A survey of over 200 publishers from late last year shows clearly that the days of ‘rocket ship growth’ from subscription models are behind us. So what’s in front of us? BlueConic’s Patrick Crane unpacks the key takeaways from the survey. TL;DR: First-party data is gaining significant traction, not just in terms of ad revenue, but also to underpin subscription strategies.
Last year was a brutal year for publishers. Advertising revenue’s wobble sped up significantly, leading to revenue misses, layoffs, and overall doom and gloom. Well before the “Year of Efficiency,” the lumpiness of advertising revenue prompted a shift toward subscription models to ensure a steadier and more reliable source of income. Publishers such as the New York Times, once struggling to survive, credit the early adoption of a subscription model as the turning point to success. Now boasting more than 10 million subscribers, the publisher is expected to reach its goal of 15 million by the end of 2027. But are subscriptions a panacea for all of the media’s problems?
In conjunction with the Rebooting, customer data platform (CDP) BlueConic surveyed 201 publishers in October 2023 to understand the state of publisher subscription programs. Despite challenges, most publishers expressed optimism for future growth but noted that subscription programs are just one facet within the broader revenue toolkit.
So, how are subscription programs being used today? When asked to rank the importance of various strategic goals regarding their subscription business, publishers showed a clear priority for revenue diversification, which makes sense. With the broader economy shifting away from growth at all costs toward a renewed focus on profitability, the best revenue strategy is cultivating more revenue streams.
However, the variety of responses underscore just how many reasons there are for launching some kind of subscription business – from building direct relationships with readers and growing known audiences to increasing first-party data collection. These findings suggest publishers are proactively adapting their strategies to mitigate the effects of third-party cookie deprecation, which impacts their ability to personalize content and effectively earn revenue through targeted advertising.
It also appears the days of ‘rocket ship growth’ from subscription models are a thing of the past. Of the publishers surveyed, most reported modest growth in subscription revenue in 2023, with the most common growth rate being under 10%. Subscription levels also remained flat or declined for 27%.
Despite these findings, publishers are still focused on subscriber growth, with 91% expecting to see revenue increases from subscription models in 2024 and only 9% believing they would see no growth or a decline next year.
So, what’s changed? First, the economy. Consumers, just like publishers, tightened their belts in 2023 and stopped spending on products they didn’t need. For some publishers, that meant slower growth rates, and for others, higher churn. Second, subscription products have matured. The focus at the inception of every subscription product is growth. But once you have enough audience and data to inform decisions, the focus shifts to keeping that audience. Eventually, this stabilizes, and the objective becomes sustaining profitably and efficiency, which leads to a focus on ARPU. While we didn’t ask it in the survey, I’d wager than “years offering a subscription product” correlates to the different priorities we saw in the answers, with 57% focusing on growth, and 37% focusing on churn.
Luckily for publishers, the first-party data generated via subscription products will play a critical role battling churn, with two thirds of respondents indicating they will focus on using the customer data generated from their subscriptions to reduce churn in the next 12-24 months.
These same publishers are also being realistic, acknowledging that ‘converting readers to members is a slow process’ and their customer retention efforts require further development. This is why we often refer to subscriptions as “forever business.” Businesses that do them well are constantly iterating and adjusting their subscription acquisition, retention, and engagement efforts while improving the product, just like a SaaS company would. It is hard work, but when done right it gives your business more economic security and longevity.
A hidden benefit we see at BlueConic is the positive impact subscriptions can have on advertising revenue. Our best customers aren’t just using their first-party data to ensure the continued viability of their subscription-based revenue models. They are also exploring how they can use that data to enhance their advertising efforts.
Going forward, the most successful publishers will be those who prioritize understanding and delivering value to their core audience through as many revenue streams as they can support without negatively impacting the customer experience. Key to delivering on this vision is having a revenue-agnostic, first-party data strategy that collects signals from across the business and synthesizes them into a deeper understanding of the customer that can be fed back into their revenue products, creating a revenue flywheel that actively improves customer experience.
When done right, it creates the sustainable media model we’re all working so hard to perfect.
Patrick Crane
Director of Sales, BlueConic
BlueConic, the leading pure-play customer data platform, liberates companies’ first-party data from disparate systems and makes it accessible wherever and whenever it is required to transform customer relationships and drive business growth. Over 350 companies worldwide, including Forbes, Heineken, Mattel, Michelin, Telia Company, and VF Corp, use BlueConic to unify data into persistent, individual- profiles, and then activate it across customer touchpoints and systems in support of a wide range of growth-focused initiatives, including customer lifecycle orchestration, modeling and analytics, digital products and experiences, audience-based monetization, and more. Web: www.blueconic.com and follow us on Twitter and LinkedIn @BlueConic.
