Happy Tuesday! I hope you had a good weekend and your week is off to a good start.
Last Friday, I wrote a piece proposing a new monetization strategy local media could take. It’s controversial, but I also think it makes sense. Paying subscribers get access to the content and are also able to leave comments. Want to join the community? Sign up now.
Now for the news…
Everyone wants to get into sports betting
According to The Wall Street Journal, William Hill, a bookmaker, and Viacom CBS have reached an agreement on a gambling deal. It stated:
William Hill agreed to pay CBS Sports a fee for access to its audience and sponsorships across CBS Sports content, according to people familiar with the matter. The deal, which includes incentives for hitting certain targets, is aimed at getting CBS Sports users to download the William Hill betting app and put money into their betting accounts, the people said.
CBS Sports plans to boost sports-betting content and data offerings to its 80 million users with the William Hill brand, including through its subscription betting-recommendation service, SportsLine, and database of fantasy sports players.
The idea here is relatively straight forward. William Hill and CBS Sports will work together to create content with the goal of converting CBS Sports’ readers into gamblers.
This isn’t the first deal of this sort and I doubt it’s going to be the last. According to Axios:
While some companies like Fox Sports are actually running their own sports books, most media networks, like CBS Sports and Turner Sports, are taking a more cautious approach — partnering with casinos on the ground in Vegas for content, but not establishing their own books.
ESPN said last year its partnering with Caesars Entertainment. Turner Sports and Bleacher Report announced a similar deal in February, building a branded Bleacher Report studio inside the Caesars Palace Sports Book in Las Vegas.
When everyone in media is looking to do the same kind of deal, it’s likely there is going to be an over-saturation of content and an underwhelming return on investment.
Here’s the problem…
These are really just glorified ad deals. Sure, William Hill is going to have its personalities appear on CBS Sports content. And sure, CBS is going to look at using data from the bookmaker to make in-depth content that entices users to click over. But at the end of the day, this is just William Hill sponsoring CBS Sports. Throw in a little sponsored content when people from William Hill offer their expertise and voila, you’ve got an advertising deal.
There’s nothing really wrong with that, but the results are not going to be as great. The exception is if the media brand builds out their own product, like what Fox did in its partnership with The Stars Group. In that case, you’ve got a tighter integration, the branding is consistent from media platform to sports book and, I’d guess, the audience feels more of a connection.
Penn National, another gambling company, is tackled this need for deeper integration by acquiring a chunk of Barstool Sports with the goal of owning it outright. I wrote when the deal was first announced:
So, what we have is a product company (Penn National) now looking for a way to bring tens of millions of potential customers to those products and realizing that a media company (Barstool) already has those prospective customers. It’s a smart play.
Penn is also going to be integrating the Barstool brand into the experience. In the presentation Penn released to investors about the deal, this slide was included:
The first one is the real trick here. The Barstool audience trusts Barstool; therefore, if the brand is used for actual products, the results should be greater.
On the other hand, these glorified sponsorship/ad deals, such as the ones that CBS Sports and William Hill are doing, will be received like any other advertising deal. Will it work? I’m sure customers will sign up. But if the reason for doing one of these deals is to reduce customer acquisition costs, I can’t see people converting. Color me skeptical, but as we move forward, I expect to see more deep integrations versus surface layer ones.
And, just as importantly, I imagine there will be a deluge of mediocre gambling content across all these sites and the outcome will be another failed attempt at monetization.
Chrome’s unilateral decision about video ads
Last Wednesday, Google Chrome released new guidance on video ads. Jason James, a product manager, wrote:
Today, the group responsible for developing the Better Ads Standards, the Coalition for Better Ads, announced a new set of standards for ads that show during video content, based on research from 45,000 consumers worldwide.
There are many different types of ads that can run before, during, or after a video but according to the Coalition’s research, there are three ad experiences that people find to be particularly disruptive on video content that is less than 8 minutes long:
Long, non-skippable pre-roll ads or groups of ads longer than 31 seconds that appear before a video and that cannot be skipped within the first 5 seconds.
Mid-roll ads of any duration that appear in the middle of a video, interrupting the user’s experience.
Image or text ads that appear on top of a playing video and are in the middle 1/3 of the video player window or cover more than 20 percent of the video content.
I have two thoughts about this…
First, this is an example of Google deciding what I can do with my business. Google says this is through the Coalition for Better Ads, but as one of the largest video ad sellers in the world, this is clearly coming from Google. That just irks me.
Second, there’s no denying that the behaviors above are incredibly annoying to the average person.
In the event that your site does break one of these rules, starting August 5, 2020, Chrome will automatically block the ads outright. Publishers can now do one of two things. They’ll either lengthen their videos—which probably reduces the quality—just so they can get a longer pre-roll and some mid-rolls or they’ll have to start enforcing a strict no ad over 30-second policy.
One thing I’d be curious about is whether this results in a large enough reduction in inventory across the internet that video CPMs increase. Publishers have seven months to get ready.
Finding a new way to monetize subscriptions
Digiday wrote a story about how Investor’s Business Daily generates 80% of its revenue from subscriptions.
Unlike most publishers that look to create a single subscription product, IBD is focused on building multiple products with different audiences in mind. In the article:
For people interested in knowing which stocks are hot and how best to invest in them, there’s Leaderboard; for people who want a more personal take on the day’s market movements, there’s IBD Live; for hardcore researchers, Investor’s offers MarketSmith.
Today, IBD offers eight different products, each designed with a different investor persona in mind and priced accordingly: Leaderboard costs $69.99 per month, which MarketSmith costs upwards of [$]1,400 per year.
To build these products, IBD needed to dive deep into the various audience personas on its platform and understand what their needs are. This is a lot harder than it seems. This isn’t just an analysis on whether someone will pay. This is about understanding what the individual psychographic actually needs and then creating a product specifically for them. That takes deeper analysis.
But what I find really informative about this story is the tactical breakdown on how IBD takes a customer from one product and starts to funnel them into other products.
They start by focusing on getting the customer really engaged with the product they purchased. IBD president Jerry Ferrara told Digiday that the first 60 days is all about helping new customers get used to the product they purchased.
You’d be surprised how many publishers don’t do any work once someone pays for the product. The most successful publishers guide the user deeper into the product. In November, I wrote about this:
Once a user actually converts, you should automatically add them into a welcome series of emails that walks them through the various content offerings that you’ve got. Here’s a basic flow that could work:
Day 0: Thanks for subscribing. Let them know that there are a few more emails coming in the next couple of days.
Day 2: Want to stay up to date on our reporting? Here are a few newsletters that you might find interesting. What newsletters should you show? At minimum, one that is related to the piece of content that finally got them to subscribe.
Day 7: Here are a few subscriber-only benefits that you may not have known about. The Athletic offers subscriber-only podcasts. The Information does sporadic conference calls. Let people know that these exist.
The number of days between each email is something to test. Perhaps two days between subscription and the first engagement email is too fast. Or, on the other hand, you may find that this email should go immediately.
The point here is to immediately build a rapport with the subscriber by communicating with them.
IBD is basically doing this, but spread it out of 60 days. The important thing here is to keep the user engaged with the product long enough that they get hooked. After a few months, IBD starts to automatically cross-sell other products based on what content the subscriber is consuming. Using analytics to inform cross-selling takes more work, but it’s an important step to generating higher conversions.
This strategy could be deployed across a variety of different niches. One that I think a lot about is how to use a low-cost/high-cost product strategy for a B2B publication. Perhaps it starts with a low-cost newsletter, such as A Media Operator, and then expands to a high-cost research component. Fewer people will convert to the higher-cost product, but the higher revenue per user more than makes up for it.
Another way to do this is with a low-cost subscription/high-cost event. I would be curious to see a publication that is earning a few hundred dollars a year per user from their content and then generate a few grand per attendee at the event.
Although I haven’t tested it yet, I imagine what you’d find in this scenario is that there is a greater conversion from the low-price to the high-price than from someone going directly to the high-priced product. Why? You’ve already convinced a user to pay for something and they are comfortable with you. Therefore, the most loyal are more likely to convert a second time.
If anyone has done a test like the above, I’d love to hear about your results.
That wraps up today’s issue. For those that have a subscription, leave your thoughts in the comments below. For those that haven’t signed up yet, if you’re interested, take advantage of the 50% off for life offer that I have running until March 12th. I look forward to seeing you all in the comments! Thanks and see you Friday!