Northwestern University researchers have completed their prototype of a Medill Subscriber Engagement Index for digital news and expect to launch the innovative tool by the end of this year.
The index will show local news executives which aspects of their online content are helping them acquire and keep subscribers and which content is causing “churn” – people dropping their subscriptions. It also will highlight best practices and will allow executives to compare their newsrooms with other participating news outlets on a variety of performance metrics.
The index will project financial results based on current trends and also will include a groundbreaking feature: a ‘What-If” tool in which news executives can forecast how changes in their news outlet’s performance – more subscribers or less churn, for example – would affect their financial bottom lines.
The Medill Subscriber Engagement Index, funded with help from a Google Innovation Challenge award, was developed by the Spiegel Research Center at Northwestern’s Medill School of Journalism, Media, Integrated Marketing Communications. The project is part of the Medill Local News Initiative, an effort to promote financial sustainability in local news.
Spiegel has analyzed subscriber behavior and retention at about 20 news outlets in the last two years, and has influenced the industry’s engagement strategies through its key finding that regular visits to a news website are the best indicator that subscribers will keep paying. Spiegel plans to open participation in the new index to outlets that are able to supply the necessary data. There will be no charge, at least initially.
Jonathan Copulsky, the newly named Executive Director of Spiegel, said the index will provide actionable intelligence.
“We are much more focused on strengthening the tie between engagement and financial results,” Copulsky said. “There are a number of tools out there – people using Google Analytics, for example, or looking at what stories their people are interested in. A lot of publications are looking at the relationship between the nature of the stories that they have and whether or not people are reading. But [we take] one step further and also tie that to ‘Well, if they read, do they become subscribers, and if they become subscribers, do they persist with us for a longer period of time?’”
Tim Franklin, who is Senior Associate Dean at the Medill School and heads the Medill Local News Initiative, emphasized that the new index will go well beyond what local newsrooms are doing now.
“By merging reader data with financial outcomes, the Medill index is a transformational tool that tears down the silos in news organizations,” Franklin said. “And it allows local news outlets to benchmark against their peers across companies around the country. The creation of this index couldn’t be more timely. It comes at the very moment that the business model for local news is pivoting to reader revenue.”
Medill has shown its index prototype to several industry leaders, and they welcomed this new way to analyze news consumption with the goal of increasing engagement.
Jed Williams, who recently left his position as Chief Strategy Officer of the Local Media Association to become Chief Revenue Officer of Ken Doctor’s Lookout Local start-up, said Medill’s index get its priorities right.
“The fact that the Medill index is focused on deep subscriber engagement, retention strategies, promotion strategies, to me is critical because in a very meaningful, data-backed way it’s addressing the most important part of the reader-revenue stack or strategies,” Williams said.
Matt Lindsay, president of Mather Economics, a firm specializing in subscription management and customer data analytics, said publishers need this type of sophisticated business intelligence.
“Local news media companies are often challenged with capturing, processing and deriving actionable insights from their audience data,” Lindsay said, “and the Medill Subscriber Engagement Index … will provide data on their readers’ engagement that is not available to publishers without extensive technology tools that can be prohibitively expensive.”
The Medill Subscriber Engagement Index will provide data on their readers’ engagement that is not available to publishers without extensive technology tools that can be prohibitively expensive.Matt Lindsay, president, Mather Economics
Tom Collinger, who recently retired as Spiegel’s Executive Director, helped set up the subscriber index. He said the ability to compare a newsroom with an aggregate of other outlets on performance metrics will bring hard data to questions that have long been ruled by editors’ gut feelings.
“Let’s just say, for example, you’ve got brand new subscribers who don’t engage very much,” Collinger said. “So you might be sitting there saying, if you’re a managing editor, ‘Aw, that’s the way it always works. We’ve seen that for 100 years.’ Now there’s a publication that’s actually doing four times better than you when it comes to engaging new subscribers. Now you realize that many of those old assumptions are, well, unreliable.”
The index will highlight best practices that allow news executives to learn from other news organizations and from new thinking throughout the industry in our constantly shifting news environment.
‘Regularity Drivers’ and ‘Churn Drivers’
The index will correlate reader behaviors with subscriber retention and apply the concept of Customer Lifetime Value to analyze how publishers’ products and presentation methods affect the bottom line.
The index will identify “regularity drivers” and “churn drivers.” Is sports coverage a key factor in retention? Does a news outlet’s main columnist or its op-eds in general lead to churn? Is it important for readers to consume a variety of content or is it OK if they stay with just one category?
This index will help news outlets identify their most at-risk subscribers and also those who have cancelled but might be brought back into the fold.
“Our system will produce scores that say [certain types of]] subscribers are most likely to churn and therefore you should be targeting your retention efforts on them,” said Spiegel Research Director Ed Malthouse. “Our models will also be able to tell you these particular churned customers are highly likely to come back – these are the most likely ones to come back, and therefore you should target your re-activation efforts on those customers.”
Our models will also be able to tell you these particular churned customers are highly likely to come back ...Ed Malthouse, Research Director, Spiegel Research Center
The index will encourage news organizations to harness their data to get new insights on best practices.
“In working with different publishers, we’ve found that some publishers could provide us with certain data elements but other publishers couldn’t,” Malthouse said. “And we’ve looked at those data elements and often we’ve found that they’re quite interesting. As an example, not all publishers could give us history on newsletter readership and their relationship with churn but some could. And we’ve found that those [readers] who are subscribing to newsletters are more likely to be retained. And that’s a very interesting finding that we would like to spread widely with all of our partners. We would like the whole industry to know what’s working best.”
Another example is ad blockers. Initial Spiegel research has found that subscribers using ad blockers are less likely to churn, suggesting that ads may diminish the user experience. Malthouse believes more research is needed into the effect of ads on retention.
Financial Forecasts and the ‘What-If Tool’
The index will include trend lines on a news outlet’s financial performance and also projections of where it’s headed in the next three years. “It’s important to know where you’re at today, but it’s also very important to understand where you’re going,” Malthouse said.
In addition to tracking subscription revenue, the index will monitor digital ad revenue, which “is going to be a function of the number of page views that these readers have in a month,” Malthouse said. “Although it seems to us that the ad revenue is a pretty small fraction of what they derive compared to subscription revenue.”
Perhaps the most innovative feature of the index is a “reader-equity optimizing tool” known as the What-If Tool.
“The What-if Tool allows the manager to try out scenarios,” Malthouse said. “If I want to get to a certain level of reader revenue, if I were to invest in newsletters, say, that would increase retention rates … well, what effect would that have on my reader revenue two years from now? If I start doing a better job at keeping the customers I have, then my customer base is going to look way different two years from now.
“Our tool will allow you to forecast that,” said Malthouse, because it will show how an adjustment in one metric might affect other metrics.
The What-if Tool allows the manager to try out scenarios.Ed Malthouse, Research Director, Spiegel Research Center
News executives will be able to adjust variables such as the expected number of new subscribers and retention rates to calculate projected financial benefits or deficits.
It’s the kind of cause-and-effect analysis that will replace guesswork, Copulsky said
“I do think the What-if Tool is a good way for people to understand and model the consequences of certain actions that they could take. ‘What if we did this? What if we did that? How would that help us? What would be the impact for us?’ And what we’ve done in the context of the index is made it relatively simple and straightforward for people to do,” Copulsky said.
He said the What-If feature “puts a very simple but powerful tool in the hands of publishers and editors and allows them experiment, tinker with, try out different scenarios to understand the consequences.”
Index Will Keep Getting Better
An exciting aspect of this project is the commitment to steadily improve the index.
“This is not building a car, somebody buys the car, see you in three years,” Collinger said. “Rather, this is something that will have the ability to be a wonderfully organic and growing-in-value tool because today even the top publishers that are our partners are not even capturing all the data that we know would be hugely valuable in predicting churn.”
Malthouse said one area ripe for further study is recommendation systems that would get news stories to the people most interested in them.
“Where we ultimately want to go is to provide a recommender system of content,” Malthouse said. “Can we be the place that will provide you with a recommendation engine to help engage readers further by helping them find the stories that they’re interested in? So if you’re a big Bears fan, we should be sending you Bears stories. My wife has no interest in the Bears, so don’t send her Bears stories.”
This is not building a car, somebody buys the car, see you in three years. Rather, this is something that will have the ability to be a wonderfully organic and growing-in-value tool ...Tom Collinger, retired Executive Director, Spiegel Research Center
In addition to improving its subscriber index for local news outlets, Medill may be able to expand the idea to other media, Copulsky said.
“This has been focused on local news,” he said. “There’s probably something similar that could be done with national news. There’s probably something similar that could be done with other types of media [too], whether it’s streaming services or movies or you name it.”
Collinger is excited about the potential growth of the Medill Subscriber Engagement Index.
“Think of it as, we’re launching a brain, and the brain continues to learn,” he said.
News executives interested in working with Medill to include their newsroom’s data in the index should contact Tim Franklin at firstname.lastname@example.org