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Building a triple-looped Growth model for newspapers36 min read

Jun 17, 2018

When I was a kid, my father would read the newspaper at breakfast. It was not just a habit, it was a ritual. Coffee and paper.

 

When I turned 18, my father still read the paper at breakfast, but I would get the news from Google. I wouldn’t only get news much faster than my old man, but I would also get them for free, together with jobs, classifieds, and real estate.

 

That subtle difference signals more than a generational divide between my father and me. In 2009, one year after the prime crisis came crashing down on the world, the newspaper industry collapsed. Advertising revenue tanked and hasn’t stopped to decline since.

 

It was carnage.

 

 

Many papers closed, only a few persisted to live.

 

The New York Times had to borrow $250m to survive.

 

The San Diego Union-Tribune was worth $1b in 2004. 5 years later, it was sold for $50m.

 

The San Francisco Chronicle had to let 150 people go and ask the remaining employee for steep concessions to avoid closure.   Between 2000 and 2015, advertising revenue shrunk by two third.

 

There’s an important conflict in this story. Business is business, industries have been disrupted for hundreds of years and we shouldn’t be too romantic about change. But it wasn’t just an industry that faced extinction but the prevalent model of journalism that forms most people’s opinion. Journalists have a moral responsibility to objectively report things as they are and that integrity was kept at newspapers. I’m going to leave it up to you which side you identify with more, but no side can be completely rejected.

 

In this article, I tell the story of the downfall of newspapers and what they have to do to steer the ship around. The heart of the post is a Growth Model that consists of three loops for user acquisition, conversion, and retention. If you’re not interested in the story part, feel free to skip straight down to the Growth Model.

 

 

How the Internet ripped newspapers apart

 

300 years after the first ad appeared in a newspaper, three trends killed ads as revenue stream and with it the business model of publishers.   First, newspapers lost their information gatekeeper status. They were such a good platform for ads because they bundled news, classifieds, jobs, apartments, obituaries, etc. and got all the attention. The Internet unbundled all these services (hat tip to Ben Thompson). Google aggregated the news, Facebook and Twitter spread them, and Craigslist took over classifieds (and with it billions of Dollars). [25]

 

(Decreasing returns from advertising for publishers, Source: Digiday, Enders Analysis)

 

Second, newspapers couldn’t offer a competitive ad network. Advertising on Google and Facebook is not only cheaper but more efficient and quantifiable. You can target people better and know exactly how much you get for your ad dollars. So, budgets got shifted from newspapers to Google and Facebook, who now own over 2/3 of digital advertising revenue. [26, 28]   Third, as if that wasn’t enough, fewer people click or watch ads in general. 11% of users have ad-blockers installed and browsers are starting to integrate them natively. Global ad-blocker usage grew by 30% from 2015 to 2016. [29]

 

 

Newspapers didn’t fail to go online, they failed to adapt their business models.

 

But now, the tide is turning.

 

Newspapers need to think like consumer companies to be successful

 

A couple of years ago, newspapers started to find new revenue streams in subscriptions, even though it came at a high price (one digital dollar for seven print dollars, to be exact).

 

The New York Times now makes $1.5b in yearly revenue and has 3 million subscribers. [27]

 

(NYT stock price recovering after the downfall between 2004 and 2009)

 

The trend sparks hope, but without a change in mindset, the spark will not turn into a fire. If the new business model is built on subscriptions, newspapers must think like SaaS companies. That means changing the business model from the ground up.

 

Meredith Kopit Levien, COO at The New York Times, hits it on the head in a podcast with DigiDay: “We are on the path to becoming a world-class consumer brand, and a lot of the work is to behave like one.” [32]

 

The 9 paths to subscription

 

In 2017, The American Press Institute surveyed 4,000 subscribers in a study around the question “what motivates new subscribers?” The conclusions can guide newspapers in changing their business models. [1]

 

(Summary of the study “paths to subscription”, Source: API)

 

The study found 9 different paths that lead readers to sign up for a newspaper subscription:

  1. Digital Paywall Converters
  2. Topic Hunters
  3. The Locally Engaged
  4. Social Media-Mobile Discoverers
  5. Journalism Advocates
  6. Life Changers
  7. Coupon Clippers
  8. Print Fans
  9. Friends and Family

 

Each path is driven by a different motivation.

 

PathSign-up driver
Digital Paywall ConvertersAccess to more content
Topic HuntersTopical focus, e.g. sports coverage
The Locally EngagedLocal news
Social Media-Mobile DiscoverersBeing able to share news/content
Journalism AdvocatesWant to support journalism
Life ChangersHave more money due to life event; moved to the area
Coupon ClippersLooking for a bargain
Print FansAlready subscribed to print
Friends and FamilyFamily bundle or being influenced by family

 

Topic Hunters and Journalism Advocates are the most followed paths, but none of them stick out by much in size. Oftentimes people follow several paths at once: They want more access to news, are influenced by family and want a bargain at the same time, for example. Another major question the study answered is “do people even care about journalism?”. The answer is “yes”: 31% of readers subscribed because they want to support journalism. It plays a crucial role in our society, but you can’t expect people to ride horses when they can drive cars.

 

When matching the results of the study with the current approach, it becomes clear that the transition to a consumer business also requires a transition in thinking. They have to apply “Growth principles”. The study is the foundation on which I built the Growth model that I explain in the next chapter.

 

The newspaper Growth model

 

We, including myself, often scream “Growth isn’t about tactics, it’s about systems and principles!” But we rarely show the systems. In this article, I’m trying to do better by introducing a complete Growth system for newspapers.

 

What is “Growth”?   “Growth Marketing is a lean, systematic approach to growing products at scale. It spans across product and marketing covering the whole user journey from acquisition to referral. It’s most commonly applied at startups, which have the goal to grow exponentially with scarce resources.

So, when I refer to “Growth”, I’m referring to what’s also known as “Growth Marketing” and was called “Growth Hacking” before the term got burned with shady tactics. The term “Growth Marketing” doesn’t do the discipline justice because we’re not only focused on marketing but also product. We haven’t found the right term, yet, so I’ll just use “Growth”.

 

When applying Growth to newspapers, we shouldn’t think of a funnel, but of 3 connected loops around discovery, conversion, and retention. Loops allow us to better visualize the process because readers don’t move from one stage to the next. They orbit around discovery, sign-up, and retention like a satellite around earth. The closer they get, the more likely they are to land, meaning to sign up and retain. They also use several channels at the same time, sometimes in a different context.

 

(The triple looped Growth Model for newspapers)

 

Growth in newspapers starts with readers (1) finding the content, (2) consuming it repeatedly, and (3) signing up – provided the content is valuable to them. In many cases, people sign up because of a trigger, which can be a discount or offer.

 

Channels connect behavior, content drives it. The big building blocks of this Growth model are based on behavior: discovery > repeat usage > sign-up > retention.

 

The basis for all this to work is high-quality and relevant content. It’s like the gravity that pulls the satellite closer. In fact, we can say newspapers need to reach Product-Market Fit, as in providing content that their target audience loves and craves. Without it, the Growth model doesn’t work. As the API study found, Quality and accuracy matter to all types of subscribers, especially after subscribing. But different readers have different demands in content.

 

The 3 loops aren’t separated from each other; they are connected. When we look at the channels, we see some of them appearing several times in the Growth Model, in different loops. Social Media, for example, is a channel for discovery and retention. Let’s take a close look at each loop.

 

The discovery loop

 

 

The journey from first contact to signup begins with the Discovery Loop. First-time discovery is different from ongoing discovery. The former is, as the name says, the first time a user finds content from a brand. The latter means the continuous discovery of content from a brand over the various discovery channels. The goal is to get readers to make it a habit to visit the site, listen to the podcast, follow on social media, and interact with the paper. In total, there are 7 major discovery channels:

  1. SEO
  2. Social Media
  3. Word of Mouth
  4. Email
  5. Partnerships/bundles
  6. Podcasts
  7. Ads

 

The continuous consumption of content from the same newspaper charges perceived value. Readers rarely sign up for a newspaper after reading a single article. Instead, they consume a lot of content until they realize that the value they get from this source is so high that they cannot let a paywall stop them, so they sign up.

(Charging perceived value through repeated content consumption)

 

Synergetic effects increase with the number of channels readers find content from a specific paper on. They compound each other. I’m much more likely to sign up if I find an article through Google News, then engage with the newspaper on Instagram and then read a weekly newsletter.

 

Search Engine Optimization

 

SEO and Social Media are the strongest discovery channels for newspapers: 43% of subscribers find content through Google. [1] “Google” as a channel can be divided into three sub-channels:

  • Organic search
  • Google News
  • AMP

 

To rank in organic search, newspapers should include and optimize multiple content formats in their SEO strategy:

  • sections (category pages)
  • articles
  • services (recipes, games, jobs)
  • landing pages (e.g. “presidential election”)
  • topic pages

 

Each format satisfies a different user intent and is better suited for a specific type of keyword. One example of a specific content format is topic pages, which cover recurring themes and are more time-insensitive: people, organizations, destinations, etc. For the New York Times, topic pages are a major traffic driver. They have a bit more than 12,000 of them.

 

(The 10 strongest subdirectories on nytimes.com for organic traffic; Source: Searchmetrics. Notice how the /topics/ subdirectory gets the most SEO visibility)

 

Interactive landing pages for evergreen topics are example another of an important content format. The NYT uses them for the presidential election, Vox to explain the Middle East. Google News has been a major traffic driver for 12 years (officially launched in 2006). To be eligible, newspaper sites must use static URLs, descriptive anchor text for internal links and base most of the site on HTML [4]. There’s not only news.google.com but also Universal Search, meaning Google News results appearing in the “regular” search. That’s very important because it widens the funnel of news consumption outside of visitors going directly to news.google.com.

 

(Universal Search integration in regular search results.)

 

Not only that, when using Chrome on mobile devices, users get article suggestions when opening a new tab. What doesn’t sound like a big deal seems to bring massive amounts of traffic to newspapers. According to Chartbeat, it’s the fourth biggest traffic channel behind Google, Facebook, and Twitter.

 

(Google Chrome’s “Articles for you” bringing in lots of referrer traffic; Source: Chartbeat)

 

“Mobile friendliness” plays a key role in SEO and content consumption: 45% of adults get their news on a mobile device and more than 60% of visits come from mobile devices. Newspapers need to make sure their content is easy to consume on mobile devices and has AMP functionality. According to AMP case studies, adding the functionality increased returning users by 23% for the Washington Post, CTR by 25% for Wired, and 50% impressions for Gizmodo. Keep in mind, though, that implementing AMP is no easy feat and takes serious developer effort. [2, 3, 5]

 

As shown by Parsely, AMP traffic is a major force that newspapers cannot miss out on nowadays.

 

(Google surpassed Facebook as traffic source for newspapers and AMP plays a major role in that trend; Source: Parsely)

 

Social Media

 

Social Media, the second largest discovery channel, plays many important roles in the Growth model. Seeing a piece of content shared on social media is more than discovery – it’s social proof. It has a different quality when somebody else, in most cases a friend or someone we follow, shares something. It makes us more likely to click on it and trust the source.

 

The API study confirms that:

  • 30% of subscribers saw friends sharing content
  • 29% shared content regularly themselves before signing up
  • 20% followed the newspaper before signing up
  • 16% followed a writer for the publication

 

Discovery through Social Media is different from Google because content doesn’t have to compete against 9 other results and users don’t have to perform a search in the first place. It’s push versus pull. At the same time, not every topic is suited to be shared on social media.

 

Like “Google”, sharing content on “Social Media” comes in several shapes and forms. Especially “breaking news” spread through social media like wild-fire (if they are actually breaking news). The goal for newspapers here is not to always be the first one to break the news, but to be the one with the most holistic coverage and most interesting angle to make it to the trending topics section on Facebook and Twitter.

 

One successful approach is to create one long, single page, instead of many short articles for news that’s constantly updated, like Vox did for the primary vote in 2018:

(Vox’ primary vote landing page)

 

It got picked up on Twitter and performed very well in the trending topics section. People shared the page as it was the most holistic with the best overview.

 

(Vox’ primary vote page trending on Twitter)

 

Of the most important social networks, only Twitter has a trending topics section (Facebook recently took it off). But Instagram and Snapchat can be fantastic news outlets, too: Instagram through hashtags and Snapchat through its Discover section. The New York Times leverages posts and Stories on Instagram to create a deeper experience for readers:

 

 

Stories are interesting: They’re available on Snapchat, Instagram, and AMP and described as the first native content format on mobile. Stories shouldn’t only be used by the papers social media manager, but also by journalists to provide angles to their pieces and build their own followerships.

 

Journalists and authors are a valuable but often overlooked part of newspaper Social Media strategies. An efficient way to increase reach and engage an audience is to provide journalists with a platform to build and nurture their audience. Newspapers should encourage them to post on Social Media, use local Instagram Hashtags, and join online discussions.

 

Word of Mouth

 

What is a better example of Word of Mouth than a young boy selling newspapers on the street while shouting the headlines?

 

 

Hence newspapers spread the word through headlines and content. Nowadays, it takes outstanding content for a newspaper to spread through Word of Mouth since the noise level has become so high. Examples are the Panama Papers or “My Medical Choice”, a piece Angelina Jolie published in 2013 in the New York Times.

 

Another common scenario in which WoM appears is referral from friends and family. Oftentimes we talk about political topics or sports and in that conversation mention newspapers that provided the information. That’s another reason for providing family bundles. Social Media replaced WoM in many ways.

 

Email

 

Like Social Media, Newsletters fulfill several functions in the Growth model and appear in more than one loop. They introduce a reader to an author’s style and subject matter expertise, even when the reader isn’t familiar with a newspaper yet. Newsletters can be door openers because they are little publications on their own.

 

Email has a big influence on sign-ups: 16% of subscribers signed up for the newsletter first, before signing up for the newspaper. The NYT has found that email newsletter subscribers are twice as likely to subscribe, and the Seattle Times found that number to be even higher:

Newsletters are the most efficient digital channel for converting readers to subscribers. Based on subscriber conversions per visit, SeattleTimes.com visits referred by an email newsletter are twenty-five times more likely to convert than a visit to our site referred by Facebook.” [1, 6, 7]

 

(Fortune’s newsletter “Data Sheet” is a daily aggregation of important Tech news.)

 

The New York Times’ newsletter “bits” is a weekly commentary on the world of Tech, but the Times has newsletters for all kinds of categories.

 

(The NYT newsletter “bits”)

 

Email has two important advantages over other channels. First, it’s a “closed environment”: you can control it; your reach is not decided by an algorithm that can change any minute (looking at you, Google and Facebook). Second, since so many people are managing their work through messengers like Stride and Slack, their inboxes have become free. Everybody still has an Email account but uses it less because it’s not clogged up from work. That leaves a vacuum newspapers should try to fill. The best approach is as an extension of the core content, i.e. an opinion piece or curated content.

 

Partnership/bundle

 

The power of partnerships is in addressing readers early on in their journey to subscriptions, for example when they move to another area or city. Newspapers provide local content that’s interesting at this moment, but it’s not easy for a newspaper to address movers. Partnerships with real estate companies, employers, and local organizations provide a way to reach new audiences.

 

Bundling is closely related to partnerships and comes with two angles. The first is to give a group of people access through one (big) subscription, like families. A similar logic is to offer a bundle for companies that provides access to their employees or to universities for their students. The strategy to expose the product outside the person who got the subscription is closely related to the concept of Land and Expand for SaaS companies (another parallel).

 

The second angle is to bundle the product itself with complementary products. One example is the partnership between the New York Times and Spotify, a handshake between the old and new media. There’s also product bundling within the same newspaper: getting free access with a print subscription. Certain print readers have strong feelings about the experience of reading a newspaper, for example starting the day with a cup of coffee and a paper (remember the intro?). Most print readers engage with newspapers online as well, for example through the mobile app. As stated in the API study “Print is a preference, but it is no longer a singular behavior.

 

Newspapers must choose bundles and partnerships strategically. Not the size of the partners’ audience is important, but the overlap with the newspaper’s audience.

 

Podcast

 

Podcasts offer many benefits for newspapers:

  • You can listen to a podcast while doing something else, like driving a car or doing chores, but still be engaged. They add a bit of excitement to boring tasks. That opens an additional channel to get readers’ attention.
  • Content can be replicated from print to audio, curated or extended to audio. That increases the value of content because it can be “repurposed”.
  • The subscription format allows newspapers to repeatedly engage users, like a subscription to a newsletter.

 

In many ways, Email and podcast are very similar. Both can be a (first-time) discovery channel for listeners and both are closed environments. The advantage podcasts have over Email (and any form of text) is that they create more personality. They give a voice to the brand.

 

The business value of podcasts lies in additional advertising revenue or in being a stepping stone to get listeners to subscribe. Publishers can find a new source for ad revenue, better than their site because podcast listeners don’t skip ads as they don’t want to miss part of the show. On top of that, most podcast ads are native, which gives them extra credibility. [30]

 

(The iTunes featured podcasts section can bring lots of traffic)

 

There are many ways for listeners to discover new podcasts and episodes on iTunes and other platforms, such as Spotify. iTunes provides recommendations for new podcasts in the featured section and in playlists. People don’t only search for podcast brands but also generic categories, like “finance podcast”. That makes iTunes a search engine.

 

Speaking of search engines, Google might be showing podcasts episodes and maybe even snippets right in the search results. That opens up a wide world of possibilities by using Google to attract more readers to podcasts, which can translate into ad dollars and subscriptions. [31]

 

Ads

 

Ads: the classic push channel. It’s ironic to mention advertising as an acquisition channel when missing ad-revenue is the reason I wrote this article in the first place. Well, life is ironic, isn’t it ;-)?

 

But when we look at advertising from a consumer company perspective, advertising on Facebook, Google & Co is a decent supportive channel. I don’t see budgets for ads to be big. It’s hard to bank Growth completely on paid channels for three reasons: first, it drives customer acquisition cost up. Second, more and more users have ad-blockers installed and some browsers natively block certain ads. Third, there’s a ceiling to the efficiency of ads.

 

Newspapers should ads used more like a scalpel than a chainsaw, even though they’re a viable small. Newspapers should look into geo-location targeting (Facebook) and story ads (Instagram). Specifically smaller newspapers should leverage local news as a gateway.

 

The sign-up loop

 

The sign-up loop converts readers to subscribers. Their value perception is charged and they’re now sensitive to discounts or paying for the paywall to disappear.

 

The sign-up loop doesn’t have channels in a classic sense, but three drivers of sign-ups: value, the paywall, and triggers.

 

Value

 

Value is created through content, the product of newspapers. Content worth paying for has to be of high quality: relevance, timeliness, depth, and style. In many ways, it’s like the concept of Product-Market Fit: the product has to be something people in a sizable market love. The sign-up loop is all about understanding the audience and what “value” is to them.

 

To get that understanding, it’s imperative for newspapers to track, segment, and profile cohorts a.k.a. user groups. Newspapers must collect as much data as the reader allows (#GDPR) and use it to inform content creation, personalization, and activation. Basic segments can be:

  • age
  • profession
  • device
  • location
  • primary interest in content (politics, sports, local news, etc.)

 

There is a second model to understand the needs of readers: Clayton Christensen’s “jobs-to-be-done”. The idea is that readers act based on solving problems, instead of their demographics. Two examples would be reading the news of the day while waiting in line somewhere or doing research for a business analysis. The two uses cases are very different but have in common that people want to get a certain job done. They want to solve a very specific problem that occurs in a specific situation. The model is opposed to the idea of profiling users and supports the notion that demographics and other means to cluster an audience aren’t the drivers of their actions.

 

The importance of understanding power users for growth

 

Audience understanding is at the heart of the model. It’s the basis for understanding what content to create, how to distribute it and when to suggest readers to sign up. The most important users are power users, as they are most likely to sign up.

 

The steps to identify and capitalize on power users are:

  1. Find power users by looking at engagement metrics, such as time on site (dwell time), pages per visit, monthly visiting frequency, shares, likes, follows, scroll depth, etc.
  2. Understand what content power users prefer.
  3. Create dashboards and reportings for journalists, marketers, and developers to work in unison. Run on a “data democracy” in which everybody has access to user data within the realms of privacy.
  4. Align the whole company on one North Star Metric to avoid conflicts of interest.

 

Once it’s understood what content works well, the way to increase subscriptions and revenue is clear. The goal is not to create an echo-chamber or clickbait farm, but to understand what your audience likes. A data-informed backlog of content you know your audience will like makes subscriptions and revenue more plannable.

 

Creating a “readiness meter”

 

No matter the approach you follow, the goal is to create a “meter” that measures how ready a reader is to subscribe. I used the analogy of “charging perceived value” before. The meter is a measurement tool that shows perceived value and certain signals that indicate the readiness to subscribe:

  • social shares, interactions, and follows
  • website visits
  • time spend on site
  • visit frequency
  • newsletter sign-ups, opens, and clicks

 

The readiness-meter should be a dashboard that shows how many users of a certain cohort are likely to sign up within the next 7 days. Newspapers should aim to trace these signals per cohort, for example

  • “users that signed up within the last 30 days”
  • “users from a specific region”
  • “users that visited the site within a certain frequency”

 

It’s the same process as increasing retention for a SaaS product by looking at certain actions of well-performing cohorts and doubling down on that. That opens the door to profiling power users and driving the likelihood of subscription, for example through personalized content or offers.

 

Creating an eco-system by offering users a login to the site brings even more visibility. Once logged in, it’s much easier to trace the behavior of a specific user. In return, users can customize the homepage and receive personalized notifications.

 

Remember that a single interaction isn’t enough: “7 out of 10 users got in touch with the paper several days a week before subscribing“. It takes engagement and time for users to sign up: 74% of readers took several months until they subscribed to the Seattle Times, which built an analytics model like the one I describe here. But it pays off. [1, 8]

 

Paywall

 

People usually don’t sign up when they hit the paywall for the first time. They have to hit it a couple of times to realize the value of the content. That’s an important counterforce when perceived value is charged through discovery channels. The limitation adds value in itself, a principle known as “scarcity”.

 

The API study came to the conclusion that “Half of digital subscribers are triggered to subscribe by hitting a paywall meter, and they are more likely than print readers to be motivated by a desire to support local journalism (38 percent vs. 29 percent).” [1]

 

There are three different types: hard, soft, and combination paywalls. Hard paywalls don’t allow any content consumption before paying, as used by The Wall Street Journal for years. Soft or “metered” paywalls allow the reader to consume a certain amount of articles in a given time, usually within a month. The best example is the New York Times, which currently allows readers five articles before dropping the paywall. Combination paywalls allow certain types of content to be free, while others are limited.

 

(The hard paywall of the Wall Street Journal)

 

It’s important to experiment with the right paywall frequency and customization. It can make a huge difference in the user experience and revenue, as the >1m digital subscribers to the Wall Street Journal show. Parsely recently published an analysis on paywalls, revealing visiting frequency of power users as a good indicator of how much consumption the paywall should allow. 70% of users visit a news site 4 times per month. We’re seeing a power law of a few users creating most traffic and newspapers must focus on those users. [11, 15]

 

Trigger

 

Triggers are discounts or offers. Technically, Paywalls are also triggers, but I chose to separate between the two. They have a different nature: a Paywall is a barrier, while discounts/offers lower the entry barrier. The limitation of consumption through a paywall paired with a strong pull leads to a sign-up. If the limitation (price) is too high or the pull not strong enough in that moment, a trigger can tip people over:

45% finally subscribed because of a promotion or a free trial” at the right time and for the right readers. Print readers are less intrigued by coupons (26%), while digital subscribers are more triggered by a paywall (47%).” [1]

 

The challenge behind triggers and paywalls is time. Newspapers need to know when the perfect moment is to make an offer and that moment needs to be informed by data. Once a baseline is established, the answer can be found in cohort analysis (how many interactions with x or visits did it take for readers to sign up?).

 

The retention loop

 

Growth doesn’t end after users sign up. In fact, that’s when it begins! The retention loop might as well be the most important one of all because retaining readers is cheaper than acquiring new ones. The audience needs to be engaged and retained, especially when they signed up with a coupon and got the first months for free because the ROI from a user is already lower at this point. The NYT understood that and hired 10 people who only work on day 90 retention. [12]

 

As the 9 paths to subscription show, there are different values a newspaper provides to readers. Understanding which one it is and how to satisfy readers’ expectations is what retention is all about. To retain users after they signed up, newspapers need to understand why a reader signed up in the first place and double down on it. In the Growth world, we refer to this as “core product value”. Preserving knowledge about users from pre to the post sign-up is crucial.

 

A situation that falls under retention is users becoming inactive. Email reactivation campaigns, retargeting on Facebook, Instagram and display advertising are good ways to “pull readers back in”. Newspapers should think about re-activation when a user hasn’t visited the site or opened the app within a specific time range. Once again, cohort analysis leads the way: find an answer to the question what churned users (those who unsubscribed) have in common in terms of visiting frequency and other usage patterns.

 

The importance of closed systems for retention strategies

 

Newspapers need to create a holistic channel strategy for retention. As found in the API study, subscribers interact with a newspaper in at least three ways: Website (33%), social media (43%), podcast (4%), app (24%). For successful retention, newspapers need to play on all of these fields. [1]

 

A holistic channel strategy starts with getting users into “closed environments” that can be controlled, like mobile apps and newsletters. Facebook and Google are open environments. Their algorithm can change and turn your traffic off overnight. That cannot happen to Email or native apps.

 

We touched on newsletters as a discovery channel, but they also work as a retention channel. Email is a good stepping stone for website content, or a re-engagement tool when readers have been absent for a while. They don’t rely on the user coming to a website or opening an app, because people check their emails at least once a day and see the Email subject. From there, it’s more a question of how relevant the subject and email is. Sending users a summary of the most read article at the end of every week or a personalized list keeps them engaged.

 

According to ComScore, 80% of the time on mobile devices is spent on apps and news consumption on mobile devices is growing at 20% YoY. Apps fulfill a similar function to Email but have one major advantage: notifications & alerts. Alerts can be great activation tools for non-predictable events, like breaking news, but there’s a high risk when notifications are abused. Users already have a negative sentiment about them, but if used respectfully they can be very valuable. Most newspapers have similar or the same information about breaking news, but a mobile app makes sure readers consume and share the content of the respective paper, instead of another one. [13, 14]

 

Closed systems benefit retention not only by increasing control over distribution, they also create “lock-in effects”. They keep users in the eco-system by providing so much service that the cost of canceling the subscription gets too high. It’s a strong defense mechanism that can be built by connecting retention channels, such as native apps with podcasts and Email.

 

Another way to “lock users in” is exclusivity. Subscriber-only events create engagement on another level and strong pull-effects – people love exclusive things. Experiences in the real world still have a different quality over the digital world. They allow people to get much more in touch with a brand and see the faces behind the paper.

 

How some publishers successfully face the change

 

Let’s look at some examples of publishers who successfully apply (some of) these methods, including The New York Times, The Washington Post, the Boston Globe, The Dallas Morning News, Bloomberg, Vanity Fair, Wired, Business Insider, and The Atlantic.

 

(August 2017 YoY change in growth rate of news sites)

 

One of the fastest growing news sites is CNBC. Jonathan Meyers, SVP of marketing at CNBC, mentions substantial tips for growth that are also reflected in this Growth Model:

  • Data has to rule everything
  • Avoid commoditized content, like breaking news
  • Know your audience and stay true to your brand’s content “style” (investigative journalism vs. “how to cook eggs”) [21]

 

Another player that performs well on the chart is Vox Media, which owns Vox, Recode, and The Verge amongst others. In an interview with Contently, Armando Turco, GM of Vox Creative, spoke about how measuring the right KPIs around engagement is at the core of creating well-performing content. [20]

 

We can’t speak about successful newspaper transformation without zooming in on the New York Times. Their paywall, introduced in 2011, is the first success to point out:

Twenty years ago, advertising revenue made up 63 percent of the paper’s revenues, while subscription revenue accounted for 27 percent. As of Q1, those numbers are nearly inverted: Subscriptions account for 61 percent and advertising represents 33 percent of the top line.” [19]

 

(Revenue from circulation overtaking revenue from ads at the New York Times)

 

While at it, I want to highlight a New York Times podcast that’s currently one of the most successful ones out there and has gathered one million subscribers: The Daily. “Within six months of launch, the podcast had helped the company’s digital advertising revenue grow 11%.” Other successful examples of newspaper podcasts are Vox’s “Today Explained” and NPR’s “First Up”. [17, 18]

 

The Seattle Times is another best practice for embracing data-driven journalism. After adding a paywall in 2013 and ramping up its platform in 2015 the paper grew to 32,000 digital-only subscriptions. Core levers of the strategy are a/b testing and dashboards that inform authors about subscribers and revenue of their content:

In 2017, digital subscribers grew by 50 percent, […] Audience revenue grew by 54 percent.

 

The Economist sees great returns from embracing a tight Social Media strategy that sounds a lot like the Growth Model introduced in this article. They use the channel to funnel readers to sign up through the app and website. Better onboarding, newsletters, and the mobile app (closed environments = stickier) increase retention:

We now have a team of 10 writers and editors promoting our output on a growing range of social platforms. We have over 17 million followers on Twitter and 7.7 million on Facebook … Our posts on social platforms encourage new readers to sample our journalism.” [22, 23]

 

Slate doubled their subscribers by focusing on engaged readers as North Star Metric, investing in podcasts, newsletter and content moderation. They specifically looked at how long visitors stay on the site and consume content. The result speaks for itself: 35,000 paying subscribers (in 2017). [16]

 

All these publications understand the importance of content, data, and shifting their mindset. They’re being rewarded with sustainable business models and revenue.

 

Journalism can thrive again – if the business model changes

 

Clayton Christensen summarized it best:

While these disruptions can collectively seem like a terrifying transition for incumbents, they have also created a wealth of opportunities that are waiting to be exploited by these very same organizations. News organizations should challenge their own assumptions by looking beyond their existing business models for new ways of finding value.” [24]

 

Those new ways are without a doubt data-driven and reader-centric. The center of the universe for newspapers are not advertisers anymore, but readers. They must double-down on their advantage over social networks and search engines: original content. Twitter, Facebook & Co provide the breaking news, the quick and dirty stuff. Newspapers add quality, depth, and balanced opinions.

 

In the process, they need to also focus on another valuable asset they have: the journalists. When Google & Co took newspapers apart, they also opened up the gates for journalists to build direct relationships with readers a.k.a. an audience! Newspapers need to be aware of this and provide a platform for journalists to cultivate that audience.

 

While speaking of business models: Publishers can rarely live off of subscriptions alone. They often have to take other revenue streams, like events, books, consulting, and affiliate into the mix (a.k.a. long-tail journalism). The New York Times, for example, acquired Wirecutter for $30M in 2016 and already made $26m from it in 2018. Buzzfeed has an affiliate deal with Spotify that gets them a 10-25% commission. Consulting is an interesting channel, because every company is a media company nowadays, and the folks who understand media best are… the media folks. So, why not leverage hundreds of years of knowledge to consult and train companies with no media background?! [9]

 

Closing thoughts: A new hope for newspapers

 

Newspapers are not the only ones facing dramatic changes: they are going through an equally rough transition period as the music and now TV industry. The music industry was disrupted by Napster, Spotify & Co, which also tanked traditional revenue streams – and it’s also coming back. [10]

 

(Revenues in the record industry are rising again, Source: RIAA)

 

Labels found new ways to make revenue, like “360 deals”, which involve sales from concert tickets, digital sales, appearances in movies, television, and more. Artists don’t earn as much through streaming services as they used to in times of the CD, but money is flowing back an industry that was corroded by piracy.

 

Cable TV is undergoing a similar disruption through Netflix & Co, but some channels figured out a way to go direct-to-consumer. One good example is HBO with HBO Go, which now has around 2m subscribers.

 

(Netflix stock price overtaking Time Warner, Disney and 21st Century Fox; Data by Quarty)

 

Let’s not forget that newspapers survived threats to their existence before, e.g. when the radio or TV arrived on the scene (1950). It’s hard to make people pay for something that is free, but it’s possible. People need and want journalism, but it has to adapt.

 

The next trend, voice assistants, is just around the corner. This time, newspapers have a chance to ride the wave, instead of missing it again.

 

References

  1. https://www.americanpressinstitute.org/publications/reports/survey-research/paths-to-subscription/
  2. https://www.ampproject.org/case-studies/
  3. http://www.pewresearch.org/fact-tank/2017/10/04/key-trends-in-social-and-digital-news-media
  4. https://support.google.com/news/publisher-center/answer/40787?hl=en
  5. https://www.stonetemple.com/mobile-vs-desktop-usage-study/
  6. https://www.editorandpublisher.com/columns/digital-publishing-why-email-newsletters-continue-to-succeed-for-newspapers/
  7. https://www.nasdaq.com/article/the-new-york-times-harnesses-the-power-of-increasingly-personalized-push-cm583704
  8. https://www.poynter.org/news/seattle-times-making-it-everyones-job-grow-digital-subscribers
  9. https://blog.markgrowth.com/inside-the-new-york-timess-post-acquisition-strategy-for-wirecutter-f6123b5f285f
  10. http://www.nielsen.com/us/en/insights/reports/2018/2017-music-us-year-end-report.html
  11. http://www.niemanlab.org/2018/02/after-years-of-testing-the-wall-street-journal-has-built-a-paywall-that-bends-to-the-individual-reader/
  12. https://digiday.com/media/get-10m-subscribers-new-york-times-focusing-churn/
  13. https://www.comscore.com/Insights/Presentations-and-Whitepapers/2018/Global-Digital-Future-in-Focus-2018
  14. http://flurrymobile.tumblr.com/post/169545749110/state-of-mobile-2017-mobile-stagnates
  15. https://blog.parse.ly/post/7393/3-questions-to-ask-data-evaluating-paywall/
  16. https://digitalcontentnext.org/blog/2017/10/24/slate-picked-engaged-time-north-star-metric/
  17. https://www.bloomberg.com/news/articles/2018-04-30/new-york-times-expands-tv-podcast-effort-after-daily-success
  18. https://www.theguardian.com/tv-and-radio/2018/mar/30/hear-all-about-it-how-daily-news-podcasts-became-publishings-new-hope
  19. https://www.recode.net/2017/5/4/15550052/new-york-times-subscription-advertising-revenue-chart
  20. https://contently.com/strategist/2017/10/16/vox-creative-create-content-actually-performs/
  21. https://channels.theinnovationenterprise.com/articles/how-cnbc-created-a-sustainable-audience-growth-strategy
  22. https://www.theguardian.com/media/2016/jul/31/print-still-has-a-future-le-monde-aux-armes
  23. https://digiday.com/media/double-circulation-profits-economist-16-people-focused-retention/
  24. http://niemanreports.org/articles/breaking-news/
  25. http://www.gc.cuny.edu/CUNY_GC/media/CUNY-Graduate-Center/PDF/Programs/Economics/Course%20Schedules/Seminar%20Sp.2013/seamans_zhu_craigslist(1).pdf
  26. https://www.emarketer.com/content/social-media-will-hit-major-milestones-in-both-ad-revenues-and-usage-in-2018
  27. http://www.journalism.org/2012/03/05/search-new-business-model/
  28. https://www.emarketer.com/Article/Google-Facebook-Tighten-Grip-on-US-Digital-Ad-Market/1016494
  29. https://pagefair.com/downloads/2017/01/PageFair-2017-Adblock-Report.pdf
  30. http://blog.iono.fm/visibility/
  31. https://blog.pacific-content.com/exclusive-inside-the-new-google-podcasts-strategy-that-could-double-audiences-worldwide-b556cdc26e43
  32. https://digiday.com/podcast/digiday-podcast-meredith-kopit-levien-new-york-times-future-depends-large-paid-consumer-business/