The Subscription Marketing survey is run annually by Wessenden Marketing and InPublishing and is sponsored by CDS Global. The 2010 survey has just been published and has produced some fascinating trends and insights into the current state of subscription marketing practice in the UK publishing industry. Wessenden’s Jim Bilton summarises the key findings.
It has been quite a year on the newsstands. Yet behind all the drama and politics of retail, subscriptions continue quietly to increase their share of copy sales. However, the subscription function has been subject to the same pressures and strains as the rest of the publishing organisation. So, what is actually going on at this end of the business?
Subscription Marketing 2010 polled the views of subscription professionals within 122 publishing companies - newspapers and magazines, consumer and B2B operators, from major international groups down to small independent publishers. These 122 companies between them publish almost 1,200 print titles brand and manage a total of 9m paid-for subscriptions, plus 1.6m free records. So, this survey is the largest and most detailed benchmarking exercise on subscriptions ever undertaken in the UK publishing business.
The 2010 survey shows many similarities to last year’s poll in mapping a very mixed market where financial caution and rapid technological change are running side by side. The result is a very difficult balancing act for subscription practitioners. Yet there are some changes that have taken place over the last twelve months.
While the general economic climate is still the context which is shaping everything that publishers do, there is a subtle change in attitude where “internal budget constraints” have taken over from “the recession” as the primary stated constraint that is limiting subscription growth - there is a sense that publishers are feeling more in control of their own destinies than a year ago, rather than the helpless victims of external forces. Finances remain tight and business practices have changed, some probably permanently. Yet, ultimately, the feeling is that it is down to publishers to market themselves out of the circulation trough.
There are some key positives. Subscriptions remain core to most companies’ circulation strategies, with the retail channel looking increasingly volatile and dangerous. Subscription budgets as a percentage of subscription revenues look to be edging up from last year’s levels.
Yet the downturn has clearly put pressure on budgets, headcount and how subscription departments operate:
* A tight control is being kept on subscription economics with a slight increase in the number of publishers looking for year one profitability.
* A number of more general tasks that are not directly related to acquisition or retention marketing have clearly been cut out of subscription marketers’ time. This includes general administration, but feedback about three other areas suggest that some important task are being left undone: data protection, analysis / modelling and customer insight.
* A tight control is being kept on acquisition cost-per-orders (CPOs), which for consumer publishers remain steady year-on-year, but retention CPOs are rising as the number of renewal efforts rise.
* Yet, in absolute time and budget terms, there has been a slight shift back into acquisition away from retention as publishers have focused more on trying to maintain the flow of new subscriptions at the front end.
* There has been a subtle shift in how digital is viewed. The references are now no longer just about digital content as part of some kind of subscription offer, but are now much more about online / digital as a marketing channel to generate more subscriptions. Here, publishers are getting smarter, but need to get much smarter much more quickly than is currently the case.
Subscriptions in Context
The overall picture is very similar to last year. It is one where subscriptions are adding stability and slow growth to circulation rather than a dramatic uplift, with business markets under more pressure than consumer – a recurring theme of the whole survey. Yet there appears to be a growing sense of stability in the subscription business, particularly in comparison to a retail market which continues to be volatile, erratic and soft.
Positive Subscription Drivers
The prime reason for publishers driving increasingly down the subscription route, as in past surveys, is the ability to lock readers in and to build loyalty and frequency of purchase in a volatile market. Yet there are some subtle shifts in tone. Being able to deliver an audience to advertisers is still critically important, but is receding slightly as publishers grapple with the extreme volatility of the newsstand. Comparisons with the retail channel seem to be coming more to the fore as publishers appear to be taking a more holistic view of circulation. Yet the ability to leverage more revenue from a subscriber name remains desirable, but frustratingly elusive.
Negative Subscription Barriers
Internal budget constraints remain at the core of what is slowing publisher subscription growth. While recent years have seen great strides in the acceptance of subscriptions in the marketing mix, the frustration that a real understanding of subscription economics is not held by senior management is beginning to emerge more strongly again. The cost of the postal service is rising back up the list of concerns.
Digital is a core element of the subscription future. Yet this is dividing ever more clearly into two distinct areas: marketing and content. ONLINE MARKETING is coming more to the fore in this year’s survey and embraces emails, name generation, apps, social media as well as self-service subscriber areas. WEBSITE CONTENT has always been a priority, particularly in developing a bundled print + online subscription offer, but the issue of whether and how to make users pay is still perplexing many respondents. Other key opportunities are seen to be:
* Digital editions, but extending beyond digital facsimiles into ereader and mobile products.
* International sales opportunities.
* Improved data management to drive smarter retention activity and cross-sell / upsell.
The ongoing poor economic environment is still a major issue, but this has been overtaken by a real frustration with the internal budget constraints which have been driven by the recession. Apart from the general economic environment, the other key threats are seen to be:
* Lack of internal publisher focus.
* Competition from free products, both in print and on the internet. In certain markets, price-cutting is a big and growing issue.
* Reducing customer loyalty.
* Cost and quality of the postal service.
Internal Company Attitudes to Subscriptions
Subscriptions are recognised as a core route to market, but the detailed economics of subscription marketing are not so well understood within the organisation generally and by senior management in particular. There is a strong and growing belief in the long-term potential to sell more subscriptions and to develop subscription revenue streams.
Standing back from the detail, there remain some major challenges and issues:
* The penetration of direct debit continues to rise. Yet for those titles reaching their DD ceiling, what is the next marketing step forward?
* There is a great deal of talk about “the potential of online and digital”, but not always a clear view as to what actually to do about it.
* The industry is still struggling with databases and how to generate more return on the investments that have been made, which to date have been disappointing.
In summary, there is the clear feeling that the industry is beginning to come out of a deep trough. Yet there is also the sense that subscription practitioners do not yet have the resources to put into action what really needs to be done and do not yet have a clear enough idea of where to put those resources once they become more available.
Digital Editions & Mobile Apps
The growth of digital media is a key theme of the survey.
* Digital editions are experiencing wide (and slightly increasing) usage with 73% of publishers currently involved, up from 68% last year.
* Yet most respondents are still looking for the real “killer applications” and digital editions are still not yet a central element of most publishers’ strategies.
* The impression is that publishers are still experimenting with a range of applications and there is a sense of companies being active in this area just in case it should develop into a primary route to market in the future.
* The applications of digital editions are subtly different between each of the three publishing sectors.
* Mobile apps are being used by 20% of publishers with another 57% intending to use them in the future.
* As with digital editions, the mood is of experimentation at the moment.
* Yet mobile apps are much more focused on subscription-bundle applications than digital editions.
Areas covered by the report
* Staffing levels & time
* Subscription profitability
* Subscription budgets
* Acquisition sources & costs
* Non-subscription revenues
* Name generation
* Digital editions & mobile apps
* Gift subscriptions & corporate subs
* Subscription pricing
* Payment method
* Subscription services
About the project sponsor: CDS Global
CDS Global is a world leader in providing customer relationship management solutions to the publishing industry and other targeted sectors. With more than 35 years’ experience and operations based in the UK, Australia, USA and Canada, CDS Global is the partner of choice for a number of leading consumer and business-to-business publishers.
Contact: Mark Judd
Tel: 01858 468811