Let’s face it: We are all fighting hard in the battle for audience. The competition for attention has never been so difficult, and some global players are not that keen to play fair. In addition to losing users, we are also losing engagement, recurrence, and depth. How can this be reversed? For those who have a solid subscriber base, the answer is to put the user at the center of the analysis. And, have no fear to go offline to attract digital readers.
At GaúchaZH is a digital platform that recently united the forces of two major newsrooms in southern Brazil (Zero Hora newspaper and Gaúcha radio station). Our subscribers are mostly print based, so we have the challenge of converting them to digital. And we are doing it. Our paywall is a modern combination of “freemium” and “metered” that allows testing of conversion hypotheses, with flexible parameter management and different rules per platform. The number of logged subscribers climbed from 23% last year to 35% in November — a 52% increase. Today, more than 82% of our printed subscriber base has created a login to our Web site. To get these results, usage and database management teams worked close to the IT and development team. And they work hard.
In 2017, Neil Chase, executive editor of the Bay Area News Group, gave his Mercury News staff plastic funnels imprinted with the words “awareness, engagement, registration, subscription.” The Merc was about to roll out a new metered paywall, and Chase felt the company hadn’t focused on subscriptions enough. Apparently, the message has sunk in: Recently, a couple reporters were overheard bragging about their stories having the most reach that month.
This article appears in the latest issue of Digiday magazine, a quarterly publication that is part of Digiday+. Members of Digiday+ get access to exclusive content, original research and member events throughout the year. Learn more here.
Since launching in May, The Membership Puzzle Project, a year-long initiative from NYU’s Studio 20 programme and De Correspondent, has researched more than 100 news organisations, speaking to members and journalists about their expectations and approaches to “membership as a social contract”.
The Guardian is now making more money from paid memberships than advertising revenue. Since February, it has grown paying members from 200,000 to 500,000, while one-off contributions have gone from 100,000 to 300,000 during the same time period. Half of those 300,000 contributions come from the U.S. and equate to £7 million ($9 million), according to the publisher.
Building consumer revenue has been a cross-departmental effort involving around 50 people across editorial, marketing, commercial and user experience. Now, with a year’s worth of data under its belt, it’s easier to spot patterns of behavior and preferences across different markets — information it will use to help with attracting more paying members, retaining existing ones and preventing churn, according to Natalie Hanman, executive editor of Guardian Membership. Continue reading “Inside the Guardian’s consumer-revenue operation”→
Like other publishers, The Times of London wants to build up a stable subscriber base, but it’s a long and strenuous journey. Working out the content and formats that drive interest and then pushing readers to subscribe is a continuous learning experience.
The Times has signed up 1.8 million people to its registered-access model — people can read two articles a week in exchange for an email address — since introducing the option in May 2016. It hit 450,000 subscribers, 210,000 of whom are digital-only, this month.
Between March 2016 and March 2017, subscribers grew 8 percent. That might not seem like much, but growth had stagnated before that, said Nick Petrie, deputy head of digital at the Times and Sunday Times.
“Journeys are complicated,” Petrie said at Digiday’s Publishing Summit Europe in Berlin. “Do we show someone who came to us through a sports article more sports coverage, or do we show our breadth? The question is, how effective can we be? And we don’t know.”
The publisher is testing different messages to people unknown to the Times to drive direct subscriptions or registered-access sign-ups, Petrie said. Before the experiment, users landing on an article page were offered the option to subscribe or register for access. Now, the subscription message has recently started mentioning pricing.
Growing the pool of prospects with the right type of audience is also important. Last week, the Times created a game ahead of the Premier League season where viewers act as a football referee and judge whether a shot was offside. The first round was free to play; to play the next round, users had to register or subscribe, which led to 12,000 registrations to play the next level. In May, a piece about pop star Harry Styles from the Sunday Times Magazine drove high registered-access sign-ups, but it’s unlikely a high percentage of audienceswill convert to a subscription.
To draw statistically significant conclusions about how to grow audiences and convert them to subscribers, the Times needed over a year’s worth of subscriber data to account for cases like someone being a registered-access user for seven months before converting. And like other publishers, the Times has a number of different subscription campaigns, including one offering eight weeks of digital access for £8 ($10.50); a digital subscription usually costs £26 ($34) a month.
Newsroom analytics can show what content drives direct subscriptions, registered-access users or conversions, but this data isn’t helpful on its own. “Stories are individual; we have to try and unpick backward the commonalities — the way it was written, the tone, the format and layout — to make it useful.” said Petrie. “Otherwise, it leads you down the wrong path.”
A simple tool to estimate the right budget to grow your audience
Developers often want to know whether they should spend money on user acquisition, and what the key factors are to help inform their decision.
There are many useful tools and models to help with this question. After working closely with our key partners in South East Asia, Australia, and New Zealand, and spending many hours testing, my team created a simple but useful calculator to help you answer this question.
First, I’ll describe the inputs you need to use the calculator and explain how the results can help developers make better-informed decisions about paid user acquisition. I’ll also share an example of how one developer used this lifetime value (LTV) calculator and generated significant value for their business.
Before I continue, however, a word of caution. This LTV calculator — or indeed any LTV calculator — is simply a guide to assist in making decisions about paid user acquisition. It helps you predict the LTV you’ll see from acquired users and therefore what spend is sensible to achieve this return. The model makes assumptions about the impact of investment, CPI, organic spin-offs, payer rate, engagement rate, and portfolio effect. These assumptions aren’t guaranteed or confirmed. Additionally, estimates of buyer rate, ARPPU, and advertising revenue per user will need to be set based on your app’s data. Where I can, I’ll show you where to find those numbers.
OK, so that keeps the folks in the legal department happy, just one more note before we jump into the real details. The calculator uses US ($USD) as the default currency, but you can easily substitute your local currency. The important thing to remember is to make sure all the data you use is specific to the country or region you want to target and relevant to your app and its type or genre. It may seem obvious, but don’t use US figures for a casual game to plan a campaign for a messaging app targeting India.
As you read the next section, you might want to download the LTV Calculator to see how it uses these inputs. You’ll notice that the download includes the option to request a member of the app marketing team to contact you. This team’s job is to help app developers create and execute online marketing strategies and can help you determine the best values to use in the calculator.
LTV calculator inputs
Investment: This is how much to spend on user acquisition. If you plan to use universal app campaigns, start with a daily budget 50-times your target CPI. This level of investment will help AdWords’ machine learning algorithms optimize. So, with a $2.50 CPI target your daily budget would be $125 or approximately $3.7k per month. Another way to view investment is to set it so that you acquire a statistically relevant sample size, enabling you to understand user engagement and LTV with confidence, the goal should be approximately 5000 users.
Cost Per Install (CPI): This is the cost of generating one install. Note that CPIs vary by country as well as app and game genre or category.
Organic spin-off (K-factor): Studies have shown that paid installs can boost organic installs (organic growth) because of spillover from word of mouth and social sharing as well as installs from any listing in a store top apps chart. The K-factor measures the number of organic installs generated by each paid install, with 0 indicating that paid installs generate no additional organic installs.
Buyer rate: The percentage of the user base that makes in-app purchases. You can find the rate from your Play Console: Select your app, open User Acquisition, click on Acquisition reports, and select Buyers.
Buyer rate multiple: This variable represents the multiple by which users from a paid acquisition campaign become payers compared to users acquired organically. To illustrate, if 1% of organic users made purchases in the app while 2% of paid users made purchases, the buyer rate multiple is 2. Well targeted acquisition should achieve a multiple greater than 1 while more generic, mass-market targeting may result in a multiple of less than 1.
Average Revenue Per Paying User (ARPPU): This is the average of the revenue expected from each user who makes at least one purchase between their first and last use of the app. You can find the rate for your app from the Play Console revenue and buyer data reports: Select your app, open Financial Reports, and on the Buyers page select ARPPU.
Average advertising revenue per user: This is the revenue you generate from showing ads to a user over their lifetime and should include revenue from rewarded and non-rewarded ads. Remember, in line with the other figures you’re using, to include ad revenue from the country or region you are running the model for. The ‘Ad Revenue Calculation’ section of the model is designed to help you calculate this value. To get started, you’ll need to access your advertising dashboard: find the total ad revenue generated for a month and divide it by the number of active users in that month. You then need your retention figures for day 1, 7, 14, 28, 60, and 90; these can be found using a third-party analytics tool or Google Analytics for Firebase. The model uses the 90-day value, but you can substitute the 28-day or 60-day values, if you want to be conservative in your calculations.
Engagement rate multiplier: This multiplier reflects how much more engaged users acquired from paid installs are compared to users acquired organically. To illustrate, if users acquired from a paid campaign stick around longer, that is they show improved retention, you could expect to see a higher multiple. Well targeted acquisition should achieve a multiple greater than 1 while more generic, mass-market targeting may result in a multiple less than 1.
Portfolio effect multiple: If you’ve a portfolio of apps, that is, more than 1 app, a paid install may generate additional value by driving the installation and generation of revenue from other apps in the portfolio. Use of tools, such as house ads, would help maximize this multiple.
Using the LTV calculator
Once you’ve gathered the numbers relevant to your app and the region you’re going to promote it in, plug them into the calculator. In my example, I’m working with a campaign investment of US$5,000, have a K-factor of 2, buyer rate multiple of 1.5, and engagement multiple of 1.3, but no portfolio multiple. The ARPPU and ad revenue figures I pulled from the Play Console.
In this example, return of advertising spend (ROAS) is over 100% so a paid acquisition campaign should have a positive return.
And the result? I can see that a paid campaign alone won’t deliver a positive return. However, organic spin-off will pick up additional users and revenue that lifts the return on advertising spend (ROAS) to a healthy 110%.
In general, using the calculator as a decision-making tool is simple. If ROAS is over 100% you should return a profit from a paid acquisition campaign. Less than 100% and you probably won’t see a benefit. In the example, we have a ROAS of 110% so it makes sense to go ahead with a campaign.
However, even if the calculator returns a positive result — unless you’ve been testing extensively to determine your organic spin-off and other multiples — it’s worth running a test campaign to confirm your assumptions.
If the calculator says that paid acquisition isn’t worthwhile, you can adjust the CPI to find the level that offers a return. However, rather than chasing a lower CPI, you may be better served by looking to improve your app’s fundamentals, such as retention, monetization, and social functionality (virality). Once these metrics have improved, look again at the value of a paid acquisition campaign.
The LTV calculator in action
Not Doppler, an Australian games developer, used the LTV calculator to decide whether paid user acquisition made sense for Crash of Cars.
The calculator provided Not Doppler with a clear understanding of the total revenue (both from ads and in-app purchases) they generated from a user over their lifetime engagement with Crash of Cars. While the calculator aims to answer the question of whether paid user acquisition is likely to be beneficial, for Not Doppler it also dispelled several misconceptions.
Misconception 1: User acquisition is expensive
“High CPIs had been an initial barrier to entry for us, given we questioned the feasibility of UA with our ad-heavy business model. Through education and controlled testing we were able to profitably acquire a substantial volume of users in the US at CPIs of less than US$1.” — Jason Daskalopoulos, Senior Business & Marketing Manager, Not Doppler
Misconception 2: All users are equal
When Not Doppler ran paid (non-incentivized) campaigns they saw a higher quality of user compared to their organic acquisitions.
“We saw that the paid pre-qualified users who installed and opened Crash of Cars via an ad were 1.8-times more likely to spend in the game versus those who came in organically.”- Jason Daskalopoulos, Senior Business & Marketing Manager, Not Doppler
Misconception 3: Calculating ad revenue LTV
With in-app advertising playing a significant role in Not Doppler’s monetization strategy, it was important that they correctly calculated the average revenue generated per user over their lifetime.
“The Model allowed us to better understand the ad revenue we generated from showing users ads in our game over their lifetime. By looking at the relationship between ad revenue per daily active users and retention in the US we were able to calculate the revenue we generated from ads over a 30, 60, and 90 day period.” — Jason Daskalopoulos, Senior Business & Marketing Manager, Not Doppler
Misconception 4: Organic spin-off
Soft launching Crash of Cars allowed Not Doppler to calculate the effect of organic spin-off (K-factor) from the game. Interestingly, Not Doppler made a deliberate effort to avoid Crash of Cars appearing in the store top charts and generating organic installs from there. This was because they wanted to discover what percent of additional installs were generated by paid traffic through social sharing, word-of-mouth, or other forms of user driven, unpaid promotion.
“Through controlled testing we were able to measure the incremental lift we gained in organic users through paid marketing.” — Jason Daskalopoulos, Senior Business & Marketing Manager, Not Doppler
Try it yourself
Wondering what all this might mean for your user acquisition? There is a simple way to find out, download the LTV Calculator and plug in your app’s numbers! If you’d like to find out more about paid user acquisition or have any further questions about the blog or model, use the “I would like the app marketing team to contact me” option when downloading the LTV calculator and someone from my team will get in touch.
New to using ads to promote your app?
If you haven’t advertised your app or game before, we provide a simple way to get started with Google AdWords’ universal app campaigns. You can set up a universal app campaign in the Google Play Console in a few clicks. Google automatically optimizes your campaign to find users who are most likely to install your app at your target cost per install across Google’s networks including Google Play, Search, YouTube, and the Google Display Network. When you fill in the form for the lifetime value calculator, tick the box if you want to hear from an AdWords expert about setting up and running universal app campaigns for your app.
What do you think?
Do you have any comments on calculating LTV? Continue the discussion in the comments below or tweet using the hashtag #AskPlayDev and we’ll reply from @GooglePlayDev, where we regularly share news and tips on how to be successful on Google Play.
Like a lot of newspapers, The Times of London is trying to grow its paying subscriber base. But going in cold with a subscriptions message to non-Times readers doesn’t always work. That’s why the Times has focused on getting people to register as a first step toward asking them to pay.
During the past year, the Times did six months of rigorous testing into what would get people to register for access to two free articles on its site, which has a hard paywall. Getting readers to return for the second article took additional prompts, as did converting those who returned into paying subscribers. As a result, it got 1.2 million users to register, and initial tests show they’re four times more likely to subscribe than those who aren’t registered, according to the publisher.
The Times has 430,000 paying subscribers, 185,000 of which are digital.
“If we take anonymous users and push them through a buying journey and they bounce, we basically have a 30-day anonymous cookie. Unless [we] can convert them in 30 days, [they] just go back to being anonymous. We wanted to bridge that gap,” said Chris Duncan, managing director of the Times.
The Times assigned eight people from marketing, editorial, audience development and product to monitor which articles drove the highest upticks in registrations, decide where to focus social media spend to boost those articles on social platforms and then tweaking the design of marketing messages around them to prompt conversions once users clicked through to the Times’ desktop and mobile sites.
The Times used social platforms as the main shopfront, posting articles marked for registration pushes to Facebook, Twitter and Instagram. Users that clicked through were taken to a landing page showing the headline and a 100-word preview of the article, where they’d be asked to register. From that point, the bulk of the experiments occurred.
“We experimented with the tone and wording of messages, their position on the page, whether we interrupted with a pop-up or a bar floating at the top of the page and what we did on mobile compared to desktop. We’d tweak and refine on a weekly basis, based on the data,” said Nick Petrie, deputy digital editor of the Times.
In-depth analysis and exclusives, profiles and opinion pieces are the Times’ bread and butter, and the registration drive reflected that. Politics and lifestyle pieces drove high numbers of registrations, though articles were selected for registration pushes on a daily basis from across the news agenda. Increases have occurred gradually rather than in big waves, with the exception of a few major news events like the death of well-known restaurant critic and Times columnist AA Gill in December, and an exclusive interview with Donald Trump, the former U.K. justice secretary and Times columnist Michael Gove in January. Petrie said both stories drove “considerable” sign-up, but wouldn’t give specifics.
One of the biggest challenges was nudging users that had clicked through to an article on a Facebook post into completing their sign-ups. That’s where the most drop-offs would occur. Reducing the number of fields they had to complete for free access helped. Requests for phone number and location, which the publisher could infer from IP addresses, were therefore dropped.
Those who registered automatically received the Times’ daily email newsletter, which features editorially curated highlights from that day’s editions. The email was particularly useful in driving people to their second free-access article.
Users didn’t respond well to the use of loud colors and aggressively worded messages in overly prominent places, so the Times adjusted accordingly. Those who returned a third time were sent more urgent prompts to subscribe, including a full-page message informing them their free access had ended, and that to see the article they had clicked on, they would need to subscribe.
The Times is considering making video available to non-subscribers, Petrie said. That said, the publisher won’t succumb to the scale trap anytime soon.
“There comes a point when you stop looking at the big reach figure and only care for the conversions. The target is making a channel that drives weekly subscription acquisitions,” Duncan said. “A lot of our targets will be around the efficiencies and sophistication of how we tell when people are ready [to convert].”
Bloomberg Businessweek has a big new interview with Apple CEO Tim Cook — and it would really like you to pay to read it. Businessweek launched a two-tiered metered paywall (and a resdesigned site, app, and weekly print magazine) Thursday. There’s also “a new regionalized email newsletter,” Daily IQ, only for subscribers.
Bloomberg Businessweek is shifting to a two-tiered membership model: Digital Only, which includes access to the app, Daily IQ, unlimited access to Businessweek content online, and 6-8 special print issues a year; and All Access, which grants all digital benefits plus the weekly print magazine, quarterly conference calls, and live-streams of key events. A metered paywall is now in effect for Businessweek content online and readers without membership will have access to four free stories per month.
The digital-only access costs $12 for the first 12 weeks, and $15 per 12 weeks thereafter (so, $65 a year). The full package is $12 for the first 12 weeks and $25 per 12 weeks thereafter, about $108 a year.
Businessweek appears to be taking pages from the playbook of some digital outlets. The Information also offers conference calls and exclusive events to its subscribers, who pay $399 a year, and also focuses on affluent professionals who can pay (there are student rates as well). Axios wants to reach a similar audience and is thinking about a subscription tier as high as $10,000, though it’s entirely free for now. The difference between The Information/Axios and Bloomberg is that Businessweek is also saddled/blessed with a print publication.
The new pricing is a substantial increase from the average $40 per year that Businessweek charges for the print magazine. [Bloomberg Media CEO Justin Smith] said the aim was to position the title at “the premium end of the market.” As a result, the magazine has cut its rate base — circulation promised to advertisers — from 1m in January to 600,000, phasing out bulk subscriptions and what Mr. Smith called “the lowest value subscribers.”
“We’ve tried to focus on smart, clever people who have more money than time on their hands,” John Micklethwait, Bloomberg editor-in-chief, told the FT. (Micklethwait used be at The Economist, which could have made a similar value proposition.) “We know that from the terminal, from what Bloomberg has achieved, [the goal] is to find people who are willing to pay money to get very high-quality information and journalism. That’s what we’re trying to replicate.”
If you want readers to donate, you have to ask — often. It sounds obvious, but it’s a strategy many news organizations have been forced to become more comfortable with, and one that takes a lot of resources to really get right.
Since going nonprofit and starting a membership drive, average recurring monthly donations to the Pierre Omidyar-backed online news site rose to $12 — that’s $144 a year versus $60, even with all the stories free to read. It now has around 1,500 members.
“We haven’t reached our ceiling in terms of the number of donors, which continues to go up month after month,” Ben Nishimoto, director of philanthropy for the Civil Beat, said. “We’re seeing all the metrics of a healthy membership program, and a lot of that has to do with the structure and advice that the News Revenue Hub has offered.”
Civil Beat was among the first five organizations to join the News Revenue Hub, which for a fee takes on the heavy lifting of setting up membership programs — the software, the recruitment and retention, the messaging and maintenance — and facilitates an exchange of insights among participating outlets. The Hub, the brainchild of Mary Walter-Brown, first began last fall as an initiative of the nonprofit news site Voice of San Diego, an exemplar of sustainable digital news membership.
After helping the five pilot news organizations together raise more than a million dollars in half a year, News Revenue Hub has spun off into its own standalone organization, led by Walter-Brown (who’s now its CEO) with digital manager Tristan Loper (also previously of Voice of San Diego). It launched at a time when many news organizations were trying to rethink their mission and messaging post-U.S. election. Walter-Brown is now hoping to continue its early successes, adding five new organizations. (We’ve written separately about The Marshall Project and The Intercept’s challenges; the full list: InsideClimate News, NJ Spotlight, Honolulu Civil Beat, The Lens, PolitiFact, The Marshall Project, The Intercept, CalMatters, Youth Radio, and Rivard Report.) The Democracy Fund will continue to support some of the overhead costs for participating outlets.
“It’s been great from a couple of perspectives: The first, basically learning how to do this kind of fundraising, and then also, realizing there’s a definite benefit to asking often of people, more often than I think as organizations we previously felt comfortable doing, and that’s been gratifying,” Beth Daley, director of strategic development at InsideClimate News, said. “The support we have from individual members is dwarfed by support we get from foundations, for instance, but foundations also like to see that we’re diversifying our funding.” (In addition to money from memberships, InsideClimate News is also looking to raise $25,000 from readers to fund one reporting trip exploring the impacts of climate change across the U.S.)
“At first, I thought, gosh, I hope this wasn’t just this weird enigma. It’s starting to become more predictable, which is what I’m excited about,” Walter-Brown said. “We’re starting to see that membership can work for a PolitiFact, an InsideClimate News — organizations with national and global readers — that it can work for The Lens, NJ Spotlight, Civil Beat. And we’re now seeing the same thing for The Intercept — an international site focused on privacy and surveillance issues — when we weren’t sure how that was going to resonate with readers.” There’s already a bit of a waiting list of organizations eager to join, Walter-Brown said, and the Hub is looking to bring several more into the fold this year.
“We evaluate each client based on whether they have a base big enough and diverse enough to make it worth their while, whether they have the internal staff willing to dedicate the amount of time and energy to this that’s needed, whether they have the buy-in from the top, whether hey support the principle of building a true relationship with your audience,” Walter-Brown said. “It’s clear when you go through these conversations. There are some where I just say, ‘You’re not ready, but here are some tools you can use to build your audience, and let’s talk in six months.’ We don’t turn people away with a blanket ‘no.’”
While most of the organizations currently in the Hub are nonprofits, it’s not a requirement: PolitiFact, one of the five original pilot outlets, isn’t a nonprofit. It launched its program just before Donald Trump’s inauguration in January, and has since raised $200,000 in contributions and pledged donations. Three quarters of its members are part of the “informed” or “involved” tiers ($50 to $150 and $151-$500); only “a few dozen individuals have contributed $500 or more,” according to Emily Wilkinson, PolitiFact’s then-business development director.
Nor, of course, is a large national following a requirement. NJ Spotlight has added 470 members since it started its membership program, raising $86,000 most at the “engaged” or “informed” levels (a minimum $35 to $100; then $101-$500), Paula Saha, who oversees events, audience, and donor development at New Jersey state-focused nonprofit news service, told me.
“Most of them came in during our winter drive, but we’ve had a steady trickle since,” Saha said, crediting a well-tailored email campaign that starts with soft asks that get stronger as readers become increasingly familiar with the work NJ Spotlight does. “It’s been really nice to see the steady trickle; with recurring donors, it’s obviously a gift that keeps on giving, quite literally.” NJ Spotlight has worked to impress upon readers the value of memberships: happy hours, coffees, an intimate event for members with Senator Cory Booker (from the dedicated Slack group for News Revenue Hub organizations, it’s also gotten some ideas for events like trivia nights).
The News Revenue Hub, especially by facilitating technical setup and helping organizations understand and use better metrics (syncing Eventbrite with Salesforce, for instance), has freed up outlets to actually get to know their most dedicated readers. Honolulu Civil Beat has been able to host regular community events, such as taking groups out to neighboring islands or continuing its storyteller series, Mariko Chang, the Civil Beat’s membership and events manager, told me.
“Ben [Nishimoto] and I try to call all of our new donors as well, which takes people by surprise,” she said. “We let them know they can come to us if they have concerns. We ask them ways we can do our jobs better. It’s been helpful to have the time and resources now to make those personal connections while we can.”
The Hub itself will remain a small staff through the rest of 2017, but it also receives additional foundation support and is looking to raise half a million more to help with expansion.
“We’re hoping to be able to scale accordingly — eventually there may be different tiers of service, maybe a full-service option where they only need someone part-time and we’re providing more of the copywriting and execution. Then others may want to bring on a full staff like we had at Voice of San Diego, with an events manager, a digital manager,” Walter-Brown said. “I’m excited to explore what the service will look like in the long term, whether it’s an incubator for some organizations, a centralized place where they outsource tasks, for organizations that only want to focus on editorial.”
Chairs of different colors, by Steve, used under a Creative Commons license.