Why subscription marketing?

All the current hot discussions on website business models, paid content, converting free-to-paid magazines, charging for news audience development etc., come back to one thing: subscriptions marketing.

Those discussions are similar in scope to the economists, accountants and bankers who, until recently, forecast continual growth. Now, of course, we are well into a long, scary recession and everyone knows they got it wrong. But, despite all that, I see that financial and economic forecasts are creeping back into mainstream media on the assumption that readers have forgotten that they were massively misled just a few months ago by the very same people.

You just cannot tell what an audience will do or how they will react.

Publishers, meanwhile, are busy debating the popular subjects listed above – free-to-paid, paid content, new revised business models etc. – which is really all about three things:

1. Their business models are wrong

2. They have run out of money

3. They should have monetised editorial content years ago

What every publisher knows

Every publisher knows advertisement revenue falls during a recession by up to 40% or thereabouts. The difference this time is that no-one thinks that revenue will come back: it’s going – gone - to the Internet. As so many companies in other markets have discovered – publishing, oil, motor, property, banking - no business can lose a large percentage of income without serious damage. Not unless they have an effective survival strategy that prepares them for future changes.

So why subscription marketing?

Subscription marketing has the answers, because it’s all about maximising long-term income from your target audience. The debate about paid content and free-to-paid is mostly unnecessary because a series of tests within a market is all that’s needed to answer those two vital questions:

1. How much will people pay?

2. How many will pay?

Tests also tell you what people will pay for those other products you have bundled up up to sell through your website. Those are what used to be called ‘ancillary products’ but are now central to turning a good profit from your customer base.

Death Valley awaits

Of course, it would be folly to roll out a business model unless you knew how many will pay. It would be like driving into Death Valley without knowing how much fuel there is in your tank. Death Valley is very long, and scary, (100 miles, 50° centigrade). Long and scary is also what this recession is and you needed to have enough in your tank to be able to get out without frying.

Recessions happen every ten years or so, so there has been plenty of time for all media folk to test how much people will pay and how many will pay it. To see how much reserve they have in their tanks for the hard times ahead. But few have done it.

The point is, with a favourable test result, there is no need to rely on advertisement income.

What will people pay?

In all the tests we carried out with specialist, B2B and consumer clients, we found readers are willing to pay if they are given a good enough reason and an effective and convincing explanation of the benefits of your product.

We use email promotions, direct mail, home page copy and advertisements to bring about the change in perception needed and to build profitable subscribers. Click here to contact me if you would like to know more.

Would you pay to enter a car boot sale?

No. Car boot sales are free so on the face of it, no, people wouldn’t pay. But to close this piece, I’d like to recount a tale – something that happened to a group of us in a small town car boot sale.

The field was fenced, with a wide, open entrance by the road. I had finished looking around, so I stood outside, waiting for my friends. Ten minutes later, they came out and I turned to walk with them. Then I saw behind me a queue of around 20 people had gathered. No-one had entered the field in those ten minutes. All thought they had to pay to enter.

Who knows what an audience will do or how they will react?

To find out go here:

Peter Hobday

17 November 2009