Having mapped out ways for magazines to develop a direct-to-customer relationship by understanding the needs of readers and finding ways to engage with them, the Google Digital Immersion Week turned its attention to what is a particularly difficult hurdle to clear – monetisation.
As the five-day course in partnership with FT Strategies and FIPP drew to close, Graham MacFadyen, director of acquisition at the Financial Times, walked the attending operational managers in magazine media through FT’s monetisation strategy, from picking the right reader revenue model, to changing the internal culture at the company.
“Some problems never go away and monetisation is one of them. I think it will be with us till the end of our careers,” he cautioned. “The challenges around acquiring and retaining individual customers are pretty predictable and even though the business models (at publishers) might be slightly different, there are some common problems and challenges.
“From the get-go we have to explain to people that we are here in the first place, that we exist, that we can solve some of their problems and that we are value for money.”
Finding a model that works
The Financial Times has showed over the last 15 years just how effective and lucrative a paid content revenue model can be. The newspaper has managed to gain 1.3 subscribers across the FT group in that time and now makes more money in digital than in print and more from readers than advertisers.
“The reader revenue model at the FT is about moving people from not knowing anything about the FT through a process of getting to know it, understanding it and understanding that it’s relevant to your needs and finally, hopefully, realising that it’s good enough value for money to make a purchase decision,” said MacFadyen.
“Once we persuade someone to make that purchase, we’re really in the mood of retaining customers by emphasising over and over again what we can do for them and how we can better meet their needs. We want to make sure we’re not leaving value on the table that is undiscovered by our customers – causing them to cancel subscriptions because they didn’t realise what we offered.
“In our cancellation insight surveys, one of the most common things that people say to us is: ‘I didn’t know the FT did that. If I knew, I wouldn’t have cancelled my subscription’. That really hurts a marketing team.”
The FT’s paid content revenue model is driven by the belief that the content it’s producing is of high quality and that the supply is limited.
“There aren’t many people and organisations in the world producing the type and quality of content that the FT is producing. Therefore the paid content model ought to, if we get all our other ducks in a row, work really well for us,” said MacFadyen.
“The downside of the paid content model is that the customer base can be relatively small. At the FT we’re not talking about a mass market audience.
Relatively speaking, we have a narrow customer base, but there’s value in niches, especially if you can multiply the niches that you’re in.”
That we find ourselves in a position where our readers don’t believe what we are saying is an indictment on the industry as a whole. But for an organisation like the FT it can have a silver lining.Graham MacFadyen
Battling fatigue and building trust
Turning to the trends impacting revenue streams, MacFadyen highlighted the scourge of subscription fatigue. With everything from wine and coffee to movies and music available by subscription, there’s a very real threat of market saturation, with consumers thinking carefully about spending more money.
To combat this, publishers need to start thinking innovatively about bundling, partnering and more flexible payment options. “Maybe subscription isn’t right for all of the FT’s customers, particularly customers outside of our core markets,” MacFadyen pointed out.
“Maybe for customers in the US or elsewhere, where most of their news media comes from domestic providers like The Washington Post or the New York Times, a subscription of £30 a month is not right. Flexible payment options or some kind of partnership with a domestic or a local news media provider would be more suitable for some of those customers.
“So we are definitely thinking about things like that at the FT – people we could partner with to provide more value and more choice to our readers when it comes to subscriptions, so we can battle that fatigue that is evident in some markets.”
While a global decline in trust in media is another worrying trend, it’s something that can benefit those publishers producing quality content. “That we find ourselves in a position where our readers don’t believe what we are saying is an indictment on the industry as a whole,” said MacFadyen. “But for an organisation like the FT it can have a silver lining.
“The FT is one of the organisations that ranks still relatively high when it comes to trust, so if there is a move from low trust media to high trust media then the FT, if we do it right, can persuade our customers we deserve to be trusted.”
We have tried to align our objectives around customer lifetime value, rather than having competing objectives across departments.Graham MacFadyen
Knowing leads to growing
When it comes to developing a strategy to grow your audience, MacFadyen stressed the importance of understanding the needs of your readers, especially groups like “objective deep divers” who value content but are not willing to subscribe.
“Objective deep divers are late in their career or retired and, while they really want to learn and understand the world, are not interested in that sort of professional super charging of your career that the FT can provide for some people, ” he explained. “Because of that, there is much lower willingness to pay on the vertical access – something like 20 per cent of the willingness to pay of the professional readers.
“So any new product or service the FT develops that’s intended to grow that objective deep diver audience needs to be much, much cheaper. And it also does not have to necessarily contain any of that career rocket fuel content that the professional readers come to us for.
“We have a new product development work stream at the FT exploring these issues right now, determining what we need to do in terms of new product development of proposition and pricing for these customers who come to us but tend not to subscribe.
“It’s about matching our future product development to the needs of our customers to give any new products that we might want to launch the best possible chance of success.”
An important part of the FT’s monetisation success has been an organisational realignment. Where individual business units used to pursue niche interests with marginal gains – damaging unity and driving down morale – the company now has multi-disciplinary teams drawn from editorial, product, tech, marketing, data and finance with a common identity and goals.
“People have empathy with other departments and care about their success, which is having a really positive beneficial effect in cultural terms,” MacFadyen said. “Having done this for two and a half years now, we can really start to see the impact on relationships and trust. We have tried to align our objectives around customer lifetime value, rather than having competing objectives across departments.”