E-Media Strategist: A Controlled-Circ App Strategy
As the popularity and hype of the iPad and other tablet devices grow, many publishers are trying to figure out what their magazine app strategies should be. Much has been written about paid-circulation publications and whether or not their app strategies are successful, but little discussion has taken place about app strategies for controlled-circulation publications.
The business objective must be answered first. Your publications are controlled circulation, and not paid, for a reason—you can make more money through advertising to a specific, controlled audience than you could by charging readers for the content. It is also difficult to charge for a magazine app when your competitors do not charge for similar content, and there is a market history of the content being freely available on the Web and in print. So let's forget about trying to charge readers for a magazine app in a controlled-circulation environment.
If reader revenue is out, then perhaps you can generate additional revenue from advertisers. Maybe you can sell a sponsorship or two, and upcharge for interactive or video ads? Publishers might be able sell the sex appeal of an app to a couple advertisers for a while, but unless we can demonstrate sustainable return on investment (ROI), the newness quickly will wear off and the revenue will disappear. You need a critical mass of circulation to sustain an advertising/sponsorship business model.
A Closer Look at Traffic Potential
Let's get real for a minute. Over 15 million iPads were shipped in 2010, and while that number is impressive and sure to grow, the vast majority of publications simply don't have a significant percentage of their audience using tablets right now. Check out your own website metrics, and look at the percentage of website visits from iPads or other large-format tablet devices. For most, that number will be 1 percent to 2 percent of total Web traffic.
While not a direct measurement of app potential, this is a very strong indicator that a large enough base of tablet users just doesn't exist in your target audience against which to generate significant and sustained ad revenue. Yes, when you include smartphones like the iPhone, BlackBerry and Android, that potential audience increases. However, because of the screen size of the smaller devices, significant development and production work must be done to adapt a magazine to them and still be effective—and the publisher now has to sell a completely different product.
What to Do?
So what's a controlled-circulation publisher to do? My advice is to stop looking at a digital magazine app as its own product and revenue stream. Instead, look at both magazine apps and Web-based digital magazines as extensions or even replacements for your print circulation. Sell a single product that is distributed three ways.
For example, look at digital editions. Just a few years ago, these Web-based, page-flipping, digital replicas of print magazines were seen as a publishing panacea—the same way many publishers look at magazine apps today. With digital magazines, publishers could produce the same products, sell them the same way, but reduce printing and distribution costs while selling add-on sponsorships and interactive advertising options.
And they worked … sort of. Many controlled-circulation publishers today have digital magazine distribution representing 15 percent to 20 percent of their qualified circulation. This represents a nice cost reduction, but very few publishers now look at digital magazines as a significant add-on revenue stream. There simply isn't enough digital circulation on its own to sell interactive advertising upgrades.
So here's one strategy for controlled circulation publishers:
• Use one of the major digital magazine technology vendors to power both your digital magazine and create an app for your publication. The cost for this is actually quite affordable (it can be less than $1,500 per issue depending on the exact needs of the publisher), and not much additional work is required.
• Market your magazine as a print product, Web-based digital magazine, or app to your target audience and existing readers. Let them decide how they want to receive it.
• Do not allow anyone who visits your website to access all of your content as a digital magazine. Instead, allow anonymous visitors to view only the cover through the editor's letter, and then ask them to log in or subscribe to see the rest. Enabling anonymous access to the entire digital magazine does you no good. You've already sold the advertising in the magazine and aren't making another dime by letting an anonymous visitor in. This tactic helps build circulation. But if they don't subscribe, you're better off letting an anonymous visitor view content on your website … at least there you're making additional advertising dollars.
• Similarly, do not allow anyone who downloads your app to access all of your content. Give full access only if they log in/subscribe within the app (and make it easy to do so). You won't run afoul of any Apple restrictions since you're a controlled-circulation publication, not a paid publication.
• Sell against the combined circulation of all three distribution channels. It's simple and straightforward. And if you develop enough circulation in your Web-based/app distribution that you can sell some add-on sponsorships or interactive ads, that's all the better!
This may sound like heresy to app purists who believe you have to develop a unique product for each medium. While I do understand the point and agree to some extent, I'm also a realist. Most publishers simply aren't in a position to spend a ton of extra money, time and human resources—or take on the risk—to go after an all-out app strategy. And frankly, even many of those who have committed to all-out app strategies have spent a lot more money than they are actually making.
The strategy outlined here allows controlled-circulation publishers to get their feet in the app business with minimal risk, effort and cost—and with a solid business strategy that grows the overall brand while keeping things simple. As app development matures, tablets become more widespread, and the numbers justify it, publishers can then expand to a more intricate app strategy with much more confidence and assurance of a positive ROI. PE
Eric Shanfelt specializes in practical revenue-generating strategies for publishers. Read his blog at eMediaStrategist.com where he often responds to comments via his BlackBerry or iPod.
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