In the world of media, Fall 2019 began with a flurry of acquisition news.
On September 25, Vox Media acquired New York Media — the company behind New York Magazine. Vice Media acquired Refinery29 on October 2. And five days after that, news broke that digital media company Group Nine had reached an agreement to acquire publisher PopSugar.
The long-expected digital consolidation is finally upon us. Media companies, it’s clear, are looking to survive by getting bigger — to increase revenue and better compete by way of sheer scale. By expanding their audiences, they hope they’ll be able to build a more sustainable revenue model.
But is that necessarily true?
There’s nothing wrong with chasing scale, or growing your business through intelligent mergers. (Piano recently took that route too, acquiring Cxense.) But for media companies, growing overall audience doesn’t necessarily mean increased engagement or enhanced revenue. Not unless a critical percentage of that audience is made up of loyal users.
Identifying (and keeping) loyal users
At Piano, we often define “core audience” as those users who view at least 10 pageviews a month. If five percent of your audience or higher visits as often as that, that’s solid performance. On the other hand, if that number falls below two percent, there’s work to be done to drive deeper engagement and grow that share.
Building your core audience — and their engagement — is key to reaching your overall audience and revenue goals. And that starts with putting users at the center of your site experience. The media companies that Piano works with — companies that have made reader revenue the centerpiece of their businesses — understand that more than most. After all, they’ve realized that they need to build those relationships if they expect users to pay.
So what lessons can digital media companies learn from leaders in subscriptions? And what other opportunity does a user-first digital landscape present?
Understanding what your audience values
What do your most loyal users read or watch on your site? Which topics resonate with them most? Are their preferences different than those of mass, one-off users?
A successful user-first strategy starts with knowing how your site’s core audience behaves and understanding what users are looking for when they get there. Both are key factors that contribute to subscription conversion, and audience data like this plays a large part in driving strategy. But while data explains a lot, our customers find that talking to users is just as important.
Asking users what they value about your content, website and brand, either through surveys or one-on-one interviews — ideally both — can give you an idea of unmet needs and what you could be doing that you aren’t yet. It helps develop an understanding on how they see you compared to a competitor and recognize the opportunity in those differences. And as you work to understand your users, you may begin to identify different segments of your core audience — along with the different content habits, demographics and benefits they gain from your brand.
And that’s the kind of information that’s critical to the next step of building a user-first strategy: defining the customer journey.
Defining the customer journey
At Piano, we’ve developed a model for the customer journey that can be applied to both media and other types of business. It helps define the milestones of increasing user engagement and key conversions you want to drive along the way. This is what it looks like:
Of course, these generalized milestones are applied differently from brand to brand. Business Insider and The Daily Beast, for example, both use registration as a sampling tool, offering temporary access to premium articles in exchange for registration. In that case the Known stage of the customer journey becomes an important milestone, with a set of specific tactics employed to target active users who might not be ready to subscribe, encouraging them to register and experience paid features. That highlights another essential element of this approach: considering the “next best action” you want your users to take to move them from one step of the customer journey to the next, then using small nudges, “micro-experiences,” to move them along that path.
In a user-first world, building deeper user engagement means considering the value exchange between the user and business. What action do you want the user to take? What’s the benefit to them? What are you asking in return? If you ask for permission to track them, for example, does that enable you to improve their reading experience by only showing articles they haven’t read yet? Are you making that benefit clear? GDPR and the coming California privacy rules require sites to ask permission for tracking, but few sites are doing more than disclose what’s being tracked. There’s a missed opportunity to use human language instead of legalese, and take it as a moment to build a relationship.
Lastly, the specific tactics also define the metrics to focus on. In the case of the two sites I mentioned above, the exposure rate (the proportion of users who see a registration offer) and the conversion rate (of those exposed, how many register) are both key metrics to measure and understand. In the Piano database, there’s a pretty wide range of exposure rates, but registration conversion rates are fairly stable — 2.2 percent for the bottom quartile and 3.4 percent for the top quartile. If you have enough audience, even a one percent conversion rate can bring in a lot of registered users. If subscriptions are a goal, then exposure rate, conversion rate, revenue per user, retention and customer lifetime value are all crucial metrics to consider.
Building user-first revenue
If you get the user journey and value exchange right, you open up a world of opportunities to drive revenue. For subscriptions, donations and memberships, certainly. But less obviously, direct, trusted reader relationships become more valuable for advertising too.
That value hinges on publishers collecting first-party data and capturing user consent to track and display targeted advertising. Insider and Mediahuis in Belgium have each developed in-house solutions to create rich first-party profiles of users, primarily by using behavioral data on content consumption and extending their reach via lookalike modeling, while also allowing advertisers to bring and match their first-party data to refine that targeting.
Diving a little deeper into the current ad landscape, increased privacy regulation and consumer awareness, plus changes in web browser cookie policies have made publisher-user relationships both valuable and essential. Valuable because publishers can build trust and encourage users to log in, allow tracking and even volunteer data in the right circumstances. Essential because without it, programmatic ad revenue drops, as browsers squeeze out third-party tracking.
Focusing on user relationships also opens up other product possibilities. Some other innovative examples we’ve seen: Austrian publisher Russmedia developed a gamified “Landlepunkte” points system to encourage user engagement, with points redeemed for swag, digital coupons and local event tickets. It dramatically increased user registrations, logged-in users and articles per user. Amedia in Norway turned 73 local newspapers and a national obsession with local professional soccer teams into a national live streaming sports network.
That’s the type of value a user-first strategy can bring. That and the loyalty obtained from users who intuitively know they live at the center of the experience you offer. No matter how big (or small) your company is.
Michael Silberman, SVP Strategy, leads Piano’s Strategic Services team, helping clients develop reader revenue strategies and drive success and revenue on the Piano platform. He joined Piano in 2018 after 10 years building the digital media business at New York magazine, and earlier, as one of the top editors launching and growing MSNBC.com in the early days of the consumer Internet.