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May 14, 2002
Case Study

Britannica.com Tests Paid Subscriptions Online

SUMMARY: Last summer Britannica.com switched from being a free portal-style site giving away encyclopedia entries, to becoming a paid subscription site.

Want to hear how it all worked out? In this Case Study we outline Britannica.com's subscription sales tactics and results. Most interesting, their recent price test results.
CHALLENGE

After a first stab at a paid site ('95 to '99), Britannica.com went for the dot-com boom's mirage of profiting from online advertising by becoming a 100% free content site. "We were trying to be a portal, like everyone else," says Sr. VP Sales & Marketing, Patti Ginnis.

For a while it worked. "Our free site got us lots of attention and visitors." It also carried lots of ads, plus the site generated some ancillary revenues from Britannica's linked online store.

However, by 2001 it became clear being a free portal was not the road to riches. The team returned again to the idea of charging for site access.

How do you sell subscriptions when your content has to compete against free Internet search engines, not to mention against Encarta and the AOL Worldbook?

CAMPAIGN

The team knew the key to success lay in strongly differentiating the paid and free content offerings. They picked two points to focus on:

=> 1. More ads or no ads: Consumer's annoyance levels with the avalanche of online advertising (especially pop-ups) were rising rapidly. Britannica.com hoped folks would be willing to pay for a guaranteed "no ad zone."

This had the additional benefit of freeing the ad sales team to sell whatever they wanted on the free side of the site, including a pop-up on almost every page and banners on framed headers for all outside links, which a 100% free site would not dare to do for fear of outraging visitors so much that they'd leave and never return.

=> 2. Limiting free content severely: Drawing that line between which content will be free and which paid is the hardest part of the subscription transition for most publishers. Britannica needed enough enticing free content to keep their traffic up for continuing ad and ancillary sales. They knew too much free content would cause conversion rates to drop dramatically.

In the end, the barrier was set by brand. Britannica brand content, full entries from its 32-volume encyclopedia set, is paid only. The site's other two content offerings: A searchable version of Merriam-Webster dictionary and thesaurus, and a list of Britannica.com's favorite links to other sites; are free.

Next the site's design team revamped the home page to completely change focus from free content to paid value. Before the site looked more like a daily magazine, with content offerings such as "Today in Science" "Today in Politics" "Today in Health" front and center. The site search bar was way up high at the very top of the page, an area many visitors' eyes fail to register because it is so often banner territory elsewhere on the Web.

With the change to paid, the design team relegated those featured article-style pitches to a column at the right side, and pulled down the search box so it rules the home page front and central. Plus they added extra methods of searching, such as Browse Alphabetically and Browse by Subject, to the home page.

This means visitors are inveigled into doing what they probably came to the site for anyway: Searching the Encyclopaedia.

However, now although visitors can view the first 100 or so words of an entry, then it cuts off to let you know only paid subscribers may read on. A short note at the cut-off point entices you to click for info on paid services:

"Need More? Complete articles are available
to premium service members. Sign up for a FREE trial!
Information on site licenses is also available."

The free content that Britannica syndicates to other public sites, such as Yahoo! Education, also works the exact same way. You can only see 100 or so words, and then the same offer at cut-off.

Free trial link click throughs go to a landing page (link to sample below) that focuses on the two big benefits: No ads and full access to the 32-volume Encyclopaedia online.

Initially the marketing team decided that the free trial offer would be for 14 days, and subscriptions would cost $7.95 month/ $50 year. Recently they have tested changing this to a 72-hour (three day) trial with a $9.95 month/$69.95 year offer. "I held my breath," says Ginnis.

Visitors must submit their credit card number to start a free trial although it will not be charged if they cancel before the paid subscription term kicks in. This has the benefit of separating the tire-kickers from potential buyers. It also stops kids without access to credit cards, and cheaters who try to get continual free access by using false identities to start new trials whenever the old one runs out.

Free trials receive two emailed notices (links to samples below):

Letter #1 - A brief welcome quickly restates the two subscription benefits, reminds users of the terms of the offer, and repeats their password and log-in name.

Letter #2 - This is sent on the day that Britannica charges the credit card the customer left on file. However, instead of dwelling on this fact, the letter focuses entirely on lovingly detailing the features and benefits available to subscribers only.



RESULTS

Since the paid offering launched last Summer, more than 45,000 site visitors have become paid subscribers, equaling gross revenues of more than a million dollars. (Britannica.com could not reveal an exact dollar figure.)

Site visitors have dipped from 7-8 million per month before to 2-3 million per month now. However, it must be noted that Britannica.com's other expenses such as servers to handle more traffic, and now-cancelled TV ads to drive high traffic, have also gone away. So, lower traffic doesn't necessarily mean lower profits.

Although only a tiny fraction of site visitors sign up for the free trial, a full 60% of trials convert to paid buyers. That 60% breaks down to about 70% month-to-month and 30% annual offer subscribers.

Interestingly, test results revealed that there was no difference in this 60% conversion rate whether the free trial was for 14 days or just 72 hours. It appears that two types of people take the trial: Those who want to get access to unabridged content for a session or two to research something specific quickly and then get out; and those who intend to use the service on an ongoing basis.

Initial price test results (just a week's worth in so far) have been extremely encouraging; it appears that the higher price gets the exact same trial and conversion rate that the lower one does. Ginnis says, "We haven't seen any change in ratio, and no drop in the numbers subscribing." However, there has been one very encouraging change, while just 30% went for the more-profitable annual offer at the lower price point, now 50% do at the higher price tested.

(Why is annual more profitable? Because you are not paying for multiple credit card transactions, and also because with a month-to-month offer, they can cancel at any time so the lifetime value per order may be lower.)

Ginnis stresses that although online subscriptions are considered a success, the Company will always rely on a mix of revenue streams to stay healthy. She says, "We're still selling print products and engaged in other businesses; so, we're not pinning all our hopes on the Internet."

"And the Internet itself is really about six sources of revenue for us. There's ecommerce sales from our store, ad sales on our free site, syndicating content to sites that use it, subscriptions from consumers, and also subscriptions from institutions."

She adds, "People who originally said 'Ads are going to be the Holy Grail,' should not now switch to 'Content subscriptions are the new Holy Grail.' Because I don't think they are."

Useful links related to this story:

Creative samples from Britannica's email campaign
http://www.marketingsherpa.com/cs/britannica/study.html


Home page http://www.Britannica.com

To see initial barrier, type a term into the search box and click "go."

To see spelled-out offer page:
http://www.britannica.com/premium/


How Britannica's limited free content appears syndicated at
Yahoo! Education -
http://education.yahoo.com/reference/encyclopedia/


See Also:

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