Audience segmentation, dynamic paywalls unlock nuanced revenue strategy

By Tim Rowell

Senior Vice President of Global Publishing

Piano

United Kingdom

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Historically, news publishers have viewed the implementation of a paywall as a choice between two revenue streams: advertising or subscriptions. This binary approach has often created tension between teams, with each side vying for dominance.

However, this mindset is outdated. With today's advanced technologies, publishers can adopt a more nuanced strategy to maximise both advertising and subscription revenues.

A dynamic paywall strategy recognises there are marked differences in the ways different audiences engage with content.

Below are four data-backed strategies, grounded in Piano's customer benchmark data, to help publishers optimise their revenue potential by strategically integrating both models.

1. Segment your audience by revenue potential

Audience segmentation is crucial for optimising both advertising and subscription revenues. Different readers contribute to your revenue in different ways. Some generate more ad revenue due to high engagement with content, while others are prime candidates for converting into subscribers.

A one-size-fits-all approach, especially with a static paywall, often leaves potential revenue untapped.

Data shows that increasing the percentage of pageviews with paywall offers leads to a rise in subscription conversions. Publishers targeting those with more than 10% of pageviews with paid offers experience 39% more active subscriptions than those targeting below 10%. However, a broader paywall application often reduces ad views.

By segmenting your audience into groups, such as high ad value users and high subscription potential users, you can tailor your approach to maximise revenue.

Users who generate significant ad value but are unlikely to subscribe should continue to have ad-based access to ensure consistent revenue from pageviews. Users who demonstrate a high likelihood to subscribe should be stopped and encouraged to pay.

2. Balance subscription propensity with ad revenue insights

Publishers often face challenges balancing subscription growth with ad revenue. Data is key to optimising both. By integrating subscription conversion data with real-time insights into ad revenue, publishers can determine the true value of each user interaction.

For example, Piano's ad revenue insights tool reveals significant variation in pageview value, with differences of up to 400 times between the highest and lowest RPM (revenue per thousand impressions) pages. High-value ad pages should remain open for ad-based users, while content with strong subscription potential can be placed behind a paywall.

With real-time data, publishers can dynamically adjust their strategies to ensure they are capturing the highest possible value from every user.

3. Implement dynamic paywalls for maximum revenue

Static paywalls, which apply the same rules across all users, can unintentionally stifle both traffic and ad impressions. Dynamic paywalls, by contrast, are flexible and adapt to user behaviour, creating a personalised experience that optimises both access and revenue.

Piano's research shows that publishers implementing a metered paywall experience an initial drop in pageviews - up to 16% in the first 90 days. However, those who transition to dynamic paywalls - paywalls that adjust based on user behaviour and likelihood to subscribe - see fewer traffic losses and higher conversion rates.

Dynamic paywalls allow publishers to strike the right balance between free content access and subscription conversion, maximising both advertising and subscription revenue without sacrificing user engagement.

4. Optimise the user experience to minimise paywall friction

While acquiring new subscribers is essential, retaining them is equally critical.

A poor user experience can lead to high churn rates and lost advertising opportunities. Enhancing the overall experience - both for content consumption and throughout the subscription process - plays a pivotal role in long-term success.

Data highlights the importance of factors such as ease of navigation, personalised content, and minimal friction during the checkout process in retaining subscribers. Publishers investing in these areas see increased subscriber lifetime value and greater engagement from ad-focused users.

Key improvements include streamlining the checkout process, offering personalised content recommendations to maintain user interest, and strategically placing ads to avoid detracting from the user experience. A fast, smooth, and relevant browsing experience helps retain subscribers and keep ad-centric users engaged.

Conclusion

In today's competitive digital landscape, publishers cannot afford to view advertising and subscription revenue as mutually exclusive. By leveraging data to segment audiences, balance subscription growth with ad revenue, implement dynamic paywalls, and optimise the user experience, publishers can unlock substantial revenue growth.

These strategies are not hypothetical. They are supported by real-world data from publishers that have successfully evolved their revenue models. As the industry continues to shift, publishers who embrace a strategic, data-driven approach will be best positioned to thrive, maximising both subscription and advertising revenue streams.

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About Tim Rowell

Tim Rowell is senior vice president of global publishing at Piano in the United Kingdom. Tim can be reached at [email protected].

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