By Tom Ratkovich Published October 29, 2018
Let’s start with a given: Traditional advertising no longer keeps the lights on. The strategic imperative for newsmedia companies is one of revenue diversification. Of course, revenue diversification can – and does – assume many shapes and sizes.
But for the moment at hand, consumer monetization is in the crosshairs of many publishers as the primary source of untapped revenue. Specifically, it is in persuading consumers to pay for digital content that, heretofore, has been available at zero or nominal cost.
Challenging? Of course.
In fact, there is such a focus on digital subscriptions that a generally-accepted paradigm has emerged for how it is accomplished. It goes something like this:
This simple paradigm obscures the fact that the journey from occasional to habitual to paid user is just that – a journey. That journey can be a complex one – different for every consumer that enters the funnel – and optimized for each based on customer knowledge.
Which of these factors will influence how you move a prospective digital subscriber through the customer funnel? (Hint: it’s a trick question.)
The answer, of course, is ALL of these should influence the journey from entering the funnel to exiting it as a paid subscriber. But the simple paradigm that has gained favor with so many typically understates the value of customer data in achieving the desired result. An optimal, well-orchestrated journey leverages the incredible depth and fragmentation of data.
But it requires more than simply having the data – it’s about having that data consolidated, integrated and accessible for marketing decision-makers in an environment that enables comprehensive analytics and customer journey optimization. THAT is how to drive more people into and through the funnel as paid digital subscribers.
To repeat: Unifying, analyzing and deploying customer intelligence to optimize a customer journey that is perfectly engineered for each individual – transporting that consumer efficiently from awareness to paid customer status – is essential to financial viability.
But that very same database will contribute to revenue diversification in many ways – not just by helping to acquire and keep digital subscribers. Whether it is in promoting events, delivering targeted online/offline solutions to advertisers, supporting e-commerce initiatives or extending the print runway – customer data is THE foundation for strategically planning, executing and optimizing revenue diversification efforts.
Clearly, the publishing community’s obsession with digital subscription revenue is well-founded. After all, what is not to like? Digital subscribers deliver significant revenue at zero marginal cost.
But let’s not lose sight of some key facts. Recent studies have implied that an estimated 10-15% of consumers are willing to pay for digital content. That may be sufficient to support the national/international model of The New York Times or The Wall Street Journal. But for most local publishers, there must be a path to monetizing the 80-90% of folks that have declared their unwillingness to pay cash for content.
That path is defined by data. Data is derived and nurtured through relationships – whether paid or unpaid. That data has value if it supports the targeting of advertiser communications, event promotions, product sales, native advertising, niche publishing, product development and more. Again, there are many, many ways to monetize a relationship.
However, as we are fond of saying at LEAP, you can’t monetize a relationship that doesn’t exist. What does that mean? Simply this:
Digital subscription strategies must be balanced. A strategy solely focused on paid digital content risks the suppression of relationships that can be monetized in other ways. A strategy that emphasizes data-optimized, tailored customer journeys will both maximize paid digital relationships and consumer knowledge that can be leveraged to drive revenue diversification.