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Jan 09, 2003
Case Study

FT.com Tests Selling Subscriptions

SUMMARY: By our rough calculations, FT.com has made between $5,000,000-$7,000,000 in online subscription sales in just seven months since they launched their paid offering in May 2002.

Learn how they researched the market to figure out what people would pay for, and how they converted visitors to paid subscribers.
CHALLENGE

In the past FT.com relied on online ad sales for about 90% of its revenues. However, with the worldwide ad sales slump, COO Zach Leonard wanted to make the site more financially secure by adding more revenue streams.

Testing subscription sales made enormous sense, but the big question was how to do it without endangering ad sales?

If a subscription barrier stopped too many of FT.com's three-or-so million unique monthly visitors from visiting, the ad sales team would not have the pageview inventory they required.

Leonard says, "To walk away from the great advertising volume and story that we had, that would have been suicide...so our ingoing assumption was anything we did had to preserve the ad revenue as best as it could."

On the other hand, as many other subscription-site-wanna-bes have
discovered, if you give visitors access to too much free content, your paid subscription conversion rate plummets.

Leonard knew the subscription launch process would be like walking a tightrope.

CAMPAIGN

First Leonard and his team conducted a careful series of three research projects

1. Internal research: "Gut-feeling"

Leonard and his team drew up the sort of content they felt could go behind a payment wall. For example, they identified popular areas of the newspaper that could be enhanced or extended online, such as the Lex columns; opinion and commentary on a company, person or market movement.

Leonard, "The Lex team writes 7 or 8 items and then it's up to the regional (print) editors to select the appropriate ones. Online we don't have to be so restrictive because we don't have a physical real estate problem. So we could give our subscribers all 8 stories."

2. Qualitative market research: Focus groups

The team then used focus groups in the UK, USA and (to a lesser extent) mainland Europe to establish how people were using the existing site, and to present various paid content packages for user evaluation.

"We asked things like, would you pay for it as it is? Would you pay for it if we added x, y and z? Did you even know we already had a, b and c? The answers were very telling."

3. Quantitative market research: Phone surveys

Building on the focus group results, the team used telephone interviews and conjoint analysis to test a variety of content packages and price points on site users.

The results indicated that FT.com could charge different rates
for different content setups, allowing two levels of paid subscription.

"As soon as you start to charge two different rates you open a lot of flexibility. You can alter your prices, you can have slightly different promotional rates, you can advertise differently, etc."

Here is how they divided content into no-cost versus paid:

-> No-cost and registered users only access

Around 70% of the site (in terms of pageviews) is openly accessible to all visitors, and covers general news and content, and quotes.

Visitors must register to access no-cost portfolio tools and selected email newsletters (simple news summaries with headlines only).

-> Level 1 subscription service: $120

For a fee of GBP 75/year (about $120), subscribers get access to what Leonard calls "Financial Times generated content and excellence," such as comment-related pieces, analysis, reports and columnists.

A strong element of this level is access to industry-specific analysis and associated e-newsletters.

The majority of FT.com's newsletters are now subscriber-only and Leonard sees them as a powerful element in the for-fee package. "The benefit of news-by-email is you're gathering together related info on a given topic or sector and that's a huge service for people, especially busy people who may not be able to get to FT.com 3, 4 or 5 times a day." (Link to sample paid newsletter issue below.)

-> Level 2 subscription service: $320

For a fee of GBP 200/year (about $320), users get Level 1 services, plus access to the World Press Monitor, with searchable content from 800-1000 business-related publications, and to a company database with information on close to 20,000 listed companies.

Fees are payable on an annual or monthly basis.

To date, the subscription services have only been promoted internally to the existing user base. Leonard explains, "We've done a very limited amount of above the line, mostly because we didn't have to in 2002. We have the 3 million monthly uniques and a whole range of newspaper
readers."

The marketing team has used four key tactics to convert FT.com visitors to subscribers:

#1 Promotion tactic: 15-day trial

The site invites visitors to sign-up to a free 15-day trial (there was no "science" behind the choice of 15 days, Leonard says it is simply a common number for certain trial categories, such as for magazine subscriptions).

People who sign-up get a welcome email, then (assuming they stay signed-up) further email communications after 30, 45, 60 and 90 days. These follow-ups generally contain some combination of the following:

- an expression of thanks
- pointers and invitations to try features subscribers
might not have been aware of
- announcements of new features

The team is also testing physical welcome packs via postal mail with further presentation of subscription features new users might not be aware of. These are sent to trials on sign-up, and a second one once they hit day 16 and become paid subscribers.

There is a third pack which goes to those who cancel during the trial, a skinnier version of the welcome pack, explaining what they missed and exhorting them to reconsider.

The postal mailed welcome packs are also customized for different geographical markets (UK, USA).

#2 Promotion tactic: Prominent display of for-fee only content links

On the FT.com site, open-access content uses black, white and (in moderation) pink color combinations. Headlines and summaries leading to paid-only content are commonly highlighted by giving them a prominent page position and placing them in a box with a light blue background and dark blue header bar.

Leonard's team picked blue because it is a basic RGB value, it goes well with pink (the FT color) and combines well with a white text font. All links to paid content are also marked by adding a small white "S" symbol in a blue filled circle.

#3 Promotion tactic: Email promotions

The team uses email already being sent to registered users to promote the subscription services. One interesting approach is the use of one-off email offers, where recipients can sign up from within the email itself.

"In a registered user context, we have some of your details pre-presented so you can confirm or revise them, give us some payment details, and within 24 hours your account is set up. That cuts the whole subscription process down dramatically."

#4 Promotion tactic: Discounts

The site is running several promotional discounts. Currently, there is a general discount of GBP 10 (about $16) off level 1 and GBP 50 (about $80) off level 2 subscriptions. Professors, students and users already subscribed to the Financial Times newspaper can claim a discount of GBP 25(about $40) or GBP 80 (about $128), respectively.

Other promotional methods used include in house banner and button ads and advertisements in the print newspaper. (Link to sample creative below.)



RESULTS

From May 18-Dec 31st 2002, FT.com sold just about 40,000 paid subscriptions, accounting for just under 10% of total site revenues. (Ads accounted for about 50% of sales, and content syndication fees were just over 40%) Leonard says, "Bang on target."

The site is currently at break-even, which is pretty impressive considering 2002's revamp costs and the general economy.

More metrics:

- The split between Level 1 ($120) and Level 2 ($320) sales is 70:30.

- Between 70% and 80% of 15-day trials convert to a paid subscription.

- Cancellations from paid subscribers are thus far almost non-existent even for month-to-month buyers, which indicates the postal-mailed welcome kits have definitely had a positive impact.

- Most FT.com subscribers do not have a subscription to the print newspaper, although a growing number of print subscribers are adding an online subscription, too. Leonard says that they've no evidence to suggest that FT.com is cannibalizing readership from the print newspaper in any way.

- Since the subscription offer launch, monthly pageviews have fallen by about 9%. Leonard puts this down to the much simplified and more efficient navigation, rather than the result of offering for-fee content.

- The subscription service has not impacted on advertising revenues. Leonard actually anticipates being able to charge premium CPMs for the advertisements shown behind the payment wall, once subscriber numbers hit critical mass.

- The subscription service hasn't affected syndication sales either. "We're careful about what we syndicate out in terms of what we keep for our subscribers. In actual practice what the market's demanding is usually quite a different thing from what we have on our public site."

Leonard's advice for other sites looking to charge for content: "People will pay either for perceived value or true value. And true value on the web is aggregating stuff that's really hard to find otherwise and presenting it in a simple, usable, interactive and engaging way."

"On the web, each week there's a new thing to try or explore. Where people go wrong is they don't shed the things that aren't working as quickly as they're taking on new things. It's as much about saying no as saying yes ... remembering why the hell you're doing this stuff."

Useful Links:

Link to creative samples from FT's subscription marketing campaigns:
http://www.marketingsherpa.com/ft/ad.html


See top right-hand corner for trial and site tour links:
http://www.ft.com

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