The topic of subscription ceilings, or peak subscriptions, has come up a lot in conversation recently, but after a chat with the HBM Advisory team it seems the problem has been misunderstood.
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 [email protected].
