FEATURE 

Digital Magazines – where are the new revenue opportunities?

With sales of digital magazines generally failing to live up to the early hype, Rebekah Billingsley asks, is it time brands started to look at alternative ways to make money beyond issue sales?

By Rebekah Billingsley

For the past few years, publishers entering the digital magazine marketplace had, in the main, just one revenue model: how to sell more magazines on the digital newsstands. It is no surprise that they all focused on the way their print businesses had worked; drive awareness of the brand; try and get a sample to a new audience; sell an issue and then use subscription marketing techniques to reach the holy grail of longer term subscribers. It was actually a perfectly smart strategy in the new digital environment: try and get committed readers to your brand for the next twelve months, guaranteeing you some revenue and seeing off any late-to-market competitors.

However, many titles are reporting at the very least a plateau in subscriptions, several are seeing a decline. It’s frustrating for publishers; the newsstands are now full to bursting with magazines, discoverability is almost non-existent, editorial curation of the store fronts has all but ceased, the algorithm driving the charts is not only a mystery but also clearly weighted to the daily and weekly titles and there is very little opportunity to market these products in the digital ecosystem outside of their own assets to existing consumers.

All of which means that publishers who, a couple of years ago, were excited and positive about an opportunity which might finally stem the decline of their titles, are once again feeling the burn with a set of new products to manage which are not profitable and squeezing already tight internal resources. Some of those publishers are now reviewing their commercial models and testing a different way to make money from their readers. After all, if circulation is becoming a limited pool, up-sell opportunities to existing customers is a solution to be seriously considered.

Improving conversion rates

Immediate Media invested in their own technology to allow them to explore and implement models they thought might drive a higher sales conversion. One aspect that they have been testing is a free metered access system. It’s a smart way of sampling the product; editors can decide between a number of free pages or a time limit access and try to find the optimum conversion for their individual title. So for example, with a title such as Olive Magazine, a ten minute time limit might work better to allow potential purchasers a tantalising glimpse of the mouth watering recipes available, but would clearly prevent them from cooking any of them in real time until they make a purchase, whereas BBC History may benefit more from a snapshot of some of their quality features via free page previews.

Initial results have been encouraging with a game changing 56% increase in conversion from free downloads to product purchase. Subscription acquisitions are up 43% and singles issue sales are up 10%. Also interesting is that tested adverts within the metered areas have seen a massive increase in page views of 45% and a click through rate increase of 83%, allowing Immediate to use the free access model to increase reach for advertisers outside of the smaller product purchase numbers.

Kevin Curtis, Immediate Media’s mobile product manager summarises the approach by saying, “We made a strategic decision at Immediate to look at ways to remove the barriers for customers to try the content before buying - the digital version of going into your local newsagent and browsing the newsstand. Although it is early days, we are seeing some encouraging statistics and because we own the technology, it is allowing us to test different approaches with different brands and pivot where we see positive uplifts.”

In-app purchasing

Some publishers might want to consider the success of the mobile gaming market and test the in-app purchasing model. 450 Degrees, publishers of a book app called How To Knit and Search Press, publishers of an app called 20 To Make have started to utilise the in-app purchasing model to sell individual patterns or pattern bundles. This could be a very interesting approach for many different magazine verticals across the market to appeal to readers who want specific information; for example, a particular recipe, a guide to the city they are visiting or inspirational ideas for the room they are about to decorate.

It is interesting that the eBooks industry, already streaks ahead of the digital magazine market, have seen a gap in the market for a new publishing model, already hugely successful on the mobile platform in games. Publishers have been exploring the idea of micro-payments for a while but it was time and resource heavy with few simple back-end transactional engines. The digital stores provide a seamless solution via in-app purchasing and many brands are in a position to now package and sell content in a way that is specific and tailored to a consumer.

Ecommerce

Another commercial model that we can see more evidence of is ecommerce. Brands such as ASOS and Net-a-Porter have been providing free digital content to drive sales for a while and we are now seeing more and more ecommerce brands following suit. Lakeland’s highly interactive magazine provides content as good as any of the premium paid-for food magazines but it is free and peppered with relevant Lakeland products to purchase. With much lauded statistics around the propensity to use a tablet to buy things, expect to see more of these ecommerce brands enter the market and pull together their savvy CRM, data, personalisation and recommendation practices. We could inevitably find more traditional publishing brands moving in this direction in the future selling biking equipment, wedding services, hotel rooms and so on.

Working your archive

Your archive may also be another source of potential opportunity. Clearly this only works in certain verticals but I have seen evidence of strong archive purchase on particular brands. Take a food title for example; if you have a consumer starting a diet in February, it makes sense that they’ll be more interested in your previous February editions than they are in your recent December and January editions due to food seasonality and relevance. Similarly, for a triathlon magazine; if a reader suddenly becomes a triathlon enthusiast, you may have special back issues dedicated to being a beginner that you might push via an email or notification as soon as they subscribe. Spending some time thinking about your archive and reviewing your analytics could create a hard to ignore up-sell opportunity.

Advertising

One commercial area in which publishers should be comfortable but all are currently struggling with is with digital magazine advertising. There is a distinct lack of consistency across the industry which is crying out for leadership. Issues such as whether adverts are going to be digital and ad served or replicas of print ads; how we can challenge a CPM model; what kinds of interactivity work best for advertisers; what should we measure and report on; what is working and what isn’t and how can we make advertising in our digital magazines a no-brainer, are all as yet unresolved. Industry wide standards, definitions and fee structures are critical as mobile advertising starts to rocket and the money passes publishers by. Many of the smaller publishers are urging the industry trade bodies to take charge and represent the industry with some research and testing to take into the key agencies and to start to become serious players in the planning arena.

The need for new approaches may be borne out of a frustrating commercial necessity, but it also represents an opportunity to step away from the familiar print models and utilise the digital opportunities available and investigate how consumers in this new world might want your content and also how they may respond commercially to it.

Of course, it’s still all going to be about scale, an area which may be a struggle for all of us until the platform providers provide a better ecosystem in which to live. In the meantime, perhaps we can press our trade bodies to create a strategy for the industry and take our expertise and needs to the (relatively) new powerhouses in digital distribution.