It’s been 20 years since digital publishers began monetising audiences and advertising spots instead of journalism, but this is no longer a sustainable source of revenue. Internet giants like Google and Facebook monopolise the ad market, leaving only 20% for other businesses to fight over. In addition, 42% of users worldwide employ an ad-blocker. Most users access publisher’s sites via mobile, where the RPM is two times lower than on desktop. With CNIL, the French Data Protection Agency, leading the way in tightening regulations, Cookie consent rates are falling. It is only a matter of months, not years; the time to adapt and future-proof your business model.
With users starting to understand the game at play and taking control of their data privacy, we have witnessed a fall of 20 % in the share of readers who consent to cookies in just six months (source link). Unfortunately, this doesn’t come without consequences for publishers. Without any changes to adapt to the changing internet environment, revenues will potentially fall by at least 10% every six months.
This is no longer a sustainable business model. In this new reality, KPIs around traffic and audience volume can no longer be considered a key monetisation metric. It is, of course, essential to have a fair and sustainable number of users active on your site, but continuing to place this metric at the top of your analytic reports no longer seems relevant nor valuable.
On the other hand, ARPU (average revenue per user) is now an essential KPI that should be placed at the centre of publishers’ digital strategies. It must be coupled with every possible effort to maximise it in every user segment at every stage of the funnel.
However, not every user is engaged to the same extent and is likely to provide the same revenue to your business, so a one-size-fits-all approach isn’t optimal. That’s why publishers should put in place three complementary strategies to increase ARPU to the maximum for each type of reader, whatever their level of engagement:
In the short term, reduce the number of unidentifiable visitors
In the medium term, engage unknown users to convert them into leads and members
In the long term, establish a recurring and predictable revenue stream via subscriptions
1 – Reduce the number of unidentifiable visitors
Reducing the number of unidentifiable visitors refers to visitors who consume your content without accepting cookies.
You can’t track this anonymous audience that provides minimal ad monetisation (if that). This is, therefore, where you should place the most urgency. Consent rates must be recovered immediately through a cookie wall with alternatives to inform, suggest and restrain.
Inform readers of how cookies benefit you. Being transparent and honest with users helps build trust and hopefully help your readers understand how valuable cookies are. The Guardian is renowned for its openness regarding how it funds content production, which is no different from its approach to collecting cookie consent.
Suggest at the article level – At the moment when your user is the most engaged (and so least likely to be frustrated by your wall), you present a cookie wall, blocking content and suggesting that they consent to cookies in exchange for content. French publisher Positivr adopted this approach, making the most of the wall to inform and suggest, without constraining (note the ‘no thank you’ button).
Constrain readers but provide an alternative – Ask users to accept cookies or support your business in another way, perhaps by creating an account or subscribing. For instance, Pure Médias offers a subscription for 1 euro as an alternative.
2 – Engage unknown users to convert them into leads and members
Here we’re talking about unidentifiable visitors. Traffic that can’t be identified yields a fairly minimal ARPU, but converting them into members with an ID, is hugely valuable to all business models, whether based on advertising, subscription, or e-commerce. It allows you to collect first-party data, track user behaviour on every visit, boost advertising revenue through targeting and personalise user experiences, ultimately increasing engagement, which directly impacts revenues.
By measuring the frequency and intensity of visits, we found an ARPU 10 greater amongst registered members than anonymous users. Establishing a lasting relationship with readers, therefore, starts with identification, and the most effective method of achieving this is through a registration wall (also known as a data wall).
A registration wall blocks readers and asks or requires them to create a free account (become a member) to access content.
The New York Times effectively employs this soft conversion step before presenting the paywall, increasing engagement to make the user highly more likely to subscribe in the future.
Equally, several TV-replay and VOD sites use this approach, often directly at the point of accessing content, just like 4OD.
Pure players and brands, such as Welcome to the Jungle, are also experiencing the benefits of registration walls. They demonstrate the utility of this tool for producers of all types of content.
Yet more compelling is the technique of placing the form directly on the wall within your content, reducing the amount of effort required from a user to register. Harvard Business Review has well understood this and the need for mobile-friendly wall versions.
3 – Establish a recurring and predictable revenue stream via subscriptions
This strategy is for your most loyal consumers, who are already engaged, access your content frequently, and have ideally passed through the soft conversion step of registering. This strategy is established via a paywall, blocking content and requiring a reader to pay to subscribe to gain access. Therefore, the ARPU is transparent – users spend on a recurring and regular basis, and you aim to retain them as subscribers to ensure a high revenue in the long term.
However, many publishers hold back from paywalls due to the fear of frustrating readers and reducing traffic. But, by providing soft conversion steps before the paywall (such as registration) and only asking for subscriptions from your ‘fans’ segment, you’ll find the perfect balance between engagement and frustration that leads to conversion without negatively impacting traffic.
The Times and Sunday Times successfully employ a paywall on their articles, promoting their free trial to engage users and allow them to see the value in their premium offer.
And HBR initially employs a metered registration wall before a metered paywall. At each step, HBR informs readers of how many articles they have remaining before the block, significantly reducing frustration.
These three monetisation strategies, targeting three types of users, are complimentary. They support one another and allow for multiple valuable revenue streams. ARPU is then measured globally, for each segment (we recommend VORFMS: volatile, occasional, regular, fan, member, subscriber) and for different types of content.
And, for those users who don’t appear to want to convert at any level, we can wonder whether it’s worth continuing to provide them with content. The Washington Post, for instance, has taken the step of completely blocking access to a user who can’t be monetised by advertising (through cookies) or by subscription.
The evidence is clear – there’s a real urgency to act and take back control of revenue streams for online content producers. Not only are advertising revenue streams no longer enough, but membership and subscription models are hypercompetitive, households have limited budgets. As a result, not everyone will pay to subscribe to your site, let alone to every publisher and entertainment offer online.
Authored by Marion Wyss, external contributor. Marion Wyss is Chief Marketing Officer at Poool