In brief: 
- Given that page-views are the key metric in most newsrooms, journalists are often unaware of the true business value of each individual article they publish
- Instead, publishers should make their whole company aware of two key metrics: Customer Lifetime Value and the revenue generated from every 1,000 page-views (RPM) 
- Metrics matter and should reflect the revenue model that your business is working from...

Most journalists actually know very little about the company they work for. Yes, they may understand that the industry in general is under threat (especially local news outlets) but there’s a lack of understanding about the business value of each individual article they publish. At least this is the opinion held by Matt Skibinski, reader revenue consultant at Neiman Lab.

In fact, it’s something that can be applied to most teams working in a publishing company – whilst advertising people may solely look at ad metrics, subscription people will focus on subscription metrics, and journalists will concentrate on outdated metrics such as how often their content made the front page… but nobody puts these metrics together to get a clear view of how the business as a whole is performing.

Which raises a very important question, one that journalists, ad and subscription people should probably consider…

Would it be more valuable for an article to generate a high number of page-views or successfully convert a user into a subscriber? 

Although the answer’s still being worked out within the industry, Skibinski shares research and metrics to point us in the right direction. 

2 key metrics for unit economics

1. Customer lifetime value (CLV or CLTV)

A well-known metric among subscription-based businesses, CLV measures the average total net revenue that you expect a subscriber to bring to your business throughout their entire time as a paying customer. 

Although there are a variety of ways to track CLV, the simplest form is

CLV = Average customer value x Average customer lifespan 

For instance, say we charge an average of $9 per month for subscription and, on average, these users remain subscribed for 20 months, then the CLV would be $180. Concretely, this means that each new subscriber will (again, on average) bring $180 to the company. 

Of course, this doesn’t take into account the cost of acquisition (Customer Acquisition Cost, CAC), worked out by combining all costs associated with marketing and advertising efforts divided by the number of subscribers generated.

Customer Acquisition Cost = Acquisition costs per month ÷ customers acquired per month

You can then subtract this cost from the CLV to find your overall profit from subscribers. 

What’s more, comparing these two KPIs will give you insights into the health and sustainability of your subscription model. If we consider the ratio LTV:CAC, a 1:1 ratio would mean that you’re losing money with each subscriber acquired and that the strategy isn’t sustainable for long-term growth. A 3:1 ratio on the other hand is considered the ideal benchmark for most businesses, representing a sustainably profitable model.

Skibinski highlights that although most publishers will have some form of CLV calculation, it will likely only be understood by finance or consumer marketing departments. Anyone outside of this small group typically doesn’t know this number, but it could certainly prove valuable if they did. 

> You’ll also enjoy: A whistle stop tour of the wondrous world of Lifetime Value

2. Digital advertising revenue per 1,000 impressions (RPM) 

Previously reserved for advertising or managerial teams, it’s time for RMP to make its way into journalist’s key performance indicators.

RPM allows publishers to understand the revenue earned per thousand impressions. 

RPM = ( Revenue ÷ Impressions ) x 1,000

So, say we want to calculate the RPM for September 1st, 2022 when the site earned an estimated $133.04 for 104,752 ad impressions.

RPM = ( 133.04 ÷ 104,752 ) x 1,000

RPM = $1.27

An important precision for journalists – not every page-view generates the same amount of ad revenue and it’s highly dependent on context, device and the quality of data available. 

Skibinski therefore recommends tracking RPM for programmatic advertising only, and reserving this metric for content pages – other pages are of course still relevant to the overall business but are less relevant to the impact that one article or another might have on the business. 

In summary, the two metrics to track: 

OK, great, but which metric is more valuable? 

Lenfest helpfully provide a case study to illustrate their point: 

This metro daily newspaper, publisher A, has a fairly high CLV of $345 and generates $21.44 in total advertising per 1,000 pageviews, or $7.16 per 1,000 pageviews from programmatic advertising only.

What can we take from this about the publisher’s unit economics? 

An article that converts 1 user into a subscriber will generate the same amount of revenue as an article that receives 16,000 page-view if advertising is sold directly, or 48,000 views if sold through programmatic advertising. 

To reach these figures: 

CLV ÷ RPM x 1,000

For direct-sold advertising: $345 ÷ $21.44 × 1,000 = 16,090

For programmatic advertising: $345 ÷ $7.16, × 1,000 = 48,184

Looking at the data for Publisher A’s content, the average article generates about 4,250 page-views in the month following publication. This means that an article that converts one new subscriber will generate the same revenue as about 10 average-performing articles (from programmatic ads). 

This kind of data and understanding about unit economics could prove invaluable to journalists, driving key decisions about content. 

> To read next: The essential engagement KPIs for optimizing conversion rates

How would combining these metrics support subscription business models?

What would happen if publishers shared this kind of data with the whole company, including the newsroom? 

In short, metrics matter. 

Today, the metrics shared within and available to journalists are primarily measures of total reach – lists of articles classed by page views, and sometimes other engagement metrics such as time spent on page. This leads to content being written with the goal of producing a high number of page views, with click-bait headlines or by covering widely-talked-about topics without sharing anything new. 

And it’s widely understood that this kind of coverage isn’t going to attract and retain subscribers….

If, however, we change the key performance metrics to focus more on delivering value, journalists would adapt writing accordingly, covering niche topics, distinctive, local reporting that’s relevant to their daily lives. I.e. content that solves a pain point or helps users achieve a job-to-be-done. Content worth paying for. 

“If newsrooms could view successful coverage not just as content that generates clicks, but also as journalism that delivers value to subscribers, it stands to reason that they would respond to those cues in the decisions they make day-to-day.” 

4 simple starting points recommended by Skibinski: 

• Ensure everyone in the company understands and knows key metrics such as CLV and marginal ad revenue 
• Daily or weekly reporting shared cross-company on the number of user-to-subscriber conversions, and from which sections of the site
• Report and share information on subscriber content consumption – this can tell you a lot when compared to the articles being clicked on by non-subscribers as well as potentially which type of content is likely to convert users into subscribers
• Consider experimenting with content attribution reporting – find the content attribution model that best matches your goals (such as last touch, i.e. the last content that was consumed before a user chose to subscribe) and rank articles based on this

Looking more broadly, combining these metrics will help publishers to better allocate resources, with a new-found understanding of the value of subscription vs advertising, as well as make decisions about which content to place behind a wall, how many articles to offer for free in a metered strategy, etc… 

The value of these metrics is endless, but it’s this that will transform publishers from acquiring eyeballs to subscribers.

What should the central monetization strategy be for publishers? Focussing on ad-based revenues or on increasing subscriptions? Well, according to researchers at the Spiegel Research Centre at Northwestern University, neither. 

For them, the best reply to this question would be to focus on increasing the customer lifetime value (CLV).

CLV is an indicator that allows businesses to calculate the total net revenue a subscriber will bring to you throughout their time as a paying customer, taking into account the monthly payments and retention rate. It’s been widely used in the e-commerce industry for years but the benefits of tracking CLV are less well known in the content-producing world. However, CLV is an indicator that publishers should embrace in order to maximize revenues.

“Being able to move a reader to a subscriber, while important, has much less leverage and value than growing the long-term value of that subscriber”

Tom Collinger, Spiegel’s Executive Director

“Across industry, it is always much easier to retain somebody than to bring in someone new, because they already value and trust you, and they want to engage with your content and your product, versus trying to convince somebody why they should subscribe or join.”

Ainul Huda, VP, audience development and analytics at Condé Nast

Concentrating on retention means improving engagement, increasing the loyalty of your subscribers, personalizing experiences, avoiding churn and building lasting relationships.  

“It means understanding the drivers of retention, and the causes of cancellation for all subscribers…It means calculating Customer Lifetime Value for every subscriber and improving the engagement and subscriber experience to grow it.”

Tom Collinger, Spiegel’s Executive Director

What’s more, increasing retention will have cumulative financial benefits. Ed Malthouse, Spiegel’s Research Director, highlighted that even small improvements in subscriber retention rates can have a significant impact on CLV and monetization, as shown in the image below.

Outbound engine further proves this financial benefit of increasing retention by calling our attention to the fact that…

Whilst “acquiring a new customer can cost five times more than retaining an existing one, increasing customer retention by 5% can increase profits from 25-95%”.

The benefits are therefore twofold: retention costs less but monetizes more.

Given this, how do you increase retention and CLV?

• Prioritize engagement: take a data-driven approach to understand where your subscribers see value, what content engages them and what increases loyalty. This will allow you to continue to provide the type of content that made them subscribe in the first place as well as see gaps in engagement that you can fill.

• Form habits: integrating your content into the daily lives of your subscribers is the key way to increase retention. Newsletters in particular have been proven to create deeper connections between a publisher and their consumer (be wary not to spam users however).

“Implementing a robust engagement and acquisition email marketing program has been the single largest contributor to our improved subscriber retention.”

Hearst Connecticut Media Group

• Develop loyalty: creating loyalty at multiple touch points will increase the lifetime of your subscriber base and so lead to increased revenues. This can mainly be done through building a strong relationship with users, increasing engagement and making them feel valued as a customer. Exclusive content or surprise gifts/promotions can help to keep a user loyal to your brand, but producing high quality, engaging content should definitely not be forgotten.

• Personalization: it’s important that you understand your audience and personalize their experience to make them feel valued as an individual subscriber (rather than as part of a mass). Sending emails with recommended content, adapting their home and account pages to match their interests or even simply allowing users to save content for later – all these personalization features add to increasing retention rates and improving customer loyalty.

• Reduce churn: if you want to increase retention, you obviously need to reduce churn (the number of users who unsubscribe). To do this, you need to understand what makes a user churn and what actions you can put in place to prevent this from happening. For example:

“When Canada’s Globe and Mail began emailing subscribers with the highest propensity to churn, it reduced churn by 140 percent. Emailing subscribers who hadn’t logged in for 30 days reduced churn by 27 percent.”

Nieman Lab

• Focus on your value proposition: your subscribers pay to access your content because they see value in it. Put simply, if they no longer feel that they’re getting this value, they’ll likely unsubscribe. Therefore, focussing on your value proposition and ensuring that you’re very thoughtful about what your value is, as well as why someone should pay for your content, is hugely important.

> To read next: How to perfect your value proposition