In a strategic move to engage a new and distinct audience, as well as take note from the creator economy, The Economist has launched its data journalism newsletter, “Off the Charts,” on Substack. This decision to venture beyond its traditional paywalled ecosystem offers a fascinating glimpse into how a legacy publisher is adapting to the evolving digital landscape. 

I sat down with Aaron Coultate, Head of Newsletters at The Economist, to discuss the thinking behind this exciting initiative.

For Alan Hunter and Michael Brunt, the concept of a subscription ceiling isn’t about there not being enough potential subscribers to convert, nor is it about readers avoiding the news, or not having enough money. Instead it refers to a point where a publisher has saturated their core audience, where cost-per-acquisition becomes too high. There are still plenty of potential subscribers, but the publisher needs to build out their offering to reach wider than their core audience. 

In short, it’s not a problem with readers, but a problem with publishers.

What is the challenge around subscription ceilings?

After launching a digital subscription model, developing paid products, testing pricing and the likes, a publisher will reach a certain level of maturity in their reader revenue strategy. At this point, subscriber volume growth starts to plateau. 

Some push past this, such as The Wall Street Journal and The New York Times, but for others, such as FT and The Economist who have had fairly static subscriber numbers for a considerable time, aside from some variation during Covid, it would appear that they’ve reached a “ceiling” – a point that feels impossible to pass. 

So what are the NYT and Wall Street Journal doing right and others doing wrong?

Because, importantly, whilst most consider the “subscription ceiling” to be a problem with readers – news avoidance, lack of time and money for yet another subscription product –  it’s actually only the publishers who aren’t building out their core product to attract and engage a wider range of readers who will find themselves at the ceiling.

What are the publishers “hitting the subscription ceiling” doing wrong?

Michael has first-hand knowledge of The Economist’s subscription strategy, explaining how they built an always-on digital marketing machine. 

“It was a multi-channel, ruthlessly optimized model, with some fancy software that tracked the value of every digital interaction along the customer journey and then tried to optimize it. And it worked really effectively – the cost per acquisition was a small fraction of the lifetime value, so it was very profitable.

Subscription became the largest revenue stream for The Economist group, it was incredibly profitable. But then it kind of stopped. Our ‘secret sauce’ of subscription success was becoming less impressive as growth slowed. Revenue was still strong thanks to optimized pricing and retention, but subscriber volume growth was an uphill battle and the cost of acquiring the next million subscribers was prohibitive. 

We can think of it like an onion – you have your core readers in the center who subscribe fairly easily, you just have to give them a good offer. But as you work your way through the layers it becomes more and more difficult. We ran crazy campaigns such as giving away insect ice cream to acquire new subscribers – I even knew how many scoops it took to convert someone! But these ideas aren’t scalable. And whilst you know there are some of the target market who aren’t yet subscribed, they read enough to satisfy their interest, they’re aware of the brand, but they just don’t want to subscribe…

It’s at this point that the publisher, especially a mature publisher with high brand awareness such as The Economist, reaches peak subscriptions with their core audience and with their core product.” 

Diversification to tap into new audiences

The best brands in the business, those who are still growing, are those who have successfully managed to diversify their products. Think of The New York Times’ games, cooking, sports, Wirecutter…

That’s the real difference between those that have passed the subscription ceiling and those that are stuck under it.

Importantly, Michael highlights that very few that have got their marketing so established that they know precisely where the edges of LTV and profitability are. So there’s a lot to do to optimize marketing as well, before all this, to even get to the point of saturation.

This is where The Economist’s Espresso comes into play

Back in 2014, Michael helped The Economist launch Espresso, a concise daily briefing targeting Gen Z with global news, quizzes, and longer reads. He believes that the recent decision to offer Espresso free access to students 16+ in July of this year is an excellent move, because early brand adoption will lead to future paying subscribers.

This strategy doubled Espresso’s readership in a month, increasing 18-24-year-old readers twelvefold. Thousands of institutions across 100+ countries adopted the student offer. They’re now adding in AI translations, making Espresso available in six languages, including French, Spanish, and Mandarin.

In an article for Journalism.co.uk, Tom McCave, VP of performance marketing at The Economist, shared that whilst “building brand awareness is important… building brand preference and equity is paramount.”

Although the impact is hard to measure in the short term, “the pool of prospects who are likely to convert will dry up, reader acquisition costs will increase, and growth will stall without a continuous investment in brand marketing,” he added.

The Economist’s marketing extends across various channels, including sponsoring tennis championship t-shirts, podcasts, and even radio spots in the US. These efforts build long-term brand recognition, setting them apart in a crowded market and justifying premium pricing.

> Engaging tomorrow: The youth-friendly engagement funnel for media brands

How can publishers approach the topic of peak subscriptions before it’s a problem?

In a few words from Michael: optimize the customer journey.

“So many publishers come to us wrangling over their free trial offer, wondering why no one is converting to a full price subscription. Or wrangling over the price point, packaging, and really having a crisis of confidence over the content, only to find that credit card payments aren’t going through. 

And this is so common! It’s boring stuff, but whilst you have low volumes it’s the perfect moment to check that everything works. Get to industry benchmark level, make it easy, reduce friction and be very sensitive over local payment methods. 

And of course look at post-payment. Especially via the paywall as this reader may have only wanted to subscribe to read that single article, so you have to really sell the product that they didn’t necessarily want. Walk them through what they’ve bought, onboarding, first 90 days, get them to activate engagement actions. 

Then on the marketing side, start at the easiest first. Be sure that your subscription is sold well on your own digital assets. Start with the people who know you and already engage with you, and then start moving further out through the layers of the onion. Data collection and segmentation will help here, further down the line.”

Finding gaps in your existing audiences

There’s also widening the core audience in other senses, growing amongst younger readers, and female readers, both underrepresented demographics in the industry. 

And this, in part, due to underrepresentation within the newsroom itself. 

“Make sure your content is being created by that audience, that your team reflects those that you want to reach, not just those in senior positions but throughout the newsroom. And of course in the formats that these readers want to consume.”

HBM Advisory works with clients to maximize their digital potential, with an emphasis on aligning editorial and business goals. For more information, contact us at info@hbmadvisory.com.

The solution

Working with our creative team, we designed a booklet that introduces subscribers to all of their benefits. It also enables them to quickly get started, explore our journalism and establish a reading habit. The booklet complements our existing email welcomes series by guiding new subscribers on using our app—a key retention-driving action—and managing their subscription, which gives them confidence in their purchase.

We also address pain points raised in customer surveys such as understanding the breadth of our newsletter coverage. Additionally, the pack includes a letter from our editor-in-chief, Zanny Minton Beddoes, to provide a  personal touch and to welcome them into our community. 

To measure the impact of the pack, we worked with our Data Insights team to determine test design and KPI. Rather than rolling the pack out to everyone, we conducted an A/B test with 50% of new subscribers receiving a pack and a 50% control group receiving nothing.

The KPI was to determine if the pack increased subscriber engagement as we know this has a direct correlation with retention rates. Engagement at The Economist is defined by the number of pieces of content consumed within a month. This can range from articles read to newsletter opens, and is something we are continuously optimizing towards.

> To read next: NZZ: How do you inspire people in the first 100 days?

Results and next steps

The test had a statistically significant impact with the test group showing an observed engagement uplift of 3.5%. Interestingly, some regional differences were observed, but these could also be due to the start mixes—further testing is required to reach statistical significance.

We are planning our next test to further optimize the pack and see if we can increase the engagement uplift—watch this space!  

Advice for others

If I were to advise other businesses on introducing a physical welcome pack I would recommend analyzing whether the cost of mailing a pack is justified and the relevance of a pack to your audience and product offering. For example, at The Economist we know we offer a premium product therefore want to reflect this in the customer experience. Additionally, although our proportion of bundle subscribers (print and digital) is declining, a welcome pack complements this cohort particularly well. However, perhaps for something like a streaming service where the audience is likely to be younger, is a purely digital offering and has a low CLTV; it may not be the best fit. 

When designing a welcome pack, I would suggest selecting the key actions you want new customers to take within their first few weeks and work with your creative team to effectively translate this into print. QR codes and vanity URLs are also great ways to seamlessly direct customers online. To keep your welcome pack concise, be discerning about which benefits you include and which actions you’d like subscribers to take—information should be easily absorbed and the pack should not be a chore to read. 

And finally, I would always advise testing rather than rolling out 100%. Direct mail campaigns are expensive and may not resonate with your audience—they may even drive churn in trialists by serving as a reminder.