Looking at successful digital subscription publishers around the world, one key thing that has been learned is that there is a small target group of users that is generating the most revenue and profit, said Waller, Principal Consultant for WAN-IFRA Consulting.
While there is a growing willingness of people to pay for digital subscriptions, this willingness is also connected to the frequency of how often a person visits a publisher’s website, he said.
Visitor frequency and target groups
The frequency of visits is also an extremely important indicator of churn, or how likely they are to remain a subscriber, he added.
For example, he said, a subscriber who visits a site only once a month has a dropout rate of about 50 percent after 20 weeks. However, if a person visits the site 25 times a month, the dropout rate falls to around 20 percent.
Therefore, a publisher’s initial key target group should be those people who frequently visit their website, Waller said. Furthermore, publishers should begin focussing on these visitors right now, and learn how they are interacting with the content they already have on their website.
Loyal users, those who visit 100 or more times each month, are on your website three times a day or more, on average, Waller said. “They have fully understood the value of your website,” he said.
“This is the target group that you are immediately going to turn into subscribers as soon as you put up a decent paywall,” he added.
The size of that target group will be relatively small, around 1 percent, he said.
A publisher’s second target group should be those users who visit their website 33 to 100 times a month. Basically, these readers are visiting twice a day on workdays, and they understand the publisher’s value as well.
The third group is “regular users,” those who visit 21 to 33 times per month.
“They have to be taught why they should subscribe,” Waller said.
To do this, publishers should try to encourage them to use more of their content and to understand the value of the content, he said.
Publishers should also be aware that 70 percent of their users are “fly-bys” who visit their site only sporadically. “They are not adding any value to your subscription business,” he said.
More importantly, publishers need to understand the user journey and how long users will stay with them.
Waller said he highly recommends publishers have a registration wall so they can identify their users. Then, publishers should train these users to be logged-in, so that they are getting further benefits.
Pricing considerations
The next major thing a publisher needs to figure out is the pricing they are going to use.
Waller recommends publishers start with a reasonable price that is not too low. He noted that it’s better to start off higher and then reduce the price if necessary, rather than starting too low and then trying to get people to pay more.
He said a good model for publishers to consider is looking at how air fares are priced, where no one is paying the same price. There is always a standard price, but then there are many components and you have to be clear about communicating those, Waller said.
The standard price, for example, could be for a basic one-year subscription, but then there could be differently priced options where someone could just have access to specific sections, such as sports or food.
Publishers can also use trial period offers or “flash sales,” where they offer a very low price for just a few days. Likewise, promotional sales where the reader gets a low price for a period of time and then pays a higher rate.
“Think about setting a reasonable price that should be high enough to allow you to go in many, many segments,” Waller said.
With print, a publisher might have two price campaigns, whereas with digital they might have 50 or 70 campaigns to allow smaller segments of your market to come on board, he said.
Where to start with paywalls
Waller also discussed the various kinds of paywalls, such as hard paywalls where a subscription is required to access any content, or metered paywalls, which allow a fixed number of articles to be accessed for free before requiring a reader to register or subscribe.
The premium model has now become the most dominant form of paywall, he said. Premium paywalls typically allow for a large amount of free content to draw readers in, but they also have exclusive content that is available only to paying subscribers.
However, he advised publishers who have not previously had a paywall to start with the metered model because with the metered model “you don’t have to have editors who create premium content.”
Then, in phase 2, after editors have learned from the data created by having the metered model, publishers can move to a premium model.
After that, as a publisher grows in scale, they can shift to a propensity model, which is a hybrid model that is hi-tech and analyses the audience and makes individualised offers based on their behaviour on the site.
Making digital subscription success a priority
Also essential, Waller said, is that the key members of a publisher’s top management team, including the CEO, the COO, and the leaders from Editorial, Product, Technology, Marketing and Sales, must be aligned and make digital subscription success their top priority.
Furthermore, these leaders need to work together to ensure that great content is created, promoted and distributed on a daily basis.
Likewise, developing a culture of testing and learning with cross-functional teams is crucial.
“Never stop testing and learning to create more engaging and relevant content and embedding that content in improved products and features,” he said.