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May 24, 2001
Event Wrap-up

Selling Subscriptions to Internet Content

SUMMARY: No summary available.
On May 18th 2001, eight subscription pioneers, including leaders from three of the top four subscription sites online today, shared their marketing, business model and profitability details during an all-day event held by MarketingSherpa.

Speakers included Craig Sherman, Executive VP Ancestry.com; Lou Betancourt, Publisher The Bull Market Report; Michael Gallagher, VP Marketing Hoovers, Inc; John LaRue, VP Internet Research & Development Christianity Today International; Paige Amidon, Chief Marketing Officer ConsumerReports.org; Diana Pemberton-Sikes, Publisher FashionForRealWomen; Bruce Guzowski, CEO HCPro; and,Richard Parker, COO and Publisher STRATFOR.com.

1. Brand Is More Critical Than Ever
Before the Internet, pubs with ad-based revenues tended to be far more concerned with brand than fee-based pubs. That's partially because media buyers were generally more influenced by perceived brand than subscription buyers were. Plus, there were fewer free information sources available, so it was easier to sell subscriptions.

Most of the speakers agreed that this has changed. Online subscription buyers are heavily influenced by brand in two ways -- the first is that if they've never heard of you they won't go looking for your Web site. For example, ConsumerReports.org gets a substantial portion of its monthly traffic from people who simply type in its name to "see what's there."

Secondly, in this universe of free content, for-fee content marketers need every weapon they can get their hands on to compete. Brand is a strong weapon.

ConsumerReports.org's Amidon said her brand's offline fame was a big help in building online sales, but she's careful not to count on it. Millions of Web surfers in their 20s may not know what Consumer Reports is; or they may only vaguely identify it with a print magazine their parents buy. That's why ConsumerReports.org makes their brand statement excruciatingly clear everywhere they appear online, "No ads, Serving consumers since 1936, Unbiased Ratings and recommendations of products and services."

In fact, we found every single speaker was able to state their brand's unique selling proposition (aka value proposition) in just a few, carefully honed words.

Aside from building and stating your brand online, speakers also noted it's incredibly important to protect your brand. Michael Gallagher, of Hoovers.com was most eloquent on this subject. He said the company no longer sold its content in any format that could be altered -- so outside writers couldn't hurt the brand by changing Hoovers' content. He also noted that the site now refuses pop-up ads after learning their visitors don't like them. (In fact up to 40% of complaints received about the site were pop-up related.) When your site is a critical part of your brand, you don't want something people hate on it.

2. Pricing Still Unscientific
Everyone at the event admitted their pricing was selected in a fairly unscientific fashion, sometimes using the words "random" or "shot in the dark." Those with print legacy products often based their prices on that. Those without legacy prices looked to competitors, chose a price, and crossed their fingers. So, clearly this is an area we'll see a great deal of testing and data gathering on in the future.

Most presenters said they offer buyers a choice of two prices -- usually monthly vs. annual -- with the larger amount clearly marked as a "better deal" than the smaller amount. John LaRue of Christianity International said he's also tested offering three choices, but almost nobody took one of them, so he switched to just two. Bull Market's Betancourt said he's tested offering two-year subscriptions with extra premiums with great results.

3. Marketing Tactics That Work
Hoover's Gallagher got a big laugh when he said, "How do you sell online? Stop wringing your hands and just do it!" Here are some of the tried-and-proven tactics speakers mentioned:

- Drive interested traffic with search engine optimization in three ways;
1) purchase banners linked to keywords,
2) purchase paid listings on engines such as GoTo and Lycos
3) optimize your site so it gets high rankings when people search for related items. Ancestry.com's Sherman said their search engine results quadrupled after they hired an outside expert (previously they'd been using "someone in-house who thought they knew what they were doing.")

- Tweak your site so it sells harder. Hoovers.com has added more gold keys, indicating paid-only content, to its site in the past 5 months to raise sales. FashionForRealWomen's Pemberton-Sikes changed her site, cutting copy, increasing benefit-laden phrases and adding graphics, until her visitor-to-buyer conversion rate went from 1:700 to 1:122.

- Use your own free newsletter to sell your subscription product. Pemberton-Sikes revealed that 5% of her free ezine readers convert to paid subscriptions at $9.95 a month. STRATFOR's Parker said 10% of his free ezine readers convert to paids at $79.95 a year. Ancestry.com's Sherman said they've added "ecommerce-enabled ads" to their HTML-version newsletters so readers can order without leaving their email in-box!

- Buy ads in other people's newsletters. While renting email lists for blast or broadcast campaigns got mixed reviews, everyone agreed buying ads in email newsletters is cost effective and often successful. Bull Market Report's Betancourt said paid newsletters pull harder than free newsletters (although his campaigns are usually profitable in either case.) He reminded everyone to test creative, and then test again. In fact he showed us how testing a new headline had dramatically improved response rates for one of his newsletter ads.

- Affiliate programs are winners for consumer publications. Ancestry.com has 3,000 affiliates who drive at least one new customer a month. Nobody on the B-to-B side mentioned affiliates, but we bet we'll see some testing of this coming up soon.


4. Marketing Tactics That Don't Work
What marketing is not worth investing in? Plenty. Ancestry.com's Sherman ended his ended his speech about their successful tactics by saying, "It would take me another hour to tell you all the things I did wrong!"

Everyone said not to bother buying banners on general sites. The only banners that were clear winners were those that were linked to search terms on search engines, and those used for affiliate programs.

Also, several speakers said they cut co-branding relationships back severely this year. These can take a lot of work and people-time, and unless they produce sales, they're not worth it. Sherman called them "virtually useless." Gallagher noted Hoovers.com told almost all co-brands earlier this year that unless they were willing to pay $1200 a month, they would cease getting content.

Free trials were also definitely a no-no for many, especially those that sell searchable databases. The only person who had real success allowing potential subscribers a free trial was Bull Market Report's Betancourt who uses an aggressive seven-step email campaign to convert trials to buyers with a 4-8% success rate. Betancourt, who comes from a classic direct marketing background said, "You've got to be aggressive! Take control over your destiny."

Last but not least, STRATFOR's Parker made a good point when he said you can't necessarily sell content that previously was given away free. Information that's fresh, newsy, or even sticky won't sell. It's got to be useful enough to pay for.

Sticky is out -- useful is in.

5. How Much Should You Give Away for Free?
After pricing, most people's next toughest decision was deciding how much content to give away for free.

Hoover's Gallagher said now that banner ad sales dollars continue to plummet, the site has less and less incentive to give away content because they just can't make enough money from free eyeballs. He said, "It's not about pageviews anymore, it's about subscriptions. You want them to use the site so they'll renew, but that's about the only reason."

So, this year most publishers are experimenting to see how little content they can give away in order to make the subscription sale. We expect to see the placement of the free vs. fee line moving back and forth on many sites.

6. Ancillary Sales Worth Exploring
Diana Pemberton-Sikes spoke for everyone when she said; "I worked so hard on this content. Now I want to know how else can I profit from it?"

Aside from ConsumerReports.org who can't sell ads due to their charter, almost everyone else is making some money from selling ads. Not as much as they used to, but some.

Some presenters, including Hoovers, said they get affiliate (commission) revenues from buyers they drive to partner's sites. Ancestry.com is also about to begin charging for inserts in its printed, snail mail welcome packages to new subscribers.

Christianity International was the poster child for other ancillary sales. Their main site, ChristianityToday.com, successfully sells print magazine subscriptions, books, eBooks, CD-ROMs, subscriptions to the organization's paid sites and more. HCPro's Guzowski noted they've had substantial success selling 20-50 page reports and eBooks in the $49-$89 price point through ads in their email newsletters reaching tens of thousands of doctors.

ConsumerReports.org has started making ancillary sales by placing offers for single reports on other highly trafficked sites such as MySimon. We definitely think this clever tactic bears watching.

7. Measuring Metrics Matters
Last December Ancestry.com ran some numbers to find out how successful their bartered banner ad campaigns were, and got the shock of their lives. Even though bartered ads are nominally free, Ancestry still had to pay to serve them. Those costs resulted in their paying anywhere from $7 to $120 per new subscriber from bartered banners!

In the ad-based world, everyone pays lip service to measuring metrics, but few dedicate many resources to it. In the subscription-based world, metrics really, really, really matter. The key reports speakers mentioned include:

- sales by channel by cash, percent and profitability
- visitor-to-buyer conversion rate
- revenue per subscriber (from all sources including ancillaries)
- retention rate

You need at least monthly (if not weekly) reports of this nature to determine where to invest your marketing budget wisely.

8. Expect Your Budget and Business Plan to Change (Repeatedly)
HCPro's Bruce Guzowski said when it comes to business models and marketing tactics, "there are no pat answers. You have to learn as you go." He ascribed much of HCPro's success to the fact that they've been able to change strategies quickly. (In fact he said he's created almost two dozen different budgets and business model spreadsheets in the past two years!)

Gallagher told us Hoovers.com has just made a radical change to its subscription model -- they're no longer selling individual subscriptions, just corporate enterprise accounts. (Hoovers' 50,000 individual legacy subscribers will continue to be serviced however.) On the other hand STRATFOR, recently added individual subscriptions to their previously enterprise-only business model and are doing so well with them that they're thinking of expanding in that direction.

Lesson learned: don't set your business model in concrete ... yet.

9. Renewals & Retention Are the Next Frontier
Although many of our speakers had been selling subscriptions online for more than three years, it was clear nobody has all the answers yet when it comes to renewals and retention. Heretofore, most have focused on new sales.

Almost everyone is using automatic credit card billing (aka til forbid) for both monthly and annual subscriptions. It became clear that the key to success with this method is not to constantly remind buyers that you're charging them again. Pemberton-Sikes said she's learned not to send receipts out after she charges cards each month. Betancourt said he's learned to only send a single notice prior to charging someone for another year's subscription, "the more notices you send, the more cancels you'll get." However, Sherman noted that in some states you must contact buyers before auto-renewing them.

You should also have a plan in place to "save" cancels. Pemberton-Sikes emails them a polite note asking them to sign up for her free newsletter. Sherman has an in-bound telemarketing team in place to placate and resell cancels.

10. Recommended Vendors
As Hoovers' Gallagher said, "Hope is not a strategy when it comes to technology. Publishers prone to outsourcing it and hoping it's going to work." Here are links to some of the technical vendors that speakers recommended:

Technology to manage a subscription site
http://www.infoconamerica.com

http://www.emeta.com

http://www.membergate.com

http://www.webonthefly.com


Search engine optimization services
http://www.zenhits.com

http://www.eluminator.com

Brian Smith - email at brismi@yahoo.com

Affiliate marketing programs
http://www.befree.com

http://www.commissionjunction.com

http://www.linkshare.com

http://www.affiliatepro.com


News on these programs
http://www.revenews.com

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