One of the big stories of the pandemic has been the subscriptions bounce, a by-product of which is increased focus on the consumer. Media brands big and small are asking themselves how to maximise their product offering while getting the pricing strategy right for long-term sustainable growth.
Discussing how to maintain this tricky balancing act at the FIPP D2C Summit in June were Matt Lindsay, President at subscriptions management firm Mather Economics, USA, Abi Spooner, Customer Strategy Officer at UK publisher Dennis and John Schlaefli, Chief Revenue Officer, FIPP.
Watch the full conversation from the FIPP D2C Summit below:
Spooner and Lindsay began by agreeing that every conversation in the industry now features a question about the future of those “Covid cohorts” of consumers, namely those acquired during the pandemic in its early stages in particular.
“Nearly everyone across the industry received a really amazing bump in subscriber acquisition volumes,” said Spooner. “March, April and May 2020 were incredible months – but no one knew how these consumers were going to behave.”
Generally, however, these cohorts haven’t been dissimilar from others who came before – it was the sheer volume of them that was different. “What Covid did was to allow people to spend more time online,” explained Spooner. “We saw many customers who already knew the brand, but lots of customers who were new as well, who were finding the brands online through social media. For example, we saw that The Week and The Week Junior solved problems for parents and children being kept home from school during the first lockdown.”
Lindsay added that Mather’s clients were managing to retain these new customers at a similar rate to before – however, the sheer volume of activity happening in a short space of time was the independent variable, he explained.
Trying to recreate that demand we saw in the pandemic through marketing is very expensive, and it’s changed the economics of this business significantly – there’s now so much more emphasis on subscriptions.Matt Lindsay
The price is right
In terms of where these new customers come from, Lindsay explained: “We see that people are coming in off intro offers – what we call ‘long intros’, where people make a single payment that lasts for several months, then renew on a typically monthly basis after that. That tends to have worked well, and across the industry brands are retaining just as many people at that price change point as they were before.”
At The Week and across the Dennis portfolio, the response was to hang tight on their pre-pandemic price points. “We didn’t change our prices at all, even though we’d just pressed the button on a big price rise. We found that people were willing to subscribe at the prices we had set,” said Spooner. “However, we knew that a lot of people signed up who didn’t necessarily have the intention to renew further down the line.”
The worry was that if the initial price level was too low, customers would not be willing to pay the higher price. “It’s a constant balance between lifetime value and acquisition,” said Spooner.
These consumers sit slightly lower than Dennis’ average subscribers in terms of likelihood to renew – but overall, Spooner said Dennis has been very pleased with the retention rate since the pandemic boost.
Refocus on digital
The influx of new consumers has led to a refocusing on digital offerings. “Covid did something really rare: it created demand,” said Spooner. It’s very rare that market conditions drive demand; it’s usually us having to go out and drive demand for the brand. Throughout the Covid period, we shifted a lot of investment to our digital channels. We’ve got social media, influencer, digital sphere firing on all cylinders, much more than we have ever done before.”
Lindsay agreed: the initial news cycle around Covid-19 drove an enormous amount of demand that accelerated existing trends. “Several of our clients migrated, for example, to branding campaigns and marketing campaigns, rather than acquisition campaigns. Now that that cycle is on the wane, they’re back to focusing on acquisition and growing the demand.”
Covid did something really rare: it created demand.Abi Spooner
Spooner expects this trend towards digitalisation to stay. “In the US market, we’ve introduced more QR codes in offline activity, and people are going to our websites more than mailing back a cheque or credit card details. That’s evidence of customer behaviour change: we’re all learning to do everything online, and there is now the customer expectation of being able to do that as well. It really feels like it has changed.”
There will always be a place for offline products, though. “Now is really a good time to be a subscriptions expert, but that doesn’t mean everything will always be digital from now on,” said Spooner. “There will be offline offerings as well. But maybe the transaction from now on will always be digital.”
The Covid effect: how subscriptions have changed
The biggest effect of Covid-19 at Dennis was to move all of their acquisitions into a primarily digital sphere. “We had a lot of telemarketing and old-school marketing methods before. With all the additional demand created, we were able to develop a really sophisticated digital-focused team with engagement and registration tools – our digital marketing teams have grown significantly!” said Spooner.
The advertising market has evolved a lot in this process, explained Lindsay. “Trying to recreate that demand we saw in the pandemic through marketing is very expensive, and it’s changed the economics of this business significantly – there’s now so much more emphasis on subscriptions, and people are very cognisant of who their core readers are and how good the core product or offering is.”
The role of media brands now
Lindsay has observed a general reappraising of what it means to be a media brand, especially a news brand, in light of the crucial role they play in disseminating crucial information to the public.
“From a science standpoint, what we’re finding is that with Covid there’s an interesting debate about what kind of service is being provided by media organisations,” he said. “What kind of news is provided free, and what’s behind a paywall? What we’re seeing in response is these freemium strategies where some content is free, and other stuff is paid for – and optimising that mix can make a big difference with acquisitions as well.”
Spooner agreed that the customer is now front and centre of subscription strategies, a natural occurrence as attention turns to maximising the value of the product or service on offer as opposed to maximising page views, for instance. “That’s a good thing for us as consumers,” she added.
With data comes opportunity
Another bonus of all those extra digital customers generated throughout the 2020 news cycle that, on top of Covid-19, included coverage of Black Lives Matter and the US election, has been to provide a huge volume of extra data. “We’re now getting really close to understanding the lifetime value of a given piece of content,” said Spooner.
“The real opportunity is in the data. Being able to say, ‘I can spend this much up here’ at the top of the funnel, and knowing that three years later, this is what the value and circulation will look like; being able to model all the way through because of the sheer volume of data we’ve been able to acquire. It’s fascinating.”