While revenue from digital subscriptions is fast growing, news publishers still make a lot of money with display advertising, sponsorships, and branded content. Is there a conflict between these two business models, or perhaps a synergy? In a session at INMA’s Media Subscription Week 2.0 Friday morning, Katarina Ellemark, product manager of MittMedia, discussed issues as targeting vs. reach, user experience vs. advertising inventory, and how to make balanced products. 

Ellemark told the audience that MittMedia makes money from advertising because of its paywall, not in spite of it.

“I am not here to brag, because we ended at the [paywall] business model because we were at a dead end,” she said. “There was no way to make up money lost from print advertisements, and we also saw that we could no longer really give advertisers the boost, like the bang for buck, they needed and we had to get our ad revenue up. We were dying.”

Sweden’s largest local media group, just bought by Bonnier, is a premium paywall model company with 75,000 digital-only subscribers. These digital subscribers and their needs are Ellemark’s priority.

Katarina Ellemark, product manager of MittMedia, talks to the INMA audience about the debate between user experience and advertising revenue.
Katarina Ellemark, product manager of MittMedia, talks to the INMA audience about the debate between user experience and advertising revenue.

As product manager for public products, Ellemark said she is caught in a loop. All suggestions for products go to her desk, where she then considers the possibilities of the project and assigns work for three in-house development teams. The system is designed in this way so that one core person is always considering if a potential product will encourage MittMedia’s audience to stay loyal.

“To a person like me, churn or ad revenue ain’t just numbers,” she said. “It is something that has to add up in the product. It has to go all the way from the Excel sheet, through the content in the newsroom, to the button on the platform.”

In the past, MittMedia was caught in a balance between user experience and that of advertisers. An improvement to the user experience could negatively impact the company’s ad revenue, and changes in the ad experience could harm the user experience.

MittMedia looked to big media players for inspirations. For Netflix, Google, and Facebook, the end goal is not about the payment, it is about data. The company had blocked its ad revenue with its paywall structure, Ellemark said, but it gained something valuable from its logged-in users: data. That is when the company decided to shift its focus on connecting relevant ads to customers.

Katarina Ellemark explains that MittMedia changed its focus to connecting relevant ads to customers behind the paywall.
Katarina Ellemark explains that MittMedia changed its focus to connecting relevant ads to customers behind the paywall.

“To do that, we realised we had to build a new sales tool,” Ellemark said. “Because if we wanted to do that matchmaking, looking at what data we had and what data advertisers wanted, we had to have an interface for that.”

That interface is called Reacher. The tool considers the group size that advertisers want to reach and pairs them with what MittMedia knows about its own audience. This is a game-changer, Ellemark said, because they can now optimise every single revenue opportunity.

The bulk of its new business development is coming from geolocation, she added. By combining behaviour with location, MittMedia can better serve its ad partners. As it continues to produce more paid content, the company is able to collect more data from its customers.

“For us, strong business-to-consumer has energised our business-to-business,” Ellemark said.

While MittMedia still has a long way to go, Ellemark said it has broken out of its advertising, user experience balancing act. Even after developing Reacher, the company has had to tweak the interface.

“We thought we had designed it to be impossible to give discounts in,” Ellemark said. “But guess what? The sales people were smarter than our development team.”

To address this, MittMedia had to change its sales strategy to emphasise impact rather than price.

The next steps for Reacher include a deep-dive into behavioural data, Ellemark said. This will help the company better understand churn while offering better targeting for its advertisers.

“This works for us only if we understand that person,” she said. “If we keep track of what is relevant to the single user, to our business, then we can nourish our business. If we lose track of it, then we’re going to be back at a dead end.”