Month: May 2019

Here are four ways to build a subscription business that bolsters ad revenue.

Subscription doesn’t mean ad-free — it means better ads

While streaming services like Netflix and Spotify offer ad-free subscriptions, users don’t expect the same quid pro quo from digital publishers. What they expect is premium content, member exclusives and better-curated ads. Publishers who collect, organize and analyze subscriber data in a DMP can use that data to deliver more relevant ads sitewide. Even non-subscribers benefit when publishers use all the data they have to improve lookalike targeting and find readers actually interested in what’s being offered. More importantly, they’re able to qualify readers for campaigns with specific business goals.

Nordjyske Medier in Denmark strategically deploys its advertising to increase quality and effectiveness for advertisers and command higher prices for campaigns. “We can get pretty close to who is interested in, say, a car, their potential buying intent and also which car or class of car they are interested in,” said their online marketing manager Jesper Johansen. The tactic has increased click-through rates by 300 percent on average — while digital subscriptions grew by 50 percent in the same period.

Figure out what converts and let your top content do the heavy lifting

A subscription team’s first order of business is often determining which kind of content drives subscriptions — and which doesn’t. Nicholas Thompson, editor-in-chief at Wired, put it this way: “When your business depends on subscriptions, your economic success depends on publishing stuff your readers love — not just stuff they click. It’s good to align one’s economic and editorial imperatives.”

The team at Nordjyske Medier, for example, realized it had many soccer fans among its readers that were likely to subscribe in order to keep up with their team. Once those determinations are made, the subscription team can weight that content appropriately within the paywall algorithm.

Publishers have mostly determined that platform distribution is a losing tactic, jeopardizing brand awareness and giving too much power to outside algorithms that drive one-time pageviews and don’t nurture reader loyalty. On the other hand, they do drive scale. The Wall Street Journal’s deal with Apple News+ may point the way toward a balance here, as the publication will reserve its premium content for on-site readers. If others model their own approach on the Journal, they may be able to reap the moderate revenue offered by platform scale while using top-performing content to grow their own base of subscribers.

Establish cross-departmental goals

Traditionally, ad revenue, subscription tactics and content development are handled by different departments, each with their own goals and managers. When a paywall is tightened, it might result in cheers from the subscription side and groans from the ad side. When it’s eased, the ad side sighs in relief while the subscription team worries about losing their momentum.

At the end of the day however, every department is striving toward the same goal: profitability for the whole organization. Since the vast majority of readers won’t subscribe, ad revenue should remain a priority for everyone.

Data sharing and tools that remove bottlenecks can help get everyone on the same page and working toward the same benchmarks. Every department should have access to dashboards that report quality, real-time data on subscription and ad performance. Department heads should review that data at cross-functional meetings so all team members know what content and reader behavior is driving subscriptions, which ad campaigns need fulfillment and what upcoming content can help the team meet its goal. Likewise, by working together teams can use data in creative ways to over-deliver on campaigns.

Put the power back in editors’ hands

Editors and reporters are now taking part in every aspect of content management, from posting stories to picking the art, as well as writing headlines and circulating them on social media. It only follows that they should have a hand in lifting and tightening the paywall when news breaks.

In a recent webinar, The Wall Street Journal said that when news breaks, it can lift its paywall in minutes if it is in the interest of informing the public. Conversely, if the ad department launches a major campaign that requires impressions, the editorial department will know first which high-traffic articles can fulfill fastest. That’s something the newsroom should have the freedom and capability to do. Thanks to user-friendly technologies, those adjustments can be made by marketers and editors directly and no longer need to sit in the IT project queue.

Publishers who deploy paywalls aren’t choosing one revenue stream over another. Subscribers — apart from providing that universally sought after predictable revenue stream — contribute important first-party data that can improve ad delivery and effectiveness. When managed correctly, that data can be used to qualify readers, create bespoke segments and serve impressions selectively. By building the right infrastructure, sharing data and embracing agility, publishers can recruit subscribers and boost revenue simultaneously.

The post How subscription models can boost ad revenue appeared first on Digiday.

Are there any platforms where you’re telling clients not to advertise or pulling money back from because of those brand-safety concerns?
We’re very careful when the big platforms extend off platform. That, to us, is a really critical area to look at because a lot of times with extensions — whether it’s Amazon, whether it’s Facebook, whether it’s Google Display Network — sometimes the measurement is there, sometimes it needs to get better. Sometimes they accept white lists. If they don’t check our boxes in terms of third-party verification and the ability to implement our white list, then we don’t do the off platform of the platforms.

[What I mean is], let’s say, for example, the Facebook platform and then Facebook has an offering where they have partners with lots of other inventory sources so that when they leave the platform that we still retarget you. We have to make sure that inventory quality is as good as all of the work we’re doing is brand safety on platform getting there.

When there are very few truly closed platforms, then the task of making sure that your brand is safe seems impossible.
It’s not a 100% sure thing. I mean, we make it as close as possible, but can somebody circumvent the system? Absolutely. But Google and Facebook and all the platforms are hiring people. They’re building and enhancing their AI technology, keywords flags, image flags, human reviewers. They’re definitely improving quarter-on-quarter. But you know what? Where there’s a way to make money, yes, people are going to keep looking for those holes, and we have to be diligent and keep making sure that we’re leaning into the partners and the inventory and those partners that care.

Is there any thought to move brands’ digital media dollars back to journalism, where the content is vetted?
I wouldn’t say it’s a question of moving back to journalism. The traditional publishers who have either extended into digital distribution or digital properties are more careful in terms of what they allow. Are they growing as fast as Google or Facebook? No. But there is a very healthy ecosystem for lots and lots of publishers outside of Google and Facebook online.

Agencies are refining the brand-safety block lists. Is that something you are seeing or doing?
We run white lists and block lists. The block lists are hundreds of thousands of sites that are piracy infringement because it’s really, really hard to keep a block list that takes into account every possibly unsafe website for brands. There’s millions. We have to make sure that we’re not on any copyright infringement.

That seems more workable.
It is. A block list — if you’re going to try and capture everything, it’s a fool’s errand. We could knock out somebody like Alex Jones everywhere, and then he puts up a new page under a different name somewhere else. You can’t track that. So you’re better off really understanding the inventory, looking and interrogating that website, and if it’s good, it goes on the white list.

Are you moving ad dollars to Reddit or TikTok? There seems to be interest in the marketplace.
We apply the exact same standards [for brand safety] that we have for our more longer-term relationships to those platforms. Reddit, in particular, we’ve been working more closely with. They’ve done a nice job in terms of incorporating all of our GroupM mandates in terms of third-party verification for viewability for brand safety. We are also working with TikTok. We’re at the very beginning of that.

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“We are always on,” said Tanner. “An on-demand video start is often to view just one story, but live streaming viewers start to view because they intend to watch at length.”

Today, CBSN is available across 18 different distribution sources including streaming TV devices such as Apple TV, Amazon’s Fire TV and Roku; live TV bundles such as Hulu Live TV; as well as its own desktop site and mobile app and the CBS All-Access subscription streaming service. The newest area of growth is coming from TV manufacturers such as Samsung, LG and Vizio, which are increasingly selling internet-connected TVs. That segment has grown by “triple-digit” percentages since the 2018 holiday season, Tanner said.

“Because we have the tech and the expertise in-house at CBS Interactive, we are able to launch into new environments quickly,” Tanner said. “That agility comes from having four and a half years of experience playing in the streaming space — we are not playing catch up, we are leading the pack.”

CBSN is also helping CBS News reach a younger demographic that doesn’t watch as much linear TV as older generations. The median age for CBSN is 37 years old, the company said. Typically, broadcast news demos are at least 20 years older, Tanner said.

“CBSN is CBS News’s attempt to stay relevant to not only new audiences who have cut the cord, but those that might have never even been ‘corded’ in the first place,” said Peter Csathy, founder of media advisory firm Creatv Media. “But while the growth is there, the question is how much more growth can there be?”

Especially since CBSN is now staring at more competitors than it had half-a-decade ago. Last year, ABC News launched a live streaming news channel and NBC News is readying its own free streaming service for this year. Fox News, meanwhile, has a membership-oriented subscription video service. And CBSN’s digital publishing competitors include E.W. Scripps-owned Newsy and Cheddar, which just sold to French cable operator Altice for $200 million. This list of competitors will soon include Amazon, which is reportedly working on a free news video streaming service for Fire TV users.

All of these services are vying for people’s time and attention as viewership increasingly heads toward over-the-top screens.

Tanner said CBSN is in a strong position even with increased competition as these services will help draw more news viewers into OTT ecosystems — which CBS News is prepared for by having a nearly five year head-start on other streaming services. “While others are just beginning to launch services, we have the depth of experience and knowledge about the news audience and what they want to see in the streaming space,” Tanner said. “That gives us the confidence that we are going to be able to continue growing and serving them.”

Some of that growth is going to come through creating more local programming. Last year, CBSN launched its first local version in New York and is currently working on a second local channel for Los Angeles coming soon. Later this year, CBSN will also go live locally in Boston and San Francisco, according to a company spokesperson.

CBSN is also ramping up original productions of documentaries with plans to make 18 this year, which is up from 12 in 2018, Tanner said.

“When we do research with our viewers, they say they want more in-depth coverage — they also tell us what topics they want to see,” Tanner said. “We have done a number of stories on migration over the last two years because viewers really respond to those.”

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Department stores once touted their enormous square footage and product selection as an advantage. But Amazon’s endless aisles have eroded that advantage. Now, more customers, if they’re going to a physical store at all, want a place where they can find what they need quickly and leave. So department stores are adding services that they hope will convince customers that they’re still a convenient and easy place to shop at — or in some cases, without visiting the store at all.

“Traditionally, the services [offered by department stores] have been very much around buying product,” Neil Saunders, managing director at GlobalDataRetail, said, citing the popularity of in-store stylists or beauty counter associates, who were focused on helping customers find the right product. “Now it’s about how customers are able to get a hold of products, so services like collect from store, reserve and collect, they’ve become a much bigger part of the proposition for a lot of the department stores.” 

“I think increasingly we see that services don’t just need to be limited to a store,” Shea Jensen, Nordstrom’s SVP of customer experience said. “Our perspective is that customers don’t see Nordstrom as a website or a store — but customers see Nordstrom as a fashion retailer, and we want to be available whenever, wherever and however they choose.”

Nordstrom’s services strategy extends beyond Nordstrom Local. Though Nordstrom hasn’t shared many details on what percentage of customers use its various services, co-president Erik Nordstrom said during the company’s last earnings call that it sees an “exponential lift in customer spend” from shoppers who use its alteration and styling services.

Over the past couple of years, Nordstrom has prioritized thinking about how it can take some of its most popular services — like buy online, pick-up in store, and styling — and how it can adapt those services to reach different groups of customers. For example, while buy online, pickup in-store is available at all Nordstrom stores, Nordstrom loyalty members get access to an even more convenient service: curbside pickup, so they don’t have to leave their car when they pick up their online order.

Jensen said that another one of Nordstrom’s most-in-demand services is styling. Previously, stylists were only available to help customers in-store. Then in 2017, Nordstrom launched StyleBoard, which allows customers to chat with a stylist online or via Nordstrom’s mobile app. Stylists curate a selection of products, called a style board, and send it to the shopper to review. Nordstrom also gives select loyalty program members the ability to order a stylist to come to their homes once a year.

Nordstrom Local stores, meanwhile, represent the culmination of the retailer’s efforts in services. The stores — which typically run under 3,000 square feet — offer all “the suite of core services” that Nordstrom has learned customers want, according to Jensen: online order pick-up, returns, styling and tailoring. It can also offer services unique to that neighborhood — the Brentwood location offers gift wrapping, for example, something that Nordstrom learned customers wanted during market research, Jensen said.

“Nordstrom Local is very flexible and we’re able to adapt to feedback pretty frequently and quickly from customers,” Jensen said.

Kohl’s, meanwhile, has not followed Nordstrom’s down the services-only path. Instead, it’s pitching customers on convenience through partnerships with other companies that customers like to shop at. — most notably with Amazon, which it first started partnering with in 2017 to sell Amazon devices. When Kohl’s rolls out Amazon return services to all of its stores in July, customers will be able to return Amazon products at Kohl’s stores free of charge. The hope then is that once customers are in a Kohl’s store, they’ll stick around to purchase other items.

Kohl’s thus far hasn’t shared any statistics about what kind of shoppers and how many of them have visited its stores to return Amazon products. But Saunders notes that Amazon is popular among millennials and younger customers, “and that is a demographic Kohl’s has traditionally struggled with.” 

There will be other opportunities on the horizon for Kohl’s to add more services. It has announced partnerships to lease some of its space to discount grocery chain Aldi, as well as Planet Fitness. And while Kohl’s hasn’t yet revealed any plans to offer services specifically for Aldi or Planet Fitness customers, it’s a logical next step.

The biggest challenge working against department stores is the risk of falling behind other retailers leaning into services — buy online, pick-up in-store is now becoming table stakes for retailers, so the move to add more services has to be done in conjunction with a push to further differentiate product selection. Saunders said that he also hasn’t seen department stores make as big of a push into integrating the mobile app into the in-store shopping experience, like Walmart and Target have.

“That’s something that a lot of traditional department stores probably need to emulate more,” Saunders said.

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