The Best First Party Data Comes From Paying Customers

Throughout the years I have written A Media Operator, I’ve offered different ideas about tactics to acquire first-party data. Whether it’s a b2b or b2c brand, getting the correct data has always been one of the most important actions.

But one area many operators forget—especially true for print products—is that the highest value first-party data can be found in your subscriptions.

I call out print because many smaller magazine brands think about their businesses in two siloes: digital and print. And so, some people subscribe to the magazine whose data is never adequately integrated into the comprehensive user database.

There are two broad reasons why this data is the most valuable.

The first is the very literal fact that subscribers provide the most in-depth data. For example, when someone subscribes, they have to tell you where they live and their full name since you accept their credit card. Believe it or not, you can acquire any data using a third-party tool if you have someone’s location and name.

But even if you aren’t using a third-party tool, the fact that someone is acting to become a subscriber opens you up to collect more data about them by simply asking. But it also depends on what type of publication it is.

In the case of a b2b brand, the fact that they are converting is likely because they value the content enough for their jobs. Adding some friction to get more data about them might not reduce subscription revenue.

In the case of a b2c brand, the very act of conversion is first-party data. This classifies someone as more than just a passive interested party. For example, if you’re running a woodworking publication and someone converts, it’s clear that this person cares about woodworking.

This is a big reason why the team at Flying Mag making their magazine entirely DTC is so impactful (beyond the increase in direct revenue). Every person who pays is someone who takes flying very seriously. It’s $40 a year, so you have to love the topic to fork over that money on the consumer side.

This leads to the second reason this data is so important: it proves quality. The mistake many media companies have made is prioritizing traffic—random people hitting their site—rather than nurturing a highly engaged audience. And what is a better way to show engagement than payment?

The advertising business is great, but the best test of an audience’s quality is the ability to get them to pay for something. A good friend of mine and a great operator said to me once: “If I can get them to pull out their credit card, I know we have a highly engaged audience.”

I would wager this is a big reason why many of The Chernin Group’s biggest investments have been in the blended media/commerce business. If these media operators can convince people to buy stuff, then it’s obvious the readership is loyal. Barstool proved it. Its readers/listeners are die-hards, which is why it earns much money from selling merch.

But do you know who also really cares about this sort of loyalty?

Advertisers. In the case of a b2b subscriber, it proves that they are part of the industry since few consumers pay hefty subscriptions for b2b information. And in the case of a b2c subscriber, it demonstrates that the reader has disposable income to spend on their interests.

In that consumer example, people paying for a subscription can tell you a lot about them. For example, is the magazine about an expensive hobby, such as skiing, golfing, or, to an extreme, boating? If so, people that are subscribing likely have the cash to buy other expensive things. My guess is there’s at least one expensive watch brand advertising in Flying Magazine since a personal plane likely costs a few dollars.

In both cases, the simple act of subscribing makes the reader a highly sought-after target for advertising. I’ve always found the subscription-only dogma to be so short-sighted. The most valuable people are the people who are giving you money.

Consider The Information. Business Insider reports that it has approximately 45,000 subscribers who are likely paying around $400 per year. Who is more valuable than someone dropping $400 on tech and media news? These people definitely have disposable money or significant influence over purchasing decisions.

That doesn’t mean The Information needs to throw up banner ads across the site. But there is an elegant way to let advertisers target these highly affluent readers.

Let’s look at Bloomberg, which is actively selling this as a product. According to AdExchanger:

Dubbed “Audience Accelerator,” the tool was built in house. Bloomberg created its own data lake with information about its 450,000 subscribers and 5 million registered users. The publisher uses that data for its own targeting algorithms and lookalike modeling. A few advertisers have already run test campaigns using the data.

Of course advertisers are running campaigns using the data. Those 450,000 subscribers are the target market for any investment product, credit card, luxury brand, etc. If I were an advertiser, I’d only want to target those people.

That’s why subscribers are the best first-party data. The simple fact that they have subscribed makes them far more valuable. That’s why Bloomberg removed open marketplace programmatic and The New York Times removed programmatic from its app in 2020. According to AdExchanger:

The New York Times is removing open marketplace programmatic ads from its mobile app starting in January 2020, because their slow loading times detract from the user experience. The decision will result in a single-digit millions loss of revenue.

…

“We also believe that we have a big opportunity around first-party data,” Thompson said. “Our new digital access model means that we’re going to know far more about millions of our most engaged users and will be able to tailor advertising messages to them more effectively in ways that rely on this first-party data.”

That last paragraph in the story is the real reason. Why give away your highest quality audience when you can directly charge more?

Publishers should be looking at this cohort as a premium product. Create a narrative about how these are the most affluent and highest-quality readers on your site. And then drive high-quality, expensive brand advertising against them. Once you know who is paying for your content, the possibilities become far more significant.

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