Selling a product these days provides much more than simply the revenue from that product. When done properly, it provides invaluable information about the purchaser, data that is often worth far more than the cost of admission.
“Publishers launch paywalls with the primary goal of getting more revenue from consumers. But the consumer information they’re gathering through the registration process also has potential value to advertisers,” notes Lucia Moses in Digiday.
“In theory, that data could be used to enable advertisers to pinpoint a select audience that is core, affluent users of the publishers’ site. That’s one of the ideas behind Time Inc.’s new paid-content strategy,” Moses continues.
“As publishers give up some traffic associated with putting up a paywall, it’s attractive to think they could make up for the loss by charging higher CPMs for their registered users,” Moses explains.
Put simply, advertisers will payer higher ad rates to get in front of tightly qualified prospects. And the best way to qualify those prospects is to learn as much as you can about them, through the information they provide when they purchase.
Time Inc. plans to roll out paywalls this summer, starting with Entertainment Weekly and soon to include Time, People, Money and Real Simple reports this piece in Medialife Magazine.
“The move comes nearly a year after Time Inc. was spun off from Time Warner. Since then, it’s been making the case both to advertisers and stockholders that its future is bright with digital, at a time when print is waning,” the article notes.
Moses notes a caution to this idea, noting that “Convincing advertisers that their first-party data is more valuable than a look-alike audience is a challenge.”
“Numbers-oriented media buyers will push back against the idea that paying readers are worth more than freeloaders,” Moses writes. For many, including Brendan Spain of the Financial Times, “it’s the constant explanation of quality versus quantity.”
We’ll certainly watch the numbers as these paywalls go up. Some publications like The Economist have done well leveraging digital sales to offset print ad revenues. Others continue to struggle to find that sweet pot.
As your own favorite content goes into lock-down, how will you react? What content are you willing to pay for, and what can you live without? That’s the critical question as paywalls hang in the balance.