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The Penny Jar Test

The importance of working on your relationships was one of the main themes at last week’s PPA Customer Direct conference, held at The Brewery, in London. And, writes James Evelegh, the FT’s Mary Beth Christie had an interesting way of illustrating this.

By James Evelegh

Are you familiar with the Penny Jar Test? The theory goes, says Christie, that if a married couple were to put a penny into a jar every time they had sex in the first year of their marriage and then take a penny out of the jar every time they had sex after their first year, the jar would never be emptied.

Sound about right? No need to answer that, but the point Christie was trying to make was that we all put a great deal of effort into the early stages of a relationship, but little thereafter, and that, as publishers, we needed to focus as much on maintaining and developing relationships with our existing customers, as acquiring new ones.

In our increasingly paywall focused world, knowing your audience intimately will help you determine where the value in your content lies, and what, if anything, you can build a paywall around. For UBM’s Phil Clark, talking about their built environment portfolio, it was data and lists that his customers found particularly valuable and were prepared to pay for.

He described the roller coaster ride of introducing a paywall. They hadn’t really done much research, on the basis that asking people whether they would be prepared to pay for such and such a service, would only ever generate a lot of nos. It was a leap of faith, but one “we felt we had to make”. It probably helped that with the downturn in the building sector, they didn’t have much to lose. Sometimes, tricky decisions are easier to make when your back is against the wall.

What has UBM learnt from its early experiences of paywalls? Site traffic plummeted, but that was ok; “losing one-time Google visitors did not bother us a great deal.” Quality not quantity was the new mantra. The previous focus on SEO had now shifted to developing their internal search functionality. And marketing went from the old “spray and pray” to a much more segmented targeted approach. The other main result was a new found-obsession with the audience and their needs.

For New Scientist’s John MacFarlane, the main lessons of their paywall journey was the need to constantly keep everything under review. Whereas in old style publishing, you might have reviewed strategy annually and perhaps change tactics every couple of years, now the process of review was permanent.

Paraphrasing Darwin, he said: “you need to evolve or face extinction”. The New Scientist journey is a perfect illustration of the need to adapt and change. Their first online model was a full high and wide paywall. There was only one way in and that was to pay. In 2005, they introduced a freemium model with very low price introductory sub offers, which proved very successful in driving sub volumes. Unfortunately, the bargain seekers were not loyal and did not renew, so subs yields went tumbling. In 2007, the then success of ad sales lead them to chase volume and they tried completely free for a while. This lasted until the 2008 crash, at which point they introduced an FT inspired frequency model. Their current approach is a mixed freemium model, offering some content free, some to registered users and the rest paid for.

Change is the one constant.

Don’t let fear of getting it wrong stop you getting started. “If you’re not already, get into the game and continuously review what you do,” said MacFarlane.

Part of the paywall equation is having valuable content that users will be prepared to pay for, clearly. The other part is the numbers game; you need a sufficiently large pool of prospects to have any chance of making money.

Kevin Costello’s strategy at Haymarket is simple: expand the pool; his marketing teams are tasked with getting as many new names as possible, and taking advantage of every touch point to capture personal data about prospects. He illustrated this with a four square matrix, containing Known Customers (subscribers, research panels etc), Anonymous Customers (newstrade customers, iTunes purchasers), Known Prospects (website registrants, lapsed subs, competition entrants) and Anonymous Prospects (website users, pass-on readership etc) and the challenge was to feed people into the system and then process them down the ‘engagement funnel’ from ‘Anonymous User’ to ‘Known Customer’. This focus on data meant that data analysis and predictive modelling were absolutely essentials part of the skill set of today’s direct marketers; Kevin didn’t like the term ‘subs marketers’ because he thought it smacked of legacy thinking.

One development that came through loud and clear was the growing conviction that the tablet really was a game changer. MobileIQ’s Shaun Barriball said that the number of people accessing magazine content via tablets had grown by 6%. Mary Beth Christie had noted the emergence of the breakfast browsers and Future’s Richard Walker said, quite simply, that 12 October (the day Apple launched Newsstand) had changed magazine publishing forever! Wow.

Was it an opportunity or threat? Opportunity, massively. Yes, there will eventually be some cannibalisation of print, but said Immediate Media Co’s Jess Burney, this should be embraced. After all, it simply doesn’t matter how your subscribers choose to read you, as long as they read you. Dennis’ James Tye echoed this: “We don’t really have this print digital debate any more. We just put the product out in a way our readers want. We don’t endlessly debate platforms.”

The scale of the opportunity is breathtaking. Richard Walker thought that in three years’ time, tablets would be ubiquitous. He estimated that there would be 400m tablets in circulation by January 2015.

Future had invested heavily in Apple’s newsstand; indeed 55 of the 131 titles available at launch were Future titles. Future had seen 6 million app downloads in the first six weeks from over 100 countries; it was opening up markets where they had previously made no headway.

Walker believes the growth is sustainable, because whilst competitors would eventually get their act together and Newsstand would become more crowded, this would be offset by the continued exponential growth in tablet users.

Talking of exponential growth, don’t be fooled into thinking that the number of Facebook friends or LinkedIn connections or Twitter followers is an end in itself. It’s what you do with them that counts. Social media consultant Matt Phelan had one client with over a million Facebook fans, but who was on the verge of bankruptcy and another client with far fewer fans, but who were nonetheless far more engaged, and that company was doing rather well.

While the level of engagement is critical, the numbers are still compelling, hence the number of publishers committing more and more resource to social media.

It’s important to agree on your social media strategy before going too far down the road. Sure, companies can play with social media as much as they like, but should only do it seriously after clear business objectives are in place. When considering social media, said Matt Phelan, publishers should start with their current marketing plan and work out how to integrate social media. Calculating return on investment, though not always easy, is imperative.

This was echoed by IPC’s Cathy Ma who also emphasised the overriding need to make it interesting! You are going into areas that your users consider to be private, so don’t be boring and don’t be too blatantly commercial.

And, Cathy continued, it’s not all about Facebook. People assumed, she said, that Facebook works for everything; it doesn’t.

The need for sophisticated, flexible, responsive IT systems came up time and time again. Legacy IT systems were repeatedly cited as restricting publishers’ marketing options. The much hyped single customer view popped up in a number of sessions during the day.

Very few, if any, publishers claim to have got it right when it comes to digital publishing. The irony of the day is that the company that has got it more right than most is the FT. And what does the FT not have? A single customer view.

Click here for more information about, and pictures from, Customer Direct 2011.