March 19, 2021

Is The Telegraph Onto Something With Its STARS?

Normally, Friday pieces are reserved for premium members, but I decided to open this up for a couple of reasons.

The first is that I got some things wrong in my initial analysis on Tuesday regarding The Telegraph wanting to pay journalists based on how many subscriptions were driven and retained. Since that piece went out to the entire list and not just premium members, I felt that this piece should also.

The second is that some of what I missed in that initial recap of the news is actually some of what I have been advocating many other publishers should be looking at.

I’m not going to rehash whether it’s right or wrong to incentivize journalists based purely on quantifiable performance. I think Brian Morrisey, who is actually a journalist, sums up the arguments against it efficiently in his own blog post. It’s much too long to quote, so click over and go halfway down to read.

Here’s the part of Tuesday’s piece that I’d like to reexamine:

Even if we remove the ethical debate around what a news organization is supposed to do, the other issue is that the data doesn’t tell the full story of the individual user. Here are a bunch of things that I’d be curious to know:

– What articles were they reading before they landed on the one that converted?

– Did they come in from a newsletter or was it the reporter driving the user?

– Did that story just happen to be the last before a metered paywall?

– Were they already registered and finally converting to a paid sub after reading for days or months?

There are a ton of questions that are more important than just which story actually converted a paid sub. Any sort of subscription business is a journey. It’s unlikely that most users land on a piece of content and instantly subscribe. There’s a nurturing process.

By rewarding the person who creates an article that results in a subscription, you’re effectively forgetting the entire team that goes into the creation of all the content that might have contributed to that user’s decision.

By writing this, I presented an argument to suggest that The Telegraph was not doing this. But after publishing and continuing to look at the discourse that was taking place online, I decided to dig a bit deeper.

The Telegraph was a 2020 finalist in the International News Media Association’s (INMA) award for best use of analytics. In the write-up about Stars, I realized that The Telegraph was doing what a lot of us should be doing when it comes to analyzing content. And that’s why I wanted to revisit this because there’s a lot we can learn from this part of the discussion.

What most media companies do when they launch a subscription is the same thing that The Telegraph did—focus almost exclusively on acquiring new paying subscribers.

But as I’ve said numerous times before, the important work kicks in after the conversion because it is easier to keep a paying subscriber than try to find a new one.

To overcome this simple way of looking at analytics, The Telegraph created a system called STARS. According to that INMA write-up:

…this bespoke super-metric is derived from three feeder metrics which identify and reward content that not just converts new subscribers (Acquisition) but also helps keep them subscribed (Retention) and resonates with registrants and new users (Engagement) – potential subscribers of tomorrow. 

The special sauce of STARS is a formula which weights the contribution of those feeder metrics based on the relative ARPU of new subscriber and loyal subscribers while also factoring in display advertising revenue but ensures that no one component unfairly dominates the others. 

Two thoughts come to mind here. The first is that this is exactly the way most subscription companies should be thinking about their analytics. We need to be looking at content that both acquires, engage, and retains users. That’s what builds a healthy business. The second is that this data, when manipulated just slightly, sounds an awful lot like the revenue server concept we’ve talked about a few times here.

Let’s dig into both of these…

Subscriptions are a journey

There are many reasons why someone finally decides to pull out their credit card and subscribe to a publisher. Serendipitously seeing a piece of gated content for the first time and instantly subscribing is not one of the highest-ranking reasons.

The reason email is the best method of conversion for people to go from free to paid is because the publisher is in constant communication with that reader. Over time, the reader sees enough content that they either realize they want to subscribe or they finally hit enough paywalls that they have no choice.

In either case, that subscription didn’t start on a single article. Instead, it started when the user first hit the website. Over time, the user has built a habit with that product, subscribed to newsletters, maybe listened to podcasts, and then after time, became a paid subscriber.

If you’re looking at just conversion data, you might see that there are more conversions on a specific type of story and assume that you need to create more of that. But that ignores the fact that other stories might have contributed to what got a reader hooked. Paying attention to the pre-conversion journey is critical to defining a good editorial strategy.

But the journey doesn’t actually stop when the reader pays. To prevent the leaky bucket that is a subscription business, it’s important to pay attention to why a reader might return time and again.

I’m reminded of the quote that John Stankey, the CEO of AT&T (owner of HBO Max) said on an earnings call in October:

The customer acquisition game is an originals game. The customer retention game in SVOD is a library game.

Once a user has subscribed, it is equally as important to pay attention to what they do next. I’m reminded of a conversation I had with Mike Orren, the CPO at The Dallas Morning News. He said that one of the big indicators of subscriber loyalty is category switching. If a publisher can get someone to go from reading about one category to another, the habit becomes much deeper and the user is more inclined to stay a paid subscriber.

What publishers should be doing is looking at all of their content coupled with their conversion and retention data and try to identify trends.

  • Are there specific stories that tend to drive more paid subs?
  • Are there specific categories that keep readers from churning?
  • Are there specific stories that get an anonymous user to become known?
  • Are there specific stories that don’t help at all?

When investing in various types of content, it helps to ask these questions. It can then inform where investment needs to be made. If a lot of people are subscribing, but then they’re churning, there needs to be an investment in more content that prevents churn. If there are stories that contribute nothing—no registration, no subscription, and no retention—maybe it’s not the right use of your resources.

Maximizing revenue at the user level

Ironically, that same analysis of stories could go into creating a more targeted means of monetizing users. I’ve referred to this as a revenue server for some time now. Here’s what I wrote last summer:

Rather than promoting everything to everyone, we start to get a bit smarter about promoting the right things to the right people. We try to force too much on our users. On a single page, there might be banner ads, commerce promotions, subscription CTAs and various other opportunities. Digital media sites are typically very messy.

Instead, we can create a more efficient page that is focused on what the individual is most likely to engage with, providing us the opportunity to maximize our revenue down to the user level.

How users engage with content should dictate how we try to monetize them. Not every story is one that will convert a user into a paid subscriber. If that’s the case, don’t give up precious real estate promoting the subscription. Instead, generate revenue via advertising or use it as an opportunity to get someone to sign up for a newsletter.

As publishers start to define what the value of different actions are, this becomes even more powerful. On its own, a newsletter sign up might not be as revenue-lucrative as running an additional ad unit on a story. One is paying you directly, the other is not.

But as we start to glean insight into how those newsletter subscribers engage with the content and extrapolate LTVs, we’re likely to find that getting a user to sign up is far more lucrative than another advertisement.

All of this is to say that when you start to track total revenue story-by-story at the user level, you might start to identify categories that are inherently more profitable. You’ll also find user types that are more valuable. That should also inform your editorial strategy.

Let’s wrap this up…

Looking at your subscriptions as a journey rather than a single event in time is critical to building a thriving business. You need to understand how people are engaging with the site, what gets them to convert, and then what keeps them from churning. Missing any of those parts will result in an inefficient subscription business.

The simple reality is this… reader engagement with a publisher is like a living organism. It’s not static. It evolves over time. What interests a reader today might no longer interest them tomorrow. We have to pay attention to how different cohorts of readers consume our content and use those insights to inform future investments.

It’s exciting to see more publishers looking at their analytics the right way. It will lead to healthier businesses and provide the sustainability so many media companies have lacked over the past 15 years.

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