Identifying opportunities to increase a publisher’s value proposition to subscribers is paramount as the publishing industry continues migrating to an audience-based business model, wherein subscriptions are the core revenue stream.
At Newsday, we have taken several analytical approaches to both identify and monetise content development opportunities aimed at increasing our value proposition to subscribers, realised through greater price elasticity and/or retention.
In a recent print content study, we surveyed our subscribers on their interest by content type, examined content type imbalances between their interests and what we publish, and incorporated learnings on customer lifetime value (CLV) and customer churn probability. The outcome is summarised on a scatter plot at the bottom of this article (with detailed notes on how to navigate the chart).
The products we produced based on the research are much easier to explain.
One of the high demand content development opportunities that we chose to pursue based on the research results was restaurants and food, where we had significantly higher demand than serve. We hired additional restaurant/food edit staff and performed more focused studies within the category to further identify usage, interest, and satisfaction.
Some of the highlights included:
- Content: Majority of interest is restaurant reviews, take-out meals, online recipe searches, and online/app restaurant reservations.
- Platform: Digital content interest mirrors print content interest. If both print and digitally engaged, they prefer content in print, followed by digital, with social being the sixth-preferred source. If just digitally engaged, they prefer the content digitally, followed by social.
- New service potential: Restaurant pass subscription.
One of the niche content development opportunities we chose to purse was a games and puzzles publication, Brain Benders Monthly.
In contrast to the traditional go-to market monetisation strategy for games and puzzle publications, where publishers charge an additional fee, we chose to test if a no-fee opt-in model generated incremental price elasticity and/or retention.
The results are astonishing and ring the register on increasing the value proposition to our subscribers.
The first leading indicator that Brain Benders Monthly was going to provide significant retention lift surfaced in our churn modeling, which scores subscribers weekly on their probability of churn, including our customer resource management, digital consumption, and subscriber demographics.
Upon opt-in before even receiving the first edition, the churn probability for those that opted in to Brain Benders Monthly dropped 12 percentage points on average.
The second leading indicator came through primary research field to recipients after the first two monthly editions. One of the model questions we ask across all our many product studies aimed at ascertaining the impact such product has on retention is, “Does receiving such product make you more likely to continue your Newsday subscription, or does it make no difference to you?”
The response here came in at more than 40% saying Brain Benders Monthly makes them more likely to continue their Newsday subscription, which is among the highest percentage we have seen for the same question for other products.
Several months after the launch we asked the same question. The percentage jumped to 55% of Brain Benders Monthly recipients saying it makes them more likely to continue their Newsday subscription.
After six issues, we commenced the measurement of Brain Benders Monthly impact on pricing and retention.
In our first price test, we targeted an additional 5% (25% vs. 20%) price increase on average to Brain Benders Monthly opt-in subs. We found while they churned less in the first few months, ultimately the Brain Benders Monthly opt-in subs with a 25% price increase churned measurably more (close to the value of the additional price increase) than non-Brain Benders Monthly subs with a 20% price increase.
However, we noted upon measuring subscription characteristics at opt-in that the Brain Benders Monthly subs were generally more engaged subs, already paying us approximately 25% more on average vs. non-Brain Benders Monthly subs.
We proceeded to measure the actual impact Brain Benders Monthly had in our churn modeling and ultimately retention driven revenue. This is where we identified that the register was ringing.
In partnership with Mather Economics, we created a controlled pricing test that allowed us to model retention post price increase. The modeling allowed us to not only measure the differences in longevity and responsiveness to pricing of the Brain Benders Monthly opt-in subs, but also assign causality to the opt-in itself. This allowed us to conclude that our added Brain Benders Monthly opt-in content induced a behavioural change in the subscribers.
Surprisingly, the impact of the Brain Benders Monthly opt-in is the greatest contributor to retention among the features analysed in our churn modeling. Its estimated impact is roughly double that of EZpay status and long tenure status, two characteristics generally seen to be the most correlated with longevity post price increase.
Ultimately, in our retention modeling (which carries the same assignment of causality to the opt-in itself), we measured the difference in weeks of retention between the Brain Benders Monthly opt-in and non-Brain Benders Monthly opt-in subs.
We saw a 35% bump in retention for the Brain Benders Monthly opt-in subs, of which we attribute about 25% as a result of the opt-in itself. In terms of revenue, the boost in retention engendered by the Brain Benders Monthly opt-in results in nearly US$2.5 million lift in revenue over a six-month period for the 36,000 opt-in subs.
Subsequent to identifying the retention-driven revenue results of Brain Benders Monthly, we launched a second no-fee opt-in product, The Newsday Vault with Classic Editions being our first release.
Six times a year (approximately bi-monthly) we are reprinting a historical edition of Newsday with a cover story that had an outstandingly significant meaning to Long Island (our market) in the same week of the year that it originally published.
Our first classic edition in April was the opening day of the 1964 World’s Fair, which was held on Long Island. Our second in June was the Protest at Shoreham in 1979, where anti-nuclear protests contributed to the ultimate decision to never use the power plant.
The consumer buzz in our market over the Newsday classic editions has been greater than any of our other product launches in at least the past decade.
Social media and commenting has been filled with readers reminiscing and sharing their memories and photos from the historical events. E-mails and letters in appreciation have been in abundance, including many from groups that are routinely adverse to our coverage. In addition, our local news broadcast did a segment including interviews with our co-publishers and readers highlighting the interest in our Newsday classic editions.
As publishers have already or soon will make the paradigm shift from an advertising to an audience-based business model, defined by subscriptions being the core revenue stream, it becomes paramount that opportunities to increase value proposition to consumers are identified.
Here we have shared how we have leveraged the disciplines of consumer research, content analytics, marketing strategy, and econometric modeling that both aids in the identification of opportunities and illustrates their impact.
Here is an in-depth look at the research that led us to create these products and an explanation of how to read the scatter chart:
- Demand for content (ranking is on the horizontal axis; defined by the product of read and want more).
- Serve of content (ranking is on the vertical axis; defined by the percentage of total week edit pages by section).
- Bubble size (section’s percentage of total weekly edit pages).
- Lower churn (sections are in green font; defined by subscribers who demand such content are significantly less likely to churn).
- Higher churn (sections are in red font; defined by subscribers who demand such content are significantly more likely to churn).
- CLV variances (denoted in parenthesis next to section labels).
Content development opportunities are defined by the bubble colour:
- Blue (0n the diagonal axis, where demand and serve is balanced).
- Red (on the upper left, where supply is higher than demand).
- Gold (0n the upper left, also where supply is higher than demand, but there is also higher CLV; potentially subs are paying for this higher serve).
- Green (on the lower right, where supply is lower than demand, our immediate opportunity).
- Bright green (on the lower right, also where supply is lower than demand and there is higher CLV, our most urgent immediate opportunity).
More simplistically, content and marketing development opportunities are defined as the following:
• Expand coverage: High CLV, serve lower than demand.
• Brand marketing: Highest CLV, high serve, and high demand.
• Niche products: High CLV, moderate demand, low serve.
• Engagement expansion: High CLV and read, serve higher than demand.