Beyond Subscription & Ad Sales: 2 Keys to Growing Alternative Revenue
Few people buy lifestyle or news content in the volume they used to. Our readers often expect it to be free, yet they’re perfectly willing to pay for niche content. Media brands must harness that niche interest in order to expand their business models into other verticals at a faster pace. One already explored scenario for lifestyle media, is to give content away on a freemium model, making sure content remains of a high quality and finding innovative ways to expand revenues beyond ad sales. This is a well-trodden path, but as a market segment it’s always been a great sector for innovation and ideas.
Following are two ways consumer publishers can build upon the freemium model and develop alternative revenue streams.
1. Harness Audience Data to Inform New Revenue Models
The best starting point for discovering new revenue streams is to collect every scrap of reader data. If you are expecting the revenue from copy sales to fade and recede into the nostalgic past, like print-film and bromides, then embrace a new world of revenue streams derived from sales of products and services. Consider the creation and distribution of content to be the marketing strategy in order to sell other products. Is this really so absurd?
The global success of Red Bull’s beverage empire is largely due to its power as a media owner and events organizer. As a brand, Red Bull creates its own media stream in the form of video and written content, as well as ownership of events that align with its brand. It’s using powerful content as a way to create a market for its products. In other words it’s found an alternate route to the same solution.
In 2010 I attended a panel debate where two major publishers both argued a strong case as to why media owners should not become retailers. In both cases, their argument relied on the fact that it would be dangerous to cross over and compete directly with advertisers. They also both felt strongly that while diversification of their business models was inevitable, the idea of becoming in part an ecommerce business would be a logistical headache and require substantial risk and investment. Seven years on, I see that both publishers are actively selling product directly from the pages of their digital magazines and websites. It’s not to say they were wrong; it’s simply that the world around us has adapted, and drop shipping is a more accessible option now, as is affiliate marketing. Even if ecommerce offers us a relatively small uplift in revenues, it’s worth pursuing.
By owning a comprehensive set of reader data we are in the position of offering those readers targeted discounts and deals on anything we choose as being relevant. As we build up a picture of readers, we can predict their purchasing behaviors and curate offerings tailored to them. Building an in-depth database of our readers has become easier and there are a variety of tools available from third-party suppliers to ensure we capture this data efficiently and thoroughly. Audience data will likely become our most valuable asset in the future. How we approach the collation, storage, and usage of this complex information from a variety of sources is an important step in building out our businesses into new verticals.
2. Take Advantage of Your Sales Team’s Expertise
There’s been a lot of discussion around the vastly changing roles of editors, in particular, but consider the ad sales team for a moment. Step back a few years and the typical ad sales person in a magazine had a very specific job; to source relevant advertisers, court them, and figure out a way to sell them ad pages in a way that fitted with their advertising strategy. I’m not suggesting it was (or is) an easy job; it isn’t, and I know that from first-hand experience. The typical ad sales person now needs to be a formidable intrapreneur, a creative thinker, and a strategic partner for all of their clients. The days of selling ad pages alone are largely gone and we’re now in the business of selling access to audiences in a myriad of ways.
The modern ad sales team is encroaching into creative agency territory. This new breed of ad sales people is adept at understanding all the technologies and channels we use to communicate with our audience, from print to apps, websites, social media, email newsletters, events, and more. But do we give them enough credit for being valuable all-rounders?
When looking for innovative ways to develop new revenue streams we need to spend more time talking to our sales team. They may be sitting on some great ideas; after all they are the front line communication with our advertisers and strategic partners. We also need to connect them more closely to the creative talent pool in our organizations, so that we are aligned.
This is going to be a long, and I hope fruitful, journey for many of us as we continue to adapt and pivot our businesses into new areas. Focusing on whether AR or VR will be the next disruptor is important, but we should also perhaps consider focusing more on our core enterprise again, connecting our audiences to products and services they may want to purchase, whether from us or our partners. If we can get that right then the new and disruptive channels will be easier to identify and adopt.
Robert Grainger had 15 years experience in magazines in the UK before co-founding Stonewash, building apps for publishers, in 2009. He served as the CEO of Stonewash until its sale in 2015 and has served on the board of SiiA (Europe), as well as being a regular speaker and commentator on the subject of digital media.