The recession is affecting publishers’ advertising businesses in more than one way. A less active Q4 2022 has led to some ad leads scrambling for last-minute quarterly events, while other publishers have decided to delay their event schedules until 2023, hoping to give sponsors more time to bring more much income.
But the economic impact on subscription revenue remains unclear as subscribers and media companies alike assess how much they can afford to pay for subscriptions in 2023.
As inflation rises, that pressure will put pressure on media companies to balance their own bottom lines and bring more scrutiny to what their key subscribers — companies and individuals who pay premium subscription fees — are willing to pay for business coverage .
Price points for these premium subscriptions, typically aimed at business and enterprise customers, range widely:
- A digital subscription to Bloomberg costs $35 per month or $300 per year ($2 per month after a three-month paid trial). Bloomberg also offers subscriptions for groups of five, starting at $275 per person per year.
- An Axios Pro newsletter costs $600 per year, or individuals can get an annual all-access pass for $2,500, and group rates are also available for an undisclosed amount.
- Annual subscriptions to Politico Pro run into the tens of thousands of dollars, and depending on customization and the number of employees who have access, the price can skyrocket even higher.
So far, subscription retention rates for Axios Pro, Bloomberg and Politico Pro haven’t dropped directly as a result of the downturn, according to company insiders at the publications. But the economy made their subscription team focus on increasing average subscription revenue rather than total subscriptions. To do this, they solicit feedback directly from their subscribers.
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Axios Pro has just passed its one-year anniversary and is renewing for the first time.
While Axios would not say how many of its 3,000 paid subscribers have reached the renewal point, publisher Nick Johnston said that so far there have been no cancellations due to the downturn. Additionally, based on subscribers who have already renewed (some of whom get accessible memberships at a higher price or enterprise subscriptions for more employees), Axios expects Pro revenue to grow 20% from last year, from 2 million in 2022. USD to $2.4 million in 2023, not including new subscriptions sold this year.
Johnston’s main strategy for renewing existing customers at a higher price in 2023 is to follow up with subscribers on the phone, asking for their feedback, including what they like and what’s missing from the Axios Pro product. He declined to say how many such calls he takes each week, but added that it has become an important part of his duties and has been taking them since September 2021.
Politico’s approach to surveying subscribers has changed over the past few months, adding face-to-face interviews with paying readers after the company hired a new head of professional subscriptions, Rachel Loeffler, in October.
According to a person with direct knowledge of the company, each member of the Politico Pro subscription team has a goal of the number of face-to-face meetings they have with so-called subscription customers.
“Cost cutting occurs when subscriptions are actually seen as a cost rather than a value creator,” said the source, who spoke on condition of anonymity at Digiday so they could speak more candidly. “When you sell to a big company, you have people who are actually using the product, and then [you have] The one who pays for it. They are not always the same person. The people who pay for it, their job is to cut costs,” the Politico insider said, adding that negotiating tactics around product portfolio pricing facilitated conversations with the group that signed the check.
The total number of visits and the titles of clients they see varies by role, but every meeting must be backed up with minutes. “You can’t just check a box,” said a person familiar with Politico’s subscription business. Combined with quantitative surveys conducted on the Politico platform, the Subscriptions team wanted to be able to pinpoint each customer’s needs.
“Because we are such a close partner with our customers, we will always match the value we bring with what they can pay. We are quite flexible and agile,” the source said. So far, the team hasn’t seen an increase in churn or a drop in the average price point per subscription due to the economy, according to insiders. A company spokesman declined to comment on average subscription prices and churn rates.
Pricing is high even in the face of inflation
Johnston didn’t lower the price of the Axios Pro because of the downturn — even if the Pro lost business because it was too expensive. While the new product launch has some promotional pricing, like a $100 discount for the first year, Johnston said he values average revenue potential more than sheer subscriber numbers.
“If someone gets to the bottom of the funnel and clicks ‘no,’ we do a lot of research on why people click ‘no,’ and often it’s because of how much it costs,” Johnston said.
Bloomberg hit 450,000 subscribers in 2022, a year-over-year growth rate of about 20%, slightly lower than what Bloomberg Media CEO Scott Havens said was a pandemic boom, but he added that subscriptions are expected to grow at the same rate. The growth rate in 2023 is the same as the previous year.
“It’s not a game of how many subscribers do you have, it’s a game of how big is the business going to grow? You can play tricks [offering the first] Free for six months, and in the end, many of them won’t stay,” said Havens, who added that his team this year is focused on getting people to move to annual subscriptions to further improve retention. He didn’t say how many subscribers are monthly Subscribers and Annual Subscribers.
One of the main strategies for turning monthly subscribers into annual subscribers is reducing free trials and implementing sign-up walls to start building relationships with readers “before you bump them into a paywall,” Havens said. This equates to hundreds or thousands of registrations per month for publishers.
“We strongly believe that in the long run, subscribers stick around longer and that pays off,” Havens said, but there’s no data to share yet.
Prioritizing average subscriber revenue over total subscriber count is a popular tactic, and Michael Silbermann, Piano’s executive vice president of strategy and social, said he’ll see more clients focus on it in 2023. [Editor’s note: Piano is a contracted vendor with Digiday.]
What this means, Silberman added, is that instead of offering free trials or long introductory price windows, publishers are focusing more on quality acquisition — which means finding subscribers who are willing to pay full price or close to it — that’s a key factor. Improved overall retention.
“A key way to shift the focus to income is to [be] Focus on yearly vs. monthly subscriptions and incentivize people to opt for yearly subscriptions,” Silberman said. “Classic discounts are around 15% [off of an annual subscription giving subscribers] 12 months for the price of 10 months.You can discount 30% or 40% and then the year is still more valuable than the month because the retention rate is higher [that annual subscribers have on average]”