How Can Monetization (M) Be Improved?
What you’ll learn:
Surprise – you have products lurking in your content that you haven’t discovered yet. From these new products to new marketing channels to the right website infrastructure, you’ll find out exactly what drives revenues for a variety of business models and begin to see how you can translate these strategies to make millions of your own.
- Don Nicholas, Founder, Chairman & CEO
- Kim Mateus, EVP & Client Success Group Leader
- Bill Dugan, SVP & Client Success Group Leader
Time: 9 minutes, 39 seconds
- The Most Profitable Subscription Website Business Models
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“M” for monetize is one of the most important pillars of ACEM in the Mequoda Method because that’s how you can fund everything that you’re doing in any online publishing venture. And there are really two main ways for monetizing. And that would be through advertising, or selling your own products. With advertising, the size of your email list can be very important, the number of visits to your site can be very important. If you’re doing any sort of sponsored content, your audience size is very important to the advertiser or the sponsor. With your own products, size of audience is important but there are lots of other things that matter. The breadth of your product line, the price points of your products, and what we found as an emerging best practice is the bundling of products into super clubs or memberships, all access products that give a buyer access to everything that you produce.
Monetize is probably the most diverse of the Mequoda Method pillars because there are so many different ways to monetize. You’ve got one or more subscription products, magazines, newsletters, advisory services, could be video training programs, could be some sort of encyclopedia that’s a comprehensive database of information on a particular topic, or of recipes or projects. Subscribers ride with you in a very predictable way. You’re taking relatively small checks from a lotta people, typically tens or even hundreds of thousands. So that’s a lotta fun. And it typically is the most profitable because of that continuity relationship, the average subscriber’s probably going to stay with you between two and a half and three years.
And the cost of delivery, especially now that we’re doing a lot of digital delivery where there, in some cases, there’s no print component or the print component frequency has been minimized maybe six times a year, the marginal contribution is really good. So that’s a combination of having at least one subscription product and if you’ve got one having more, recently in the past few months, we’ve watched any number of our publishers launch additional subscription products, and that did very well. And I think one of the things that’s interesting about launching additional subscription products or information products in general, is you have this relationship with again, 10,000, 100,000, a million customers, you can see the content they’re reading, you can see what they’re downloading. And when you wanna spin out a new paid subscription product, you can use that data.
With monetization, the cool thing about, you know, operating in the digital world is that, if you’re looking at the data, you can see opportunities to generate revenue that you might not have had. One of our clients recently, I’ll give you an example, they are an investing publisher and they’ve historically talked about certain topics and stayed away from other topics. Well, they started noticing a significant increase with traffic arriving at their website, looking for content in a particular investing category. And again, they had never really talked about it before.
But with this interest, they were saying, “Well, clearly there’s a demand here. What can we do to meet this demand?” So first, they started out by creating a free download in this topic category so that they could at least capture some of that traffic. But because they didn’t write about it, that traffic was getting to their website and not converting. So the first thing they did was create a download that was related to this new topic area. And once they saw that that was successful, they then released a premium paid product in this topic area, so. And that was like a three month deal, you know? And if you think about the dirt world, if you will, that would have taken years to do that kinda testing and to figure that stuff out. And online now, it can be that fast again if you’re looking at the right things and are able to spot the opportunity quick enough, which they were able to do. And it’s a digital-only product, so you know, it’s very high margin.
So I think with monetization, it’s part of recognizing what you did in the legacy world, and adapting that to digital, and doing as good as you can with it, but also keeping an eye toward new areas of monetization that weren’t possible before. And then on the sponsorship side of things, I think that world is also opening up a little bit. And our clients who are special interest publishers are seeing growing success native advertising as they try to get themselves outta the whole, you know, messy sorta programmatic and into the, “Let’s find advertisers that are completely endemic to our audience and offer them programs that are more content-oriented.” And they’re seeing a lotta success with that.
Any surfer will tell you, you wanna surf a wave, you gotta find the wave first, right? You’re not gonna surf the calms. And having the Portal allows you to see a lot of data and identify those waves of interest that are going on inside your customer base in what really is real-time. So the idea of having subscription products and lots of subscription products probably is top of my hit parade. Advertising far and away number two. A lot of people complain pretty viscously these days about how the display advertising market has gone programmatic, and the yields are down, all true, but our publishers are largely special interest publishers. And they may have a programmatic component, a display component in their mix, but most of them are doing other things. I’d say most successfully is native advertising, whether it’s long form native that would be something similar to magazine articles, or short form native. That’s the kind of snippets that you can put into an email newsletter that will lead back to a product or a service that a sponsor has to offer.
Events would be another, probably the third most likely candidate. I’d say at least two thirds of our current Gold Members are running events that might be conferences, webinars, we have two that are running online learning programs that are 24/7, 365 programs where there’s ongoing expense involved with putting new products into the learning programs, but the product accumulates over time, and the product becomes more valuable to the consumer to the end user because there’s more and more product in there.
Then we have just, you know, all of these outliers. We have some clients that do consulting services, we have clients that actually run travel and tourism where they’ll take a group of people who are interested in a topic, and take them to Europe because they’re interested in pottery making, or they’ll take them to Asia because they want to see Buddhist landmarks. So all sorts of interesting ancillaries there too. And again, because you’ve got that relationship with the customer, the customer will suggest things. They’ll say, “Hey, we’d love for you guys to offer, you know, this or that.” And the publisher really is in the seat then of trying to prioritize. Almost every publisher we work with is doing new product development. They’re almost all either adding more products like the products they have, or they’re experimenting with new product formats like online learning for example.
“M” is a difficult one to measure because there’s all sorts of different measurements you would play with if you were doing ad sales versus subscription sales that are unique to those industries. But at a macro, macro level, our proxy metric, if you will, the approximation of the value is going back to the idea, is that if the Mequoda Method is fundamentally an audience development program where the core relationship is within an email subscriber, then we can simply take all the revenue streams, whether they’re subscriptions, advertising, events, etc., take the total number, divide by the number of subscribers that we’ve got, and pick off a number.
So the publisher we work with that has the highest revenue per subscriber is actually in the event business primarily. This last year, they did about $7.5 million, they’ve got about 85,000, 90,000 subscribers. So they’re pushing right at $100 a head. So simply, take the revenue, divide it by the subscribers and that gives you a basic fundamental calculation that will tell you about the health of your business, and it’s comparable. Really, it’s meant to be kind of a representation of are we doing better than we were doing a year ago, or are we doing worse than we were doing a year ago?
And of course the trick here is to grow the number of relationships, grow the number of email subscribers, and at the same time, grow the value per subscriber. And if you were to ask me what would be the characteristics of those publishers that really excel with our method, and that would be it. They’re growing the size of their audience, and they’re growing the revenue per subscriber at the same time.