Google’s new Consumer Surveys product is a typically disruptive innovation from the search giant. Leaving aside the massive disruptive threat to survey vendors, Google Consumer Surveys gives publishers a new consumer monetization tactic that will help reduce the recurring conflict between paid content and ad strategy. A struggle which often begets strategic paralysis.
Freemium Strategies Don’t Work So Well When Advertising Pays the Bills
Paid Content hasn’t been the runaway success story publishers hoped for. The real success stories of paid content are tied to device ecosystems: iTunes, xBox, Play Station, Kindle etc. Publishers however don’t have the benefit of ecosystems and have instead had to grapple with converting small single digit percentages of their audiences to digital subscriptions whilst desperately trying not to kill the golden goose of advertising revenue, the tactic for monetizing free use. The problem with this twin track, freemium model is that though it works well enough for music services like Spotify for publishers it creates a tension that threatens the core of their digital revenue strategy, putting paid customer acquisition in direct competition with ad revenue.
Take the example of the New York Times. The Times is one of the more progressive and innovative of publishers in the digital arena yet they are grappling with how to grow their paid content customer base. Despite having a very popular website with more than 30 million monthly unique visitors and a monthly print circulation of 30 million the New York Times has only converted 454,000 of those consumers into paid digital subscribers. That’s a free-to-paid conversion ratio of 1.5% compared to Spotify’s US conversion ratio of roughly 13%. Freemium just doesn’t translate as well for online news. The Times’ near term solution is to scale back what is available to non-paying site visitors in an attempt to nudge the next wave of potential subscribers over the paid content hump. But such a strategy has massive risk. With just 1.5% of its monthly visitors paying for content, the Times relies heavily upon advertising for monetization rather than being able to view it as a loss-leading customer acquisition funnel in the way that Spotify can. Scaling back free content will inevitably have an impact on site traffic and thus on advertising revenue. So publishers are faced with the risk of an overly ambitious paid content strategy killing off their advertising business, with the hunt for extra revenue effectively having the polar opposite effect. This is problem that Google Consumer Surveys helps solve.
Consumer Data: the Third Way for Content Monetization Strategy
One of the most important dynamics of the shift in consumer content consumption in the digital age has been a paradigm shift in perceptions of value. Because most of the content that is consumed digitally is free it is easy to, wrongly, assume that consumers do not value content anymore. Consumers do value content, they just don’t have to pay for it anymore to value it. They also value much more than just the quality of the content itself, they value things like convenience, experience and immediacy. The problem with paid content strategies is their fundamental assumption that consumers still only transact in monetary currency. Digital consumers in fact transact in three equally valuable currencies (see figure):
Freemium strategies predominately play to the first two of those currencies. Google Consumer Surveys enable publishers to start harvesting that third currency by getting consumers to part with personal data in return for ‘free’ access to content that they would otherwise pay for.
Google Consumer Surveys are not an alternative to paid content or advertising, but instead a complement. They enable publishers to more easily build blended content monetization strategies that soften the increasingly adversarial relationship between advertising and paid content. Of course some best-practice publishers already pursue effective triple tier content strategies, but now Google have just made it a lot easier for everyone else to join in.