,” said Ehrenpreis.
“One of the key innovations at Tesla was to think about this in a different way. It was the idea that when we were growing up we may have gone to a dealership to buy a car but not the mall. And that’s what Tesla pioneered. Tesla upended the assumption that there’s a bifurcation between the OEMs that produce the car and the dealerships that sell the car. It is a profound change in how we think about customer engagement and relationship using innovation.”
A key lesson media groups can take from Tesla is the company’s refusal to compromise on quality as it swung for the fences when developing a new kind of electric vehicle.
“Tesla went out not just to build the greenest, most environmentally friendly car but said – what if we build a car that accelerated faster than a Ferrari?,” said Ehrenpreis. “At Tesla we did not go out to build a different car, but a better car. That was the profound missionary statement, which in many ways has defined what we think of as double bottom line.”
“It’s the idea of not doing different for different sake but to find a way to be better through innovation. One of the real lessons coming out of it was that by building something from scratch or at least questioning the status quo, you are able to just uproot all these dimensions that unlock a set of other opportunities that we didn’t have.”
Another big brand to benefit from aligning its values with consumers is Nike. The shoe giant’s successful Nike Adventure Club – a monthly subscription service for children allowing parents to swap out their kids’ old trainers for new ones – was born out of the desire to recycle old shoes at the end of their life to meet sustainability goals.
“Growth and sustainability are intertwined,” said David Cobban, who incubated and developed the Nike Adventure Club and now runs UNBRKBLE, developing and delivering consumer-centric tools and strategies for companies to deepen their relationship with their customers. “Ultimately we were all about new economic oxygen. The goal was to bring in new revenue growth and to do that without totally being bound to physical goods. Nike sells 800 million pairs of sneakers a year so growing without the need to have more physical stuff in a landfill or the ocean is very important.
“What was also very important for us was the customer priority because, as we know, customers are beginning to get more and more interested in sustainable practises.”
“Making it easy for people to return shoes to Nike – and we have this facility called Nike Grind which allowed us to recycle those shoes and grind them into sports courts and playgrounds – was a real bonus and benefit to the customer and the reason why they would stay loyal to us.”
Collecting data – The third-party cookie crumbles
With Google extending its deadline to remove third-party cookies from its Chrome browser from January 2022 to late 2023, publishers have been given a bit more breathing room to make a shift to first-party data. As the cut-off point approaches, expect an increasing number of media companies to use their content to create fresh contextual audience data (and to try and convince advertisers their contextual audience approaches are worth paying for).
One of the publishers taking the lead in exploring ways to collect first-party data is women’s lifestyle brand Livingly, who shared its journey with delegates at the D2C Summit. The company recently launched a contextual targeting product called IRIS (Insights, Research, Intenders and Scale), mining data that indicate what people really care about. In addition to consuming Livingly content, users engage in quizzes telling them how their personality matches with their decorating style, or what character they from the office.
With millions of users answering these questions, Livingly organically know how to match their interests – all done at no cost extra cost to consumers and by using engaging and entertaining content. In January, Livingly was approached by two agencies independently inquiring if they would consider asking questions that their brands wanted to know about users.
“From the testing period the feedback from the clients was that there was something extremely special in our offering that we were sitting on a treasure trove of actionable data for targeting and insights for brands,” explained Jonathan Penn, SVP Revenue for Livingly Media.
“For months during the proof of concept period, we have been working on developing solutions to future proof identity targeting and provide measurement, and it’s from there that Iris was born. It helps brands to identify, segment, target and plan new users that originate from their targeted media campaigns across our premium content.
“With third-party cookies going away, we are starting to see brands beginning to realise that they are going to have to find their customers in the future. And that’s the ability to catch their own users across publisher sites for remarketing and so on. So knowing the importance of this strategy part of the Iris framework is to allow our customers to just do that.”
Livingly has been working closely with Permutive, whose privacy-safe infrastructure helps publishers and advertisers reach audiences safely and keep control of their first-party data. The publisher uses Permutive Vaults as a way to match users with its advertisers, and aggregating the data in a way that there are no privacy or leakage concerns whatsoever. From there, they can model specific cohorts to find additional customers and understand deep insights.
“When we first started working with Permutive over a year ago, we were able to establish two important criteria. Number one, we were going to mimic the taxonomy of data only where we have relevant audiences. And then two was to identify robust audiences that are unique to Livingly Media and lean in there,” said Penn. “So for example, packages included new moms, or home décor enthusiasts, and health and wellness living that use both contextual and behavioural insights.
“We started to transact on these complimentary new deals with data, and have been really thrilled with the success for our partners. These partners have not only been able to scale into our inventory across all devices and browsers, in some cases they’ve been able to increase spend by five times where they previously were, and they’ve also been able to save money on that third-party data usage.”
Also jumping on the contextual audience bandwagon has been the Independent whose climate hub homepage links readers to eco-conscious brands while also allowing the publisher to form an audience segment of green consumers that it can then pitch to advertisers.
Then there’s Buzzfeed, who is using shopping-centric product reviews and wish lists to help them learn more about people’s actual purchase intent. “We’re building out behaviours that allow us to create more loyalty within the shopping content,” Ken Blom, Buzzfeed’s Senior Vice President of ad strategy told Digiday.
In March, Buzzfeed launched a first-party data platform to offer customised audience segments for selling directly to advertisers. According to Blom: “The new information the publisher can generate through its own content can give ad salespeople fodder to package audiences and insights in more customised ways advertisers couldn’t get through open programmatic auctions”.
In Sweden, Bonnier News is facing up to a third-party cookieless world by joining forces with Syno International, a technology company that helps publishers to implement first-party data solutions in an ethical and anonymised way. At the D2C Summit, Jokke Nurminen, CEO for Syno stressed the importance of a panel-based solution to achieve long-term success.
“We have been banging the drum about this for a few years already, but with the death of third-party cookies it is just going to become more and more important,” he said. “Having your own panels, having volumes, and working with first-party solutions is the way to move forward.
“As Syno, we are the matching service provider. So we are getting these emails from both the panel provider and the publisher, and the important thing to keep in mind here is that everything is anonymous and GDPR complaint. We receive these emails in a ‘hashed’, anonymous format and then do a matching job to see how much congruency there is between the two. We can then run ad-evaluations on these users.”
For Bonnier, the move to first-person data can’t happen soon enough. “Moving forward, we do see that we’re not so keen on using third-party cookies in our re-target solutions, and rather we’ll be using our own first-party data for setting up those types of services,” said Malin Backlund, Analyst for Bonnier News.
“In general, we would clearly prefer our first-party data based solutions over third-party solutions. In particular, that could mean using sign-in data, emails and phone numbers, but of course used in a safe and anonymised way with no data leakage, and also full compliance.
“Conversely IP addresses for example, we do not think are particularly well suited for this type of role, because they are not designed in that way and they have limited identification capabilities.”
Building a tech stack – all that glitters is not gold
With digital subscriptions skyrocketing during the Covid-19 outbreak – driven by a housebound public seeking entertainment and dependable news coverage online – many publishers have made the acceleration of digital transformation a priority. As media groups realise its digital value proposition matters, the hunt for effective new tech is well and truly on.
“Digitisation is now truly top of the agenda for publishers across the board,” explained York Walterscheid, the Managing Director of CeleraOne, the paywall experts and sponsors of FIPP’s quarterly Digital Subscription Snapshots.
“You need to discuss how to keep your conversion rate and look at the tech stack you have. Is it modern enough to make good conversions and can you play around with modules, tech stacks, paywalls and audience development tools to modify and influence the conversion rate?”
According to Scott Howland, Global Director for Publishing & Media for Zephr, it is crucial to build a tech stack that matches the needs of your business. “How do you go from a vendor-first approach, looking at technology, to actually what you care about for the business?” he said.
“The immediate questions to ask become: What are your objectives? What are your outcomes? What capabilities do you want? What tech do you actually need? The key is about not buying tech for tech’s sake, but instead to meet your outcomes.
“Someone can always tell you the features that they think you need. But why do you need 10-20 different features, when actually it’s only two that’s going to help you get towards your outcomes? Yes, there might be a lot of future usage, but again you’re future proofing ahead of time. So it’s something you just need to think about and the more features that are there, the more complex things are.”
Beginning with the most basic logistical approach is the key to setting out down the right path for subscriptions success, added Howland.
“Obviously subscription is a growing business. It’s a recurring relationship between a business and its customers, which we’re seeing not only in media and publishing, but also software, different industries, gyms, clubs, etc. It’s becoming more and more popular as a method of attaining increased revenues.
“And essentially that journey remains the same as it always has done. It’s about moving users from anonymous to known, and then moving those leads or known users into customers, and then moving them into retention flows and making sure you drive that lifetime value. So the four key areas I always look at are: looking at anonymous users, moving onto registered and known, then onto customers or subscribers, and then looking at retention.”
When it comes to new tech, all that glitters is not gold. Nikolay Malyarov, CEO International and Chief Content Officer at PressReader, warned that, in the media industry, there is a tendency to chase a new idea, rather than focus on older and more established strategies for growing revenue.
“We have to be careful about chasing moonbeams. You’ll get no argument from me that D2C is a key pillar of any strategy, but not all D2C strategies are created equal. The takeaway is: if you’re going to focus on D2C revenue, follow the money.”
Malyarov put forward revamped e-replicas of print editions as an area that deserves closer inspection. “This is the often-overlooked digital edition, the ‘ugly duckling’ of digital news,” he said. “To put it into perspective, in the first 10 days of April 2020, we signed more digital replica contracts with magazines and publishers than we had the entire previous financial year, which ended just before the pandemic began.”
A glowing example of how to build a tech stack to maximise content monetisation is German newspaper BILD. During the pandemic, the Axel Springer title saw its digital subscriber base grow to half a million, and is now looking to capitalise on its 25 million monthly userbase even further.
Daniel Mussinghoff, Director of Premium, BILD+ stressed that data is key to executing effective paywall strategies, but pointed out that it’s about starting from a simple base point and building in sophistications from there.
“On the one hand we should focus more on the simpler data projects and how we can evolve from those projects on a daily basis, with simple AB testing and so on,” he said. “Of course, we’re also looking at Axel Springer at pricing, dynamic paywalls, and implementing those techniques and projects. And I think doing a good job on dynamic pricing so that each and every customer gets a price where they will want to subscribe right away. So we want to drive the number of subscribers, but of course, revenues as well.”
Post-Covid churn… and how to stop the leak
For publishers, there was always a flipside to the massive increases in subscriber numbers during the height of Covid – significant churn once the virus wasn’t the only thing people were talking about. As we enter a post-Covid world, retaining subscribers has become a top priority for media companies.
“What we see now is discussions with our clients around post-Covid strategies. What can we do after Covid to keep the audience and keep converting in the same manner?” says York Walterscheid of CeleraOne.
“You have to look at the churn – how can you keep all these new subscribers. Did they only come to you because they were looking for Covid news or were they bored because of social distancing?
“The big question is – what drove these guys to sign up, to subscribe? You have to ask yourself the question – how can I still drive the engagement if these guys are not present on my website? How can I contact them off page? Off-page and on-page strategies need to be discussed and everything around personalisation and engagement.”
Levels of engagement play a big role in stopping churn at News 24, South Africa’s largest news website.
“The churn journey doesn’t start when the user cancels, it starts when there is a slowdown in engagement,” said TinaShe Makwande, Subscriptions Business Expert at News24. “When we see the decrease in the engagement score (e-score) we find ways to re-engage with users.
“One of the ways we know someone is about to churn is when they reach out to our call centre and issue some sort of complaint that speaks to their experience as a reader. This is of real benefit because it gives us clear indications of what you are unhappy about and gives us a chance to correct ourselves, solve their problem and try and prevent them from taking that last step.”
Catching subscribers early in the process before they churn and implementing onboarding strategies was also something recommended by Michael Silberman, SVP Strategy at all-round subscription and e-commerce optimisation platform Piano.
“Auto-renew disablement tends to occur quickly – within the first day of subscribing – and that tells you that there isn’t much time to get people on board,” he explained. “It’s so important to have a plan for getting people engaged. Tactics like a newsletter from the editor, signing them up for a subscriber-only email right after they sign up, encouraging people to download the mobile app, and surveying them after a few weeks to get their feedback – that’ll let you know what’s working and what’s not. That’s a pretty common tactic from the direct-to-consumer (D2C) product companies.
“Then, if you can keep people for the first month, then you have a much higher chance of staying. Long-term subscriptions are one of the best predictors of whether people will stick around.”
A market where churning is largely being stopped in its tracks is video streaming. According to data from Zuora’s Subscription Economy Index Report published in March 2021, 23 per cent of consumers have added at least one paid video streaming service to their mix, whether that’s Disney+, Hulu, Netflix, or another service. And they are not budging.
“The good news is that churn has been reducing,” said Nick Cherrier, Senior Strategist – Subscribed Strategy Group at Zuora. “And that’s because we’re noticing that OTT video streaming services are moving away from strategies of acquisition – new launches and free trials – and more towards customer retention. This market is now highly competitive, and a certain maturity level has been reached.”
“The focus should not be on using data to target audiences with ads, but to be constantly improving the subscriber experience. Audience targeting is important, but we should be thinking about how to use that data differently to make the experience better.”
It’s a sentiment echoed over at Disney+, which has raked in more than 100 million subscribers in just 18 months at a rate that will allow it to overtake big VOD rival Netflix by 2024 at the latest.
While Disney’s streaming success has been propelled by iconic brands like Marvel, Star Wars, Pixar and National Geographic, it’s been crucial for Disney+ to back up its content with a superior product.
“They both go hand in hand. You don’t want to have great content and then the streaming quality is bad, functionality is not there and it’s not on the device you want to use,” said Molly Brady, SVP, Growth Marketing, at Disney Streaming Services at Disney. “The teams have done a great job marrying great content with a great product experience across the devices you want to watch on.”
Such is the breadth of Disney’s content, the company has to try and find content that pleases a wide demographic. “While there is some overlap in audiences, there are also very different audiences,” said Brady. “So there’s different content that families with young kids are going to watch versus ESPN and combat sports and then there is some overlap like Marvel and Star Wars.
“It’s about finding the right audience, with the right content at the right time. It is where experimentation, testing and learning comes into play again to indentify what the special sauce is.
Main Image: Adobe/Proxima Studio
