In one of the news industry’s more innovative ventures, Austria regional publisher Russmedia has set up a model using gamification to get logins, engagement, and subscriptions. Eight months in, the company has grown traffic and advertising revenue. In an INMA Webinar on Wednesday, Managing Director Georg Burtscher shared how Russmedia had to change how it works and markets itself, how its free reach portal gains subscriptions, and how other news brands can get benefit out of it.
“We have a multi-brand strategy,” Burtscher began. “It’s a complete reach news portal. We have 226,000 users a month and a monthly reach of 71% in our region. The model behind it is advertising.”
The Austrian-based, regional media publisher has a total daily reach of nearly 90%. Its main business is newspaper subscriptions, and Burtscher said its biggest goal at this time is to increase logins.
“At the end, we are battling with engagement in our users,” Burtscher said. “We think we have to change this kind of mindset in how we talk or behave towards our users.”
Social media traffic is not really important to Russmedia, Burtscher added. The business model is based on native advertising. “Our goal is to have 80% of our business based on content or native.”
Finding the answers
The question for the team then became this: Why should someone pay to subscribe to the content Russmedia was offering?
Burtscher said his team asked themselves: “Why should you pay for articles from newspapers when you can find that [same content] all over the world? For us, we do not have so much unique content.”
The next question they asked was whether their typical user ever paid for journalism. The average Russmedia user pays for classified and marketplace items, for example, but largely has not paid for journalistic content before. “We give everything for free, and make ad revenue out of it.”
Overall, the biggest question became: Why should the users log in on a news site?
The team turned to Ernst Fehr, an Austrian-Swiss economist who produced research Russmedia used to dive into studying human cooperation, sociality, and reciprocity to find the human behaviour answers to these questions.
“Think about games,” he used as an illustration point. “One of the most downloaded apps is Candy Crush.” Candy Crush is completely free, yet it enjoys a huge revenue — in fact, it makes the most revenue of any gaming app. “So they have a way to bring the people on the games to play for free.”
Candy Crush’s revenue comes from the in-app purchases that occur after the users download the free game. Another example Burtscher gave was Pandora, which is also free, but makes money on optional subscriptions.
“The app game industry is really an interesting benchmark for us,” he said. “We think about how to behave; if we have more engagement, we can monetise this engagement.”
The engagement engine
For its own gamification model, Russmedia developed a virtual currency for user engagement — the landlepunkte. The name, which they came up with after testing a variety of candidates, is derived from “Landle,” which is the name of the region, and “punkte,” which means points in German.
“For everything you do on our portal, you get some points,” Burtscher explained. For example, when a user logs into the Russmedia site and reads an article, he or she earns points. Users earn points for downloading a Russmedia app, sharing, and many other activities:
- Watching a video.
- Setting a region/town.
- Comment voting.
- App download.
- App use.
Russmedia is still developing other activities for which users can earn landlepunktes.
“You can collect on these points and change them into rewards,” Burtscher said. “We get data out of it and in the end will start a subscription content model. We are sure that we can monetise it in the end.”
The model used is a pyramid model, with advantages for both Russmedia and its users:
- Content: Engagement/additional value.
- Content appreciation: Data/reduced pain for paying.
- Monetisation: Revenue/attractive rewards.
Burtscher then presented a live demo of the Russmedia platform to the Webinar attendees. As users scrolls through the site, they see their points and accumulation live in the top menu bar, with a drop-down that shows all the details.
“For example, you can get points for taking quizzes, so we are collecting data,” he explained through the demo. “At the end you have rewards, and you can exchange them for books, activities, or whatever. That is a reward we are giving back to the readers.” The points are also counted even when the user is not logged in.
Part of the funding for the initiative came from the Google Digital News Innovation Fund. “We get a huge amount of money and this helps us a lot to get on track,” Burtscher said.
After testing with the rewards system, Russmedia launched it live. In the first day, the team saw it had an effect on the number of logins. From one or two new logins a day, they went up to 450 since May 2018.
“A user who is getting points reads a few more articles than a normal user,” Burtscher said. A control group in the testing read an average of 53.54 articles per month, while the landlepunkte users read 79.45 per month. Time spent also saw a dramatic difference; a user receiving points spent an average 7:41 minutes, while the control group spent only 4:07.
How the system generates revenue
There are a number of ways in which Russmedia foresees this model generating revenue:
- Data collected.
- Users buying landlepunkte to obtain rewards.
- Using landlepunkte as a regional currency.
- Selling rewards to marketers.
- Indirect subscription sales for dailies.
- Reach and engagement for existing products.
“We can build an indirect subscription business because on the news portal, we have the biggest reach to get subscriptions and we have better data,” Burtscher said. “And we have a better engagement for existing products.”
What the system will not do is give points when you click on an ad. “We don’t want to give something for clickbait.”
Burtscher shared a number of things Russmedia has learned from this venture:
- User engagement grows even when the feature is not marketed.
- Give points wherever you can.
- Use points to collect data.
- Be aware of possibilities to cheat the system.
- It spurs innovation for new business models.
- It works on any industry and model.
- It can be a solution for our industry if shared.
Russmedia did run into issues with people cheating the system. “They see that if they share an article they get points; and it was not limited,” Burtscher said. “We have a few people who were sitting there and clicking, sharing, sharing.” The team had to figure out how to address that.
Another thing that didn’t work was to exchange points into print subscriptions. But, Burtscher said, the team will find a way to achieve that.
“We give them points wherever we can,” he said. “The most important thing is that the level of logged-in users is now a KPI. It’s a completely different business for us because the previous model was just about reach — and now it’s about reach and subscription.”
The fun thing, Burtscher said, is that this works for every single model. It doesn’t matter if it’s a reach model or paywall — even an entirely different industry. The team built the same engine for a Swiss company for soccer games and had the same result. “We know now with this other client that we can go live with this in about three months.”
Another big goal is to develop landlepunktes as something that can be used as a local currency, just like real money. Where users can actually use the points to go to the grocery store, for example, and buy something. The team is also trying to put it on the blockchain. Russmedia has received a second set of funding from Google to attack these areas next.
INMA: How does the control group help and what is its significance?
Burtscher: The control group doesn’t see or collect the points; they see the system just like before. This helps us to see what happens when a user sees the points, or not. How do they behave? It’s a little bit like A/B testing.
INMA: Why don’t you allow clicks on advertisements?
Burtscher: I’m responsible for our sales revenue, and I don’t think that this will help our industry to solve problems against Facebook or Google clicks.
INMA: What was the required investment for development and ongoing management?
Burtscher: I don’t have the numbers in mind, but I think our team was growing up to five people in the time we had this project. We didn’t create a completely new team for this, but the team is growing at the moment. We made it all with our internal resources.
INMA: Did you source the swag from somewhere? Is it all standard, or do you have premium swag?
Burtscher: Swag is all internal; we don’t have premium for now, but it will come. We don’t start with a perfect product — we start with a prototype and we make it better every single day. These things will come, we think about it, but not now.
INMA: How has this increased your revenue; has it allowed you to come out of ad revenue?
Burtscher: We don’t see that at the moment. We see that time spent, reach, user sessions are growing since we started the project. But I cannot say that the project at the moment is responsible for a certain percent of our revenue.
INMA: What is the average age of a user of the portal versus a subscriber to the newspaper Web site? And what about gamification? Surely they skew a lot younger?
Burtscher: The login user is a little bit younger than the average user. But for gamification, no, the ages are the same. The age groups as represented in percentages of users are very, very close. At the moment, we only see that everybody is working with these points.
INMA: Can the service be used without opting into the points/reward system if the company already has their own rewards system? Can you supply the gamification system and let the client handle the rewards?
Burtscher: Yes, it’s possible.
INMA: What are readers over 50 doing on your Web site in comparison with younger readers?
Burtscher: At the end, they act nearly the same. What you really see is that the device where they’re coming from is different. Sometimes one is more on sports, one on economics.
INMA: You’re collecting a lot of data. What are you doing with it?
Burtscher: One thing is we can use it for classic advertising. We are using it internally to bring the best leads to the newspaper, and we built up data apps to know our users better. Maybe in the future we will show different content. So for us, we collect the best data at the moment of our loyal users, not fly-bys.