Why a small fraction of visitors drive most online traffic — and profit.
Nearly a decade ago, I began asking media executives what I assumed would be a simple question: “What percentage of your visitors drive 50 percent of your site’s traffic?”
“Hmmm……interesting,” came the initial responses, usually followed by silence. Only Raju Narisetti, then managing editor at the Washington Post, knew offhand. “A surprisingly low number,” he responded quickly with a smile. “About eight.”
These days, Narisetti, now CEO of Gizmodo Media Group, isn’t alone in knowing that stat — which most newspaper executives say is between 2 and 12 percent of their visitors. The traffic pattern didn’t change. But, as the past decade’s gains in traffic didn’t produce proportionate increases in revenue, publishers started focusing on this core audience.
Only 7 percent of monthly unique visitors drive 50 percent of traffic on average, according to Piano data from hundreds of major media sites. Call them super-fans, super-users, direct and dedicated, the invested, and loyalists, or call them, as we do here, the “seven percenters.” Being able to serve and monetize this relatively small part of the audience now makes all the difference between success and failure.
A unique visitor is not the same as a unique person. Typically, the former includes every browser on any device that’s used to access a site during a given month — a number that’s two to four times higher than the number of readers, according to some estimates. But this only reinforces the essential point, since it means that the number of loyal readers is even smaller and more engaged than the unique visitor numbers indicate.
At the New York Times, just 12 percent of visitors drove 88 percent of digital revenue in 2015, according to CEO Mark Thompson. Since then, the Times has almost doubled its visitors, and yet, says the Times, “The rapid increase in subscriber numbers means that, if anything, an even smaller percentage of the audience is driving the bulk of the revenue.”
The number of loyal Times visitors is still growing rapidly, but not as fast as the overall number of visitors. That’s how they now account for a smaller share of the audience. The Times’ metric here combines the two numbers most fundamental to the future of the news business: digital subscription revenue and digital ad revenue. The Times, unlike most other publishers, can produce such a metric because it has consolidated its databases, giving it a complete view of its subscribers and non-subscribers and each group’s ad consumption.
“Most publishers have advertising data in one place. Reader data in another place. Content data in another place,” says Laura Evans, senior vice president of data and insights at the Times. But the Times invested in technology that allows it to track all of this information together, in “a concerted effort to understand the whole customer experience.”
That knowledge is essential for getting higher ad rates. Advertisers want to know whom they are reaching — especially when they are being pitched “premium audiences” reading “premium content.” In statistical terms, says Arvid Tchivzhel, director at the consulting firm Mather Economics, “ad yield is positively correlated with known user percentage.”
Michael Finnegan, president of Atlantic Media, illustrates the concept. “Our advertisers really aren’t as interested in those one-off, passerby users. When you’re doing a sponsored content play, the advertiser knows that it’s not going to get access to all 30 million people. And they don’t want access to all 30 million people — they want access to the million viewers who are particularly engaged and influential.”
The seven percenters not only drive a majority of ad revenue and digital subscriptions, they drive the bulk of revenue for any online business. For instance, at Narisetti’s Gizmodo Media Group, 5 percent of visitors account for 70 percent of e-commerce engagement, a major revenue source for its sites.
Yet too many publishers know too little about their best customers. Mather found that 20 percent of readers drive more than 70 percent of pageviews. But it estimates that only 1.3 percent of them have provided e-mail addresses or names. That means too many publishers don’t know who their power users are, and therefore can’t personalize their digital subscription offers or optimize their ad rates.
As digital subscriptions become a larger share of revenue, the most important question about the seven percenters might be: How many will pay?
It’s a difficult question. Most sites calculate their percent of subscribers by dividing the number of digital subscribers by the number of unique visitors. But, as noted earlier, unique visitor numbers can double- or triple-count individuals, while subscriber numbers do not. That makes this an imperfect calculation that underestimates the true percentage of subscribers, but it is the easiest way to measure relative conversion rates between publications.
By this measure, The New York Times, with its impressive 2.3 million digital-only subscribers, counts just a little less than 2 percent of its U.S. unique visitors as digital subscribers. That’s out of its approximate 100 million U.S. unique visitors, as recently measured by Comscore. At the Washington Post, which passed the 1 million digital-only subscribers mark in late summer, it’s about 1 percent, given its 92 million unique visitors.
Regional publications typically sell fewer subscriptions. One high achiever: the Twin Cities’ Star Tribune, which has converted 1 percent — or 50,000 — of its 5 million monthly uniques. At the L.A. Times, which now boasts 105,000 digital subscribers — a big increase in 2017 propelled by a spate of low-priced trial offers — digital subscribers account for just a third of a percentage point of visitors. And that’s better than most other regional papers.
It makes sense that large, national publications would have a larger absolute number of digital subscribers. If you’re the Miami Herald, Mercury News, or Philadelphia Inquirer, you’ve got audiences only one-fifth to one-twentieth the size of the Times or Post. But the fact that the percentage conversion is typically higher for the national news sites than the local sites seems off. Shouldn’t local news publishers — presumably with content that no one else can offer — convert a higher percentage of visitors than the nationals?
It’s a paradox that local papers need to solve — fast. At The New York Times, more people pay for digital subscriptions than pay for daily print ones. But among the hundreds of large dailies across the country tracked by Mather Economics, 93 percent of all subscriptions count as print-based. To be sure, most dailies offer digital access as part of print subscriptions, but the consumer’s primary sales relationship is typically to the paper.
While some of these print subscribers see and get value from their digital access, it’s undeniably true most of these papers haven’t created digital-only subscription offers that are attractive enough to stand on their own.
To regain their footing, the local papers need to devise new subscription strategies to convert a larger share of their readers. One tactic: Act on “acceleration of interest,” says Mather’s Tchivzhel, targeting readers when breaking news creates a burst of attention. Leading media outlets account for these spikes in demand and capitalize on moments — like the start of football season or a shift in political headwinds — when passions run high and readers’ willingness to pay increases.
Local publishers also need to update their pricing strategies. There’s evidence that readers are willing to pay high prices, but trial offers and segmented products remain vital. How the Boston Globe converts low-paying subscribers into high-paying subscribers is the best example. The Globe brings in readers with a 99-cent deal for four weeks, then raises the price to about 60 cents a day, then to $1 a day in the 13th month. This year, says Peter Doucette, chief consumer revenue officer at the Globe, “churn rates are declining for both tenured [13-month-plus] and newer digital subs.”
“What’s their path?” replies Evans of the Times when asked how Facebook readers become digital subscribers. Many of publishers’ top readers consume content on Facebook — and the platform accounts for a huge share of unique visitors for many sites. But all top publishers tell me that they’re only now starting to understand how those readers become subscribers. They don’t yet know who’s consuming on Facebook — whether they are already readers, or even subscribers — let alone on what device.
In general, Google referrals convert to subscribers at a higher rate than those from Facebook, according to both Mather and Piano data. One reason: Most Facebook traffic comes to publishers from mobile, where conversion is about half that of desktop, according to Piano. At Tronc’s 10 properties, 60 percent of content consumption is mobile, but mobile drives only 25 percent of subscription sales. That’s why making mobile payments effortless is near the top of many publishers’ 2018 to-do lists.
While Google and Facebook are making incremental steps to help publishers turn readers into subscribers, publishers need to blaze subscription pathways of their own. That’s why the smartest are using their best customers to drive new business via digital word-of-mouth. The Wall Street Journal serves as a prime example. A year ago, the Journal loosened its paywall to allow subscribers to share five stories per month for free on email or social networks. The idea, according to Edward Roussel, Dow Jones’ chief innovation officer, is to offer subscribers an additional benefit while widening the top of the funnel.
It’s been one of the Journal’s most successful conversion initiatives. “At the Journal, 62 percent of traffic derives from our subscribers, and the remaining 38 percent are non-members,” says Roussel. He credits subscribers’ sharing of stories and the Journal’s newsletter program for much of the paper’s 30 percent year-over-year digital subscription growth in 2017.
Newsletters aren’t just a bright spot for the Journal. The Washington Post’s 70 newsletters have doubled conversion rates and boosted engagement by 40 percent, says Shailesh Prakash, the Post’s chief product and technology officer. At the Boston Globe, “77 percent of our digital subscribers” get at least one newsletter, says Doucette.
Does that mean publishers should pull back from Facebook to focus on newsletters? Not necessarily, since one publisher estimates that Facebook Instant Articles delivers about 20 percent of newsletter growth. Perhaps the path from Facebook reader to subscriber runs through readers’ inboxes.
Publications, especially newspapers, also need to face hard questions about just how big they can get. In the 1950s, household penetration of dailies in the U.S. hit more than 100 percent, driven by evening papers offering an experience their morning competitors didn’t. Now, if they are lucky, publishers are getting 1 or 2 percent of their readers to pay. But that’s at least partly because online technology tracks readers who glance at a single story, the digital equivalent of counting everyone who looks at headlines walking by a newsstand. That’s why publishers are focusing on the intensity of reading — on the seven percenters. How publishers engage those loyal visitors will determine who’s still publishing, and at what scale, a decade from now.
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