In 2020, we’ve seen a remarkable period of transition. According to some estimates, the COVID-19 pandemic will mean “most major economies will lose at least 2.4% of the value of their gross domestic product) throughout 2020.” In the U.S. alone, that equates to some $3.5 trillion dollars lost—just like that.
Typically, a serious economic downturn should show up in the subscription numbers. After all, many people have less money to spend on subscriptions.
Yet that’s not what we’re seeing. In fact, many publishers are thriving in what Digiday’s VP of Marketing and Growth, Mike Madarasz, is calling the “Corona bump.” Confirming this surprising boost in subscription numbers, Recurly’s recent study into how subscription media companies are faring found a mostly positive outcome. From March 2020 to June 2020, publishers experienced a spike in conversions from free or low-cost trials to full-cost paid subscriptions. And even after the initial spike, conversions remained healthy at an average of above 49% through June.
What’s happening here?
For one, there was a significant difference in how U.S. digital publications responded to COVID. In Europe, publications tended to keep coverage behind paywalls. In the U.S., publishers took another route: they put their virus coverage online for free. This often required no sign-ups at all.
This “public service” approach gave away some of their most valuable content. But rather than backfiring on them and encouraging people to drop subscriptions, it had the opposite effect. It drew people in.
Why are subscribers sticking with their subscriptions, even when disposable income may be lower? One reason is that digital publishers are normalizing paid content. For example, “paid-for trials” gets new customers used to the idea of paying for news coverage.
“In April, 73% of new monthly subscriptions were paid-for trials, 11% of new subscriptions were for free trials.” -Digiday
But there’s a lot more to the story than a few key differences. Publications like Digiday, the Telegraph, and more have had interesting results in the face of economic upheaval. What can we learn from their efforts to reduce churn and retain customers?
Digiday is an online trade magazine featuring brands like Glossy, which includes 30,000 email subscribers and 250,000 monthly users.
Annual membership for Digiday+ runs higher than many of the other media outlets on this list, with a $395 annual billing plan. At the top of the Digiday home page are membership-exclusive pieces, even though much of the content is widely available without membership.
Digiday’s presence has always been online, putting it in a different position in contrast to the other publications on this list. Digiday had a head start from 2008, including an “optional registration” format for many of those years.
Like many media outlets, Digiday found itself experiencing a boom in traffic in March and April 2020. Partly, this is because Digiday’s coverage on changing trends in media, retail, and fashion industries was well-positioned when the pandemic struck. Suddenly, these industries faced massive upheaval, and Digiday was a known source for quality coverage of exactly these types of topics.
Digiday wanted to capitalize on this boom and convert new visitors into paying subscribers. But with a premium subscription price, it could potentially be challenging to convert the average new visitor.
The solution: A trial offer that would be affordable for Digiday newcomers but also didn't cheapen the high-tier value of the regular membership: $10 for one month access to Digiday+.
The company ran an A/B test for 60 days, with half of visitors seeing an ad for the new $10 offer and the other half seeing the standard offer of $159 for three months. Notably, Digiday’s focus for the success of this test was not to see how many people would take the $10 offer, but how many of the takers would stay on long term.
Digiday’s Mike Madarasz says, “Lifetime value is our north star...we really need these people to [renew at full price] about four or five times to make it worth it.”
So far, the results are promising, if not yet concrete. Those who took the $10 offer have about a 50% retention rate, which is lower than the Digiday average of 70% but high enough to spark hope that this “experiment” might just work.
To help boost these results, Digiday also diverted a large chunk of marketing resources and manpower into driving and maintaining subscriptions. These resources were available given many other marketing tactics were out on hold due to COVID-19, including events and awards. Madarasz says they’ve increased the amount of “email inventory” devoted to subscriptions by 117 percent.
For Digiday, the question now is how to ensure that their “Corona bump” of new subscribers remains loyal long term.
A low-cost short-term offer can pay off during times of high traffic.
Digiday broke from its premium pricing model for a short-term offer that would attract new visitors to sign up for paid trials of its content. The company is banking on keeping these subscribers after they experience the depth and quality of Digiday’s coverage. To help encourage new subscribers to renew, Digiday has devoted extra resources to manage its subscription model.
Double down on the revenue streams that are working best during COVID-19.
Digiday had multiple robust revenue streams, including in-person events, niche advertising, custom content, and subscriptions. When the pandemic struck, the company was quick to funnel its resources into the revenue streams that were unaffected (and even boosted) by the crisis.
People will still pay for exclusive content.
Digiday responded to the crisis not by offering more free content like many other publications, but instead by focusing on getting more people in the door to pay for its exclusive content.
The challenge is turning an audience into loyal subscribers.
Although Digiday’s membership is valuable enough to focus on customer retention, they’ve also noted that one key element is a media outlet’s ability to turn an audience into paying subscribers. Digiday statistics note that identify this turning point as a key challenge. Once subscribers are onboarded, the next challenge is to keep them long term to ensure the sustainability of the subscription model.
There’s a lot to learn from the UK’s the Telegraph. As Digiday notes:
Its average revenue-per-user figure is approximately £200 ($256).
Its operating profit is £8.1 million ($10.36 million).
After accounting for churn, the Telegraph set a goal for 100,000 net
new subscribers between 2019 and 2020.
The Telegraph is also working with a history of building its subscriber base, well ahead of the COVID-19 pandemic.
About three years ago, the Telegraph moved to a registered-user/paywall format. With goals of 10 million registered users and 1 million paying digital/print subscribers by the year 2023, the Telegraph has a clear vision for the future. So far, the Telegraph has over 460,000 subscriptions in print and digital formats, with digital outweighing print subscriptions. And overall free trials are very high, with 6.5 million people getting used to the idea of signing up for exclusive content.
CEO Nick Hugh has expressed optimism about these results as part of the growing a new media format. “The fact we have an operating profit of £8.1 million ($10.36 million) implies a much stronger underlying base,” said Hugh. As Hugh puts it, 400,000 subscribers with a two-hundred-pound ARPU makes for greater sustainability. The alternative is to rely on print subscriptions and an intrusive advertising model.
The overall strategy: Focus on building content that entices new, anonymous and non-registered users to visit the site. This keeps fresh leads coming to the Telegraph’s web presence, which in turn creates a consistent influx of new subscribers.
They’ve set ambitious goals: 10 million registered users and 1 million paying digital/print subscribers by the year 2023.
Over the course of a three-year strategy reducing costs by 20% by eliminating redundancies, the Telegraph was able to bolster its digital presence. In April 2016, monthly page views of 790 million were the norm. Now, 1.35 billion page views (as of March 2019) are more in line with average Telegraph traffic.
But then COVID hit.
The Telegraph doubled down: it decided it would invest in exclusive content.
The publication quickly responded by becoming a “hub” of COVID-related information, establishing a coronavirus live blog. It also created news stories that were exclusive to the Telegraph to engage its readership.
The Telegraph also launched new editorial content, known as Brave New World. It’s currently available to consumers without any need to sign up.
Not only would the Telegraph lead the way with exclusive stories about the pandemic, but it would include editorial-style content designed to keep consumers informed about how COVID-19 would impact their lives.
This reflects a choice that the Telegraph made earlier on: it could put its COVID-19 coverage behind a paywall, or could make it widely available.
Additionally, the Telegraph offers an incentive for people who sign up for a digital subscription, including a FitBit. For many people who come to the Telegraph for up-to-date news on health information related to the virus, it’s not a stretch to imagine that this incentive might help incentivize more paid subscriptions
Strategies like these may have contributed to the fact that the Telegraph’s revenue comes largely from digital subscriptions now. That includes a 44% growth in digital subscriptions even before the COVID pandemic hit.
Exclusive, relevant content. In addition to exclusive news stories, the Telegraph’s “Brave New World” feature includes tips, advice, and opinion pieces on living during a pandemic. The publication didn’t stand idly by while watching the world change around it. The exclusive content helped the Telegraph stay relevant and attract new readers. And by keeping this content available to everyone, it avoids turning away readers who would object to paywalls.
Giving away content for free. Exclusive content that’s available to everyone is an instant draw. There was a similar tactic with the Atlantic. The Atlantic does feature a paywall for some content, but during the pandemic continued giving much of its content away for free. During March, for example, the Atlantic succeeded with 36,000 new subscriptions, partially due to the fact that it was featuring so much exclusive, free content online. Clearly there’s a balance that outlets can strike if they want to draw in new users while maintaining a digital subscription.
Incentives. A FitBit--which is worth about as much to consumers as the cost of the Telegraph subscription itself--means that people who were otherwise considering a purchase could accomplish both with one purchase. By getting customers “in the door” with this powerful incentive, the Telegraph could shift its priority to reducing customer churn. In the meantime, the exclusive, free content helped obtain new readers who eventually convert into new customers.
Success in Digital Media Subscriptions During Uncertain Times
The early portion of 2020 should have seen drops in media subscriptions across the board. Only it didn’t.
Publishers like Digiday emphasized paid content, while other outlets like the Telegraph's drew in more readers through freely available content, from podcasts to advice on stocking up pantries.
What are the key takeaways from the statistics? That loyalty isn’t dead. If your platform continues to provide value to its subscriber base, you can expect plenty of subscribers to stick with you. Focusing on the quality content helps keep subscription numbers high and retains subscribers over the long haul.
As our own Emma Clark, Head of Strategic Initiatives, says, “It’s about identifying what your core base is and what they care about, and how you can serve and expand that.”
To learn more, listen to our on-demand webinar: Strategies to Minimize Churn & Maximize Revenue for Publishers