- Matt Lindsay
This guest article is the last in a three-part series from Mather Economics, an Atlanta-based global consulting firm that helps businesses with pricing strategies.
This is the final installment in a three-article series that examines how data and analytics offer opportunities for publishers to improve business performance in the three primary functions: editorial, advertising and audience. The first article on editorial described how big data and analytics have integrated content creation and monetization to an extent previously impossible on the print platform. The second article on advertising described the opportunities to use data and analytics to support yield management pricing strategies and tactics for print and digital advertising revenue growth, including the use of first-party audience data for premium digital targeting opportunities. In this article, we will focus on how data and analytics can improve revenue yield from the audience across both print and digital platforms. The central theme of these articles is that the three functions have much to gain from the use of a common set of data and analytics that provide a holistic understanding of the business and a foundation for coordination among the functions to maximize overall business performance.
Audience revenue growth
Audience revenue is now more than half of total revenue for many leading publishers, including digital innovators such the New York Times and the Financial Times. Even at regional and community publications, audience revenue is a far larger share of revenue than it was five years ago. Unfortunately, much of the change in revenue streams is due to the decline in run on press advertising, that is advertising that appears in the print editions, but audience revenue has grown significantly, and continues to grow, for many publishers despite lower print circulation levels. Audience analytics and targeted pricing strategies have contributed significantly to the revenue growth while minimizing incremental churn, as publishers have become more sophisticated in their product marketing and consumer pricing. Consumer pricing is now a point of strategic leverage for these organizations and the data they collect on their audience a valuable asset.
My company, Mather Economics, works with hundreds of publishers to maximize home delivery circulation revenue through targeted subscription pricing, and we help our publishing clients to measure the effect of price changes on churn using A/B testing with target and control groups. In most cases, publishers are pleased to discover how much their subscribers value their product and are willing to pay for access to their content. At the same time, publishers are able to see what pricing actions have cost them customers in the past so as to avoid those same mistakes. The result is more revenue and circulation volume than would be possible under less targeted pricing.
The expansion of publishing onto multiple platforms is a tremendous opportunity for audience revenue. The ability to track digital content consumption provides unprecedented insight into what customers desire from the product. As discussed in a prior article, using these data and analytics, the editorial and audience functions can work together to design products that better reflect the demands of the audience. Product configurations can be developed to target customer segments with particular preferences and price elasticity. As much as the cable industry has offered different bundles of channels, publishers are able to offer the core product in addition to enhanced coverage of certain content categories. This additional content can be in several formats, including video, event access, digital only or in high-quality print, depending on the topic and the audience.
We have found that the audience preferences for platform change slowly. Print readers often have strong preferences for that platform, for example, but there are tactics that are effective in introducing them to digital platforms. Incentives for activation of their digital access is the first step, followed by content marketing through email, and in-paper promotion of digital features. Pushing print readers into the digital platform before they are ready to make the transition can lead to higher subscriber churn and loss of the customer altogether. There is evidence that print and digital platforms are complements, not substitutes, for certain customer segments, with consumers across both platforms having higher retention and lower price elasticity than single-platform customers. The implication is that retaining print a few days of the week may augment the digital business in the long run, for both audience and advertising. Data and analytics are critical to understanding preferences and pricing power for acquisition and renewal pricing as well as in the transition of their audience from print-only to a multi-platform relationship. We believe that audience revenue will continue to grow as a share of total revenue, as that is the revenue stream in which publishers have the most control and the best data.
Having a centralized data and analytics platform that combines data from systems in each of the primary functions and that support analytics to optimize the operations of these three functions is critical to the success of publishers. Having separate “big data” operations for advertising, audience and editorial functions will never maximize the potential of the organization since these functions will pursue conflicting objectives without a clear understanding of the tradeoffs that must be made. Audience revenue must be maximized subject to the opportunity cost of lost advertising inventory. Editorial content must be produced in a manner consistent with the platform in which it is distributed adjacent to advertising and the manner in which it is sold to the audience. Advertising revenue must be maximized subject to the potential for lost subscription-acquisition opportunities and its effect on the customer experience.
This article has discussed the use of data and analytics in growing audience revenue on both print and digital platforms through increasing the average rate while also maintaining or growing subscription volume. Publishers have a competitive advantage in their relationship to their audience and the data that relationship produces, particularly in the combination of offline and online data. It is likely that investments in analytics on the audience will have the highest return on investment than anywhere else in the organization.
Matt Lindsay, president of Mather Economics, has more than 20 years of experience in helping businesses improve performance and grow revenue through economic modeling.