Case Study on Foreign Affairs: The Life Cycle of the Digital Customer


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Foreign Affairs has had unique experience in its success with a paywall and not having to retrain users to pay for content. But, the magazine is still working through testing optimal permutations and metering ad microcontent purchase options. Foreign Affairs publisher Lynda Hammes will speak about the ‘customer voyage,’ of guiding a completely anonymous user through becoming a registered user, repeat visitor, and ultimately – paying subscriber.

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  • About… FA was the original “thought-leader magazine” before the term existed. The magazine’s been around since 1922 where it started at the Council on Foreign Relations as a public forum on the most important topics of the day, with articles written by experts in academia, business and policy….
  • The magazine framed the ideological debate of the times, and was made famous with pieces by Henry Kissinger, Isaiah Berlin and even Leon Trotsky. In fact, it was in Foreign Affairs that George Kennan first proposed the policy of containment, which became the touchstone of U.S. strategy during the Cold War. Notably, Foreign Affairs played a cameo in Stanley Kubrick’s masterpiece “Dr. Strangelove.” This is actress Tracy Reed as "Miss Foreign Affairs," the centerfold June 1962 issue of Playboy magazine.The magazine became iconic during the 20th century as a living record of America’s changing role in the World.
  • The magazine became iconic during the 20th century as a living record of America’s changing role in the World…And that’s still the case. But the editorial content has evolved and expand to cover topics of global relevance today.  But our editors have expanded the dimensions of our coverage to include new topics of contemporary interest like gay rights abroad and the Internet of Things and the snafu – all in the current issue alone – held here by Stephen Colbert.
  • Brand RepositioningAlong with this evolution in editorial coverage, we are signaling contemporary relevance through our design, technology, marketing, etc. We’re in the midst of a 2-year overhaul of the magazine including a full-scale redesign which introduced cover imagery last year for the first time in history. We’ve rolled out a new brand toolkit, and are launching a responsive website redesign later this year.
  • This brand repositioning is invigoratingour value to advertisers. But we’re still focused on our original reader-supported business model. 72% of our revenue comes from paid content of some form. We’ve never needed to re-train our readers to pay for content. We’ve had a paywall on for more than a decade.  What I’m going to talk about here today is our strategy in innnovating in our consumer marketing – an area that is grossly stunted in the traditional magazine circulation world. 1) Transition to Relationship Marketing.2) Customer Segmentation by Content Appetite – including flexibility in our paywall 3) Ultimately, match new products to segment by user appetite  This is a reader-supported model. This is the most sustainable revenue stream. We have not had to re-train our readers to pay for our content.Add Lifetime value slide?-Want to maximize our online acquisition – low cost of acqusition, Autorenewal, Long lifetime value SEM – Reached natural performance / E-mail + Direct visits -> 19% and 70% respectively.
  • We have learned is that Paid Content Conversion relies on Relationship Marketing. For too long, the circulation business has relied on direct marketing of under-priced subscriptions.  Today, digital life had changed the way readers discover content and their reading consumption habits. Unlike many sites, our success is dependent on establishing a long-term relationship with visitors rather attracting maximum eyeballs for advertising, which is a secondary revenue stream.
  • To form a relationship, what kind of information do we need to know?One way is to do a traditional 350 degree profile with demographic and psychographic dimension. Here are the 6 personas we’ve devised that represent our readers - our audience studies.The Global C-suite is short-hand for executives and entrepreneurs. TK % of our audience qualifies…The Student and Professor audience is a critical segment because school is a feeder for future readers…Early affinity for the magazine is bornThe Engaged Citizen is a catch-all term for the highly educated and affluent general interest readers that may not need FA to do their jobs but look to the magazine for its intellectual nourishment.The Busy Policy Leader and Issue Advocate represent readers working in government, NGOs or int’l orgs that need to stay ahead of global issues to do their jobs.The Public Intell is the blogger, journalist, or pundit who creates influence in media and policy circles. (amplify our influence)This kind of segmentation helps tell an attractive story to our advertisers – and the people you see here really are readers… BUT To serve our paid content goals, we are thinking about segmentation in a different way.
  • Here’s a different way to think about Customer Segmentation. By reader appetite. We think about what need we can meet for the reader, whether its casual reading, keeping up-to-date, or deep research.There are casual web users who snack from social media, and long-time subscribers who report spending more than 2 hours reading each issue. Here are six categories.However, its very hard to know and to track – to the user level – what their appetite is.
  • The most obvious way to track visitors’ appetites is to experiment w/ the access levels on your site. We used to have a confusing paywall model where subscribers got access to everything and a random smattering of daily content was open and then moved behind a wall – which was confusing for our users and for us. Late last year, we launched a metered paywall. Explain rules… Then, you are hit with a subscribe offer for a print subscription, digital-only subscription or PLUS subscription, which offers premium content at a higher-cost. Every month the meter restarts. These rules were heavily focused on generating leads for e-mail marketing through emphasis on registration.----Discoverability: Paywall did NOT depress traffic. Registration increased.2) Lead Gen: We’ve generated more leadsd, but our conversion rate did NOT go up.3) Transparency: Successful.
  • Since introducing the paywall, both Total Registered Users and Registered UserVisits to the site have increased.Now approximately 20% of our Total Registered Users visit the site in a month.This is up from 10% from before the paywall.
  • HOWEVERWe are not yet seeing an increase in subscription conversion. Orders are constant – not up, down but constant so far.From our old paywall, we aggressively forced users to a subscription form. While this was successful in converting people who already were inclined to subscribe, it also drove users away. Now we don’t hit them with the subscription form as early or often. But our abandonment rate when they do reach the form is slightly lower. Our next steps are to A) test copy and design that will increase visits to the subscription form B) Develop the relationshipWE need to do more targeted email marketing, content marketing (newsletters) and drive more interest in the magazine. We’re introducing free trials this month.We don’t have conclusive evidence yet of whether the paywall is working but we continue to test – Mainly b/c We don’t yet know how long it will take for the most qualified of this growing class of registered users to convert. We have seen in the past that success conversion from email marketing happens after someone’s on the file for 3 months.---Approximately 50% of users who read 1 article, will read a 2nd article. 75% of users who read 2 articles will read a 3rd article. 100% of users who read a 3rd article, will max-out their allowance.
  • Think back to the content appetite segmentation I shared with you.Our visits referred from social media tend to be younger users who are less likely to pay for content, call them snackers. We monetize this traffic from advertising. But if we can convert them to registering or signing up for our newsletters, we can increase those impressions. And that’s the most we expect from that content appetite.But, think about a visitor who is aspiring to a career in global business or policy – or a visitor who thinks of the magazine as an intellectual badge. AT various stages of their relationship with the magazine, we need to identify what content and how much of it would have enough value for them to become a paying customer. <<events, upselling, crosssellingetc>>Our goal is to offer more value to each of these segments along the course of their life cycle from the moment we get their email address.This year, in addition to rolling out free access passes, we are going to be expanding the value AND the price of our premium subscription. Ultimately, we maximize average revenue per user by matching the product we offer with the customer’s appeetite.
  • Relationship marketing takes center stage(for acquisition not just retention)Segmentation by content appetite is crucialMatch product and price to content appetite
  • Case Study on Foreign Affairs: The Life Cycle of the Digital Customer

    1. 1. Case Study: The Life Cycle of the Digital Customer
    2. 2. Then (1922).
    3. 3. Dr. Strangelove (1962) Dr. Strangelove 1962
    4. 4. Today.
    5. 5. To sum it up…
    6. 6. 59% 24% 4% 13% Subscriptions + eReader 59% Advertising 24% Other 4% Newsstand 13% Business Model Paid Content = 72% of Total Revenue
    7. 7. Direct Response Relationship Marketing
    8. 8. Student & AcademicGlobal C-suite Busy Policy Leader Issue Advocate Public Intellectual Engaged Citizen
    9. 9. Reader Appetite Deep research on a single topic Snacks on a variety of content Must-read in the field (Trade) Stay up-to-date on news cycle Satisfy intellectual hunger Aspirational, self-identifies with intellectual authority BRAINY BADGE IN-THE- KNOW REQUIRED READING SOCIAL ANIMAL GO
    10. 10. Paywall Testing
    11. 11. Metered Paywall Results: the Good News Registered Users Visits # Registered Users Launched November 2013 +10% engagement from registrants +19% increase in Registered Users
    12. 12. Paywall Results: the Jury is still out...
    13. 13. Register for access eNewsletter Microcontent Free Trial Access Pass $10 Subscription Premium Subscription Membership $100 Average Revenue per User Conversion Life Cycle
    14. 14. Presented by Lynda Hammes, Publisher Digiday Publishing Summit, March 2014
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