The Challenges of Running Multiple Revenue Streams
Publishers are in a tough spot. No longer able to sustain themselves from paper distribution and sales, they’re scrambling to make up for lost advertising revenue. Meanwhile, Facebook and Google are consuming their ad budgets and holding their data hostage with insular campaigns.
Solutions to these issues have been creative to say the least. Vice launched in-person events like the Munchies Food Hall in New Jersey. Sports Illustrated introduced its own line of bikinis. And TheSkimm created a calendar app with a $3-per-month subscription.
The problem is, there’s no singular salve for this burn.
As Jim Norton, former chief business officer of Condé Nast, told Business Insider: “No single stream of alternative revenue will make up for the declines that we’re seeing in advertising. There’s no silver bullet. You can’t say, ‘If we’re down 10 percent on advertising, we can make it up through subscriptions.'”
That’s why publishers are now investing in and experimenting with multiple revenue streams. And they’re stuck figuring out how to be an advertising, subscription, media, and ecommerce business all in one.
To help make sense of these issues, LiveIntent sat down with executives from the New York Times, The Daily Beast, and Ziff Davis to hear about the biggest challenges – and solutions – they’ve faced combining multiple revenue streams.
Here’s what they had to say.
Challenge #1: Testing new revenue streams
Once you have a new revenue stream at your fingertips, it’s difficult to decide how to test it and for how long, especially if you have a lean team or budget.
“You want to fail quickly, but you want to give something the opportunity to succeed, and things take time – very few are going to be successful right off the bat,” says Mia Lehmkuhl Libby, chief revenue officer of The Daily Beast. “Toeing that line is one of the hardest things about starting a new business.”
Solution: Make a playbook
When Ziff Davis was acquiring publisher sites and leveraging ecommerce operations through them, they had to test how these new operations would work internally.
“You have to get product, editorial, tech, and analytics teams aligned with you,” says Jessica Spira, vice-president of partner growth at Ziff Davis. “After doing that a few times, you can create a playbook they can apply across all brands.”
Challenge #2: Jumping at the first sign of momentum
If you do see a sign of success, proceed carefully. Putting all your eggs in one basket could result in more issues down the line. Consumer behavior can evolve, algorithms can change, and you could be stuck with a handful of products that don’t drive engagement.
Solution: Take it slow
The New York Times saw impressive engagement after launching one podcast. But they didn’t rush to make 20 more podcasts right away.
“Sometimes that ‘a-ha’ moment is to deliberately slow growth and not immediately jump after what seems like the first sign of momentum,” says Allison Murphy, senior vice-president of ad innovation for the New York Times. “We resist that urge and instead put out products that can sustainably grow.”
Challenge #3: Mistaking scale for engagement
When Ziff Davis acquired IGN, they knew they had an opportunity to tap into a massive audience. But they couldn’t just throw affiliate links at these readers and expect conversions to follow.
Solution: Understand your audience’s voice
“We equated scale with immediate sales and that’s not how that works,” says Spira. “A reader has to be in sync with the brand and the content has to be aligned editorially to perform well. That audience needed a particular voice and products.”
Challenge #4: Combining revenue streams in one product
Publishers not only have to figure out which revenue streams to invest in, but also which ones to tie to each product offering – and how to do so in a way that keeps consumers engaged.
For example, a podcast could combine paid subscriptions, in-stream ads, and branded content. But which solutions actually drive conversions? Which are worth the investment? Are you overwhelming consumers with too many options? If so, how can you narrow down these offerings?
Solution: Pick a dominant measure of success
At the New York Times, Murphy learned to keep it simple.
“With each product, we decide early on what is the dominant theme,” she says. “For us, we know it’s always going to be subscriptions. That’s the first measure of success. That upfront decision matters a lot.”
Challenge #5: Calculating LTV and cost of subscribers
With multiple revenue streams always changing and being added to the mix, it’s tough to decide how much you’re willing to pay for a customer, and what their lifetime value will ultimately be.
As Libby says, “There are various value exchanges along the way. If you’re not a paid subscriber now, maybe you’re a newsletter subscriber, and maybe we convert you to a paid subscriber down the road.”
Solution: Use both analytics and intuition – and be OK without a concrete solution
“You have to combine both math and judgement, and recognize that you’re not going to have definitive answers,” Murphy says. “You can’t let any one single metric delude you into thinking there’s one north star – because usually there isn’t just one.”
Enjoyed this post? Check out the first in the series: Why Top Publishers are Expanding into New Lines of Revenue.